· News

Hammond: Management funding to boost productivity

Chancellor Philip Hammond announces increased funding for management programmes to boost productivity, while a new CIPD report points to under-utilisation of skills and productivity

A management training funding boost aimed at improving UK productivity has been announced by chancellor Philip Hammond.

At the Conservative party conference, Hammond announced that a recent productivity review had uncovered a management skills challenge in small businesses, to be addressed by a £20 million investment in networks that enable firms to learn from each other and from world-leading organisations.

The Small Business Leadership Programme will provide management training to an initial 2,000 small businesses, rising to 10,000 if there is sufficient demand. More than 100 mentors from companies such as GSK, Amazon, KPMG and Siemens have already signed up to offer their management expertise.

Cary Cooper, professor of organisational psychology at the University of Manchester, commented that investment in management is long overdue. “The evidence is there. It doesn’t matter how much technology we have, we won’t be able to improve productivity unless we invest in strong socially-skilled line managers," he told HR magazine. "It is great that the government is finally starting to listen."

He added that HR is instrumental in helping to improve management and, in turn, productivity. "As HR is at the forefront of people management this is absolutely the time to step up and show organisations how we can help them, and to show our worth as a profession."

The Chartered Management Institute (CMI) welcomed this increased investment, with CEO Ann Francke pointing to bad management as the main cause of poor productivity in the UK.

"Poor management and leadership is the number one cause of the productivity gap; costing the UK £84 billion every year in lost productivity. Investing in management is vital to turning the 2.4 million 'accidental managers' into conscious leaders equipped to lead post-Brexit Britain,” she said.

"The government's new interventions, focusing on training SME leaders in management skills and supporting business-to-business mentoring, complement the focus on management apprenticeships. This investment is a welcome step in the right direction to make the UK more competitive as we approach an uncertain future."

The news coincides with the launch of a CIPD report finding that as many as half (49%) of UK workers could be in the wrong job based on their skill level – a key factor in the UK's historically flagging productivity.

Over-skilled and underused: Investigating the untapped potential of UK skills found that more than a third (37%) of workers have the skills to cope with more demanding duties than they currently have, while one in 10 (12%) employees said they lacked all the skills needed to carry out their job effectively.

How people’s skills are utilised has a significant effect on the nation's productivity, skills policy adviser at the CIPD Liz Crowley said.

"How skills are used, or not used, in the workplace has important economic and social implications, and is a key factor in tackling the UK’s productivity crisis," she said. "Individuals who report using their skills fully in the workplace have higher levels of job satisfaction, earn more and are more resilient to change, while businesses benefit from a more productive workforce and increased profitability.

“However, we have ended up in a situation where our economy isn’t creating nearly enough high-skilled jobs, while the proportion of low-skilled roles remains stubbornly high. This leaves many workers trapped in low-skill work, which doesn’t match their ability, offers poorer pay and progression prospects, and does little to boost the productivity of organisations.”

The report found that being over-skilled can have a number of negative consequences for employees. Just 53% of over-skilled workers said they are satisfied with their jobs, compared to 74% of people whose skills are well-suited to their roles.

Furthermore, being over-skilled can hurt people’s chances of climbing up the career ladder, the research found. Just 22% of workers who say they are over-skilled have been promoted to a higher position in their current organisation, compared with almost a third (31%) of workers in well-matched roles. More than a quarter of over-skilled workers earn less than £20,000 a year, compared with just 15% of those who say their skills are well matched to their jobs.

In response, the CIPD has called for organisations to improve how they manage and develop their people and for the government to work in partnership with employers, unions, and local areas to provide bespoke practical support to enable smaller firms in particular to improve their people management practices.

Crowley added that better people management must be prioritised. “There needs to be a much greater emphasis on how well existing skills and capabilities of individuals are harnessed and developed at work, through better people management practices and access to development opportunities […] Without real and impactful change to the UK’s skills strategy the UK’s productivity puzzle will prove impossible to solve,” she said.

These revelations also come as business secretary Greg Clark has announced a series of new measures to back businesses, support workers and ensure the UK benefits from the government’s modern Industrial Strategy. These plans include ensuring workers receive tips in full, greater transparency on parental pay, and proposals to help parents and carers in the workforce.