Research findings from HR software platform Employment Hero show that nearly three quarters (72%) of SME leaders say productivity in their business has increased over the past year; they attribute these gains to technology adoption.
But while leaders feel their businesses are working more efficiently, the research also shows that one in three small businesses are operating in or close to “survival mode”, with limited capacity to grow or innovate.
This contrast suggests that the performance of SME business' isn’t translating into meaningful growth or long-term sustainability.
For employees, the strongest driver of productivity isn’t time spent on tasks, or financial reward, it’s job satisfaction.
The data shows that employees who find their work meaningful are three times more likely to feel committed to their organisation, and twice as likely to say they are productive.
The report also reveals a mismatch between how productivity is measured nationally – through output per hour – and what drives productivity at the human level.
Read more: Pressures drive SMEs to revamp benefits
There is confusion between being busy and being productive, explained employee engagement consultant Lucy Kemp.
She told HR magazine: "Just because everyone’s working at full tilt doesn’t mean the business is moving in the right direction. High output doesn’t equal high impact.
“Many companies are pushing their people harder without asking why they’re doing what they’re doing. The result? Burnt-out teams delivering on tasks that don’t shift the dial, while leadership wonders why things still feel unsustainable.”
Jenny Jarvis, founding partner and head of human transformation at Q Branch Consulting, pointed to a gap between perceived productivity and actions that truly drive results.
Speaking to HR magazine, she said: “It has been a long-term society norm, particularly in the UK, to wear the badge of honour for being incredibly busy and working long hours.
“Owners and employees often benchmark their productivity on how many hours they have worked and totally ignore how beneficial those hours really were.”
Read more: Five actions that boost productivity
To shift from survival to strategy, Jarvis suggested that employers start measuring what matters, rather than what's easy.
Productivity isn’t just about doing more, it’s about doing the right thing, with clarity and purpose, Kemp added.
“Today, productivity has to account for emotional energy, psychological safety, and how empowered people feel to actually make decisions. If your team spends their day in meetings, chasing approvals or firefighting internal politics, that’s not a productivity problem, it’s a leadership one,” she said.
Using metrics like “autonomy, engagement, and trust tells you more about a team’s ability to perform than any hours-logged report ever will. The companies that understand this and design systems that measure both performance and experience are the ones that will move from survival to real, sustainable growth,” Kemp explained.
Another way to measure success and productivity is by asking your team how they feel in the working environment, added Jarvis, for example by asking staff questions about their workload, their frustrations and how they feel valued in the business. She added that staff trust and loyalty can be stifled when a business is in survival mode.
Employment Hero polled 1,000 business leaders and 1,500 employees for its Work that Works report, in partnership with software company QuestionPro, between 14 to 21 March 2025.
