CIPD points to people management as solution to UK's long tail of low productivity

Evidence to Select Committee highlights need for basic people management support to boost UK small businesses

Ben Willmott giving evidence to Select Committee

Ben Willmott, Head of Public Policy at the CIPD has given evidence to the Business, Energy and Industrial Strategy Select Committee as part of its inquiry into small businesses and productivity. The session, held on 5 June in Parliament, investigated what kind of support small businesses need, how that compares to what support is already available, and how management training is linked to improved productivity.

In the CIPD’s view, the UK’s ‘long tail’ of low productivity can partly be explained by poor management practices, a point argued by the Bank of England’s Chief Economist, Andy Haldane, last spring. He’s not the only one, as ONS data shows us that family-run manufacturing businesses are both the least likely to have formal management practices in place, and are the least productive. Ben Willmott emphasised to the Committee that there is a consistent relationship between the use of formal management practices and higher business productivity.

When asked if small businesses are aware of their own productivity, and how basic people management skills can have a real impact on their business, he sympathised that “they don’t know what they don’t know”. He continued to explain that many owner-managers will struggle to identify management and leadership challenges when asked, but will easily be able to explain their most significant business challenges. What they don’t realise is that people management and HR issues are often the root cause of those business problems: getting those foundations rights will have an impact across the business.

To address these issues, Willmott recommended that the Government spend £13m per year to roll out the CIPD’s People Skills initiative across England.

The CIPD’s People Skills programme, funded by the JP Morgan Chase Foundation, provided up to two-days’ worth of free HR support to small firms in Glasgow, Stoke-on-Trent and Hackney, London. Support included face-to-face advice, a telephone helpline, online information and templates, as well as group training events.

Evaluation of the scheme found that what small businesses needed help with the most were basic people management skills such as writing job descriptions and establishing workers’ terms and conditions. “Even though this support was transactional”, as Ben Willmott told the Committee, “the results were often transformational.”

Without getting the basics right, SMEs can’t implement more sophisticated policies, and management qualifications are too aspirational for business owners who are cash- and time-poor, and therefore it’s essential that support the businesses receive is both low/no cost and accessible.

The CIPD will continue to engage with the Government, Select Committees, policymakers, and civil servants on this issue by submitting evidence to the Department for Business, Energy and Industrial Strategy’s Business Productivity Review. We’d also encourage our members to respond to the consultation too. Read the CIPD's written submission here.

Watch the full evidence session.

Read the session transcript. 

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