Bahrain's small and medium enterprises (SMEs) are operating at just over half their productivity potential because of archaic management styles, according to a researcher.

The average productivity of factories in Bahrain is 54.1 per cent, which means these manufacturing companies are only utilising half of their resources, said Jaffari Consultants (Jafcon) chief operating officer Dr Akbar Jaffari.

Although their productivity is half of what it could be, 91 per cent are highly profitable and 93 per cent of investors are highly satisfied, he said.

'The problem is they are profitable and satisfied because the economy is offering favourable conditions, such as high purchasing power to consumers,' said the statistician.

'Demand is high and prices are favourable and the economy is healthy, but if the environment disappears or reduces, they aren't going to be sustainable.

'The sustainability of these businesses is 49 per cent, this is the ability of companies to absorb negative impact. This means they are not fit if the punch comes,' Dr Jaffari added.

He was referring to a study he conducted that measured the performance of SMEs manufacturing in Bahrain.

He was discussing his findings at a seminar attended by business leaders and government and Bahrain Chamber of Commerce and Industry (BCCI) officials at the Beit Al Tijjar in Sanabis yesterday.

Dr Jaffari said SMEs manufacturing in Bahrain needed to increase their productivity to ensure higher sustainability.

He said profitability was affected by external factors in companies that operated at low productivity levels.

To increase productivity and sustainability, industries needed to utilise modern management practices,' he said.

'Most of the management practices are old style, but the solutions are spearheaded by the managers,' Dr Jaffari added.

'They need to focus on human resources and look at the human side of the organisation. The core issue is management practices, if you mishandle human beings, they will mishandle your affairs.' Dr Jaffari said.

'The moment they feel unfairness, they will reflect it onto you and in this game everyone loses, but in the other mode of thinking, everyone wins.'

Dr Jaffari said industries needed to start treating their employees as a human resource, rather than just a number.

They should invest in the people they have and stay away from cheap labour, which will end up being costly for them, he added.

'At the moment they just treat them as a number, a figure, and not as a human. They see them as a physical resource, when they need to look at them as a brain resource.'

Dr Jaffari encouraged small and medium industries to raise their productivity but looking into co-opetition (co-operative competition).

The principle of co-opetition is where companies that are in the same market work together in a constructive manner to be competitive.

'At the moment there is no network between companies in Bahrain, but they need to have some forums, so they can meet and exchange experiences and difficulties and go for collective purchasing and maintenance,' he added.-TradeArabia News Service