Management apprenticeships are key to solving the productivity puzzle

Petra Wilton, Director of Strategy, Chartered Management Institute, lays bare the risks of poor management to the UK's productivity

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Poor management costs UK plc a staggering £84bn a year in lost productivity.

With 71 per cent of firms failing to offer training to first-time managers, management apprenticeships will be key to tackling the problem.

The cost of poor management

There’s an urgent need to raise our game when it comes to leadership and management.

According to a recent study by Investors in People, poor management is costing UK employers £84bn a year. Currently, UK productivity stands at 21 per cent lower than the G7 average. Recent OECD analysis revealed that poor management and leadership is the number one factor driving the total productivity gap.

This is hardly surprising when you consider that for too long management training has been a blind spot for employers. CMI research found that seven in 10 admit that they fail to offer management training to first-time managers, and 43 per cent of workers rate their manager as ineffective.

Developing home-grown management talent

As a nation post-Brexit, we need to be far more competitive and start investing more in UK talent as opposed to turning to foreign workers to fill skills gaps.

We clearly lack skilled managers, with historic and systemic low investment in the higher level management skills needed to drive growth.

According to a recent Chartered Management Institute (CMI) survey of 1,065 UK managers, 67 per cent are now concerned about their organisation’s ability to attract EU workers post-Brexit and 44 per cent say uncertainty about the status of existing EU employees will affect their organisation.

Four in five agree that there needs to be far greater investment in higher skills development to meet massive new economic and employment challenges.

The rise in the number and relevance of management apprenticeships shows that leading employers are now recognising how best to drive growth.

This is backed by a government agenda that has pledged to create three million apprenticeships by 2020 and will see the introduction of the Apprenticeship Levy in April 2017 to stimulate employer investment in skills development.

Why management apprenticeships

As the only chartered professional body for management and leadership, the CMI has been supporting a 30-strong employer-led group to pioneer the development of the trailblazer standards in management and leadership apprenticeships.

November 2015 saw the launch of the Chartered Manager Degree Apprenticeship, which combines world-class business education, work-based learning and professional development through to Chartered Manager status, tailored to the needs of employers and employees.

This has been followed by the introduction of team leader and operations manager apprenticeships, and a Master’s level apprenticeship is currently in development.

The range of management apprenticeships offers a ladder of opportunity to people of all levels and experience. These programmes are being used by employers for both school leavers and for those already in the workplace. Management apprenticeships give employers the ability to tap into a more diverse workforce and offer a new route to further develop existing internal talent and ensure those entering the workforce have the trickle-down impact of working for a good manager.

The payoff for employers is great: effective leadership development can result in a 32 per cent rise in productivity, and Chartered Managers add an average of £391,000 in value to their organisations.

Many leading employers including Serco, Nestlé, Civil Service Learning, Pizza Hut, KFC, Barclays, Boots and a host of SMEs are now running trailblazing management apprenticeship programmes. These programmes are being delivered through approved FE colleges, private training providers and universities, with CMI qualifications and accreditation embedded in the courses.

The Apprenticeship Levy: an investment opportunity

The introduction of the Apprenticeship Levy in April 2017 will require employers with an annual pay roll greater than £3m to pay 0.5 per cent into a communal pot.

This will give all employers the opportunity to invest in up-skilling their workforce and attract the talent they need to succeed. All funds can be reinvested back into organisation’s own workforce, and can be aligned to existing talent development schemes.

As Josh Hardie, CBI deputy director-general points out: “the UK must carve out a new economic future and this is an area where we must take action to support our competitiveness and prosperity.”

The Levy addresses this with investment in the next generation of managers already proven to be more than repaid by the productivity gains they deliver.

The proposed funding model means that 98 per cent of employers will have 90 per cent of the costs of training paid for by government. Extra support – worth £2,000 per trainee – will be also available for employers and training providers that take on 16-to-18-year old apprentices or young care leavers.

Organisations with fewer than 50 employees will have 100 per cent of training costs paid for by government if they take on these apprentices. Employers will have two years to spend the funds in their digital account.

Time to solve the productivity puzzle

Future projections by UKCES suggest that the UK will need two million more managers by 2024. It’s imperative that we invest in the next generation of managers and existing talent to tackle our productivity gap and develop the skilled and highly productive workforce the UK needs to compete internationally.

Management apprenticeships will play a huge role in achieving this aim.

To start your management apprenticeship programme, visit www.apprenticeships.managers.org.uk or call CMI on 0333 220 3149