Businesses are not investing in the staff, technology and equipment needed to boost productivity, says a new report by the Chartered Institute of Personnel and Development (CIPD).

The survey of 1,000 businesses found that despite 2 years of improving economic growth, 29% are failing to get the right balance between investing in staff and investing in technology.

When asked about their future plans to boost productivity:

• 34% do not see the need for future investments

• 55% expect to produce more goods and services in the next 12 months, while 8% expect to produce less

• 33% will soon be able to make investments in staff and equipment that they have not been able to make in recent years

• 16% do not have the finances needed to invest and 4% think they lack the skills or ambition needed to boost productivity.

The report groups businesses into 5 groups based on their experience over the last 2 years:

• balanced investors (25%) who have continued to invest and increased their productivity over the last 2 years

• survivors (21%) who have not been able to invest or make major improvements

• cost-cutters (19%) who maintained a stable level of investment by cutting costs elsewhere in the business

• people-focused investors (16%) who have continued to invest in their staff but need to put more money into equipment

• capital-focused investors (13%) who have invested in technology but not in staff.

Nigel Holland from Holland & Co Chartered Accountants said:

“ It is a fact of life that in business it is almost always necessary to invest in the infrastructure of each individual firm. This includes investing in training, technology, plant and equipment, IT, buildings and research and development. Once a firm decides to cut back on investment there is a danger that productivity will be adversely affected.

The recent economic downturn may have played a part in giving business owners a mindset which encouraged them to hold back from future investment decisions.

At my firm we encourage clients to adopt a balanced investment plan. This involves in our clients investing in people and technology when there is a reasonable chance that this investment will produce positive financial returns for the business involved. The cost of the proposed investment needs to be compared to the expected returns which are likely to be generated. There also needs to be attention given to what would happen to the business if this investment is not made.

It is not an exact science, however with careful planning, a firm can ensure that investment can be profitable and can ensure that a firm is not over taken by its rivals.”