MANAGEMENT AND LEADERSHIP IN THE UK IS 'A DYSFUNCTIONAL SYSTEM' THAT THREATENS NATIONAL PERFORMANCE AND PRODUCTIVITY, WARNS GOVERNMENT BODY

14th May 2002

Professions lag in management and 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 on, 13th May 2002.

Many individuals in the professions exercise management responsibilities. Yet most professionals are untrained, and few professional associations have mandatory management and leadership specifications for membership, says the Council, which interviewed representatives of numerous professions in preparation for its recommendations.

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.

Professions could get management training from business schools
CEML says that business schools could play a bigger part in supporting the professional bodies' adoption of management and leadership modules. Business schools working with Professional Associations should ensure that management modules count towards both the professional and the management qualification. Similarly, Business Schools should recognise modules from professional qualifications for professional applicants to academic courses.

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 within the professions and 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.

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."

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."
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.

Professions to encourage management and leadership skills ?
Among these recommendations is that professional associations should introduce elements of management and leadership development into their pre-qualification and Continuous Professional Development (CPD) programmes. About 5 million people in the workforce are professionally qualified and many of these - some 45 per cent - exercise some form of management responsibility. Yet only 11 per cent of professional associations have mandatory management and leadership specifications for membership. CEML has established an "irreducible core" of management and leadership abilities for the professions which should be introduced to both pre and post-qualification training, and which would require professionals to build capacity in the following areas:

Leading strategic direction
Managing client/customer relations
Managing and leading people
Making it happen

Professions lukewarm on management?
A study conducted for CEML found that many professionals saw management as "necessary but uninspiring" - whereas leadership was more equated with professional excellence rather than with outstanding organisational or business-related skills. And the Council found that very few professional associations systematically encouraged their members to consistently develop management and leadership skills, either as entry qualifications or as part of CPD.

Sir Michael Bichard, Rector of the London Institute and previously Permanent Secretary at the Department for Education & Skills, who chaired the Professions Working Group, said: "Management is not an optional bolt-on extra for practising professionals. Its quality often makes the difference between success and failure, good or bad client care and ultimately between profit or loss. Yet even now few professions recognise the importance of management education either as part of their initial training or continuing development. The professions need more first class managers - and so do their clients."

Ted Awty, UK Head of Assurance at KPMG, who was involved in the study of professional firms, said: "The Professional Accountancy Bodies have long recognised the need to move from technical excellence to helping create a rounded business advisor.

"This is addressed in part by the entry level qualifications. But the roles of most accountants in the profession and in the industry are such that there is a clear need for the development of the core of the management and leadership abilities.

"I believe that this is best dealt with in the CPD curriculum, but even more in practice with the firms and businesses in which we are employed."

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).
¨ The members of the Professions Working Group were:
Geoff Armstrong, CBE Director General, Chartered Institute for Personnel and Development
Ted Awty Head of Assurance, KPMG
Sir Michael Bichard formerly Permanent Secretary, Department of Education and Employment, now Rector of The London Institute
Mary Chapman Director General, Institute of Management
Jonathan Harris President, The Royal Institution of Chartered Surveyors
Dr Bob Hawley President, The Engineering Council
Mike Napier President, the Law Society
Dr Jenny Simpson Chief Executive, British Association of Medical Managers
¨ The Council's main report - "Managers and Leaders: Raising the Game" - is accompanied by other reports released simultaneously, on:
¨ Joining Entrepreneurs in their World : Improving Entrepreneurship, Management and Leadership in UK SMEs
The Report of the SME Working Group
¨ The Contribution of the UK Business Schools to Developing Managers and Leaders
The Report of the HE Advisory 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: www.managementandleadershipcouncil.org
¨ Media enquiries: contact Patrick Roberts on (020) 7629 8771 (email: proberts@ahadden.com)