Increasing employer demand for management training

We know that employers want and need management skills. We also know that management capability is fundamental to future productivity performance and public service improvement. However, our public debate is locked in caricatured narratives, such as dismissing higher-level management apprenticeships as simply ‘MBAs for London professionals’ or ‘generic’ qualifications, which the data disproves.

The current reluctance to embrace modern, skilled management as crucial to future economic and societal success is harming our ability to develop businesses and organisations fit to face enormous collective challenges.

Significant employer demand for management skills

Management skills have been in demand in the UK for many years. 1 in 4 working people in the UK are managers (CMI Analysis of the Labour Force Survey data, 2021). Two-thirds of these work in an SME. The majority of these will be ‘accidental managers’ – managers who have not received proper support and guidance from their employer to develop the skills required to lead in an effective manner.

An inability to effectively address this skills gap has directly contributed to current skills gaps which are growing. In 2013, UKCES found that 7% of organisations publicising vacancies had one or more management vacancy, with 1 in 5 of these vacancies being hard to fill (although this varied considerably in different parts of the economy). Fast forward to 2021 and, according to the Skills Network, management skills are the second most in-demand skill across the UK.

Management skills are not a ‘nice to have’ – and they’re not only for managers or aspiring managers. Skills like planning and organisation skills, communication, team working and problem-solving are critical to labour market success, whatever age or stage you are at in your career. Management skills can also be the bridge that helps to translate existing experience into new roles and responsibilities – vital for up- and re-skilling.

Employers are not prepared to pay for it

The benefit is not just for individuals. Despite considerable evidence demonstrating the link between good management and business productivity, profitability, resilience and innovation, employers aren’t willing enough to put their money where their mouth is. This is largely because of a tendency among employers to focus on short- over longer-term needs and – as the Skills and Productivity Board identified recently – because the transferability of management skills provide weak incentives for employers to invest compared to firm- specific skills (Understand Current and Future Skills Needs, Skills Productivity Board, 2022).

Apprenticeship Levy is tackling employer short-termism over management training

The temptation amongst employers to focus on immediate challenges over longer-term, structural weaknesses is why the Apprenticeship Levy system was introduced. And whatever the wider challenges with the levy, it has been successful at driving up management training and capabilities.

The businesses that make use of this training are benefitting. For example, at small manufacturing business Diamond Hard Surfaces Ltd, innovations identified as part of a management apprenticeship enabled the company to grow by 60% in 2020-21.

The Apprenticeship Levy has also – despite popular misconceptions – been a positive force for social mobility. In a recent survey of CMI management apprentices, 71% came from families where neither parent went to university.

Through the apprenticeship system, Travis Perkins, for example, has become so effective at utilising apprenticeships that competitors now use them to deliver training to their own apprentices.

But others – mostly big businesses – have fought back against this forced engagement, complaining the apprenticeship system is preventing them from addressing wider skills and training priorities. And yet, CBI research shows that 19% of levy-payers say the levy has increased their investment in non-apprenticeship training, and 60% say non-apprenticeship training investment has remained the same.

Skin in the game has proved to be critical in making the case for employer investment. Without an upfront cost towards longer term/higher quality training, employers save in the short term – but they will pay for it in the long run through diminished productivity, innovative capacity and ultimately competitive advantage.

Employers are already feeling the pinch when unable to fill skills gap vacancies – 94% said that their skills gaps had a negative impact on business performance. The apprenticeship system has to deliver not just for short term employer specific skills, but for the skills needs of sectors and industries into the long term.

Employer investment in longer-duration training

Structural issues won’t be resolved by a day training course and there are greater productivity gains from higher level and more intensive training. What is needed is a future-focused programme of upskilling and development with significant employer buy-in. Countries such as Sweden, Germany, Switzerland have coordination bodies supported/convened by employers in recognition of the importance of delivering against long term training needs. The challenge in the UK is how to secure employer buy-in for this approach, building on the Apprenticeship Levy.

Recommendation 1

Management apprenticeships at all ages and stages should continue to be funded out of the Apprenticeship Levy. The levy system has been highly effective at driving take up of management training amongst businesses that pay it. Consideration should be given to reducing the £3m pay-roll threshold so medium-sized employers come within scope of the levy, with funds used only on high quality longer-term skills interventions (accompanied by wrap-around advice and guidance and/or wage subsidies for under-represented businesses or individuals).

Recommendation 2

Uplifting management capability should be at the heart of major national and sub- national policy priorities including increasing productivity, green transition, public service transformation, regional growth and innovation.

Recommendation 3

Management training should be considered alongside other productivity-enhancing skills provision. Given its applicability across so many job roles and areas of the economy, management should be considered a strategic priority and core skill alongside emerging and priority industries such as digital and green skills. This will require dedicated funding and incentives.

By Anthony Painter, Director and Daisy Hooper, Head of Policy and Innovation, Chartered Management Institute

This article is part of Campaign for Learning’s series: ‘Driving-up employer investment in training – pressing the right buttons’.

Part One: Employer investment in context

1. Louise Murphy, Economist, Resolution Foundation: Investment in the round
2. Dr Vicki Belt, Deputy Director, Enterprise Research Centre, Warwick Business School: UK enterprises and investment in capital and training
3. Becci Newton, Director, Public Policy Research, Institute of Employment Studies: Employer investment in training in England

Part Two: Drivers of employer investment in training

4. Neil Carberry, Chief Executive, Recruitment and Employment Confederation: Derived demand, British management and employer investment in training
5. Ewart Keep, Professor Emeritus, Education Department, University of Oxford: Strategies to drive-up employer investment in training
6. Sam Alvis, Head of Economy, Green Alliance: Transitioning to net zero, green skills and employer investment in training
7. Dan Lucy, Director of HR, Institute of Employment Studies: Job quality, job design and driving-up employer investment in training
8. Natasha Waller, Policy Manager, LEP Network: Local inward investment, business support and employer demand for training
9. Jovan Luzajic, Acting Assistant Director of Policy, Universities UK: Universities, R&D, business innovation and meeting employer skills needs
10. David Hughes, Chief Executive, Association of Colleges: FE colleges, business innovation and meeting employer skills needs

Part Three: Increasing employer investment in training

11. Paul Bivand, Labour Market Consultant: Why should employers invest in training in a flexible labour market?
12. Aidan Relf, Skills Consultant: Why should employers invest in training with large net worker migration into the UK?
13. Stephen Evans, Chief Executive, Learning and Work Institute: Raising employer investment in training
14. Robert West, Head of Education and Skills, CBI: Increasing employer investment in training
15. Lizzie Crowley, Skills Policy Adviser, CIPD: Encouraging employer demand for training
16. Anthony Painter, Director and Daisy Hooper, Head of Policy and Innovation Chartered Management Institute: Increasing employer demand for management training

Part Four: Raising employer demand for publicly funded post-16 education and skills

17. Jane Hickie, Chief Executive, AELP: Increasing employer demand for post-16 apprenticeships in England
18. Mandy Crawford-Lee, Chief Executive, UVAC: Increasing employer demand for level 4-5 technical education in England
19. Ian Pryce, Principal, The Bedford College Group: Increasing employer demand for higher technical education in England

Part Five: Raising employer demand for work placements

20. John Widdowson, Board Member, NCG: Increasing employer demand for work placements for level 3-5 vocational courses in England
21. Stephen Isherwood, Joint Chief Executive, Institute of Student Employers: Increasing employer demand for undergraduate work placements in England