Workforce Efficiencies, Tech Improvements to Drive Big Productivity Gain in Next Year

Chief executives of the nation's fastest growing private companies expect a significant increase in productivity over the next 12 months, with most of the credit going to workforce efficiencies and technology improvements, and some attributed to good old-fashioned restraint, according to a survey by PricewaterhouseCoopers.

Among 364 CEOs at privately held product and service companies with from $5 million to $150 million in revenue, 60 percent expect that their company's productivity will increase, according to the latest PwC Trendsetter Barometer. Among that group, 21 percent say that growth will be "much greater," while an additional 39 percent say "somewhat greater." Thirty-seven percent expect that productivity will stay about the same, and 2 percent say that it will be somewhat lower.

Those expecting an improvement see an average of 14.2 percent over the next 12 months, according to the report. Overall, an 8.3 percent increase is anticipated for all surveyed companies.

Almost all CEOs expecting higher productivity (98 percent) say that their workforce's performance and efficiency is definitely a contributing factor, followed by IT technology improvements, cited by 78 percent. CEOs also cited two things that they're not doing for boosting productivity -- not jumping the gun on hiring, cited by 73 percent; and limiting expensive or risky new business initiatives (58 percent). Other contributors include lower cost of goods and materials (34 percent), lower staff support (29 percent), and use of domestic outsourcing suppliers (22 percent). Only 9 percent cited offshoring to foreign outsourcers, and 6 percent cited offshoring to their own workers in subsidiaries abroad.

PwC said that businesses expecting higher productivity have increased revenue at twice the rate of all other fast-growth companies over the past five years: 447 percent versus 206 percent, respectively. And they expect an increase of 23.3 percent over the next 12 months, versus 17.6 percent. Because of their faster growth, they are more likely to add to their workforce in the year ahead: 82 percent expect a net increase in hiring, versus 73 percent of all others. They also plan to add a greater number of workers -- an increase averaging 11.1 percent, versus 7.4 percent for all others.

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