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Poor management and leadership hold back UK's economic growth

Poor management and leadership are holding back the UK’s economic growth, according to a new report from the Department for Business, Innovation and Skills.

The document highlights the mounting evidence suggesting the UK is lagging behind international competitors.

Nearly three quarters of employers in England report a deficit of management and leadership skills, while 43% of managers regard their own line manager as ineffective.

The report follows numerous high-profile management failures, which have dominated the news since the start of the credit crunch and continue to make headlines in 2012. But the evidence shows that such incidents are only the tip of the iceberg, with the costs of ineffective management being felt much more widely across the economy.

Entitled Leadership & Management in the UK - The Key to Sustainable Growth, the report was produced by BIS in partnership with leading stakeholders. It provides a concise overview of the latest research evidence to help business advisers show employers why they may need to look again at their management and leadership capability.

The report sets out the policies put in place by the Government in England to address these critical skills gaps, such as the Growth Accelerator initiative, which provides tailored business packages to high growth businesses; the Growth and Innovation Fund which provides support to employers wanting to create sustainable skills solutions; and the Employer Ownership Pilot which provides funds to employers setting up their own training programmes. The report also includes policies put in place by the Scottish Government, the Welsh Assembly and the Northern Ireland Executive.

John Hayes, minister of state for further education, skills and lifelong learning, launched the report at a meeting of the All-Party Parliamentary Group on Management on Tuesday night.

He said: "Too many of our organisations, both private and public, are failing to achieve their full potential. Improving our leadership and management capability is fundamental to creating a culture where more organisations have the ambition, confidence, resilience and skills to respond to compete successfully, both nationally and globally.

"Government is supporting this process by creating a framework for business growth and by providing specific support to those businesses with the most potential.

"Employers have to be the driving force behind any improvements. The potential gains are clear: improved survival rates, better employee motivation and well-being, and increased profitability and performance."

Ann Francke, CEO of the Chartered Management Institute, said: "This report provides compelling evidence that investing in management and leadership best practices improves business performance. Let's use this as a basis for convincing our customers - the UK's employers - that growing the number and quality of professional managers makes outstanding commercial sense. A timely side benefit of this is that professional managers are, by definition, ethical managers who have signed up to a code of conduct - and recent events remind us that putting ethics back into business has become an imperative for UK PLC."

Peter Cheese, chief executive, CIPD, added: "There are eight million people in the UK workforce with direct management responsibility for one or more people. This army of people managers has a huge impact on this country's productivity and global competitiveness - not to mention on individual and social wellbeing and resilience.

"Leadership can no longer be about a few charismatic 'masters of the universe' at the top. There's a whole cadre of managers in the middle and on the front line who need to be equipped and inspired with the skills to lead and to win hearts and minds - from the very earliest stages of their careers. We can't as a nation afford to keep promoting people to management roles and assuming that these capabilities come naturally. We need a step change in the UK in how we develop and promote people management in every organisation, as this report so clearly highlights".