One-fifth of our small firms are 'poorly managed'

At the launch of Irish Management Institute 'Closing the Gap' report were, from left, Dr Tom McCarthy, CEO, IMI; Frank Ryan, CEO, Enterprise Ireland; and Dr Phil Nolan, chairman of IMI

Peter Flanagan

December 21 2010 04:47 AM

NEARLY a fifth of small businesses are poorly managed, according to a new survey.

A new report from the Irish Management Institute found that 19pc of small firms had poor management practices and that this helped contribute to the country's competitiveness deficit.

The IMI survey follows standardised research carried out internationally by the management consultants McKinsey and the London School of Economics. The survey focused on day-to-day management skills, as well as people management and performance reviews, amongst other areas.

Each country's management practices are rated out of five. Ireland scored a 2.77 rating, behind Germany, the UK, Italy and Poland, but ahead of India and China. The US tops the table, with a rating of 3.30.

The report shows that while 19pc of businesses had an overall rating of less than two, virtually no firms rated close to five.

An element of supply-side economics could be used in a peripheral economy like Ireland, said the IMI, but the key was to get Irish competitiveness back in line with international standards.

IMI chief executive Tom McCarthy said the results of his group's 'Closing the Gap' report needed to be seen as an opportunity rather than an obstacle and said a one-point jump in our management expertise would increase national competitiveness by a quarter.

"There is a significant gap between where Ireland is now and international best practice, but that is something that can be resolved relatively quickly. By taking care of this, we can add €2bn to business competitiveness.

"We have an advantage now compared to previous downturns because of the education levels of our workforce, but retraining will be needed. For example, there are many qualified architects in Ireland who won't be needed in the near-term, but they are highly intelligent individuals who need to be utilised by business.

"The low-skilled unemployed will be the focus of the Government's efforts, but it is vital that measures are taken to improve management. By doing this, we will preserve and create jobs for the low-skilled unemployed and drive productivity growth.

"It is easy for a company to cut in a recession, but especially for export-driven companies, cost on its own isn't enough. It's about reliability, efficiency, cost-effectiveness -- these all need to be considered.

"We will never be as cheap as a China or an India, so to stay ahead we have to be better. It's that simple."