CMI/Penna report suggests management ability and organisational performance are 'clearly linked'

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Just over two out of five bosses consider their line managers to be ineffective, according to a study into the business benefits of management and leadership development, released today by the Chartered Management Institute (CMI) and Penna.

The research shows organisational performance and management abilities to be clearly linked - with only 39% of managers in low performing businesses deeming their line managers to be effective, compared to 80% in high performing organisations.

The CMI-Penna report, produced with Henley Business School, draws on findings from almost 4,500 managers, including more than 300 CEOs and 550 HR decision makers.

The research provides evidence showing how management and leadership development activities can lead to increases of up to 32% in people performance and 23% in overall organisational performance, across organisations of all sectors and sizes.

The report, published this morning finds "too few" employers are doing the right things to secure the returns on investment in management and leadership.

Although many employers are investing in a vast range of 26 types of management and leadership development activities - with the average manager having been exposed to six over the last three years - the types of training being offered are not always those rated by managers as most effective. Accredited learning and qualifications, including MBAs and professional bodies' qualification, are rated as having the most impact on individuals' performance, yet there is still widespread reliance on 'on-the-job' experience and short courses.

The effectiveness of different types of training also varies between particular management levels - for example, many CEOs wish they had access to coaching earlier in their careers, while professional qualifications are seen as particularly effective for new and junior managers.

The findings also show high performing organisations spend on average 36% more on management and leadership development per manager per year than low performing ones (£1,738 compared to £1,275), with the mean organisational spend per manager estimated at £1,414 per annum.

Public sector organisations spend on average £1,515 per manager per year, while private sector organisations spend £1,416 and not-for-profit sector organisations spend £1,133.

Christopher Kinsella, acting chief executive for CMI, said: "This report contains good and bad news for UK managers. The bad news is that a culture of bad management continues to damage UK Plc. But the good news is that organisations who are investing strategically in management and leadership development, are far more likely to be reaping the benefits through higher performance. What is more, it is within an organisation's own power to make that change - by investing in management and leadership development wisely, employers can make a real, measurable difference. Clearly a one-size fits all approach is not appropriate, all development activities need to be focused on developing specific line manager skills and behaviours that will help achieve business results. As such, it should be clearly linked to the organisation's overall business strategy, and thoroughly evaluated to ensure its continued effectiveness."

Gary Browning, chief executive of Penna, added: "This research provides a valuable contribution that stimulates debate about the very real business case for investment in management and leadership development addressing long-standing concerns in the business and policy communities about the quality of management and leadership skills in the UK. Developing effective managers not only impacts the business (they make better decisions and follow through) it also releases the potential of the people who work for them. The research shows us that having an effective manager means employees get more effective development and feel more positive about their ability to manage their own careers. We have seen through working with many employers the tangible difference that can be made by organisational commitment to management and leadership development and as the world economy starts to grow, British business needs to remain highly competitive; the ongoing development of our top talent will help us retain our position."

The report makes it clear that financial investment alone is not the deciding factor in the impact of management and leadership development. To maximise performance, training must support business priorities, with the skills and behaviours being learned directly based on business needs. Development should be reinforced through practices such as performance management and competency frameworks. Top level commitment is also critical: CEOs and senior management should show their own commitment to learning and act as role models.

The research was guided by a Steering Board chaired by Dr Martin Read CBE CCMI, former Logica CEO and now a non-executive director at Invensys, Aegis Group, Lloyd's and the UK Cabinet Office Efficiency and Reform Board.

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