Yet new research reveals how management and leadership skills can drive up UK performance

43% of managers consider their line managers to be ineffective, according to the largest ever in-depth study into the business benefits of management and leadership development, released today by the Chartered Management Institute (CMI) and Penna. The research shows organisational performance and management abilities to be clearly linked “ with only 39% of managers in low performing businesses deeming their line managers to be effective, compared to 80% in high performing organisations.

The CMI-Penna report, produced with Henley Business School, draws on findings from almost 4,500 managers, including over 300 CEOs and 550 HR managers. The research provides new evidence showing how management and leadership development activities can lead to increases of up to 32% in people performance and 23% in overall organisational performance, across organisations of all sectors and sizes.

The research finds that too few employers are doing the right things to secure the returns on investment in management and leadership. Although many employers are investing in a vast range of 26 types of management and leadership development activities “ with the average manager having been exposed to six over the last three years “ the types of training being offered are not always those rated by managers as most effective. Accredited learning and qualifications, including MBAs and professional bodies qualification, are rated as having the most impact on individuals performance, yet there is still widespread reliance on on-the-job experience and short courses.

The effectiveness of different types of training also varies between particular management levels “ for example, many CEOs wish they had access to coaching earlier in their careers, while professional qualifications are seen as particularly effective for new and junior managers.

The findings also show that high performing organisations spend on average 36% more on management and leadership development per manager per year than low performing ones (£1,738 compared to £1,275), with the mean organisational spend per manager estimated at £1,414 per annum. Public sector organisations spend on average £1,515 per manager per year, while private sector organisations spend £1,416 and not-for-profit sector organisations spend £1,133.

Christopher Kinsella, Acting Chief Executive for CMI, said of the results:

This report contains good and bad news for UK managers. The bad news is that a culture of bad management continues to damage UK Plc. But the good news is that organisations who are investing strategically in management and leadership development, are far more likely to be reaping the benefits through higher performance. What is more, it is within an organisation’s own power to make that change “ by investing in management and leadership development wisely, employers can make a real, measurable difference. Clearly a one-size fits all approach is not appropriate, all development activities need to be focused on developing specific line manager skills and behaviours that will help achieve business results. As such, it should be clearly linked to the organisation’s overall business strategy, and thoroughly evaluated to ensure its continued effectiveness.”

Gary Browning, Chief Executive of Penna, comments:

“This research provides a valuable contribution that stimulates debate about the very real business case for investment in management and leadership development addressing long-standing concerns in the business and policy communities about the quality of management and leadership skills in the UK. Developing effective managers not only impacts the business (they make better decisions and follow through) it also releases the potential of the people who work for them. The research shows us that having an effective manager means employees get more effective development and feel more positive about their ability to manage their own careers. We have seen through working with many employers the tangible difference that can be made by organisational commitment to management and leadership development and as the world economy starts to grow, British business needs to remain highly competitive; the ongoing development of our top talent will help us retain our position.”

The report makes it clear that financial investment alone is not the deciding factor in the impact of management and leadership development. To maximise performance, training must support business priorities, with the skills and behaviours being learned directly based on business needs. Development should be reinforced through practices such as performance management and competency frameworks. Top level commitment is also critical: CEOs and senior management should show their own commitment to learning and act as role models.

Revealing the secrets of success of high performing organisations, the report provides a number of practical questions for all employers to consider including:

* The importance of evaluation: what measures do you use to know that your development activities are aligned to your business targets and achieving maximum impact?
* Qualifications hit the sweet spot: being seen as the most effective route for developing managers’ skills to do their jobs “ have you considered opportunities for your managers to have their skills accredited?
* Creating a rich learning environment: given the reliance upon on-the-job training, are you providing a sufficiently strong learning environment through the use of coaching, access to e-learning resources and external networks?

As well as making recommendations for employers, the report also calls on Government to take a key role in improving management capacity and organisational performance “ especially amongst medium-sized businesses, who make up only 16% of the high performing group. Recommended actions include:
· Making leadership and management skills a key part of the skills for growth strategies, at national and local level
· Enabling young people to have earlier access to management and leadership development activities through reviewing provision at schools and colleges
· Taking an active role in promoting high quality management education and accredited learning by supporting employer engagement with university business schools and professional bodies
· Investing strategically in the leadership and management skills of the Civil Service and public sector

The research was guided by a Steering Board chaired by Dr Martin Read CBE CCMI, former Logica CEO and now a non-executive director at Invensys, Aegis Group, Lloyd’s and the UK Cabinet Office Efficiency and Reform Board. He adds:

“I have always believed passionately in the importance of developing managers and leaders in order to drive organisational performance. With the UK economy stalling, the UK has rarely had a greater need for world-class management and leadership.

“It is crucial that there is commitment at the very top of organisations to produce managers and leaders for the future. The CMI-Penna report not only provides a comprehensive picture of current practices and their effectiveness – but, crucially, makes vital reading for CEOs and MDs on how they can personally promote better management and leadership in their organisations.”