According to a new survey almost half of Irish small and medium-sized businesses expect turnover to drop this year as a result of Brexit. The report from the Irish Small and Medium Firms Enterprises Association (ISME) notes that the profound impact Brexit could potentially have on indigenous Irish businesses is laid bare by the fact that 48% of companies questioned believe profitability will suffer decreases of up to 20% as a direct consequence. ISME CEO Neil McDonald said the results of their survey do not give the complete picture. “The real scale of impacts, direct and indirect, will only be truly known when we see the shape of the agreement between the European Union and the United Kingdom”.
With Productivity being the main determinant of national income per person, surely now following the triggering of article 50 by the UK government, Irish organisations faced with the Brexit uncertainties will make it a priority. In simple terms, productivity growth is the most important driver of prosperity, therefore any future business strategies needs to prioritise productivity over other key performance indicators. Ireland has the most to lose from the new post-Brexit era and organisations exposed to the fallout must respond with urgency by setting new more bold productivity improvement strategies. Not only will this benefit Ireland against International competition in the long run but help entry into new markets as well. The productivity measures of labour and capital can be based on value-added concepts. Among those measures, value-added labour productivity is the single most frequently used productivity statistic, commonly utilised throughout Europe and particularly in Germany. For individual organisations, productivity gains can occur in several different ways, by:
- Innovating products, services or systems
- Adopting new technologies
- Less productive firms dying and being replaced by new, more productive firms
- More productive firms gaining market share from less productive ones.
Effective implementations of the above can off-set the effect of the loss in cost competitiveness that Brexit has now brought to bear on the trading positions of Irish Companies. Establishing programmes for real cost savings in a pragmatic way to identify productivity improvements will require organisations to invest in technology, new innovative systems, services & products and/or their workforces. It’s challenging to know which productivity strategy to choose and strategies can be seriously flawed by failing to make the right real cost saving investment decisions. At the same time businesses must act immediately to offset the fall in Sterling and not only rethink their plans for the coming months, but how they can make use of productivity partners to deliver their aspirations. Real productivity improvements pay for the investments made and the support of specialists can smooth the transition to lower cost competitive positions.
Tecknic Performance Leaders can provide the productivity improvements necessary to meet the challenge of Brexit.
