BIS Evidence Review - Leadership and Management in the UK: The Key to Sustainable Growth

First published on Tue, August 07, 2012.

As the Government’s Growth Review has emphasised, sustainable economic prosperity and growth is underpinned by effective leadership and management. Strong leadership fosters innovation, unlocks the potential of the workforce, and allows businesses to develop strategies for driving productivity and growth.

This paper, developed by the Department for Business, Innovation & Skills Leadership and Management Network Group (LMNG), offers a useful and comprehensive summary of the evidence which supports the argument for investing in leadership and management development.

How does the UK compare Internationally?

The UK is falling behind many competitor nations in terms of leadership and management capabilities, with detrimental effects on productivity levels. The US, Japan, Germany, Sweden and Canada all register higher productivity levels than the UK.

Factors contributing to the UK’s relatively poor performance include the prevalence of skills gaps, low levels of training, shortages of key skills, the failure to apply skills strategically, and employer concern about the relevance of training provision. Many smaller businesses also report finding it difficult to recruit graduates with the right skills. These issues are compounded by the generally held belief that leadership and management skills are something you ‘pick up’ on the job, and a lack of clarity about which specific skills and behaviours managers need to display.

Key Figures:

• Ineffective management is estimated to be costing UK businesses over £19 billion per year in lost working hours.

• Effective management can significantly improve levels of employee engagement: single point improvement in management practices (rated on a five-point scale) is associated with the same increase in output as a 25% increase in the labour force or a 65% percent increase in invested capital.

Leadership and Management Training in the UK:

The UK Commission for Employment and Skills have indicated in their Working Futures report that the UK will need 544,000 new managers by 2020. Ensuring that mangers are appropriately and adequately skilled will be vital in supporting economic growth, yet UK businesses are not taking the initiative to up-skill their workforce:

• Only 34% of all employers provided management training in the past year, a figure which equates to just 45% of all managers. Relative to the number of staff employed in each occupational role, managers are among the least likely to receive training.

• Only 28% of micro-businesses and 49% of small businesses provided managers with some training or development to improve their leadership and management skills in the past twelve months.

• Meanwhile, The CIPD Annual Survey Report 2012 shows that nearly three-quarters of organisations in England reported a deficit of management and leadership skills.

• Evidence suggests that UK managers are less well qualified compared to their peers in other advanced economies. Just 38.5% of UK managers are qualified at level 4 and above compared to 80.9% in other professional occupations. Only one in five has a management-related qualification.

What role do Sector Skills Councils play?

The report makes a strong case for the importance of Sector Skills Councils, particularly with regard to helping companies understand the role good leadership and management plays in improving business performance. Through the advice and practical help they - and other intermediary bodies such as the National Skills Academy - offer, Sector Skills Councils have enormous potential to raise employer ambitions and give employers the confidence to take concerted action to boost their leadership and management capabilities. Ultimately, the aim should be to encourage businesses to take ownership of their own growth strategies and support long-term strategic planning.