Incentivising Management and Leadership Development

A Centre for Enterprise Discussion paper for CEML

Workforce development is once again a priority in public policy. The current moves began in June 2001, with the UK's 'productivity challenge' and an increased attention to microeconomic reform, including the labour market. Following this, the Performance and Innovation Unit has published its first report on workforce development. In practical terms, the creation of the Small Business Service and the Learning and Skills Council has brought the longstanding gaps between aspiration and action into focus. The discussion on workplace learning grows - with new organisations, and others, all seeking to find their proper roles.

As new ideas and thinking have emerged to solve the problem of a workforce skills deficit, there has been increasing interest in the potential of financially based incentive mechanisms. Within broader policy on adult learning, this has been a longer-term evolution, starting with the creation of Career Development Loans, and later, Individual Learning Accounts. The preference for such measures over more traditional product subsidy models starts with a perception of additional benefits from reinforcing market choice.

Whilst incentives tried so far have been focused on individuals, any application to workplace learning will have some connection with the business - and this is where interest has been. So, most recently, the PIU has proposed a developed learning account model for small firms. Before that, the Small Business Council suggested a 'Company Learning Account' and the National Skills Task Force recommended a tax credit for businesses recognised as Investors in People - an idea that continues to be discussed.