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Poor management skills hampering growth of UK SMEs

MANY small and medium-sized businesses in the UK are being held back by poor management and leadership skills, according to Warwick Business School research.

A survey of 2,500 SMEs found that many identified poor management skills, especially entrepreneurial skills, as hampering their growth. The study also showed a generally low uptake of important practices such as formalised strategic management, and many of the so-called ‘high performance’ human resource management practices such as information sharing, participation in decision making, training and employee ownership.

Professor James Hayton, of Warwick Business School and the report’s author, said: “When looking at the distribution of skills in the population, there is currently a ‘long tail’ of SMEs not employing management best practice.

“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.”

To better understand the SME sector, Hayton examined the association between entrepreneurship skills, leadership and management skills, the implementation of management best practices and how these factors are related to three measures of firm performance: turnover, productivity and employment growth.

The results clearly demonstrate leadership and management skills are relatively under-developed in many SMEs Hayton said.

“Of all of the dimensions measured, the most important predictor of positive performance is entrepreneurship skills. There is a strong argument that entrepreneurship skills are positively associated with good strategic management practices, good HRM practice, and ultimately firm performance.”

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