Mid-market out-performs on productivity despite ‘skills shortage’

Mid-sized organisations are leading the UK market in terms of productivity growth, a new study from Grant Thornton suggests. While large firms have been quickest to sink funds into AI, the average growth of productivity at mid-tier firms per employee is still around £25,000 higher.

Analysis from Grant Thornton finds that mid-sized businesses in the UK are punching above their weight, when it comes to labour productivity in the UK. When measured as average annual revenue per employee, the mid-market has surpassed that of larger and smaller companies, and the UK average, for the past six years.

Compiled in advance of the autumn budget 2025, the research, which analyses labour productivity levels of UK businesses over the past eleven years, finds that, in 2024, the productivity gap by company size continued to widen, with mid-size businesses (MSBs) pulling further ahead than other segments – a trajectory dating back to 2018, when MSBs started to outshine both larger and smaller businesses.  

In 2024, average annual revenue per employee was 11% higher at MSBs than at larger companies, up 4% since 2023. It was also 15% higher than the UK average for businesses with more than 10 employees – up 3% since 2023. 

Carolyn Hicks, transformation and people advisory partner at Grant Thornton, said of the findings, “Mid-market businesses continue to set the pace for UK productivity. Why the mid-market is so resilient is a salient question. Essentially, it’s down to their very size, enabling them with greater agility than their larger or smaller competitors, based on two factors; firstly they can adapt quickly to market changes, unlike large enterprises. Secondly, many have better access to finance than smaller businesses so are generally more resilient to shocks and market uncertainty. Their success stems from the beneficial blend of an entrepreneurial mindset of a smaller business with the resources of a larger one.”

That does not mean the mid-market is without its challenges, though. In terms of the factors influencing productivity, 79% of respondents speaking to Grant Thornton said a lack of necessary skills is affecting their productivity – which aligns with concerns about training and recruitment and highlights the need for targeted upskilling initiatives.  

Skills cited as the top three most important to deliver improved productivity were leadership abilities, by 19% – although 72% already have internal training in place – and skills for managing remote teams at 18%, though 79% already have internal training in place.

AI in the mid-market

To help bridge this gap, mid-market firms are also looking to invest in technology. While they are already performing well without it, AI was seen by the survey respondents as a powerful driver of productivity, with 78% of mid-market businesses expecting AI to deliver a positive impact on productivity within the next 12 months.

A further 81% added they were exploring AI to enhance – not replace – employee output, signalling a clear shift toward augmentative technology that supports human effort rather than substitutes it. So far, the large amounts of capital needed to install AI in a business mean that larger entities have led the way on this; but increasingly, research suggests the technology may be better suited to smaller firms.

The complexity of the largest companies means AI’s mistakes are harder to pick up on, while its specific gains become more marginal. But in a challenger organisation, it may help to deliver more discernible opportunities – if matters of transparency and privacy can be addressed; and 24% of mid-market businesses cited uncertainty around AI regulation and ethical use as a key barrier to productivity.

Hicks added, “The emergence of AI as a productivity enabler is a game-changer – when deployed responsibly, it augments human capability and empowers teams to achieve more. With talent shortages posing a challenge to growth, AI is stepping in as a productivity partner, enhancing what people can achieve. I believe that a balanced approach to technology and talent will be key to sustaining long-term success. The mid-market is well placed to capitalise on the opportunities that AI brings.”