Economic experts have come to the conclusion that to succeed business must be more flexible with benefits
Good HR policies and customer service are the key to corporate growth, according to a report by the Economist Intelligence Unit (EIU).
The EIU survey of 153 UK business leaders found that the majority think improving their existing customer base and workforce skills is more important than acquiring new customers through advertising.
Employee development is high on the agenda. A sizeable number of the respondents claim growth is being hampered by inadequate workforce skills (16 per cent), with inadequate management skills causing particular concern (20 per cent).
“Another key factor for growth was management capability,” said Adrian Farley, HR director at SAP, the IT company that sponsored the EIU report. “The interesting thing about this is that it is the first thing that organisations can do something about.”
The economic outlook is optimistic, with most respondents (75 per cent) saying the UK economy is recovering, although the same number also think Chancellor Gordon Brown’s predictions of economic growth in 2004, of 3-3.5 per cent, are overly optimistic. The EIU forecasts GDP growth of 2.9 per cent in 2004.
With this renewed confidence, a minority of the surveyed companies are concentrating on advertising or acquiring new customers to drive growth, but only a quarter intend to use advertising to increase sales.
Instead, the focus is on the retention and development of existing customers and staff, said Denis McCauley, director of global technology research at EIU. “There is less of an interest in conquering new, untapped markets and more on getting more out of the existing customer base,” he said.
“Companies are pursuing the productivity agenda. This includes empowering teams and managers to increase their own contribution, improve productivity and reduce costs.”
The majority of respondents plan to use performance-based management to increase employees’ productivity.
Farley said that managers need to understand and be trained in how to lead, develop and motivate employees. As demand for skills and staff starts to pick up, he predicts that companies will lose people unless they provide the right environment and training for their employees.
“Now is the time to put the effort in, as retaining, motivating and developing your best staff is increasingly important,” he said. “Turnover in itself isn’t a problem, but if you’re losing your best people you’ve got a real problem.”
Many companies in the survey recognise this, with 66 per cent claiming to be extending education and training programmes.
Graham White, head of HR at Surrey County Council, thinks managers need training in how to manage a dispersed workforce and how to manage remotely.
“With greater use of homeworking and remote working, a manager’s team might not be in the office with them,” he said. “Or the manager may not be in the office very much. Managers have to learn new skills and be more adaptable,” he added.
The popularity of flexible working among employees was recognised by most employers, in the survey, with more than 50 per cent planning to expand current schemes. Almost a quarter (23 per cent) think mobile working will have a significant impact on revenue growth in the next year, with 41 per cent intending to invest in enabling technology.
As the majority of employees have enjoyed only incremental pay rises in recent years, Farley said, it has become increasingly important for companies to find other ways to reward staff.
“You have to go as far as you can in terms of other benefits,” he said. “Companies have been leveraging this in terms of flexibility and benefits.”
The other key way to retain employees is by offering good career development and training packages, he said. “Today’s young employee, in particular, is coming in and looking to see how much they can develop,” he said. “Fast-track schemes, mentoring – these are the real attractions for people.”