NZ business culture to blame for flatline productivity

NZ business culture to blame for flatline productivity

19 October 2014

Despite people working longer hours, New Zealand is facing a serious productivity problem, which Paul Kane, Partner,Privately Held Business at Grant Thornton New Zealand attributes to a laid back business culture in this country.

The firm says output has increased in recent years but productivity has barely risen since 2000.

“Put another way, we are just working longer hours at the same old pay rate.”

Paul Kane says Government policy cannot be blamed, with the Organisation for Economic Co-operation and Development (OECD) research finding that New Zealand’s policy settings should generate GDP per capita 20 per cent above the OECD average. Instead, New Zealand‘s GDP is currently about 30 per cent below the OECD average.

“Ninety-five per cent of New Zealand businesses are small to medium sized enterprises (SMEs). We could say the relative scarcity of large multinationals deprives our best people of opportunities to develop the kinds of skills that would allow them to become highly productive.

“But that is just a smokescreen and, in reality, New Zealand’s business culture is – broadly speaking – laid back compared with many other countries. We’re not saying New Zealanders aren’t hard workers. We’re saying New Zealanders lack the business edge that’s evident in some other countries.”

Paul Kane says owners and managers of SMEs need to be better educated in the fundamental principles of running and growing successful businesses.

“Many SME owners are ambitious, financially literate, business literate, hardworking and smart. We don’t deny that for a moment. Our point is that as a culture – as a nation – those attributes apply less here than they do in other OECD countries, despite individual exceptions.”

He says more SMEs need to create powerful international connections and crack open overseas markets.

“Shining examples include cloud-based accountancy software firm Xero, and Wellington’s Weta Workshop. Both companies worked hard from their early days to make it internationally. This ambition drove them to find ways to do things better, more efficiently, and differently from everyone else.”

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