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Employers not doing enough to 'fuel growth', research finds


Employers are placing too much emphasis on cost reduction and not enough importance on initiatives to fuel growth, according to research from transformation consultancy Moorhouse.

The research found more than half (54%) of organisations have initiatives in place to reduce costs, compared to just 22% aimed at improving performance. Less than a fifth (19%) claimed to be addressing new products or services.

The research found these initiatives are often not addressing the strategic challenges that employers face, even though 82% of organisations believe they are focused on the right activities.

Employers that have experienced higher growth in recent years are more likely to have initiatives in place that engage staff or pursue growth. The research showed employers that have been less successful are more likely to be focused primarily on cost reduction. Those that remain agile and view themselves as "pro-change" are almost twice as likely to experience higher growth, compared to oragnisations, which see themselves as "anti-change".

Stephen Vinall, managing director of Moorhouse, said: "Some UK businesses have become stuck in a mindset of cost reduction and internal efficiency drives, with little focus on initiatives that will generate their competitive edge and position them well for growth.

"To achieve growth, organisations must look beyond cost cutting and at investing in the kinds of initiatives that will help support this ambition, such as accessing new markets or tackling regulatory-driven change."

He added: "Savings being generated by cost reduction should be reinvested in these kind of activities to help safeguard the future of the business.

"Organisations are pulling themselves in opposing directions. A business cannot deliver the most bespoke service available to its customers while also being the most highly efficient; nor focus on either of these while developing the best products.

"You can't be an Apple or Dyson while also being a Tesco or Easyjet. To differentiate themselves clearly, organisations should pick one of these areas and make excelling in this their strategic priority that their change initiatives then clearly support. Whatever their context, every business has to be adept at turning its strategy into a realistic and achievable portfolio of programmes or initiatives."

The research spoke to over 200 board-level directors and senior managers reporting directly into the board at FTSE 250, UK multinational and public sector organisations, responsible for a total spend on change of £4.4 billion.