Are skills holding your business back?

Research is showing that skills and particularly leadership and management skills are a more significant barrier to growth than access to finance.

This week I read the ACAS paper Building Productivity in the UK which provides some excellent analysis, evidence and recommendations for action on this agenda.  It has application in businesses big and small and is well worth a read

The Institute of Fiscal Studies stated in 2015:

  • UK labour productivity has been exceptionally weak since the 2007-8 financial crisis
  • UK productivity is 17% lower than the G7 average
  • Growth is being generated by long hours not efficiency

Instead of adopting the ‘high road’ economic model where skilled workers deliver high specification goods and services based on quality and value, The UK seems to mostly choose the ‘low road’ model of a workforce producing standardised goods sold on price, where firms are attracted here because it is cheap place to do business.  This oversimplifies a complex picture but overall if we favour a low road model, we reduce the incentive to invest in workforce development and see lower productivity.  It impacts on the current political discussions about a move from ‘low wage, high benefits’ culture to ‘high wage, low welfare’ approach to reduce tax credits and the overall benefits bill.  This approach would be best supported by a more productive high road model.

So what can we do to make progress?  ACAS set out 7 levers:  progress

  1. Well designed work – jobs and work organised to increase efficiency and make the most of people’s skills
  2. Skilled line managers – with the confidence and skills to lead effectively
  3. Managing conflict – reducing the likelihood of problems and dealing well with issues when they arise
  4. Clarity about rights and responsibilities – where everyone understands their rights and responsibilities
  5. Fairness – ensuring employees feel valued and treated fairly
  6. Strong employee voice – when employees are listened to and contribute to decisions
  7. High trust – when employers share information at the earliest opportunity

Sounds simple but the costs of not doing it are massive.  In 2012, BIS estimated that the cost of ineffective management to the UK businesses was over £19B per year.  By contrast, the gains from changes are substantial: best practice management development can result in a 23% increase in organisational performance.  Output can rise as if extra employees were recruited or investment was pumped in.

The report is accessible and has lots of examples of when businesses have seen a difference from improvement.  Money can always be a break on investment and is quickly identified but maybe we can all agree with Brendan Barber, the ACAS chair, “it’s hardly possible to conceive of a business or organisation that can look at itself and conclude there is no room for improvement” within our workplaces.  With these 7 levers there are excellent prompts for micro, small and larger businesses to make quick progress.