“Knowledge is power” – lessons from high growth businesses. - Succession Plus

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“Knowledge is power” – lessons from high growth businesses.

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“Knowledge is power” – lessons from high growth businesses.

By , January 31, 2012

A study of Australia’s fastest-growing businesses has discovered that they key element for growth is an environment in which staff want to learn and apply new knowledge creatively.

The study, conducted at RMIT’s School of Management, quizzed 253 companies that have achieved growth of between 35% and 600% over the last four years.

“Fast-growth SMEs are the high-power engines of our economy, comprising only 3 to 10 per cent of firms but generating up to 90 per cent of employment growth,” Dr Tan ( the lead investigator ) said.

The significance of what Dr Tan calls “learning orientation” emerged from the study, as many of the fastest growing companies studied had created an environment in which staff are committed to constant learning.

“These businesses know knowledge is power,” Dr Tan said. “It has always been said that learning is the only source of competitive advantage. You can learn from competitors, suppliers, anyone in industry.” Businesses that recognise this empower staff to learn, both formally and from trial and error. Teams are encouraged to learn from members’ efforts, so failures become as learning experiences not negatives deserving of censure.

Dr Tan said the study “Also found that rewards associated with performance do not make employees more market oriented or customer oriented. Money can’t buy creativity.” Willingness to learn, however, can achieve those outcomes because staff who want to learn will pick up the knowledge they need to understand the market and will ensure they have – or seek out – the knowledge to satisfy customers.

Tactics Dr Tan has observed which businesses use to create learning orientation include open question and answer sessions among staff, or adoption of social networking tools like Yammer to encourage collaboration. Physical environment is also important, Dr Tan said, as a pleasant one will stimulate staff to higher efforts.

The research by Dr Tan, Professor Kosmas Smyrnios and Lin Xiong in RMIT’s School of Management showed there was no significant relationship between reward-related human resources practices and learning orientation.

“Benefits and bonuses have their role, but they do not necessarily mean employees are committed to learning or to the goals of the venture,” Dr Tan said.

“In contrast, our study indicated that learning orientation in a firm is only enhanced when high levels of motivation are maintained and employees are treated as valuable resources.”

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.