There is a well-established correlation between management practices and productivity. According to experts quoted by The Economist, the UK’s productivity gap with its leading competitors could in great part be due to differences in the quality of management.

Analysis by the ONS found that management practices played a part in variations in productivity, and that people management practices – including performance reviews, managing underperformance, training and promotion – were the practices most connected to productivity. CIPD research also highlights a link between the quality of people management and employee engagement, performance, health and wellbeing.

This paper examines how effective current policies are in raising management capability, especially in small and medium-sized enterprises (SMEs) and how enhanced UK Government action could improve this.

Improving UK management capability

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Key recommendations

  • Improved labour market enforcement with more wide-ranging measures are needed, such as a Know Your Rights campaign and/or a significant increase in ACAS or Citizens Advice funding. The UK Government should set up a single body to reinforce this and support employer compliance.
  • Reform the Apprenticeship Levy by making it a more flexible training levy to allow more public funding to invest in apprenticeships for young people, who benefit most from them. Funding should also be concentrated on boosting management capabilities in SMEs as current policies risk falling short of the hoped-for impact.
  • Review and improve publicly funded management qualifications and business support programmes through developing an accessible, locally-delivered business support service.
  • Carry out a review of publicly funded management qualifications and business support programmes designed to build management capability. This should inform the development of an accessible, high-quality, locally delivered business support service that can over time help a large number of SMEs improve their management capability.
  • Prioritise and adopt a new approach to the overarching industrial strategy, with a view to influencing the business environment and raising management capability across the whole economy.

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