Increasing regulation and the negative impact it will have on business over the next three years is the top concern for company bosses, a new report has revealed.
Gateley Plc’s ‘How UK businesses can successfully transform’report found that 94 per cent of companies surveyed said red tape is the biggest threat to their business. Of the 94 per cent, 36 per cent believe it will have a major impact.
The prospect of potential interest rate increases over the next three years was the second biggest concern (83 per cent), followed by a downturn in emerging markets (78 per cent).
Dan French, partner in Gateley’s corporate recovery team, said: “Red tape has long been a major bugbear for businesses in the UK and this doesn’t look like changing any time soon, with concerns remaining over the negative impact it will have on business in the medium to long-term.
“However, with much of the regulation set by Brussels, Britain’s exit from the European Union could pose an opportunity to de-regulate and ease some of the bureaucratic burden on businesses.”
According to the Gateley report, more than a third (35 per cent) of those surveyed said investment in people was a key strategic priority in 2016. However, businesses are still finding it difficult to recruit the right people, with filling job vacancies and staff retention cited as two of the main barriers to implementing strategic priorities.
Benedict Gorner, partner in Gateley’s employment team, said: “Companies are placing great importance on investing in people to successfully drive change within their business. However, the skills gap and difficulty in recruiting the right people for the job continue to be major issues. This is particularly acute in manufacturing, engineering and construction and will only be exacerbated by Brexit.
“For businesses struggling to keep up with the pace of change in their sector, recruitment will be a bigger challenge in the future. Talent is attracted to dynamic businesses, which creates a negative spiral for those that are underperforming, as they lose existing talent and fail to replace it with new blood.”
Mr Gorner said part of the solution may lie in attracting more skilled workers from ethnic minorities or getting more female recruits into industry sectors traditionally regarded as predominantly male.
“Reviewing and updating diversity and equal opportunities policies is about more than just legal compliance,” he said. “Businesses which embrace diversity and make it a pillar of their recruitment and retention policies are going to be in a much better position when it comes to tackling the growing skills crisis in the years ahead.”
Gateley’s ‘How UK businesses can successfully transform’ report provides an insight into how business leaders across the UK are implementing change within their own businesses and the challenges they face.The specially commissioned report explores a number of themes including how companies set strategic priorities, achieving growth, transforming ways of working, and breaking down the barriers to change.
When asked about setting strategic business priorities, 50 per cent of respondents said sales growth and profitability is their main aim over the next 12 months, with 47 per cent citing it as a priority over the next three years.
Differentiation and productivity were also cited as main priorities over the next three years.
Dan French said: “Change and transformation need to be the servants of the strategy a company is pursuing. Major change should always be in support of a strategic priority for the business and tightly connected to it.
“However, the focus of many businesses remains, unsurprisingly, on prioritising sales growth or profitability over the next 12 months.
“In chasing short-term profits, there is a risk that some businesses are failing to invest in laying down the correct foundations to clearly establish a pathway to delivering growth and profitability in the longer term.
“The fact that differentiation and productivity are seen as more important medium-term goals is perhaps indicative that businesses are focussing only on immediate short-term wins, rather than focussing on investing in longer term growth strategies.”
Other key findings in the report
- Of the companies surveyed, 40 per cent claim they are transforming faster than the average in their fast moving sector, while 36 per cent of companies admitted to just keeping up with the average pace of change.
- 44 per cent of companies believe they will grow a lot faster than the average growth rate in their sector over the next three years.
- More than half (51 per cent) said regional devolution will have little or no impact on their business.
- 69 per cent of participants said they were very (33 per cent) and extremely likely (36 per cent) to recommend the company’s primary law firm.
- Resistance to change and employee engagement/motivation were cited as two of the main barriers to implementing strategic business priorities.
- Inadequate resource and cost/budget constraints are the most commonly encountered barriers to business transformation.