SMEs held back by poor leadership skills

SMEs held back by poor leadership skillsMany UK SMEs are being held back by their lack of management and leadership skills, according to new research from Warwick Business School.

While the UK economy is growing faster than any advanced nation, productivity remains a problem with output per hour worked still 2% below pre-crisis levels according to the Office for National Statistics (ONS).

For small firms, a key issue is lack of leadership skills according to a new report, Leadership and Management Skills in SMEs, by Professor James Hayton of Warwick Business School.

Professor Hayton said: "Skill levels and the adoption of best practices are uneven across the SME sector. Under-developed leadership and management skills and a widespread failure to adopt management best practices are constraining the performance and growth of a large number of SMEs."

The report concludes that the benefits of managers with good leadership and entrepreneurship skills are "evident in both revenues and growth, as well as indirectly with productivity and turnover."

In addition, the study shows there is a low uptake of practices such as strategic management and what it calls "high performance" HR practices such as information sharing, participation in decision making, training and employee ownership.

Professor Hayton said: "The results indicate skills matter, but not all skills matter equally. Of all of the dimensions measured, the most important predictor of positive performance is entrepreneurship skills. Given limited resources, especially time, SME owner-managers may benefit most significantly from ensuring that their entrepreneurship skills and leadership skills are well polished."

He added: "There is growing evidence that entrepreneurship skills are trainable. Entrepreneurship education is becoming widespread and is accessible not only within schools, further education and higher education institutions, but is also accessible through established sources of business support."

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