Management and Leadership Council

NEW REPORT CHALLENGES BUSINESS SCHOOLS TO IMPROVE MANAGEMENT AND LEADERSHIP IN THE UK

14 May 2002

The UK's Business Schools need to place greater emphasis on practical leadership skills.

The most comprehensive study ever conducted into the supply of and demand for management and leadership capability in the UK finds that current management and business leadership development is "a dysfunctional system", and that the UK's economic performance is being held back by a shortage of appropriate and practical leadership skills.

These skills are "in short supply from the top to the bottom of organisations", despite a rapid expansion of formal management education in the last 20 years, according to the final report of the Council for Excellence in Management & Leadership, published today, 13th May 2002.

The UK's Business Schools - some of them 'star performers' according to the report - need to address issues of staff quality, salary levels and resources if they all are to compete on a level playing field internationally, says the Council, which conducted wide-ranging interviews and consultations with representatives of Britain's Business Schools in preparation for its recommendations. "There is generally a need for greater flexibility to enable people to acquire qualifications in smaller, more digestible chunks and to enhance the value of informal learning opportunities," says the report.

At a presentation attended by Estelle Morris MP, Secretary of State for Education and Skills, and Patricia Hewitt MP, Secretary of State for Trade and Industry, (whose predecessors established the CEML in April 2000), the Council's chairman, Sir Anthony Cleaver, reported that although the past two decades have seen an explosion in management education, this quantitative leap has not resulted in the development of the kind of practical management and leadership skills most conducive to entrepreneurial-led economic growth. The report makes an explicit connection between management and leadership quality and economic performance, and argues that the link between the two should be tracked over time in order to achieve continuous progress.

Sir Anthony Cleaver, who chaired the Council during its two years work, said: "We set out to be a catalyst for change. Above all, we looked for practical recommendations to overcome the many gaps and blockages which exist between current management performance in the UK and where we need to be in the future. There is much to do; but I believe that the UK can match any country in the world in the quality of its management and leadership, provided our recommendations are implemented."

The report is the culmination of two years of wide-ranging consultation and analysis across the UK's public and private sectors and the professions. It says that while there is a consensus that good management and leadership skills are pivotal to quality of performance, investment, productivity and delivery of service in all enterprises, these business-enhancing capabilities are not as widespread as they should be in the UK.

Business schools and other training providers come in for criticism, for being light on leadership development and, in general, being insufficiently flexible to customise themselves to match organisations' or individuals' needs, most notably those of Britain's 3.7 million smaller businesses, where entrepreneurs frequently have little time or money to attend courses that may not seem relevant to their own needs in running a business.

Business Schools need greater autonomy
The CEML says that more autonomy for Business Schools within the University sector should form the focus of a constructive dialogue between Business School Dean, University Vice-Chancellors and Principals and in consultation with the Higher Education Funding Council for England and its equivalents in the UK. It adds that "whilst there are some star performers among British business schools, there are many that are not performing at the highest level." It adds that "it is essential that the undergraduate achievement of business and management studies is valued by employers as an applied discipline and is not seen as a soft academic option."

Professor Stephen Watson, Principal of Henley Management College, said: "UK Business Schools are doing a great deal for the UK economy - for example they are educating over a tenth of the undergraduate population in UK universities, and are earning well over £500 million a year in teaching students from overseas. The recommendations made in this Report will ensure that these efforts are united for the greater good; creating and maintaining a formal dialogue between employers and business schools to ensure that we meet with the demands of this constantly evolving sector. In particular the Report's recommendation that business schools should be more autonomous within their parent universities, would allow them to respond more flexibly to market needs. The sheer growth of the business education market in the UK over the past twenty years reinforces the importance of this sector to the strength of the UK economy."

The report - "Managers and Leaders: Raising our Game" - also warns that the need for stronger management and leadership abilities will increase as the pace of change hots up, and as consumers and other stakeholders demand better performance, from professional practitioners as well as major corporations and the public sector. The implication is that much of the money spent on management training - both in the public and private sectors and in the professions - has little impact on outputs. Thus, according to the report, the MBA degree has "succeeded as a qualification but has not necessarily developed future leaders." As a complement to more formal business education, the report lays emphasis on the value of informal development and mentoring practices, as an additional means of assisting time-poor entrepreneurs, in both larger and smaller companies, in their search for practical and relevant management skills.

The report tables a strategy, developed by the CEML over the last two years, for the UK to create a more encouraging environment for the development of world-beating managers and leaders. It looks at how to increase demand for better management talent and training (including the small business sector); how to improve supply (ranging from business schools, further education and private providers, down to creating more opportunities for the acquisition of basic management and leadership skills through schools and universities); and how better to match supply and demand.

The study argues that management and leadership skills are integral to the development of the workforce as a whole, and are not simply bolt-on benefits confined to the UK's 4 million managers. It contends that this economically vital issue requires solutions on both the supply and demand sides; that just as the suppliers of business education and training need to make their activities more pertinent to the business environment, so too must greater attention be paid to the requirements of managers and leaders of companies.

Estelle Morris, Education and Skills Secretary said:
"Management and leadership skills are vital to economic success yet the CEML report paints a disappointing picture of both their supply and demand. Some 140,000 new managers are required each year but at the current rate of progress only 20% will achieve management qualifications. There are 4 million managers in this country, but they are disproportionately white and male.

"It is important that we get the leadership culture in this country right which is why we have introduced the new Sector Skills Councils which will ensure high standards of management and training across occupational sectors and why £30 million from the Budget will be used to boost the number of small firms working towards Investors in People status.

"I welcome the report's suggestions for better matching supply and demand - the Government will publish a full formal response to this in the summer."

Patricia Hewitt, Trade and Industry Secretary said:
"This is an important report which takes a significant step forward in defining a coherent and realistic approach to tackling the UK's deficit in management and leadership capability.

"Management and leadership is a skills priority area for the UK which has a vital knock on effect on our levels of enterprise, innovation and business growth in the UK. There is also strong evidence that this is a factor which adversely affects UK productivity in comparison with our main international competitors.

"Although there are concerns about the quality and supply of managers, the DTI can help to make a difference by taking a lead role in stimulating demand for better management skills from employers, and in encouraging them to deploy skilled people more effectively. By improving management and leadership skills and by establishing stronger links between employers' investment in skills and improvements in their productivity we can significantly improve the competitiveness of many individual firms.

"This report will assist Government and Business in establishing the UK as a world leader in developing and deploying management and leadership capability by 2010."
The report recommends that a National Forum should be established, hosted by a new Strategic Body for Management and Leadership, with the objective of developing an action plan to ensure that UK Business Schools are better able to compete in the global marketplace for corporate customers.

Proclaiming a positive vision of the UK as a potential world leader in developing and deploying management skills, the report carries 30 detailed and specific recommendations for change, and presses upon government an urgent need for the establishment of a new, over-arching Strategic Body for Management and Leadership.

Notes
¨ Photo of launch event available in CEML folder on www.papicselect.com
¨ Texts of Summary and other Council reports on: www.managementandleadershipcouncil.org
¨ Members of the Council for Excellence in Management & Leadership are: Sir Anthony Cleaver (Chair), Chairman, UK eUniversities Worldwide Ltd; Ms Sarah Anderson CBE, Chief Executive, Mayday Group; Dr Neville Bain; Dr Tony Hayward, Group Vice President Finance, BP plc; Mr C Humphries CBE, Director General, City and Guilds; Professor Amin Rajan, Chief Executive, CREATE; Sir Martin Sorrell, Chief Executive, WPP Group PLC; Professor Stephen Watson, Principal, Henley Management College. The Council's policy consultant is Mrs Liz Amos.
¨ The Council has conducted its work through an extensive network of Working Groups, Advisory Groups and Taskforces. Particular areas of study have included large organisations (under the direction of Dr Tony Hayward , Group Vice President Finance, BP plc); small and medium enterprises (under the direction of Sarah Anderson CBE, Chief Executive of Mayday Group); the professions (under the direction of Sir Michael Bichard); Higher Education including business schools (under the guidance of Sir Martin Sorrell, Chief Executive of WPP Group plc and of Professor Stephen Watson, Principal of Henley Management College); Further Education (under the direction of Chris Humphries CBE, Director General of City and Guilds).
¨ Members of CEML's HE Working Group were:
Mr Peter Campbell HR Director, Life & Region Zurich Financial Services
Mr Ray Campsie Group Training & Management Development HSBC Holdings PLC
Professor Chris Greensted Dean of Faculty University of Plymouth Business School
Professor David Kirby Surrey European Management School University of Surrey
Dr Clare Morris Director of Academic Quality Cardiff Business School
Ms Sally Muggeridge Management Development Director Pearson PLC
Professor Leo Murray Director Cranfield School of Management
Mr Michael Osbaldeston Head of Global Learning Shell International Ltd
Dr BAW Redfern Director Foundation for Management Education
Ms Margaret Saner Deputy Director, Development Policy Cabinet Office
Professor Ken Starkey Professor of Management & Organisational Learning Nottingham University Business School
¨ The Council's report on The Contribution of the UK Business Schools to Developing Managers and Leaders (The Report of the HE Advisory Group) accompanies a main report - "Managers and Leaders: Raising our Game" . Other reports published at the same time were:
¨ Joining Entrepreneurs in their World : Improving Entrepreneurship, Management and Leadership in UK SMEs
The Report of the SME Working Group
¨ Management and Leadership: Building Future Supply
The Report of the Non-HE Advisory Group
¨ The Council will also be releasing a series of recent research reports, including a paper prepared for the large organisations group on Managing Diversity for Strategic Advantage, and a paper on Measuring and Reporting on management and leadership capabilities.
¨ The Council for Excellence in Management & Leadership, 211 Piccadilly, London W1V 9LD. Telephone: 020 7830 9780; Fax: 020 7830 9781; Website with texts of reports: www.managementandleadershipcouncil.org
¨ Media enquiries: contact Patrick Roberts on (020) 7629 8771 (proberts@ahadden.com).
¨ Media enquiries for the DTI: Bradley Smythe (020) 7215 5965 (Bradley.Smythe@dti.gsi.gov.uk)
¨ Media enquiries for DfES: Sally Claughton (020) 79255102 (Sally.CLAUGHTON@dfee.gov.uk)