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Government investment in reskilling and upskilling central to recovery says business leaders

24 Feb 2021

The Government must use next month’s Budget to announce further investment in management and leadership skills training to aid economic recovery after the pandemic, say leading business organisations the Institute of Directors (IoD) and Chartered Management Institute (CMI).

The two powerhouses, which together represent over 168,000 business leaders and managers, are calling on the Government to invest more in reskilling and upskilling thousands of people who are potentially at risk of redundancy and preparing the remaining workforce for the rebuild task that lies ahead. Additional funding for core skills to embed management and leadership capabilities will help to close the productivity gap and aid economic recovery. The overwhelming majority of managers and directors view management and leadership skills as critical to improving performance and achieving success.

The UK economy and labour force has been fundamentally changed by the pandemic, with the UK seeing the largest decrease in GDP since 1709. According to the latest joint research by the IoD and CMI, 89% of directors and 96% of managers believe that management and leadership roles will be important in shaping the UK’s economic recovery in 2021. However, the Department for Education’s own data suggests a lack of management and leadership skills accounts for around 57% of organisational skills gaps.

Ahead of next month’s Budget, the IoD and CMI are urging the Chancellor to extend support through the Lifetime Skills Guarantee and allocate additional funding to the National Skills Fund to provide management and leadership training. The two organisations are calling on the Government to:

  1. Allocate additional funding to ensure that every course funded through the National Skills Fund also includes a ‘bolt on’ of high-quality core skills training, including digital, communication and management and leadership provision
  2. Extend support for adult skills through the Lifetime Skills Guarantee up to Level 5, enabling adults who already have a Level 3 qualification to access critical training at higher levels
  3. Introduce targeted support for all SMEs to boost their management and leadership capabilities with all SME business leaders given the opportunity to undertake a high quality management or leadership qualification.

Furthermore, according to the Industrial Strategy Council:

  • 2.1 million workers are likely to be acutely under-skilled in at least one core management skill (leadership, decision-making or advanced communication),
  • 800,000 workers are likely to face an acute shortage in teaching and training skills - which are defined as the ability of those in the working environment to upskill others
  • 1.8 million workers are estimated to face under-skilling in terms of knowledge necessary for educating and training.

Ann Francke, Chief Executive of CMI, comments:

“The vaccination programme rollout offers some glimmer of hope for a return to a new normal, but we are deeply concerned that the government is not seizing the opportunity to ensure that we have a workforce with the skills that business leaders have said are pivotal to success. The pandemic has seen a dramatic change in working practices, with many businesses being forced to change their operating models at pace. These changes may become permanent. This is a golden opportunity for the government to invest in building a solid foundation for the future. Mr Sunak must act now to ensure management and leadership skills are at the forefront of Build Back Better.”

This call on the Chancellor reflects the government’s own recommendations pre-pandemic in its Business Productivity Review, November 2019: "Businesses that embrace leadership and management best practice and adopt tried-and-tested technologies are more profitable, productive and are better to work for. We need to get businesses across the country to adopt these actions and boost their own productivity."

The Review also highlighted that leaders and managers echoed the academic evidence “that leadership and management skills are central to ensuring change is embedded within a business” and “that workers are regularly promoted to managerial positions with little or no leadership and management training, and the promotion can be a result of success in more junior roles and not indicators of management potential.”

Jonathan Geldart, Director General of the IoD, comments:

Directors and the senior leadership of organisations have told us they need workers with the management skills necessary to drive companies forward. The leaders of the engine of the economy have spoken and we encourage the Chancellor to listen to their voice.

Please find a copy of the IoD and CMI's paper here.

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