Why bad managers make bad companies

Poor management is the number one cause of UK business failure, warns the Chartered Management Institute's director of strategy

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As the United Kingdom edges towards Brexit the need to deal with our chronic productivity crisis becomes more urgent with more businesses, both large and small, at a risk of failure. Since the financial crisis productivity growth has fallen from annual average rates of almost 2 per cent a year to zero. It means productivity in the UK now stands 21 per cent lower than the G7 average. For some the problem has been more long-term with a third of UK companies failing to improve their productivity since 2000. We know from OECD analysis that the key to increasing productivity is better management but Chartered Management Institute (CMI) research has found 71 per cent of businesses do not train first-time managers.

Collapse of Carillion

The fate of Carillion has rightly led to an investigation into the conduct of the directors responsible for the collapse of what was once the UK’s second-largest construction company. However, Carillion was a company that employed more than 43,000 people worldwide, with 20,000 in the UK and held around 450 contracts. It was an organisation with thousands of managers ranging from local team leaders to senior directors. For the company to operate effectively each of those managers needed to be professionally trained. Effective leadership can lead to a
32 per cent rise in productivity but CMI research has found 43 per cent of workers rate their own manager as ineffective.

Training is needed at all levels

Any company, especially one the size of Carillion, needs to get the best from its workforce to succeed and to do that requires management training at all levels, from the new starter to the CEO. A long-term failure to invest in training has led to a chronic skills gap in the UK, especially at leadership level with 2m more managers needed by 2024. Management apprenticeships offer an innovative and flexible way for employers to build the skills base they desperately need. They are tailored to the needs of employers offering professional training ranging from people wanting to upskill to become a team leader through to senior managers embarking on a master’s degree-level apprenticeship. Funded by the apprenticeship levy, the range of new management apprenticeships now available 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.  

Management apprenticeships are transformative

CMI research has found 65 per cent of employers say graduates lack the interpersonal skills necessary to manage people. That experience has led to more companies running management degree apprenticeships to nurture new talent and provide a pipeline of future leaders. Earlier this year, Universities UK published a report showing these were the fastest growing degree-level apprenticeships, alongside digital and engineering. And all these areas clearly reflect the biggest skills gaps that employers are facing. Furthermore, those on the graduate programmes can expect to earn £50,000 more over the course of their career compared to graduates from non-Russell Group universities.

Leading employers embrace Chartered Manager Degree Apprenticeships

November 2015 saw the introduction of the Chartered Manager Degree Apprenticeship; it is a degree that combines full-time employment whilst studying for a degree and professional Chartered status, covering all the areas essential to managing and leading effective teams, and for the successful running of a business.
Many of the UK’s leading employers, including Barclays, Nestlé, Boots, the Civil Service and McDonald’s, offer these new degree apprenticeships and have designed their programmes in partnership with leading business schools like those at Aston University, Manchester Metropolitan and Nottingham Trent. The tuition fees are paid by the employers via the Apprenticeship Levy and those undertaking the programmes earn as they learn. Nestlé is just one of the top employers using CMDA to develop pathways and career progression for its staff. Dame Fiona Kendrick, chairman of Nestlé UK and Ireland said: “Because we’ve been involved in designing the curriculum with Sheffield Hallam University, it means that we can ensure the work that the apprentices are doing on a day-to-day basis is really aligned to that.”
She added: “The apprentice really gets the best of both worlds; they earn and they learn and they’re really able to develop at pace.”

Time for more businesses to embrace the Apprenticeship Levy

The Apprenticeship Levy provides an opportunity for British business to close the skills gap and improve productivity. Introduced in April 2017 the Levy requires employers with an annual pay roll greater than £3m to pay 0.5 per cent into their levy pot. This gives all employers the opportunity to invest in upskilling their workforce and attract the talent they need to succeed. All funds can be reinvested back into an organisation’s own workforce and can be aligned to existing talent development schemes alongside recruiting in new apprentices.
The levy has faced criticism in recent months for being too restrictive on employers. But those challenging the Levy, which is still in its infancy, are underestimating its potential as an intervention to transform investment in much-needed skills. The collapse of Carillion is a stark reminder that it is poor management and leadership that is the biggest threat to business, and not the Levy.

Case study: Boots

Boots started its Chartered Manager Degree Apprenticeship scheme in October 2016 and currently has ten apprentices on the programme. Andrew Chandler, HR director for retail and pharmacy at Boots said: “We started in partnership with Nottingham Trent University – they are our local provider. The benefits of this degree apprenticeship programme are numerous. The starting point is that we get to keep and develop some brilliant apprentices.” He added: “Our Chartered Manager Degree Apprenticeship programme will help us to develop employees into CMI-accredited chartered managers who will lead us now and in the future.”

For more information on how you can start your management apprenticeship programme and to find out which providers you could work with, visit: www.managers.org.uk/bettermanagers or call CMI on: 0333 220 3149

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