A new BNZ survey shows New Zealand businesses are much more likely to see productivity as a national issue than one affecting their own business.

Eighty percent of respondents see productivity as an issue for the country, compared with 68 percent for their sector and 58 percent for their own business.

Even where businesses recognise the challenge, short planning horizons and hesitancy about investment may be holding them back from making productivity improvements.

Alex West, Head of Sustainable Finance, Growth Sectors at BNZ, says the gap reflects how hard it can be for owners to step back from the day-to-day running of their business.

“Business owners understand their operations inside out, but when you’re focused on serving customers and keeping everything moving, it can be difficult to step back and identify where productivity improvements could be made on a larger scale,” West says.

“That means some businesses may not be looking far enough ahead to work out what they need to invest in now to be ready for the future.”

West says recognising the issue is increasingly important given the scale of change required.

“One of New Zealand’s biggest challenges is how much we rely on labour-intensive ways of working in a world that has changed dramatically. Improving productivity is no longer just about working more hours or hiring more people.

“Digital tools that take away the administrative burden have made a real difference, but they should now be the norm. The next wave of productivity gains will require a much broader rethink of how businesses operate, and we shouldn’t be afraid to take examples from offshore.”

West says the investment that delivers that shift rarely sits in a single purchase.

“A piece of equipment or machinery on its own may not transform a business. The real gains come from the software that helps that equipment work the way your business needs it to, upskilling your people, adapting processes to future needs, and removing waste across the business.”

Nearly half plan productivity improvements less than 12 months ahead

Nearly half of respondents (45 percent) plan for productivity improvements less than 12 months ahead. Only 12 percent plan three years or more ahead, while a further 10 percent address productivity only when an issue arises.

West says that horizon doesn’t match the kind of investment that productivity increasingly demands, with automation offering businesses an opportunity to rethink how repetitive, labour-intensive work gets done.

He points to medication dispensing as one area where automation can change how skilled people spend their time.

“Automating tasks such as counting and packaging medication can free pharmacists to focus on critical work and serving customers, while also helping to reduce errors and rework.”

For example, BNZ financed an automated dispensing system for a pharmacy business that uses refillable components and packaging in place of non-recyclable PVC blister packs. The system is expected to reduce plastic waste by around 574kg a year.

The research also found availability of local talent was a barrier for 52 percent of respondents.

"If you can’t find the people you need, the answer is different work, not more work,” West says.

"Automating repetitive tasks frees your people up to spend their time where they add the most value.”

Economic uncertainty tops the list of barriers

Economic uncertainty was the most identified barrier by 72 percent of respondents, ahead of regulatory complexity (54 percent).

“There’s been economic uncertainty for over half a decade now, so what we’re experiencing is probably the new norm,” West says.

“If you wait for conditions to settle before you invest, you could be waiting a very long time. The alternative is to assume the volatility and plan through it, over five to ten years rather than one. Otherwise, the step change investments that keep you competitive may never make it off the list.”

Views on funding and finance may be reinforcing that caution.

Around a third of respondents (32 percent) believe only large businesses can access meaningful capital, while 39% indicated fear of financial loss as a barrier to investing in productivity.

West says shifting those perceptions means lenders showing businesses what is actually possible.

“At BNZ, where we’ve been evolving our thinking is in understanding how we structure funding to support that wider investment, the whole change process rather than just the asset at the centre of it.

“One example is Taranaki commercial laundry La Nuova, which worked with BNZ on a $5 million automation project involving AI-enabled sorting, product tracking and changes across its production process."

BNZ brought together traditional lending, specialist asset finance and flexible cashflow support to help the business manage the different stages of implementation.

“The technology has reduced repetitive manual work, with no redundancies, and enabled people to move into higher-skilled roles in areas such as quality control, logistics and technology management.”

His advice to businesses is to lift their planning horizons and look outward.

“Understand what your business and industry will look like in one, two, five and ten years, and have a plan for how you execute at each of those intervals.

“The biggest productivity gains will come from businesses prepared to look beyond the next financial year and invest in what they’ll need to remain competitive over the longer term," he says.