HR · 3 March 2016

Small UK firms not investing in management training despite poor productivity

management training
The cost of such training was the most important factor preventing business owners from providing it

Just 25 per cent of small firm owners have invested in leadership training in the last year, according to new research by the Federation of Small Businesses (FSB) – with price being cited as the biggest barrier to making such an investment.

The survey also found that less than one-fifth of small business owners send their staff on external management development courses – even though 64 per cent think a lack of skills impedes business growth.

The cost of management training was the most important factor preventing business owners from providing it, with 43 per cent citing this as a key challenge. The availability of relevant training was also seen as an issue, with a third of respondents of the opinion that this held them back from providing it.

UK productivity has long trailed by behind that of the rest of the G7, with the gap between the output per hour of British firms and international competitors widening despite government investment in higher education and vocational training. The most recent data from the Office for National Statistics (ONS) estimated UK productivity in 2014 at 20 percentage points behind the rest of the G7.

Management is thought to play a key role in explaining this gap. In 2012, the results of a decade-long worldwide study carried out by academics at Stanford, Harvard and the LSE found the UK had more badly managed firms than better-performing competitors – and that good management skills were important drivers of high productivity.

FSB policy director Mike Cherry said: “The UK’s 5.4m small businesses boast some of the most dynamic and creative business leaders in the world. However, our research demonstrates how greater investment in management skills could significantly benefit startups and scale-ups and help owners realise growth ambitions.

“The UK is well known as being a great place to start a business, but we need to get better at helping small firms reach the next level. A key aspect of this is making sure the right management and leadership capabilities are in place, and that these grow in line with the business.”

Additional new research commissioned by Young Enterprise has suggested that many young people are entering the workplace lacking teamwork skills. One-third of those surveyed were of the belief that they hadn’t developed such abilities at school – with 30 per cent anticipating a year-long job search before finding employment after leaving education.

“Academic attainment is only part of the journey to building a well-rounded individual and workforce. Our research has found that young people are seriously concerned with how they will attain the necessary skill sets to enter and succeed in the world of work,” said Young Enterprise chief executive Michael Mercieca.

For suggestions on how to improve the productivity of your micro firm’s workforce, don’t miss this guide.

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Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics – as well as running a tutoring company.