Are Kiwi Companies Really Clever?

Monday 15 August 2005

Are Kiwi Companies Really Clever?

Results of PricewaterhouseCoopers/EMA Clever Companies Survey Released

Despite the buoyant New Zealand economy, only 32% of small and medium-sized businesses believe their profitability is consistently good, according to the results of the PricewaterhouseCoopers/EMA Clever Companies Survey announced today.

The Survey uncovered four areas that companies believed were important to developing and maintaining a profitable business: coping with business growth; understanding markets and customers; overcoming skills shortages; and harnessing technology to deliver structural efficiency.

Comprising a questionnaire and face-to-face interviews with 900 business owners and managers nationwide, the Survey revealed the important issues facing small and medium-sized enterprises (SMEs), and drilled down into how they were coping with those issues.

PricewaterhouseCoopers’ Private Client Services lead partner Robbie Gimblett said it was concerning that many respondents believed they were struggling to perform in these four crucial areas. “Small and medium-sized businesses are the engine room of the New Zealand economy – if they’re battling to deliver consistently good profits this highlights a major barrier impacting on New Zealand businesses’ ability to reach their potential.”

With 67% of respondents citing growth as their most likely future strategy, EMA (Northern) Chief Executive Alasdair Thompson said companies needed a business environment in which they could grow. “The desire to expand indicates businesses are optimistic and ambitious about their future plans, but business practices must evolve to support this anticipated growth.”

Compliance overwhelming innovation

New Zealand businesses feel they have the mandatory business practices under control, with understanding and meeting compliance obligations high on the radar of many businesses. Robbie Gimblett said the dedication to administrative requirements came at a price. “The trade-off is that energy is being diverted from business growth activities and that’s a worry,” he said.

The stereotypical Kiwi trait of thriving on a culture of innovation is one area that appears to be under threat – close to 90% of respondents rated this as highly important, yet only 45% believed they were performing well here.

Only 27% of respondents said accessing grants was highly important, and a mere 9% said they were doing this very well. Alasdair Thompson said: “While there are government grants available to assist businesses, it’s evident that few see these as important or are making use of them.”

Market understanding is crucial

Companies appeared to be struggling to achieve in areas critical to developing competitive advantage: knowledge of customers, understanding the competitive environment, and innovation. Almost all (94%) of those surveyed said knowing and understanding the needs of their customers was highly important, but only half (54%) were doing this very successfully. Just 30% of those surveyed rated having a budget for research and development as important, and only 17% admitted they were performing well in this area.

Robbie Gimblett said the research showed that successful companies were committed to understanding their markets. “Those who have a good knowledge of competitors, who regularly review their market position, and who focus on delivering innovative products and services are much more likely to be delivering consistently good profitability.”

Human resource management limitations

Managing skills shortages and developing staff were identified as priorities in the best performing businesses, and overall 90% of respondents said this was highly important. However only 41% said they were delivering training and staff upskilling programmes effectively. Coping with labour shortages was also seen as very important by 90% of businesses, but only 33% said they were performing well at managing this issue.

Alasdair Thompson said the Survey findings posed some major questions in terms of the human resource management capability of some New Zealand companies. “The ability to manage, improve and develop the people in the workshops, warehouses and offices around the country is a critical element of business success in this country. At the moment there appears to be a big gap between where businesses aspire to be and where they are in reality.”

Other findings

Awareness of the impact of the Kyoto Protocol was very low, with only 26% of respondents rating it as being highly important and only 10% saying they were prepared for its effect on their business. E-business also rated lowly for businesses, with 60% rating it as highly important but only 34% rating their delivery as very good or excellent.

For more information please see www.clevercompanies.co.nz

ABOUT THE SURVEY

The Survey canvassed a broad range of small and medium-sized businesses throughout New Zealand drawn from the membership of the EMA, EMA Central, Canterbury Employers Chamber of Commerce, and Otago Southland Employers Association. 900 questionnaires were completed by owner/managers, general managers and senior executives, then subjected to rigorous analysis by independent research consultancy VantagePoint Marketing Limited.

The quantitative data was complemented by a series of in-depth qualitative interviews to uncover clever practices implemented to overcome specific issues facing business. A diverse range of companies emerged in terms of location, industry, turnover and staff numbers, and the resulting case studies highlight the clever practices of companies from places such as Hawera, Te Kuiti, Nelson, Wanganui and Invercargill.

ENDS

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