RADAR
Understanding the businesses driving Australia’s economy
About this report
Pitcher Partners’ Business Radar canvasses the trends, challenges and opportunities experienced by Australia’s middle market businesses. Independently commissioned, our most recent survey captured the sentiment of 142 business owners and leaders across a range of growth stages, states and industries.
Here, you’ll read how business leaders feel about the current and future success of their businesses and what that could indicate for Australia’s economy.
We also deep dive into succession – are Australian middle market leaders planning for it or just seeing how it goes? And are they leaving themselves enough time to plan?
Key findings
1
2
3
Confidence is steady and boosted by solid demand, but still being chipped away by increased costs
Australia’s middle market is thinking about succession planning but may not be leaving themselves enough time
Succession planning discussions are being put off –how to have the hard conversation
Business confidence –Efficient tech and higher demand soften the blow of increased costs
Australian businesses keep their spirits up, even as cost increases bite
In our previous Business Radar survey, confidence continued to dip from the spikes of mid-2023. Still higher than pre-pandemic figures, the numbers seemed to present an adjustment back to normality rather than more troubling omens.
This Business Radar report seems to confirm that assessment, with confidence levels barely moving since earlier in the year. Although the change is too slight to be statistically significant, we could also be seeing the start of an upward trajectory, although the latest GDP numbers could suggest otherwise.
Business owners and leaders continue to face increased operating costs, but their confidence is buoyed by strong consumer demand and the efficiency gains from tech advancements like generative AI and process automation.
Are we on the up?
After the surprising spike in confidence levels of May 2023, consecutive reports have trended down – perhaps an expected readjustment. However, in this latest period, we may be seeing the end of this trend. Business leaders’ belief in the future success of their business is experiencing a gentle increase from 7.84 to 8.14.
The same uplift appeared in their confidence in the current success of their businesses, which rose from 7.77 to 7.91.
Confidence in own business
Looking back to 2019, when our Business Radar reporting began, it’s worth noting that our middle market leaders are always more confident in their future than current business success. This pattern speaks to the inherent optimism we continue to see from this cohort – they always believe things will get better.
Global economy looks a bit more promising
Businesses are feeling slightly more confident in the global business economy compared with previous Business Radar reports, particularly in its 12-month growth prospects, inching up from 6.84 to 7.15. It’s the first time respondents have shown more confidence in the future prospects of the global economy compared to here in Australia.
Higher demand, higher costs, better tech
In the last 12 months the factors most affecting business confidence have largely been shuffling around the top five. Since late 2023, we’ve seen ESG initiatives and changing interest rates give way to increased demand for products and services and increasing operating costs.
In March, the Australian economy seemed to match our business leaders’ confidence, with the Australian Bureau of Statistics reporting a slight rise across most key economic measures. We await their next report in September with interest. 1 2 3 4 5
Top five factors affecting business confidence, positively or negatively
These top five factors can have a positive or negative influence on business confidence. Digging into the detail we can see that positive factors like increased demand (43%) or tech advancements (37%) slightly outweigh negative factors such as increased operating costs (42%) or inflation (34%).
(July)
Demand benefits and cost worries hold steady
In the last Business Radar report, demand for products and services took the top spot of positive influencing factors –43% naming it as their top factor. This is more than double the number of respondents who placed it in their top three in September 2023. Similarly, tech advancements and consumer preferences as positive influencing factors have held steady since the last report.
Just as in the last survey, that rosy picture is marred by continuing increases in business costs. The top four factors negatively impacting business confidence all still relate to cost: changing interest rates, inflation and increased labour and operating costs.
What our respondents said:
“Inflation is causing the cost of goods to rise and consumers having less to spend.”
“The tax cuts are helping. However, the cost-of-living crisis is impacting the business.”
“New technologies such as AI, prompt programming and data collection create a lot of free hours for the business.”
This equation of continuing strong demand and higher costs is pointing to a prolonged inflationary environment for middle market businesses to contend with.
Survey respondents
Gavin Debono, Partner, Pitcher Partners Melbourne
Business leaders breathe easier
In the last Business Radar report, we expected to see a gentle decline in overall confidence levels as the year progressed and the market resettled after 2023’s bump. This report’s results offer a slightly different picture – not so much a steady decline, but steady as she goes.
It’s telling that these stable numbers appear across the board –a sign that business leaders are navigating the current business environment well after four years of uncertainty.
Succession planning –how will Australia’s middle market hand over the reins?
Succession planning
For this report, we have defined succession planning as the process of preparing for a transfer of business ownership or identifying and growing talent to fill
Australian business owners and leaders in the trenches of business as usual could be excused for delaying succession planning.
This certainly is the case for some of our 142 middle market leaders. Of those surveyed, 28% have a formalised succession plan and only 4% say they don’t need one. That leaves two thirds who need to get moving.
20% of respondents either don’t know if they have a succession plan in place or haven’t started one. This is especially concerning, given that the ‘silver tsunami’ is on the horizon. This will be the biggest transfer of wealth in Australian history as 5.7m people prepare to retire in the next 10 years. 40% of SMEs are owned by these Baby Boomers, meaning 1m business owners will be looking for an exit.
Is there a succession plan in place overall
Yes, we have a fully developed and formalised succession plan
Yes, we have a rough plan, but it is not fully developed or formalised
We are in the process of developing a succession plan
No, we have not started developing a succession plan
No, we don’t need one
Don’t know
Dig further, and the data suggests that some leaders may be underestimating the time and complexity involved in passing on the torch.
For example, when split by business turnover, these figures show larger businesses are propping up the averages. Over two-thirds of businesses turning over more than $10m have a rough or formal plan. Only 45% of businesses with under $10m turnover have the same – and a far higher proportion than the average believe they don’t need one at all (10% vs 4%). Businesses with fewer than 100 employees repeat this pattern – only 44% have a formalised or rough plan, and 11% think they don’t need one. Interestingly, the businesses with over 200 employees are trailing behind those with 100-200 people. Only 56% of the largest businesses have a rough or finalised succession plan, compared to 77% of the mid-sized cohort.
Is there a succession plan in place by turnover
Yes, we have a fully developed and formalised succession plan
Yes, we have a rough plan, but it is not fully developed or formalised
We are in the process of developing a succession plan
No, we have not started developing a succession plan
No, we don’t need one
Don’t know
The overall characteristics of middle market business leaders – confident, adaptable, growth-focused and self-driven – mean they’re used to doing more with less. They might accept a rough succession plan as sufficient, given they are the main decision makers and will be most financially impacted. However, this may be a false reality if those looking to succeed don’t have replacements already in place. By comparison, larger businesses are more likely to be managed by an executive team who don’t own or have a financial stake in the business. They may have ownership structures established for succession by a sale or takeover, so need a more formalised plan in place.
For many, change is coming soon –are they ready?
A surprisingly high percentage (27%) of businesses said they expect to change owners or senior leaders within the next 12 months. An even greater percentage of businesses turning over more than $10m are expecting a change – one third are anticipating a change within 12 months and a further third in this group think that change is coming within the next three years.
Compare that to businesses turning over less than $10m – only a little over a third expect to change owners or leaders within the next three years.
3.6yrs
Those businesses expecting to change owners or leaders within the next three years are far more likely to have a formalised or rough succession plan – 58% vs 28% average. However, Pitcher Partners sees a disconnect between these numbers and the respondents’ expected timings. Succession planning normally takes between five to 10 years as part of a larger strategic plan, so we would have expected a far higher percentage of these businesses to have one formalised.
When asked what keeps them from planning for succession, 31% said it was too far away to be a priority. The data indicates that five years out from expected change is when businesses start prioritising succession planning. 54% of businesses that don’t expect to change owners or leaders within five years cite this as a barrier, compared to only 26% of those who expect to see change in less than five years.
Worryingly, 18% of these soon-to-change businesses say they don’t need a succession plan.
With a large cohort of business leaders and owners set to transition control and/or ownership, many opportunities are going to present themselves to enter a new market, expand operations or grow the business. According to the latest Dealmakers report, dealmaking is getting harder and it’s taking longer to get deals done, indicating there could be a change in the supply and demand dynamic. For those entrepreneurs looking to take advantage of this transition, planning and preparing for these opportunities will be important to enable quicker and reassured decision-making and action.
The scale of transition is going to mean the well-prepared on both sides of the transition are going to be the ones who will benefit the most. Competition for capital and talent will grow as time moves on. Being prepared and ready to act will put you and your business in the best position to benefit.
Succession is not always about an end – it is more often the start of something new.
Client story
Planning and being ready is key. A successful manufacturing business had reached capacity with their location and internal personnel. The owners were turning their minds to the next phase of the business as it could not continue to grow as it was. Work was done to assess the viable options including locating and moving to new premises and searching for new personnel to bring into the business, as well as possible sale or merger options. All three options were being progressed concurrently. Ultimately a preferred path was identified in merging with an established larger business. The owners were ready to take action, as they had been fully prepared for this next step in the business’ future.
Gavin Debono, Partner, Pitcher Partners Melbourne
Gavin Debono, Partner, Pitcher Partners Melbourne
Case study
The founders of a family-owned business wanted to design a succession plan for their four children. Only two of the four children were involved in the business. They aimed to reward the children in the business for their contributions while ensuring financial equality among all children. The plan included establishing new trusts, contributing to the parents’ superannuation funds, addressing governance improvements, strategic planning and setting a clear retirement timeline for the founders. An independent chair was also appointed to oversee the process. The founders updated their wills to ensure the nonbusiness children were adequately catered for and managed the emotional and relationship challenges associated with the transition.
Robert Prince, Executive Director, Pitcher Partners Perth
Succession planning triggered by an impending change
Most businesses with either a rough or formal succession plan expect a leadership change within the next three years. These results may indicate that business leaders are developing a plan in response to an impending change, rather than starting early to use succession planning as a long-term strategic tool.
Any transition comes with many complex variables to work through – the success of this planning can generate, protect or lose significant value. Having early conversations, sometimes 10-15 years before succession, gives you time to put everything in place so you are set up for success.
Business owners should undertake at least some planning of what a transition might look like including identifying the critical steps to ensure the process is as smooth as possible. This can help protect their hard-earned value.
These assumptions are supported by responses around what triggers or hinders succession planning. Respondents named factors relating to leaders’ exits as two of their top three. Other top-rated triggers were a change in business strategy and a need for new ideas or investment.
The biggest trigger – change in business strategy – is the only proactive trigger, all the others are reactive or passive
Triggers to succession planning
Respondents see limited time (31%) as the top barrier to succession planning, with an equal number saying succession is too far away to be a priority. Owners and leaders being uncomfortable talking and thinking about exiting was a significant barrier for 29% of respondents. This barrier is much less important for smaller businesses. This may be because smaller businesses are often led by a smaller number of people operating a close-knit team. This connected, transparent culture may make it easier for leaders to have these tough conversations.
Smaller private businesses may also already have a second or even third generation of workers, which brings the topic of succession planning to the fore.
Often the hardest part of letting go of the reins is having something to transition to (17% of respondents). This particularly can be the case in large family businesses where so much of their personal identity is intertwined in their business.
Business owners may set aside an agreed percentage of the capital base to set up their own philanthropic foundation, in consultation with an independent advisor and family board guidance.
Barriers to succession planning
Philanthropy can help educate the next generation on financial and investment strategy which can ensure their own selfreliance and financial independence.
Kylie Lamprecht, Partner, Pitcher Partners Brisbane
Should a sale be part of your future business plans, succession planning is the key to ensuring your business is ready at the appropriate time and that it has been managed to maximise its value.
James Beaumont, Partner, Pitcher Partners Melbourne
Case study
Akubra, the iconic Australian brand, had seen five generations of family ownership and internal leadership succession, with support from a sixmember board. One regular topic of conversation was – what does the future look like and what does succession mean to Akubra? The family recognised the need for fresh ideas and additional infrastructure to sustain the Akubra legacy. It was important they found someone who would protect the company, support longstanding staff, create jobs, and invest in its future, ensuring the growth of Australian manufacturing. With guidance from Pitcher Partners, Akubra established a solid framework and plan to be in a position to seize the right opportunity, which came at the end of last year bringing together two iconic brands – RM Williams and Akubra.
Grant Parish, Partner, Pitcher Partners Sydney
Succession outcomes
In general, Australian middle market businesses plan to pass the business on to someone they know – a family member, internal candidate or co-owner.
Interestingly, smaller businesses are more likely to hand over to family (28%) while mid-sized businesses are more likely to hand over to an internal candidate (25%). Despite these expectations, 43% of businesses don’t have even a rough plan in place to ensure a successful transition outcome. Having a discussion with a professional will help guide a business through the myriad options, obstacles and potential traps throughout the succession process.
Top 5 likely outcomes of a change in ownership/leadership
20% 19% 15% 12% 10%
Owner/s transferring their business to family
Internal candidate/s will replace the existing leader/s
One owner to be bought out by other owners
Replacing leaders internally often stems from organic growth and cultural alignment within the business. However, this might require revising remuneration and profit-sharing agreements during the transition to equity succession. While internal candidates understand the company culture, outsiders can introduce fresh energy and skills needed for advancement. Identifying these skill gaps with modern leadership is essential and may take years of preparation rather than responding hastily to retirement or another trigger event.
One clear outlier is businesses with over 200 employees. 22% of these surveyed leaders or owners expect to be succeeded by an external candidate. This starkly contrasts with their smaller counterparts – 4% of businesses with fewer than 100 employees expect to hand over to an external party, and 8% of businesses with 100-200 employees.
Non-service businesses are also far more likely to replace existing leaders with internal candidates compared with service businesses (30% vs. 9%). A non-service business will have an associated facility to manufacture products, meaning less flexibility for external candidates. By contrast, a service business has a book of clients or customers that they can ‘sell’ for a multiple of what that book generates – a more attractive option.
Owner/s selling the business but staying on in a leadership role for a period of time
22%
External candidate/s will replace the existing leader/s
of businesses with over 200 employees are considerably more likely to have an external candidate replace the existing leaders
Larger businesses tend to pursue a corporate sale, as they have a more quantifiable value and can get a higher multiple. If the transition is through other means they’re more likely to have the capital to hire the relevant professionals to run the business. Smaller middle market businesses will have less capital but also fewer people in the mix – they know who will take over and can map that to a succession plan more easily.
Robert Prince, Executive Director, Pitcher Partners Perth
Succession risks and rewards – two sides of the same coin
Despite their slow progress, business leaders know the value of a well-managed succession process. Many see it as an opportunity for new strategies to drive growth (42%), introduce new ideas, revitalise company culture, collaborate on new ventures, and adopt innovative processes and tech.
The top risks of succession link strongly to these benefits. A change in strategic direction is the top risk at 36%, followed by financial instability, a lack of clear leadership, a change in company culture and values and negative impacts on company culture and employees.
of a change in ownership/leadership
Compared to counterparts in other growth stages, leaders of mature businesses are considerably more likely to see succession as an opportunity for growth (52% vs 35%) and innovation (37% vs 16%). This is understandable as mature businesses need new ideas and new people to move them into a growth orientation, culture and mindset. And the upskilling of later generations and sustained technological investment by established businesses are also driving this mindset. Succession is not always about an end –it is more often the start of something new.
47%
focus on people and culture-related aspects of the business and preparing existing staff for change in ownership/leadership
Protecting employees, company culture and values are succession’s top benefits and risks. Unsurprisingly, these issues are also top-of-mind for leaders when asked what they would focus on to prepare for succession. 47% of respondents said preparing staff for the transition would be a top focus area – there is no leadership succession unless your people buy into it. Get the change management wrong and you risk:
• Loss of top talent
• Attraction challenges due to reputational damage
• Loss of relationships with key clients, suppliers and buyers
• Lack of buy-in, to new leadership from those who stay
• Disengaged and demotivated employees
• Poor culture creating operational challenges and financial impacts
The role of expert guidance
Culture is everything. Losing your top salesperson or best customer because of poor change management will have far reaching impacts. Succession communicated early means a more harmonious transition.
Around half of middle market businesses look to professional advisors for guidance when it comes to succession.
Who you would seek out to discuss succession
48%
Professional advisors (legal, accounting, HR)
Aligning with the importance they put on preparing staff for the transition, 43% of respondents said they’d rely on internal HR teams. This reliance is even more pronounced for larger businesses (59% vs 25%), perhaps because they’re more likely to have well-resourced internal HR teams. Similarly, smaller businesses are more likely than their larger counterparts to seek external support (59% vs 41%).
External advisers provide an outside perspective, an emotional check, accountability and someone to bounce ideas off and talk through issues, offering a broader lens to help you successfully navigate the process.
Business leaders in my professional network
For business owners, professional isolation and loneliness is a real challenge, with 19% of respondents saying they don’t have anyone to talk to about their succession plan. It can add to the difficulty of making decisions at the top, as we reported in our first Business Radar in 2020. With so many financial challenges facing middle market businesses, it’s vital to establish your professional networks to connect and learn new ways of thinking and overcoming challenges.
Karen Frenkiel, Senior Manager, Pitcher Partners Melbourne
Insights for business Planning puts success back in succession
Effective succession can’t be improvised. It can be a complex process that’s often underestimated or misunderstood, so a succession plan is critical – whether you’re hoping to sell to an external party or hand over to a staff or family member. It’s best to start the planning process as early as possible, with the support of succession experts, so when it’s time to exit, you’ll maximise the value you extract and minimise your stress. In the meantime, your plan can become a valuable part of your strategic planning and decision-making.
Steps for developing a succession plan
An effective succession plan should outline the steps needed to ensure your business keeps running smoothly through a transition. It should detail how to support and upskill incoming leadership, hand over key supplier and customer relationships, and protect staff morale and company culture.
Be opportunity ready
Should a sale be part of your future business, succession planning is key to ensuring your business is ready:
• Start by making a list of likely acquirers and consider how and when to connect.
• Have strong management in place so the business runs smoothly after the existing owner exits
• Have the appropriate corporate structure in place
• Get your corporate records and information up to date
• Financial forecasts are in place and can withstand due diligence
• The business balance sheet is lean and efficient
Actions you can take
Envision the future, strategise the present. The first step is to decide what you want for your business in the future and when you ideally want to transition. This vision sets the foundation for all other succession planning decisions, including what you want in a successor.
Change is hard, so effective change management is crucial. Communicate openly, identify key roles and skills, continually review your plans and share responsibilities.
Spot your successors – who will take over? Make a list of internal and external candidates who could lead your business towards the future you’re planning. Consider not just skills and experience but leadership qualities and fit with your company culture. You may also need to do this for other key roles.
Train and prepare incoming leaders. Based on a skills gap analysis, create a training plan for each incoming leader, including mentoring, training, job rotation or formal education.
Consider how you’ll continue supporting the new leader after they step into the role –this may mean staying on for a period to offer advice and guidance.
Bring your staff and customers along for the journey – a change in leadership can be stressful for your staff and may put your customer relationships and company culture at risk. Make sure you have a clear plan for managing the transition.
Maintain flexibility on timing , particularly where your succession plan involves a sale to a third party. In this case you’ll want to consider general market conditions, as well as the timing preferences of potential buyers.
Connect with other business owners and key advisors to test your thinking against how they approached succession planning.
Plan how you can meaningfully contribute after exiting the business to drive the succession conversation.
Regularly review your succession plan – as your business evolves, your succession plan will change too. Make succession planning part of ongoing business strategy conversations with the leadership team. This transparency will help uncover new insights or changes, align expectations and reduce uncertainty. If the unexpected happens, you should be ready to implement an emergency or interim succession plan.
At every stage of the succession process – planning, transition and beyond – it’s essential to stay the course, pivot where necessary and seek external advice from qualified and experienced professionals.
The pressures of productivity
– what the middle market can do to move the needle
Australia’s agriculture, manufacturing and resources industries have long delivered the lion’s share of our country’s productivity gains, while service productivity falls behind. This reflects the global trend, with service industries around the world continuing to be highly reliant on labour.
It’s the likely explanation for a surprising overall increase in reported productivity we saw in our most recent survey of middle market businesses. 64% of middle market businesses reported that, by comparison, their business operations were more productive than they were two years ago. While the snapshot canvassed over 150 businesses across industries, sizes and states, the sample did have some bias towards those industries most likely to see overall productivity growth, according to the Australian Bureau of Statistics
Smaller middle market businesses are faring better – 15% of larger middle market businesses and 14% of medium sized middle market businesses are experiencing some decrease, compared to 4% of smaller middle market businesses.
Level of productivity vs two years prior 20%
Increased significantly
Here’s just some of what our respondents said:
“Higher productivity levels can contribute to overall economic growth in Australia, attracting investments and creating job opportunities.”
“Productivity has been fluctuation lately, however the overall results have proven consistent.”
Survey respondents
Increased slightly 25% Remain unchanged 6%
Decreased slightly
4%
Decreased significantly
15% of larger middle market businesses are experiencing some level of decrease in productivity
Productivity panics
Despite the generally positive view on productivity gains, our middle market business leaders are worried. 52% are extremely or very concerned about the levels of productivity in their business, although larger businesses are less so (33% are not concerned vs 22% overall). So, what’s driving these concerns?
We asked leaders to name the internal factors that most impact their productivity, and labour issues are looming large. They see difficulty attracting and retaining talent as the greatest challenge to productivity (30%), with employee burnout and engagement issues taking two more of the top five spots. These labour issues are likely amplified by labour market shortages and skills gaps, identified as the key external factors impacting productivity.
Employees are an important part of productivity – their quality and work attitude directly affect production efficiency.
Survey respondents
Size matters
When comparing responses across business size, we see that smaller organisations are disproportionally impacted by government policies, perhaps because they’re used to operating more nimbly.
Larger businesses ranked geopolitical instability as their second most influential factor – overall businesses put it way down in the eleventh place. This may be because larger businesses are more likely than smaller businesses to be trading internationally.
Here’s just some of what our respondents said:
“Complex regulations and red tape can create challenges for businesses in terms of compliance costs and administrative burden.”
“The labour costs are relatively high, labour laws are stringent and compliance costs are elevated.”
Here’s just some of what our respondents said:
“To improve productivity, business needs to clearly define roles and responsibilities and have a set of SMART goals to measure performance.”
“My priority would be improving standardised operations and providing training for employees.”
A nuanced view from those with productivity gains
For those who’d seen no productivity gains, labour was top of mind: difficulty attracting and retaining talent and employee burnout. Respondents agreed that major external factors included skills shortages and complacency in Australian society. Institutional training gaps were also a top factor (24%), echoing recent comments from Productivity Commissioner Catherine de Fontenay
Survey respondents
Businesses reporting productivity gains also agreed the skilled labour shortage was a factor (34%). However, this group seems to have a more nuanced view. They’re concerned with getting more from existing employees and see innovation as important as labour issues. 27% named both declining employee engagement and the absence of employee training programmes as influencing factors. Respondents agreed that a lack of focus on innovation and limited investment in tech was impacting productivity.
Perhaps more a comment on their industry than their outlook, 28% of respondents who’d seen productivity gains agreed supply chain dynamics were an influential factor, compared with only 16% of those who’d seen no gains. Supply chain dynamics also featured more strongly in respondents’ top three (32% vs 24%), along with a lack of leadership focus on productivity (28% vs 19%).
28%
respondents who’d seen productivity gains agreed supply chain dynamics were an influential factor
External factors impacting productivity: Businesses that have seen productivity gains vs those who haven't
No silver bullet
Interestingly, no single factor was put in the top three by more than a third of respondents. This spread of factors suggests there’s no easy productivity fix for middle market businesses. With different situations requiring different solutions, it’s paramount that business leaders look deeply at their processes across the whole spectrum of their business. They should seek external analysis to understand what is occurring more broadly, and to help uncover their unique productivity roadblocks.
Time to stop cracking the whip?
It’s easy for business leaders to draw a link between productivity and employee effort. And in many cases, this is true –but it has its limits. A February 2024 report from the Productivity Commission showed a 6.7% increase in hours worked over the 2022–23 financial year, but without a corresponding uplift in output.
The commission’s deputy chair, Alex Robson, told the Guardian that low capital expenditure was to blame.
“Employers didn’t invest in the equipment, tools and resources needed to make the most of employees’ skills and talents.”
Supporting this hypothesis, employee burnout was highlighted as one of the top internal factors impacting productivity: more pressure on employees isn’t an easy fix.
Innovating for smarter working
Another report from the Productivity Commission says 98% could see “much productivity improvement [from] the adoption of established, even dated, technologies and practices.”
It’s a message that businesses are already starting to take on board. When asked about steps they’re taking or intend to take to improve productivity, the top two were focused on technology – employing new technology and introducing new collaboration tools. And 33% of respondents named management attention to productivity, putting it in third place.
However, initiatives to get people working more productively still made up half of the top 10 – investing in training, changing incentives, exploring working models, and implementing well-being initiatives and feedback mechanisms.
This points to a continued acknowledgement on the importance of labour – however our respondents see that productivity improvements will come from other areas.
Respondents were asked to suggest one change or reprioritisation for their business that would enhance their business productivity. When asked whether suggestions from other respondents would apply to their business as well, internal innovations dominated: introducing new technology and digital tools, investing in technology, improving production processes, eliminating unnecessary tasks, and streamlining processes.
Initiatives to get employees working more productively are still present, but these make up four, rather than five, of the top 10 and are positioned much lower in the rankings –hire new talent, staff training, flexible work and increased employee benefits.
Over 80% agreed that each of these changes would improve their business productivity, starkly contrasting with the lack of consensus over factors impacting productivity. This suggests that while each business has its own context and productivity challenges, they’d benefit from similar solutions.
It is about continuously training and developing employees’ skills and knowledge, motivating them to perform better.
Survey respondent
Innovation doesn’t need to be groundbreaking. This is a potential antidote to the core barrier to action on innovation to deliver productivity. There is a fear and intimidation that comes with the expectation of needing to create something new or invest heavily to obtain it. One leading business’ status quo is an aspiring business’ treasure.
Nick Bull Pitcher Partners, Melbourne Partner
It’s not about working harder. The data suggests more hours are being worked, however there doesn’t seem to be a corresponding increase in output. Leaders need to help employees be more effective with their time. Focus needs to be on simplifying and improving processes, ensuring training and development activities are targeted and effective to upskill your people, and make sure your teams are healthy and happy. This all helps to promote good decision making and focus on producing great work in the areas that matter.
Key areas of prioritisation to enhance productivity
90% 89% 88%
Introduce new technology Introduce new digital tools Optimise production process
85% 85% 84%
Invest in technology Hire new talent Staff training
Gavin Debono Pitcher Partners, Melbourne Partner
Insights for business
Mind your Ps: processes, platforms and people
People will always form the core of business productivity, especially those in service industries. Motivating, engaging, and supporting are key. However, these will only take you so far.
Once your team is working at its peak, your productivity gains are capped. Pushing beyond this can often be counterproductive – you burn through goodwill, minimising future efficiency, engagement and retention.
The answer is to build systems, processes and technology around your people to help them work smarter. These innovations don’t even need to be ground-breaking – they just have to help your people do more with less.
Actions you can take
Review your business processes, especially your supply chain management, to uncover any that are slow, redundant, are too manual or are prone to error.
Get a leadership team in place that takes a strategic and clear-eyed view of your business and makes productivity a priority.
Build KPIs around productivity indicators like production output, sales conversions and customer service response times. This will help keep everyone focused and let you spot issues early.
Invest in good financial management processes, people and systems.
Collect and analyse your production, sales, inventory and customer data to spot inefficiencies and bottlenecks.
Look into your software systems, tools and equipment – are the platforms effective? Does the data flow freely between systems? Is the equipment reliable and in good repair? When your tools, both analogue and digital, work as they should, your people spend less time plugging gaps and managing delays.
Pay attention to customer feedback and complaints – any that come up often around product quality, delivery times, customer service or more may highlight where you can improve.
Invest in your people – schedule regular performance reviews, build upskilling and team building into your business as usual, and take steps to support their health and wellbeing
Build a culture of innovation. This begins with leadership setting specific innovation goals and objectives, then training people in creativity and experimentation, allocating resources, and rewarding and communicating innovative improvements.
Check against industry benchmarks and your competitors. These may highlight where you can improve.
Learn from others. Engage in conversations with fellow business leaders, gaining insights into their experiences and the strategies they’ve employed to enhance productivity.
Get external help – a fresh expert pair of eyes may see productivity-boosting opportunities you might have missed.
Meet our middle market businesses
Business profile
25%
Contribute approximately 25% of Australia’s total revenue
A range of business structures
20-200 $2-$500m
Typically employ 20-200 staff annual revenue with a growth mindset and the ability to adapt quickly
A range of business lifecycle stages Seed
Operating for less than two years. Focus on establishing business model and reinvestment of profits.
Gaining traction in market with recent, consistent growth. Reinvest profits to support expansion.
Consistent and stable revenue. Working on a business-as-usual basis.
Transition
Focused on evolving the business model, or selling / winding down the business.
Growth
Mature
About Pitcher Partners
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We’re ready to help you thrive
Since day one we’ve been helping businesses, families and individuals intelligently frame their goals and make the most of their potential.
Today, we’re one of the largest accounting, audit and business advisory firms in Australia. We work with middle market businesses, from family-run companies to renowned industry leaders and iconic brands. And help families and individuals manage their wealth across generations.
If you’ve got ambition, we’re the team you want on your side.
Local knowledge, national footprint
Pitcher Partners is a national association of six independent accounting, audit and business advisory practices. You’ll find our firms in Adelaide, Brisbane, Melbourne, Newcastle and Hunter, Perth and Sydney. Each firm has a unique character, with a strong connection to the local community. Supported by our combined resources, we deliver Australia’s most personalised and responsive assurance and advisory services.
And if you’re thinking beyond the border, we can support your global operations and ambitions through the Baker Tilly International network.
We’ll always make it personal
At the heart of Pitcher Partners is the idea that business is never just business. We’re known for the dedication we give to building great relationships, and it’s been that way from the start. People first.
Everything we do is grounded in communication and collaboration. We’re here for that frank, refreshing and always informed discussion that leads to new ideas and better decisions. And we’re here for you. Whatever your goals, we can get there together.
9th largest network of accounting and advisory firms
Our global reach
We are proud to be a member of the Baker Tilly network, a global network of independent accounting and business advisory firms, whose member firms share our dedication to exceptional client service.
Every day, 43,000+ people in 141 territories share experiences and expertise to help privately held businesses and public interest entities meet challenges and proactively respond to opportunities. International capability and global consistency of service are central to the way we work.
3,380+ partners 43,000+ experienced professionals 141 territories
Baker Tilly International
Experts across a wide range of industry and business sectors, each Baker Tilly International member firm combines high-quality services and in-depth local knowledge. Sharing knowledge and resources, our business approach brings together the power of the global network to deliver exceptional results to clients globally.
$5.2bn worldwide revenue 2023 (USD)
Pitcher Partners
Pitcher Partners is an independent member of Baker Tilly International. Pitcher Partners’ strong relationship with other Baker Tilly International member firms, particularly in Asia-Pacific, provides clients with access to international networks, opportunities and expertise to expand globally.
Global statistic as at March 2024
Kylie Lamprecht
Partner – Brisbane
p +61 7 3222 8437
e klamprecht@pitcherpartners.com.au
Robert Prince
Executive Director – Perth
p +61 8 9322 2022
e princer@pitcher-wa.com.au
Gavin Debono
Partner – Melbourne
p +61 3 8610 5331
e gavin.debono@pitcher.com.au
Jyotika Rangel
Partner – Sydney
p +61 2 8236 7811
e jyotika.rangel@pitcher.com.au
Peter Lawrence
Partner – Newcastle
p +61 2 4923 4000
e peter.lawrence@pitchernewcastle.com.au
Chris Hanna
Principal – Adelaide
p +61 8 8179 2800
e chris.hanna@pitcher-sa.com.au
Karen Frenkiel
Senior Manager – Melbourne
p +61 3 8610 5429
e karen.frenkiel@pitcher.com.au