advanced management skills needs

Advanced management skills study

ADVANCED MANAGEMENT SKILLS NEEDS: A STUDY OF A LAGGING SUB-REGION RESEARCH REPORT By Les Worrall and Kate Gilbert

Management Research Centre University of Wolverhampton Business School

May 2003

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ADVANCED MANAGEMENT SKILLS NEEDS: A STUDY OF A LAGGING SUB-REGION RESEARCH REPORT

CONTENTS SECTION 1: INTRODUCTION ............................................................................... 5 1.1 The context of the research .............................................................................. 5 1.2 Detailed aims and objectives ........................................................................... 6 1.3 The structure of the report ............................................................................... 7 SECTION 2. THE REGIONAL AND SUB-REGIONAL CONTEXT ................ 12 2.1 Introduction.................................................................................................... 12 2.2 A discussion of the structural issues and problems facing the area .............. 12 2.3 A distillation of the structural issues affecting the locality............................ 17 2.4 The Regional Policy Context ......................................................................... 19 2.5 The business and its links to its external environment .................................. 24 2.6 Breaking the low skill/low wage equilibrium: developing new work practices .............................................................................................................................. 27 2.7 Summary and key issues................................................................................. 29 SECTION 3: ADVANCED MANAGEMENT SKILLS – WHAT IS THE CURRENT THINKING? .......................................................................................... 30 3.1 A review of current literature on advanced management skills – in search of a framework. ........................................................................................................ 30 3.2 Management skills – how have the ideas evolved? ........................................ 33 3.3 Competency frameworks ................................................................................ 35 3.4 In search of Advanced Management Skills .................................................... 37 3.5 Leaders and managers ................................................................................... 38 3.6 SMEs and Entrepreneurship .......................................................................... 39 3.7 Frameworks for management skill needs ...................................................... 42 3.8 A framework for analysing skills needs and reviewing supply of development opportunities ........................................................................................................ 49 3.9 A framework for Advanced Management Skills for the Black Country and Telford-Wolverhampton corridor ........................................................................ 51 SECTION 4: THE DELIVERY OF MANAGEMENT DEVELOPMENT AND TRAINING TO SMES: WHAT ARE THE ISSUES? ............................................ 55 4.1 Does training enhance the performance of SMEs? ....................................... 55 4.2 Key issues: training and SMEs ..................................................................... 62 SECTION 5: A CRITIQUE OF THE EXISTING PROVISION FOR ADVANCED MANAGEMENT SKILLS ................................................................ 66 5.1 Introduction.................................................................................................... 66 Page 2


5.2 National agencies that could provide local support ...................................... 66 5.3 Local provision for Advanced Management Skills ....................................... 67 5.4 A map of provision ........................................................................................ 69 5.5 The Suitability of Provision .......................................................................... 72 5.6 A review of the functioning of local intermediaries ...................................... 75 5.7 A critique of AMS provision locally ............................................................... 76 5.8 Key points and issues .................................................................................... 78 SECTION 6: BASELINE ANALYSIS OF SUB-REGIONAL BUSINESSES .... 80 6.1 Introduction.................................................................................................... 80 6.2 Respondent characteristics and background details ..................................... 81 6.3 Participation in formal management development and training ................... 82 6.4 The importance that managers ascribed to the Advanced Management Skills .............................................................................................................................. 85 6.5 How well did respondents think they performed on the set of Advanced Management Skills? ............................................................................................. 89 6.6 Priorities for Advanced Management Skills Development and their relationship to type of business ............................................................................ 91 6.7 Priorities for Advanced Management Skills Development and their relationship to the educational qualification of respondents .............................. 98 6.8 Which skills impact most on "the bottom line": managers’ perceptions ..... 100 6.9 Sources of business advice ........................................................................... 101 6.10 Training and development infrastructures within the firm ........................ 103 6.11 Managers' perceptions of which training providers they would use ......... 105 6.12 Managers' preferences for types of managerment development ................ 105 6.13 Attitudes to management development and training .................................. 108 6.14 Summary of key points and issues .............................................................. 113 SECTION 7: CASE STUDIES AND KEY INFORMANT INTERVIEWS ...... 115 7.1 Introduction.................................................................................................. 115 7.2 Rationale and approach ............................................................................... 116 7.3 Triggers for management development/change of company direction ........ 117 7.4 Where do the skills reside in organisations? ............................................... 122 7.5 Why the survivors had survived ................................................................... 123 7.6 Partners in the change process .................................................................... 124 7.7 Advanced Management Skills in use ............................................................ 129 7.8 Business attitudes to and experiences of intermediaries ............................. 134 7.9 Training and development provision: attitudes and experience .................. 137 7.10 Summary of key points ............................................................................... 139 SECTION 8: REVIEW OF INNOVATIVE MODES OF DELIVERING MANAGEMENT DEVELOPMENT TO BUSINESSES ..................................... 142 8.1 Introduction.................................................................................................. 142 8.2 The purpose of management development ................................................... 143 8.3 “Traditional” forms of management education .......................................... 147 8.4 “Specialist” Masters in Management programmes .................................... 148 8.5 Short courses ................................................................................................ 149 8.6 Competence approaches .............................................................................. 149 8.7 Evaluation of traditional forms .................................................................... 150 8.8 Innovative approaches to management development .................................. 151 Page 3


8.9 Coaching and Mentoring ............................................................................. 152 8.10 Business advisers ....................................................................................... 154 8.11 Action learning........................................................................................... 156 8.12 E-learning .................................................................................................. 157 8.13 Blended learning ........................................................................................ 161 8.14 The Birmingham Chamber of Commerce Learning Zone Model .............. 164 8.15 Discussion and conclusions ....................................................................... 167 SECTION 9: KEY FINDINGS AND POLICY ISSUES ..................................... 170 9.1 Introduction.................................................................................................. 170 9.2 The issues posed by the local economic and social context ......................... 171 9.4 Understanding the resistances and issues in the delivery of training to SMEs ............................................................................................................................ 174 9.5 Existing provision of advanced management skills - what are the issues? 175 9.6 Key issues arising from the baseline analysis of sub-regional businesses . 175 9.7 The views of case study companies and key informants ............................. 177 9.8 Creating a blended learning environment .................................................. 179 9.9 Final comments ........................................................................................... 180 REFERENCES ......................................................................................................... 181 APPENDIX 1: QUESTIONNAIRE SURVEY ..................................................... 194

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ADVANCED MANAGEMENT SKILLS NEEDS: A STUDY OF THE BLACK COUNTRY AND WOLVERHAMPTON-TELFORD GROWTH CORRIDOR RESEARCH REPORT Management Research Centre University of Wolverhampton Business School SECTION 1: INTRODUCTION 1.1 The context of the research The competitiveness and productivity of a regional economy is largely determined by the competitiveness and productivity of the firms located within it and the competitiveness and productivity of firms is largely determined by the quality of management within those firms. Some manufacturing firms have been found to be 2.75 times more productive than others even in the same industry (Mole, 2002). In an area like the Black Country and Wolverhampton-Telford Corridor (BCWT), which is acknowledged to have lower levels of total factor productivity than the rest of the West Midlands Region, the transformation of the sub-regional economy will depend on the transformation of the businesses located within it. This transformation will only be achieved by radical change and improvement in the local workforce and particularly in the managerial capital of the locality. Consequently, the task facing this research project and its importance to the transformation of the sub-regional economy are considerable. The prime objectives of this report are, first, to identify the advanced management skills (i.e. those skills above basic, functional skills) needed to support the economic regeneration and diversification of the Black Country-Wolverhampton to Telford Corridor area; and, second, to develop the strategic framework and policy packages to facilitate the continuing development of the sub-region’s senior managers. Essentially, the research project has sought to understand current and emerging advanced management development and learning needs and to use this knowledge to underpin the development of new policies, approaches and programmes. While the project is important in its own right, it must be consistent with the raft of regional policies, programmes and initiatives that currently exist in the region. In fact, these regional strategies (such as the Regional Economic and Innovation Strategies, the emerging cluster and diversification strategies and the Framework for Regional Employment and Skills Action) have been extensively used, with other inputs, to help define the advanced management skills forming the focus of this research. A central argument is that the economic development and diversification of the subregion will be best facilitated by businesses, service providers and business support agencies developing a shared understanding of the issues and problems, and developing more effective ways of working together. While a number of reports have raised concerns about workforce and managerial quality in the region, and in the UK generally, we argue that real progress can only be made by developing these shared understandings and by developing more effective ways of joint working.

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The region is embracing an economic development model based on the “cluster concept” (see Porter, 1998). Thus it is essential that robust linkages are developed, not only between businesses and their customers and suppliers but also between business and the support agencies (such as accountants, banks, training providers, further and higher education) on whom the prosperity and continuing development of many businesses depends. The success of the cluster approach will depend on the development of effective linkage mechanisms between businesses and support agencies, both public and private. It is an issue of some concern that much of the academic literature points to the existence of information asymmetries, information imperfections and a lack of mutual understanding between businesses and key support agencies. Many studies have exposed cycles of blame where businesses protest that public sector bodies do not understand or meet their needs and business support agencies criticise businesses for being unable to articulate their needs and for being difficult to contact. In addition to strengthening the managerial capacity of existing businesses, it is also important to consider the nature of routes into management and progression routes up the management ladder. Management skills are far from static and it is important to understand the processes by which managers are “recruited” into management and how they progress their careers. Without a growing pool of acknowledged managerial expertise it is unlikely that the locality will prove attractive to potential inward investors who need workers who can add significant value. While endogenous growth is essential, alone it will prove insufficient to foster regional regeneration, diversification and an increasing ability to add value. In the Telford area in particular, it has long been acknowledged that economic diversification and the migration of firms “up the value chain” has been difficult. A local scarcity of high quality workers and managers has often been put forward as a factor militating against the further development of the area through the attraction of better quality jobs. 1.2 Detailed aims and objectives The aims and objectives of the report are itemised below:       

To develop an understanding of the higher management learning and skills needs and the learning styles and preferences of managers in the area – particularly those of SMEs and firms located in key strategic clusters To review and critique frameworks for advanced management skills (AMS) that have been developed elsewhere To develop a framework of advanced management skills for the locality To assess the current position of the sub-regional economy against that AMS framework To develop an understanding of the relationships between demand and supply in the market for skills and to understand the role of intermediaries To identifiy issues, problems, impediments and barriers to the development of more effective inter-relationships between demand, supply and intermediaries To develop an understanding of management learning needs and styles and to assess the implications of this for the relevance of existing provision, the development of new products and the development of new approaches to the delivery of management skills to the workplace Page 6


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To map and critique the existing sub-regional provision of advanced management skills To develop an understanding of the triggers to management learning and to make recommendations on how to exploit them To analyse the experiences of local businesses that have sought to acquire advanced management skills To review the frameworks for the delivery of advanced management skills that have been developed elsewhere To develop a framework for the delivery of advanced management skills to the locality To make detailed recommendations to promote the development of AMS in the locality

The ethos of the study is to complement other regional initiatives, projects and strategies to improve the quality, productivity and competitiveness of local firms by developing more effective linkages between firms and key agents in the various industrial clusters. The strengthening of the local managerial base should enable the attraction of new investment and assist the process of regeneration and the diversification of the existing industrial base. Developing better-led and bettermanaged businesses is seen as an essential element of these wider strategies. While workforce and management quality are currently seen as a liability, a strategy to improve managerial capability is essential if we are to enhance the comparative advantage of the area. The outcomes of the research will be a strategic framework focused on developing managerial capability in order to build stronger businesses locally. This will involve:        

Maximising networking opportunities within companies and between companies and support agencies. Developing more effective collaborative approaches and partnerships between firms, support agencies and intermediaries Developing innovative approaches to management skills delivery Opening up routes into management Identifying and making better use of currently under-used assets Improving information flows and awareness Identifying gaps in the provision of advanced business/management support and gaps in the learning supply chain Identifying new products and delivery strategies

1.3 The structure of the report As the prime outcome of this research project is a strategic and policy framework to guide action and resource commitment, it was essential to develop a structured research process that would generate evidence on which a robust policy framework could be developed. The purpose here is to describe the logic of the research design, which also provides the structure of the report. The main sections of the report are outlined below. Page 7


Section 2: Regional policy context The prime aim of this section is to develop a clear understanding of the regional economic context in which this research is to be conducted. Clearly, if the research is to contribute to the wider economic development of the region, then it is essential that the advanced management skills research project is embedded within a wider regional economic and labour market context. A number of regional strategies have been used to develop both a context for the research and to inform the structure of the research exercise. The Regional Economic Strategy, the Regional Innovation Strategy, the Cluster Strategy, the Regional Diversification Strategy and the FRESA have been used to provide a context for the research. These documents were also used to help define the framework for advanced management skills that is central to the research. Each of the above documents was subjected to the same form of analysis to answer a key question: what management skills are needed to deliver the strategic intentions contained in the various regional strategy documents? For example, key capabilities emerging from an assessment of the regional innovation strategy were that senior managers in firms should be able to manage the innovation process, to develop effective marketing strategies for new products, learn from interaction with customers and suppliers and to redesign business processes to support innovation. While many regional strategies, and work to underpin the development of industrial clusters, identified “management skills development” as an issue, there was a singular lack of precision about what the term actually meant. The framework developed in this report can be used as a high level framework in subsequent skills development work in the clusters. This section also contains other material to underpin the research. For example, we develop a framework for looking at businesses focusing on the nature and patterns of relationships between the firm and the many agencies and service providers it interacts with. We have also examined recent literature on emerging forms of work organisation and recent research that seeks to explain why localities such as the Black Country-Wolverhampton to Telford Corridor seem to have become locked into what is termed a low wage/low skill equilibrium. Our contention is that the locality will only move out of this cycle by the radical reinvention of firms locally. This will, in turn, depend on the radical improvement of the local managerial capital. Section 3: Advanced management skills – what is the current thinking? There is a considerable academic and practitioner literature on management skill needs and several frameworks have been developed purporting to provide a context for their development. The purpose of this section of the report is to evaluate and critique competing frameworks and, in conjunction with the analysis of regional strategies, to put forward an advanced management skills framework to underpin the later, more empirical sections of the research project. The section will also reflect the need to embed studies from other locations within the regional context. This is achieved by integrating the industrial cluster concept within the discussion, as the effective working of clusters is a necessary condition for the transmission of management knowledge and advanced management skills into regional businesses. Page 8


Thus, the effectiveness of inter-working between businesses, public sector business support agencies, private sector services to business and the education sector assumes paramount importance. While it is important to develop a framework for advanced management skills, it is equally important to understand which factors are conducive to management skills development in business and those which tend to create resistances to the transfer of management knowledge and skill. There is a substantial literature about training resistances, particularly in SMEs, which is covered in this section. Most of these resistances can be explained by information imperfections and by problems at the interface between businesses and the agencies that putatively exist to support them. Section 4: The delivery of management development and training to SMEs: what are the issues? The effective delivery of management development and training to SMEs is a subject that has perplexed the business support industry and academics for many years. There is a considerable literature that tends to identify what doesn’t work and why. Unfortunately, that literature often does not reveal what would work and how it could be made to work. The purpose of this section is to review the literature here and to attempt to distil guidance on the development of approaches that would lead to business support agencies and training providers delivering more effective training and developmental interventions to SMEs. The literature reveals that there have been significant problems with the delivery of training and development to SMEs and that the SME market for training and development is difficult to penetrate because SMEs often do not have defined internal labour markets; that providers have often “not got it right” in terms of content, mode of delivery and cost; and, because many SMEs either consider themselves to have highly specific needs. Many SMEs are also argued to be unaware of what their needs are and how to have those needs cost-effectively satisfied. Section 5: A critique of the existing provision for advanced management skills locally In conducting the research, it quickly became apparent that advanced management skills was an under-researched area that did not map cleanly into the sub-regional matrix of provision and interest or into the existing NVQ framework. Given the view that developing effective strategies for advanced management skills development would depend on developing a blended approach to address education, training and developmental issues, it soon became apparent that advanced management skills, as defined in Section 3, would require a delivery system that was qualitatively different from existing forms of provision. While the basic skills and supervisory level are the prime focus of the LSCs, FE Colleges and market-based training providers, the Chambers of Commerce, Business Links and the Accountancy profession control the arena of business advice and guidance and the HE sector plays a central role in certificated management development at the functional level, it appeared that the business leadership apex of the management skills pyramid was conspicuously outside the remit of any single agency apart, perhaps, from the Institute of Directors Page 9


(which through the Director Development (West Midlands) Programme is already taking steps in this area). The objectives of this section of the report are to review existing initiatives delivered, primarily, through sub-regional providers; to produce a sub-regional map of provision; to analyse the map for overlaps and gaps; and, to critique sub-regional provision. An important finding from the research is the problems surrounding issues of both self-awareness (i.e. firms existing in a state of “unconscious incompetence” where they do not realised that they have developmental needs) and inter-agency awareness (where firms that realise that they need development do not know how to procure it or where to procure it from). Many studies of workforce and management development have pointed to “information imperfections”, “information asymmetries”, “supplier-driven approaches”, “lack of provider flexibility” and “the over-formalisation” of training as factors that prevent firms being more effective in procuring the support they need. The critique of the sub-regional provision matrix will explore these issues. Section 6: Baseline analysis of sub-regional businesses An important element in the research project is to develop a baseline view of the subregion using a robust framework for advanced management skills development based on a synthesis of the relevant literature and the analysis of the sub-regional context contained in Section 2. A questionnaire was designed to test several propositions derived from the project proposal and reinforced by the review of the literature. The main objectives of the questionnaire were to:           

Identify which advanced management skills local business saw as being most important Assess how firms thought they performed on these skills Identify priorities for action Identify which business support agencies businesses had used and their views about those agencies Identify business opinions about advanced management skills providers Identify business perspectives about, and awareness of, providers Identify business resistances to management skills development Identify business preferences for management skills development delivery approaches Identify if training development infrastructures existed within firms Relate skills development to business, product and market development strategies in the firm Relate senior management attitudes to management development to a range of background characteristics of senior managers

This section contains an analysis of this data and uses the analysis to inform the development of advanced management skills delivery systems later in the report.

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Section 7: Case studies and key informant interviews A central feature of the research strategy was to develop a mixed mode approach using a questionnaire survey, desk research, case studies and key informant interview techniques. Our view was that over-reliance on one approach would yield a partial and incomplete view of a very complex subject. While the questionnaire survey was used to provide “width of analysis”, case studies and key informant interviews were used to provide the “depth of analysis” needed to craft an effective strategy. The case studies were selected to identify aspects of exemplary practice that can be used to develop guideless of “what works”. However, we are strongly of the view that “what works” is often context dependent and a key element of the case studies is to identify the aspects of context that seem to be critical in the process of management skills development. Consequently, the case studies will focus on issues such as:      

Clarifying the business context Identifying the key steps in the process of management development Identifying expressed needs, attempting to reveal latent or unexpressed needs Identifying firms frustrations with providers, exploring "information imperfections" and problems of awareness Revealing top managers’ perceptions of providers Revealing top managers’ view of what training should be provided, by whom and in what form.

The key informant stage of the research focused primarily on interviewing respondents who have an in depth knowledge of advanced management skills development, respondents working with local firms in related areas or with senior managers from agencies with a remit that embraces workforce and management development support. While the case studies attempt to provide a “user” perspective, the key informant research focuses on both providers and intermediaries. Section 8: Review of innovative modes of delivering management development to businesses Having developed the frameworks for analysis and conducted the analysis, the report then proceeds to a review and critique of modes of advanced management skills development to businesses. This section will be based on the analysis of users’, providers’ and intermediaries’ views but will also be based on documentary and other evidence about the frameworks and approaches that have been developed to deliver advanced management skills to local businesses and, especially, to SMEs. Section 9: Key findings and policy issues This section will draw together the key findings and issues that have emerged during the conduct of the research. The objective here will be to develop and synthesise the insights developed as a basis for policy and strategy development.

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SECTION 2. THE REGIONAL AND SUB-REGIONAL CONTEXT 2.1 Introduction In any public policy development context, it is important to develop synergy between different policies, strategies, initiatives and programmes. Consequently, the purpose of this section is to briefly describe the regional and sub-regional development context in which the current study must be located. There exist a number of regional policy and strategic statements which the current study must reflect. These include:     

The Regional Economic Strategy (RES) and subsequent reviews of the strategy The Regional Innovation Strategy (RIS) The Framework for Regional Employment and Skills Action (FRESA) The Cluster strategy framework and strategies for individual clusters The growth corridor strategy for the Wolverhampton-Telford Corridor

The following sections of this section will, first, briefly outline some of the key structural issues and problems that the Black Country and the WolverhamptonTelford Technology Corridor currently face; second, develop a context for policy development in the BCWT area to reflect the implications of the various regional policy documents listed above; third, develop a framework thast focused on the business and its ability to secure and use resources external to the firm; fourth, review recent literature to expliain how localities become locked intro a low wage/low skill equilibrium; and, fifth, discuss recent developments in work organisation that emphasis job enrichment and emphasise the need for better skilled managers and workers. 2.2 A discussion of the structural issues and problems facing the area The economic and workforce development problems of the region are well known and will not be discussed in great depth here. The key issues that have emerged in the research are:       

An over-reliance on sunset rather than sunrise businesses Low levels of innovation and productivity leading to low growth and low competitiveness A relatively badly trained workforce at all levels ranging from school-leavers to business managers and leaders A failure of the demand and supply sides in workforce development to harmonise A lack of integration between the potential partners in the process of economic development The problem of a long tail in the quality of regional businesses (i.e. while there are a number of world class businesses in the region, there is a relatively large pool of poorly performing businesses) The lack of an enterprise culture and lack of ambition in the workforce

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Wide variations in these measures across the region and evidence for the emergence of a “three speed region” in which the area is in the third speed group The persistence of the range of structural issues despite significant public investment emphasising the need for diversification and modernisation

The various regional strategies are based on in depth research and analysis that adequately demonstrate these points. For example,   

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GDP per capita is 8% below the regional average (Regeneris, 2003); while the average worker in manufacturing in the West Midlands contributes £29,500 to GRP, the average in the North East and South East is over £45,000 (Worrall, 2001); a recent study of Internet use in the region by Levy and Worrall (2002) identified that 49% of SMEs had neither developed new markets nor had they innovated in the last year and only 16% of firms had developed new markets for products and services new to the company; the West Midlands Business Surveys (1994-2001) regulary raised concerns about the low level of innovation and capital expenditure in the sub-region (Mole and Worrall, 2001); and, regular regional labour force surveys have revealed that the regional workforce is significantly under-qualified and has failed to meet national targets for workforce development1.

While there is ample evidence that the region as a whole has a number of structural problems in its economy and labour force, there is also evidence of significant unevenness within the region in terms of economic development and the capacities of the work force. Recent research on the Black Country (Worrall, 2001) based on the West Midlands Business Surveys, revealed that the area performed less well than the region as a whole and much less well than more diversified parts of the region such as the Solihull/Warwickshire area. The recent Regeneris report 2 confirms that these issues have persisted and provides evidence of a three speed region. The key points that emerge from the 2001 review of the Black Country (Worrall, 2001) are that:  

The Black Country is sensitive to a highly valued pound because of its industrial structure and because businesses are more likely to be competing on price than on quality The fact that Black Country businesses are more likely to compete on price means that export markets are at risk and domestic markets are also at risk from increasing import penetration from low cost producers overseas

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For example, Basic Skills Agency statistics suggest there are approximately 183,000 people in the Black Country with low or very low levels of literacy and around 198,000 with low or very low levels of numeracy (AWM Press release, 15 May, 2003) and the West Midlands has the lowest proportion of people with NVQ Level 3 of any region in the UK and the third lowest proportion of people with NVQ level 4. 2 http://www.advantagewm.co.uk/doc/wmesupdate/Regeneris_report.doc Page 13


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While the pound has been at high levels against the Euro, local businesses have sustained declining sales and declining margins Declining sales and margins have reduced the capacity of local firms to invest in new products, new technologies and new skills The proportion of firms introducing new products and services to the market (i.e. a crude innovation rate) was consistently lower in the Black Country than in any other part of the region from 1994 to 2000 Around 27% of firms in the Black Country and the region identified difficulty in recruiting “well qualified managers”

The paper concludes with clear messages that impact upon regional policy:    

The Black Country economy must diversify away from traditional export markets, away from markets at risk from further import penetration and away from traditional markets in the automotive and engineering sectors Black Country businesses must invest heavily (in capital, skills/training and infrastructure) in order to increase productivity and sub-regional competitiveness Local businesses must move into more high value adding and knowledgeintensive economic activity Black Country businesses need to identify new product and market opportunities in the different niches of the same product markets or, more radically, move into different product markets completely while simultaneously changing their basis of competition

The paper concludes with a very clear recommendation: “In the next year to eighteen months, many Black Country firms are going to have to bite the bullet - the agenda for many Black Country businesses is to modernise, to diversify and to innovate or face a very bleak future indeed” (Worrall, 2001). While the Black Country has a number of clear structural problems, the problems of the Telford area are somewhat different. Telford is a high population and employment growth location that needs to maintain and develop its locational advantages if it is to continue to prosper. There are several reports (e.g. SQW, 2001) that reveal Telford to be largely dependent on manufacturing and low value adding, low complexity work despite substantial attempts by local agencies to diversify the local economy by moving up the value chain. A recent report by SQW (2001) identified that while “levels of entrepreneurship in the (Telford to Wolverhampton) Corridor are strong”, GDP/capita is low and the locality is still heavily dependent on traditional manufacturing with more advanced forms of manufacturing being relatively under-developed. The SQW report also identified a number of strategic needs and challenges that are important to this study: 

There is a strategic need to ensure that the area’s existing knowledge assets…..link more effectively, and operate in a more integrated fashion for the benefit of the corridor. Actions need to ensure that these links and synergies are actively encouraged Page 14


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The corridor does not currently possess – either within the university or the business base – a readily available comprehensive R&D endowment that can be quickly pulled through into new hi-tech spin out companies. As a result, in the short term at least, it makes greater strategic sense to focus efforts on the development of a ‘higher technology’ corridor that encourages and supports development and entrepreneurship in technology based industries. Understanding of knowledge-based activity within the business base by the area’s centres of excellence is not well known, and vice versa. Actions to develop awareness and understanding of knowledge based activities on both sides are needed The activities of the Small Business Service will need to be fully aligned with the strategic framework for the corridor’s development, so that the SBS directly contributes to levering-up the technological capacity and competence of the area’s business base The development of a highly skilled, flexible, and competitive work force will be core to the development of the corridor. As the corridor progressively seeks to develop its higher technology potential, the requirement for skills will become ever greater. Ensuing that actions and infrastructures are in place to anticipate, and meet, these skills requirements should be a strategic priority for partners Skill development and training activities will need to be fully aligned with the strategic framework for the corridor’s development. Accordingly, the Learning and Skills Council, partners and employers will need to work closely together to ensure specific and focussed training activities that directly contribute to levering up the technological skills and competence of the area’s business base. Specific actions to develop skills are immediately required in three areas:  Developing a culture of entrepreneurship  Developing enterprise skills  Embedding a culture of lifelong learning At present, the corridor self-evidently lacks any existing product or process cluster that can be immediately exploited. There are two key sectoral groupings which offer clear potential to be developed and grown into formal clusters: polymers, plastics and composites in Telford and advanced engineering in Wolverhampton (though development of these nascent clusters is unlikely to occur in its own right and, as a priority, actions should be undertaken to stimulate and advance them).

Additional research in the region, focussing on “Supporting Effective Internet Adoption in SMEs” (Levy and Worrall, 2002) identified that firms in the area were lagging in the use of modern communications technologies compared to more progressive regions in the UK and elsewhere. Of particular relevance to this study was the finding that “For most SMEs, their failure to plan the introduction and exploitation of new technology is due to management limitations” (Levy and Worrall, 2002). The report revealed that those firms that had not sought to enter new markets or had not innovated in the last year were least likely to have invested in new ICT and to have taken steps to enter the world of e-commerce. The skills development and business issues identified in the Levy and Worrall (2002) report included: Page 15


        

A lack of understanding of the potential of ICT particularly among top managers Management have insufficient skills to think through their business development strategy and how this could change given developments in ICT Management often see ICT in terms of solving an immediate problem rather than as a strategic, business development issue Investment in ICT is often not accompanied by investment in ICT skills development Management teams having little experience, skill or interest in exploiting technology or knowing how to embed technology into their businesses effectively A lack of awareness about how technology can be deployed across the business to encompass more advanced functions (e.g. marketing and inventory management) than simple transaction processing (e.g. book-keeping) Limited ICT skill in-house Limited ability to use consultants effectively Limited financial resources and ability to seek external advice

Both the Black Country and the Shropshire Learning and Skills Councils have recently undertaken workforce research that identifying specific management skills gaps. The Black Country LSC assessment of learning and skills needs in the area (January 2002) identified an under-representation of higher skilled occupations: “The occupational structure of the Black Country’s workforce differs significantly from that of the region and UK. Primarily this is the result of an over-representation of lower/semi-skilled occupations and a corresponding under-representation of higher-skilled occupations.” (p.28). This situation is forecast to change with 36% of the future anticipated skills demand increase being for "people management skills" (p34). The report also identified corporate managers, administrators and professional occupations as likely to sustain the highest growth rates (p.32). However, we would argue that a need for management skills development, implicit from the above, is not adequately reflected in the action plan resulting from the analysis. Where management skills are mentioned they are spoken of as a concern, for example: "The lack of management training offered by firms within the Black Country is a cause for concern. The lack of management skills among SMEs greatly affects their competitiveness and this issue should be addressed, particularly within the manufacturing sector." Although the Black Country workforce has many strengths, particularly in traditional manufacturing skills, the area lacks many of the higher level skills which places it at a relative competitive disadvantage to other regions. At present only 21% of Black Country residents are qualified to NVQ level 4 or above. The proportion varies greatly within the sub-region and varies from 19% in Sandwell and Walsall to 25% in Wolverhampton (p73). It is of some concern for the development of AMS in the region that that the report’s target for achievement of higher level management Page 16


competencies is constrained to NVQ level 4 which, we argue is below the level required for the effective development of AMS. However, it should be noted that the Black Country LSC has secured European Funding of £24 million over 5 years to support skills development, particularly in SMEs. This will help 2,000 companies and over 8,000 employees to access training and development to improve their basic, vocational and management skills and, where appropriate, achieve nationally accredited qualifications (Black Country LSC Annual Plan 2003-04, p.8). We welcome the priorities of the action plan which aim “to increase employer activity in education and training to ensure we meet the modernisation and diversification needs of the Black Country” and "to increase the number of managers in SMEs, owner managers and entrepreneurs who participate in skills development to support the modernisation and diversification of their business and the BC economy, as well as developing their own skills and those of their workforce” (p.11). Similar intentions have been expressed by the Shropshire LSC whose strategic objectives are to “Promote and encourage the take-up of management development activity especially amongst micro-businesses, SMEs and ethnic businesses” (Shropshire LSC Local Strategic Plan 2002-05, p.50) and to “stimulate the development of the local economy by ensuring there is high quality provision of learning to develop entrepreneurial skills and management skills”. However in Shropshire, there is evidence to suggest that it is difficult to motivate managers to engage with learning. Only 3% of the Shropshire population have Level 5 qualifications or higher (the national average was 5% in 2002) and only 39 out of a survey of 179 households had anyone in them with an NVQ4 or higher (Shropshire Household Survey, 2002: p28). These findings indicate strong inter-relationships between business strategy, technology strategy and managerial capability. These inter-relationships have fundamental implications for this research as they demonstrate that a key impediment to the more effective deployment of ICT in local businesses arises because of a lack of managerial capability. 2.3 A distillation of the structural issues affecting the locality While the evidence presented above presents only a superficial view of the totality of evidence available, it does provide a sufficient basis to distil an impression of what are the core structural issues affecting the locality. The purpose of this section is to identify these issues but then to put forward some views about how they will affect the nature of the management development task facing the locality.

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Table 2.1: Issues affecting management development the sub-region 1

Issue Over-reliance on traditional manufacturing, products are markets

2

Low level of innovation in products and processes

3

Competition on price and emphasis on cost reduction Low value adding, low skill occupational structure Difficulty in recruiting Low productivity Low R&D endowments in both local businesses and local HE

4 5 6 7

8

Lack of alignment of skills development provision and needs

9

Immature industrial cluster architectures

10

Lack of a culture of lifelong learning

11

Inability of the locality to move to "high skills" without first moving to intermediate skills

Management development implications The problem of business myopia seems to loom large with too many businesses seeking to stay within the “comfort zone” of existing markets and products. Too many businesses seem to be reacting to the future than trying to shape it. This seems to point to a lack of strategic planning and management skills within local businesses and an unwillingness to confront change. Lack of business development strategies within companies. Lack of knowledge of the innovation process and lack of innovative capacity. Low level of knowledge about process innovation and quality management approaches. Lack of integration between local business and local higher education institutions. Lack of strategic capacity and knowledge of how to relocate the business in the value chain. A function of a lack of strategic capacity in the business as under-developed managers fail to invest in their employees thus perpetuating outmoded occupational structures. The drive to competition on the basis of cost means that wages are depressed and firms develop a poor “HR brand image”. A function of a failure to generate profits for retention and reinvestment leads to outmoded technology and outmoded skills. Over-reliance on traditional manufacturing has led to a lack of investment in R&D, knowledge production and the exploitation of business knowledge as a basis of competition. The lack of R&D in local HEIs indicates that the development of integrated clusters is a long term development The inability of firms to diagnose and articulate their needs which are aligned to their business strategy is a core problem as is the perceived inflexibility of the FE/HE sector. There would appear to be significant information imperfections between demand, supply and business support intermediaries given findings in other localities (Perren, 2002) Research on the development of “innovative milieu” (Camagni, 1995) and the regional industrial cluster strategy emphasises the need for the close and effective integration of industrial complexes and regionally based support and knowledge production bodies. The SQW report would cast doubt on the effectiveness of this locally. The region and the locality have a long history of poor academic achievement across all levels. While much attention has been focused on entry level skills regionally, little attention has been focused on higher level skills clearly with the assumption that any skills issues at the most senior levels in organisations will (somehow) take care of themselves) The SQW report would seem to indicate that the knowledge and skills endowments of the locality are such that a straight progression into cutting edge skills is unlikely and that there is a need to take a more staged and incremental approach my moving from current skill levels to higher rather than high level skills

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2.4 The Regional Policy Context The current study has particular relevance for two of the four pillars of the regional economic strategy: developing a diverse and dynamic business base; and, promoting a learning and skilful region. We argue that developing the managerial capacity of the region is essential to the delivery of many aspects of the regional strategy. Below, we review and critique several regional policy documents and identify that management development can be considered as something of a blind spot in the region. A critique of the FRESA (framework for Regional Employment and Skills Action) Of central importance to this study is the FRESA. Published in October 2002, the purpose of the FRESA is to develop a coordinated approach to addressing regional employment and skills issues to support the delivery of the regional economic strategy. The strategy was based on a participative approach to developing a regional view of what constitutes “a healthy labour market”. While the FRESA covers the 14-19 issues in detail, it is conspicuously silent on in the issues of management development and advanced management development. The paucity of thinking in the document on the theme of management development is encapsulated in the rather pithy statement that “A wide range of management development skills are identified as needs across all 10 key clusters”. (FRESA, Section One, Summary and Action Plan, October 2002). The majority of the FRESA is focused on the lower NVQ levels in the workplace: while actions are clearly needed here, the content analysis of the FRESA reveals that management development and advanced management skills development currently do not seem to register on the public policy radar in the region. Of concern here is the relative fixation with NVQs, which, while they are measurable, do not (we contend) cover the field of advanced management skills (many of which are difficult to measure). Of considerable concern here is the regional blind spot over the issue of advanced management skills. This is of critical concern as we argue that they array of skills here form a bridging link between Pillar 1 (which focuses on building better businesses) and Pillar 2 (which focuses on building a better workforce). We argue that the leadership level in the region's businesses is critical given that business strategy and workforce development strategies will be determined at this level in most organisations. A dysfunction or weakness at this level will have major implications for the effective development of the organisation as a whole. Consequently, we argue that “getting it right” at this level in organisations is a critical determinant of business performance and, ultimately, a critical of regional performance. It is disconcerting that this level is not adequately covered within the FRESA. A critique of the Regional Economic Strategy 2004-2010 (Delivering Advantage) Following from the identification of Pillars 1 and 2 as the critical elements of the regional strategy to which this research relates, the focus here is on distilling the management development issues that each of these pillars contains. The creation of a diversified and modernised economy depends on having business leaders having the capacity, capability and skills needed to transform their businesses and to create new Page 19


businesses that can flourish in a global market. Managing innovation, managing the successful deployment of new technology, managing supply chain relationships, coping with the loss of major customers, developing effective marketing and business strategies are seen as essential components of making this element of the regional strategy work. All these are advanced management skills. Yet the strategy reveals that too many West Midland businesses are still focused on ageing products and difficult markets, trying to compete on price and too focused on low-value-adding products that are at risk of competition from lower wage economies. These all are characteristics of a "low wage/low skill equilibrium" economy: this is a concept we discuss in more depth later in this section. The issue is to break out of the cycle by which competition on price perpetuates low wages and low skills. It also demonstrates that demand-side actions, to change in the industrial culture of the area, are needed if the low wage/low skill cycle is to be broken. Levels of enterprise are also shown to be problematic, as manifest by low levels of self-employment, low levels of business start up 3 and high closure rates. Regional firms, especially SMEs, are shown to have low engagement with business support agencies, and poor awareness of the finance that may be available to them. As the strategy says “It is the willingness and capacity to plan, to think creatively and make best use of resources that distinguishes the really successful business. They are also not afraid to take calculated risks and they have people trained in the skills needed to take business forward and benchmark against world class competitors” (p24). The second critical pillar of the strategy for this research project focuses on the creation of a learning and skilful region. Just as the FRESA is, in our opinion, remarkably thin on basic management skills, and particularly on advanced management skills, the RES reinforces this weakness. Management skills are dealt with summarily in one terse paragraph (paragraph 6.4 on page 34), in which management skills are left largely undefined and the concept of advanced management skills is not mentioned at all. While Higher Level Skills are dealt with in slightly more detail, here the emphasis is on formal learning either through FE or HEIs. As we shall see later, the structure and funding of the FE and HE sector are part of the problem in the development of advanced management skills in businesses, as managers reveal that they are far more concerned with the effective transfer of business knowledge than with the architecture of formal learning enshrined in these institutions. A review of the actions recommended for Pillar 2 reveals that the plan is relatively strong on the mainstream activities of the LSCs, FE Colleges and HEIs, but relatively weak in the area of management development and silent on advanced management skills development. It appears that there is an implicit view that advanced management skills will take care of themselves, while the regional economic and business performance data on which the economic strategy is based reveals that they do not. 3

Indeed, parts of the Black Country have some of the lowest levels of business start up in the UK. Page 20


A critique of the Regional Innovation Strategy (RIS) The RIS was produced in 1999 and is currently under review. The four core elements of the RIS have also been used to assist the development of an advanced management skills framework tailored to the delivery of regional strategies. The four elements of the RIS are based around the following areas, which have been recast to emphasise the managerial skills and capacities needed to deliver the innovation strategy:  





People management – recruiting the people with modern skills, developing existing workforces to embrace new skills, changing the culture of organisations, developing and harnessing specialised skills and knowledge Managing resources – effectively seeking advice and guidance, managing the firm’s relationship with external suppliers, customers and agencies; effectively securing finance to fund development; and managing/exploiting intellectual property Managing knowledge/knowledge transfer – securing and exploiting knowledge from within and outside the company; and effectively exploiting the knowledge in local universities, research organisations, supply chains and consultancies Managing strategy – developing business strategy that reflects national and international development in the technology base; and exploiting the potential for future growth with new products in new markets

We argue that each of the various policy frameworks that exist in the region should be critically reviewed with the objective of identifying what managerial skills (particularly advanced management skills) are needed to facilitate their delivery. While we have attempted this later in the project, we are aware that this is a first attempt and will need to be reviewed and updated as the strategies are continually developed. Our fundamental concern with regional skills policy is that the necessary emphasis on workforce development has not been complemented by sufficient emphasis on management skills development. As senior managers are the key agent of change in many organisations, we are of the view that unless managerial behaviours are changed and skills are developed, it is unlikely that wider workforce development strategies will be implemented. Workforce development issues are also fundamentally being seen from a supply side perspective, despite attempts to engage the business community more effectively. A critique of the cluster strategy The region has a developing industrial strategy based on the notion of industrial clusters. While some might consider this work to be innovative, particularly business gurus like Michael Porter, the notion of industrial clusters has been around since the 1940s. As the regional cluster strategy implementation is still in its infancy, it is important to develop a view of “the business” that will assist in the development of a strategy for the delivery of advanced management skills.

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The regional economic strategy uses the concept of an industrial cluster and has identified ten clusters for the region. These clusters are at different stages of development. While some are established, others are growing and others are embryonic. The clusters have been identified a region-wide basis but some are more concentrated in particular parts of the region. Given that the clusters are at different stages of development and have significantly different structures, customised forms of support will be needed for each one. The clusters are identified in Table 2.2 below. Table 2.2: Industrial clusters in the West Midlands Established 1.

2.

3. 4. 5. Growing 6. 7. 8. Embryonic 9. 10.

Transport technologies - transferable technologies from automotive, engineering, engineering design and materials management, rubber and plastics/polymers. Building technologies - transferable and developmental technologies and products from ceramics, engineering, engineering design & architecture, materials management and recycling. Food & Drink Tourism and leisure - linked to food and drink (hospitality) and creative industries. High value consumer products - tableware, jewellery, glass, leather - all linked by primacy of design. Information and communication technology (ICT) - which has various sub elements including software and telecommunications. Specialist business and professional services such as design, finance, legal, consultancy Environmental technologies Interactive media for education and entertainment - linked to creative and ICT. Medical technologies.

What is interesting, given the focus of this study, is that the analysis conducted in all these clusters has pointed to "management weaknesses" and, in the ICT cluster, a "perceived lack of management maturity". All clusters have identified “management development” as an issue but little work has been done in clusters to define what specific management development interventions are needed. Clearly, the development of management skills is a strand that is needed to underpin the future development of all ten clusters in the region. The strategic framework for the ICT cluster goes on to identify a number of other issues that resonate with the RDT view of the firm we have developed:      

Variable links between the Universities and the sector Weak clustering behaviours within the cluster Low business awareness of regional research assets and resources University to industry relationships are weak Links between businesses and support services are badly developed A weakness of entrepreneurial spirit Page 22


  

A business culture that is parochial and untrusting A lack of managerial maturity Badly developed and badly regarded career structures

All of the items above demonstrate the importance of linkages in the regional economy and reveal that the lack of "managerial maturity" is an issue in the region. An emphasis on developing local clusters is often seen as an approach favouring an endogenous approach to growth. While there is clearly a highly localised emphasis, this narrow view is misplaced, as the objective is to develop an environment or "industrial atmosphere" which is conducive both to endogenous growth and to the attraction of investment from outside the region. This is particularly appropriate in the case of Telford where economic development activity so far has fundamentally failed to diversify the industrial base and to move the area forward in the value chain. Essentially, if the cluster approach is to work it must make the network of interrelationships work more effectively. Within the cluster approach (see AWM website) emphasis is placed on the following:                 

Local entrepreneurship The creation of an institutional setting conducive to entrepreneurship Adding value to local resources through innovation and good design Close competition and co-operation between firms Effective linkages and relationships between the demand and supply sides The effective operation of intermediaries such as business support agencies Effective inter-relationship between businesses and local centres of expertise in Universities etc An intricate network of often informal relationships A strong psychological sense of local identity An effective education system to produce well-skilled workers An economy and local business psychology with the capacity to regenerate and restructure An emphasis on innovation over the quest for cost reduction leading to change in the basis of competition of many firms Fast reactions and an ability to create and imitate The capacity to shift resources from declining to growing product markets The more effective creation of business knowledge and know-how Moving to highly integrated systems of production with high levels of task specialisation The "socialisation" of the education system into the industrial structure leading to the diffusion of learning and knowledge production

Of particular importance here is the Finance and Business Services cluster, given that it comprises accountancy practices, legal practices, management consultancies and more specialised business services such as marketing and design. We see this cluster as being of primary importance in supporting and enabling the development of other industrial clusters in the region. It is thus disconcerting that our face-to-face research with local businesses and key informants from intermediaries has raised a number of Page 23


concerns about the quality of some locally based management consultancies, accountancy practices and banks. Recognising the substantial emphasis being placed on the development of clusters in the region, we consider it essential that each cluster places far more attention on the development of the management capabilities needed to deliver each cluster's strategic agenda. We also see the Business and Financial Services cluster as crucial to regional and business development. 2.5 The business and its links to its external environment All businesses exist within an operational environment, and some writers on strategy emphasise that the function of strategists within firms is to maintain a degree of fit between the business and its environment. The external environment not only contains the market for the products of any business but it also contains its actual and potential supply of workers; its sources of finance; its suppliers of raw materials; its sources of competition and, increasingly, its sources of knowledge and business support. This, in the business strategy literature, is known as "Resource Dependence Theory" (RDT) (see Hatch, 1997, p78): essentially, the business can be seen to exist within a network of actors (see Figure 2.1). Figure 2.1: Resource dependency theory

Chambers, CBI, IoD, Trade Associations

Banks

Accountants

Professional bodies Continuing Professional Development

Actual and potential workers Lawyers

Suppliers

Business

Education and Training

Informal social networks

Customers

Consultants

Universities Innovation

Business support bodies

Competitors and collaborators

Within this scenario, the competitiveness of firms will largely depend on how senior managers within firms learn to exploit the resources available outside the firm to help it to become more competitive and productive. Clearly, the better senior managers understand how to manage relationships in this environment, the greater the likelihood that their firms will be able to identify, capture and effectively exploit the Page 24


external resources available to the firm. The prime risk of firm dysfunction here is the lack of flow of information between the firm and its very complex environment. A recent report by on management skills development in Canada by Industry Canada (Newton, 1995) identified that there were significant problems that could be located within the RDT framework: 

   

Managers were often insular and myopic in that they were more focused on short term issues within the business than with developing a better strategic fit between the business and its environment by making better use of the resources within that environment While resources clearly existed in the environment, many managers were unaware of the existence of these resources as information flows were ineffective or badly crafted and managed Some managers were unable to articulate their needs effectively as poor firm managerial environments often bred poor managers Resources were often seen as too expensive, delivered in a way that rendered them useless to the business Resources were often seen as supplier-driven rather than demand-led

Of key importance here is the link between the regional business base and the region's universities. These are often the source not only of innovation and R&D but also of management development training, business advice and consultancy. While there are currently links between the region’s key agencies and the Universities, discussions with several businesses in the sub-region identified that they were unaware of the nature of "the offer" and the services that universities could provide. Perhaps there is a need to develop a more effective "portal" between businesses and the universities locally (Dahlstrand, 1999; Kailer and Scheff, 1999; Mason and Wagner, 1999) as an integral element of the regional cluster strategy. It is interesting to note that research on the West Midlands and the sub-region has identified many of these problems, and it is at least comforting to note that the region is not unique. There is a sizeable body of literature showing that the issues and problems facing managers - particularly in SMEs - are becoming far more complex. A recent report by the Small Firms Enterprise Development Initiative (SFEDI, 2002, p7.) argues that: "Effective management will require a very broad range of abilities, from narrowly defined skills through to certain personal behaviours and attitudes. Know-how will need to be accompanied by know-that (knowledge), know-why (understanding), the ability to cultivate and learn from networks of external relationships". (SFEDI, 2000, p.7) Since we are using resource dependency theory as a basis of the research, we consider it essential to add “know-who” to "know-that", “know-how” and “know-why”. From this notion of RDT we can develop a three level hierarchy in which advanced management skills can be developed:

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  

Level 1: The capacity to manage the firm’s relationship to its external environment to capture knowledge useful to the development of the firm - the business strategy level Level 2: The ability to internalise knowledge from outside and inside the organisation to reconfigure the organisation, reorganise work and manage and develop workers in radically new ways - the organisational development level Level 3: The ability to develop managers and workers to deliver the organisation's mission and objectives - the management and workforce development level

We see advanced management skills as primarily operating within these three levels and consequently this research into AMS is fundamental to the integration of Pillar 1 and Pillar 2 of the region's economic strategy. A key advanced management skill is the ability of senior managers in firms to manage their external relationships effectively so as to capture management knowledge and skill from the environment of the firm. Consequently, making the complex web of inter-relationships work better is fundamental to building better businesses and helping firms to operate more effectively in this web is fundamental to regional development. As a firm seeks to manage its relationship with its operating environment and, more particularly the network of actors within it, it must continually seek to change from within. It is not sufficient for firms to capture knowledge and skill from outside the firm, they must be able to internalise those changes through organisational development. The areas where change will be manifest are the: structure of the organisation, the technology platforms that firms use in the production process, the nature of the production process, the basis of competition; the mix of occupations and skills, and, the sophistication of the goods and services being produced. The business literature is full of recent innovations in the way that business is now conducted: these include kaizen; TQM; business process re-engineering; lean production; knowledge management and many others. Many of these initiatives have been driven by development in the operating environment of firms and, in sectors like the automotive sector, the most effective driver of change has been large employers who have required their suppliers to radically reinvent their production processes. Consequently, we see the capacity for organisational development as an area where advanced management skills are situated. A clearer understanding of the dynamics of organisational development should also help us produce a stronger insight into what AMS are needed. Given the regional policy focus on clusters, it is important embed the RDT view of the firm into the notion of clusters. The resource dependency view of the firm links very closely into the notion of an industrial cluster as developed in the region and into the notion of an “innovative milieu” as outlined by Camagni, 1995 who sees the notion of an industrial cluster as an effective vehicle for improving European lagging regions. He defines an innovative milieu as: “The set of relationships that occur within a given geographical area that bring unity to a production system, economic actors, and an Page 26


industrial culture, that generate a localized dynamic process of collective learning and that act as an uncertainty-reducing mechanism in the innovation process". (Camagni, 1995, p320) We regard this notion of industrial clusters and the resource dependency view of the firm as critically important. The competitive edge of firms will depend on how well senior managers either do, or can learn to, manage their relationships with a range of external providers and agencies. Again, we echo the regional economic strategy that identified that “It is the willingness and capacity to plan, to think creatively and make best use of resources that distinguishes the really successful business". 2.6 Breaking the low skill/low wage equilibrium: developing new work practices The study area is acknowledged to be a low speed sub-regional economy in a region characterised as "three speed". Skills problems here are not superficial and are deeprooted in the sub-regional economy: Westhead (1998) cites Keep and Mayhew (1996) who argue that a low demand for skills and training is, in part, due to "product market strategies based on a concentration of simple, standardised products and services on low cost, low skill competition (which) creates a weak demand for skill. This weak demand for skill within the economy reduces the incentives to training, which in turn produces a poorly skilled workforce". This cycle has become known as the "low skill/low wage equilibrium" in which problems on the demand-side of the economy are seen to perpetuate low skills. We present this cycle as Figure 2.2. Consequently, policy prescriptions focused on reinventing the basis of strategy in businesses, reinventing organisational structures, reinventing the way that work is organised and rethinking the way that workers are managed and developed need to be central to the regional strategy. In this section, we explore some of these issues. Concerns about the prevalence of this cycle in the UK economy, and particularly in lagging regions, is reflected in recent DTI thinking on developing Human Resources (HR) practices to promote improved business performance by radically reinventing forms of work organisation and levels of employee involvement both of which require managers radically to change their behaviours and develop new skills. The DTI’s recent publication focusing on "High Performance Workplaces" and the need for more enlightened forms of employee involvement in a modern economy4 (July, 2002) discusses styles of management and comments that “command and control is no longer a sufficient model” indicating that a more collaborative framework for employee involvement is needed to harness the talents of all employees.

4

High performance workplaces: the role of employee involvement in a modern economy. Discussion Paper, July 2002. London: DTI Page 27


One of our case studies (FinServCo) is a good example of how an organisation has been transformed from a Tayloristic organisation to one that exhibits the traits of a high performance work place: [FinServCo] "was very directional – people did not think, they waited to be informed about what to do. This is now changing and people are working more together in teams and are beginning to take initiative to solve their own problems rather than waiting for someone above them to take the decisions affecting them". Figure 2.2: The low wage/low skill equilibrium5

The DTI report goes on to argue that "A modern forward-looking business does not keep its workers in the dark about important decisions affecting them, it trusts them and involves them, striving for leadership at all levels". Yet, the CIPD (2002) argues that only a minority of senior business leaders consider people management to be a top strategic priority and Keep and Payne (2002) reveal just how difficult it can be to break the mould. Mole (2002) identifies what he terms "organisational imprinting" which is the tendency for firms, especially SMEs, to adopt attitudes, behaviours and routines that were current at the time of their birth. Clearly, the task is to erase and modify this imprinting: the perceived need to "erase" is often triggered by a critical event in the firm's existence such as a management buy out. The key question locally is how can the BCWT area break out of this cycle? If it is the case that the cycle is driven by defective business strategy, then interventions that address skills issues rather than involving the transformation of the competitive basis

5

Page 32 of "In Demand: Adult Skills in the 21st Century", Performance and Innovation Unit Report December 2001. http://www.cabinet-office.gov.uk/innovation/2001/workforce/report/index.html Page 28


of the sub-regional economy are unlikely to be effective. If businesses are to be transformed, the sub-region needs much more effective managers. 2.7 Summary and key issues The purpose of this section has been to set the local, sub-regional context for the research into advanced management skills that is to follow. The sub-region has certainly been shown to have its problems in that it has been characterised as a third speed sub-region in a region that is far from the top of the list in terms of competitiveness, productivity, enterprise and innovation. Attention here will not be focused on the catalogue of economic, infrastructural and workforce development issues affecting the area; rather the objective is to identify the situational factors affecting the area impinging on the development of policy and strategy for the development of advanced management skills. Simply taking a supply-side view focusing on the development of more training is likely to be ineffective. Rather we need to look within businesses as we argue that urgent attention needs to be focused on encouraging firms, and particularly senior managers in firms, to radically reconsider the way those firms operate. Too many local firms are competing on price; too few are developing new products and services; and, too few are seeking to exploit new markets. More firms need to reposition themselves in the value chain. However, these are not trivial tasks. More firms need to receive a wake up call that forces them to understand that their current mode of competition is no longer appropriate; and unless they radically reinvent their ways of doing business then the future is likely to be bleak. This will require senior managers in firms building new skill sets that will enable them to become better strategists, better innovators, better at reading markets, better at recruiting and developing new people, better at redesigning business processes, better at managing risk and better at managing their relationships with a host of service providers, intermediaries, customer and suppliers. While this might seem a daunting task, we have identified eleven businesses based locally that have made these transitions and engaged with new forms of strategy, repositioned themselves in the supply chain and radically changed the way that work is organised. Their experience has been investigated and reported in Section 7 of this report. The emphasis on cluster development and the view of firms as existing in a complex network of agencies also implies that the processes which lead to the efficient matching of the demand for and supply of advanced management skills must be made to work better and that the role of intermediaries in that process is clarified and made more effective. The central question facing the sub-region is: how can we build better companies by creating more skilful managers? The next section of this report examines the rich literature on management skills in order to construct a clearer understanding of what a more skilful manager is and can do.

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SECTION 3: ADVANCED MANAGEMENT SKILLS – WHAT IS THE CURRENT THINKING? 3.1 A review of current literature on advanced management skills – in search of a framework. The purpose of this section is to define what is meant in this report by the term advanced management skills and to build a framework of advanced management skills (AMS) that both reflects current thinking generally but is, at the same time, embedded into the various regional policies that exist to modernise and diversify the regional economy. Particularly insightful has been the material that has recently emerged from the Centre for Management Excellence and Leadership, which identified a key problem that has affected this study: “There is widespread agreement that the skills required at all levels of employment have been steadily increasing. This is particularly true at managerial levels, in addition to which managerial skills are being required in many occupations in which they were not previously needed. However, there are no reliable measures of skill gaps at managerial levels.” (CEML 2002). Management is estimated to be the primary occupation of 13.4% of the British workforce (Tamkin et al. 2001). Bosworth (2002) estimated that there were 4.1 million managers in the UK. It might seem surprising that reliable measures of skill gaps are hard to come by, given that in 1996 a sample of 1000 West Midlands CEOs identified that management skills was a regional weakness and that improving management skills was one of the two most important factors in improving the region’s competitiveness (Worrall and Cooper, 1996). Advantage West Midlands have also pinpointed a shortage of management skills across the region’s ten industry clusters (AWM 2002). A recent study by the EAMA (2003) identified “the quality of the management team” as the most important factor affecting the success of SMEs in engineering but went on to describe the Small Business Service, Business Links, Regional Development Agencies, the Manufacturing Advisory Service and the Banks and other investors as having either a negligible or negative impact on the profitability of manufacturing SMEs. The managerial skills base of the region is clearly problematic and our concern is that the pace of change in the environment of the firm is presenting challenges to managers and leaders that have never been confronted before. The question about the quality of UK management has been a thorny issue for many years and the saga of management incompetence, worker resistance and industrial disharmony in the UK probably has no better negative stereotype than the industrial history of the British Leyland/Rover Longbridge plant. Recent research has revealed three very important issues that affect this study. First, UK businesses make relatively poor use of the skills they already have - for example, Felstead et al. 2002, p48 show that 34% of graduates are in jobs that do not require a degree (if this is the case, and the UK economy cannot create jobs in sufficient numbers for the graduates we already have, why are is it government policy to produce yet more graduates?).

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Second, UK businesses are failing to engage with modern forms of business organisation that create the need for higher and more refined management skills - for example, there is now a growing literature on the concept of the "high performance work organisation". The DTI has recently published a discussion paper entitled "High Performance Workplaces: the role of employee involvement in a modern economy", July 2002. Yet a recent study (by Guest et al, 2001) shows that even businesses that often see themselves as leading edge organisations are failing to engage with progressive management practices and (more worryingly) that many of their interviewees did not know what terms like "job redesign" actually meant (often confusing the term with attempts to leverage more productivity than with enhancing managers' role clarity or task autonomy). Third, a number of authors, notably Huselid (1995, 1997) have identified that training alone is unlikely to be effective in enhancing productivity or making an impact on the bottom line (a point reinforced by Keep and Mayhew, 2002 who were unable to make a compelling case to convince either public bodies or businesses that investment in training would positively affect the firm's bottom line) rather a complementary bundle of HR and organisational development interventions are needed. Consequently, it is our strong contention that many of the problems of advanced management skills development lie in the demand-side of the economy and that the solution to these "skill problems" lies not solely in the supply-side by producing more courses (maybe better courses), but in encouraging firms to reinvent themselves to create high skill jobs. This finding might fly in the face of the plethora of supply-side interventions that have characterised public policy in this field for the last twenty years but it might help explain why these interventions have not been successful. Here we present a wide-ranging review of current literature and information on management skill needs, with a three-fold intention:   

To identify what is already known about management skills and skills gaps in the UK generally, and locally in the West Midlands To identify what gaps remain in our knowledge, which research needs to address To construct a framework, based on 1 and 2 above, for analysing advanced management skill needs and reviewing the kinds of opportunities available in the region for managers to acquire and enhance their skills.

In order to clarify how we got to where we are today, the first section presents a brief overview of how ideas about management skills evolved during the 20th century. Such ideas shaped beliefs about the priorities for management action and management development, and reflected the industrial and market realities of the time. They are familiar to many managers and business leaders who followed management courses in the 1980s. While the conditions in which our organisations are operating have changed radically in the last ten to fifteen years, management skills have been slow to catch up, and traditional frameworks for understanding the role and the skill of the manager and/or the business entrepreneur are no longer adequate. The second section reviews more recent literature to identify current thinking about management skill needs, with an emphasis on “advanced management” and Page 31


leadership. The term advanced management skills is not intended to denote, necessarily, an elevated position in an organisational hierarchy. Indeed, in smaller or flatter organisations, where a hierarchy hardly exists, advanced management might be more evident. Rather, those attributes of management that could be termed “advanced” represent a growing self-awareness and sophistication on the part of the individual manager, and a stronger sense of him or herself in the role, coupled with a growing ability to deal effectively with contradictions and uncertainties in the environment (Fisher, 1996). Several paradoxes and problems emerge here, such as the apparent, but unclear, distinctions between management and leadership on the one hand, and the manager and the entrepreneur on the other. Is it feasible to assume that they have the same needs when their roles may be diverse? What can current research tell us about this? There is a vast amount of writing available on this subject that fills the pages of management magazines and the shelves of airport lounge bookstores. This review has narrowed down to those studies which are a) based on empirical research and therefore backed by reliable and valid data, b) contemporary, most being published within the last five years, and c) from authoritative publications, such as government or institutional reports or refereed journals. Other items which support or challenge key points, illustrate a key point, or, in a few cases, offer a radical alternative view supplement this “core” of the literature. In the third section of the review, several contemporary frameworks for management skills are analysed and compared, to identify areas of overlap and difference. In the nine selected for examination and comparison, the degree of overlap on certain themes is striking. The main theme that emerges from this section is that advanced management skills needs are not only are intensifying, but are changing fundamentally; away from a traditional emphasis on systems and information control towards a focus on people and knowledge. Not only are current studies pointing to a need to shift attention towards managing people and relationships, but the “advanced” manager is also required to change internally, to adopt new ways of thinking, even, in some cases, new ways of being. The challenge to management education and development, let alone to managers themselves, is formidable. This is not to say that the “traditional” or more functionally oriented skills have been supplanted entirely and that the established skills of finance, information management, quality management, and deep industrial knowledge are no longer relevant. On the contrary, to compete, organisations must become more quality and cost conscious (CIPD, 2001) – transformational and transactional skills are both essential. Rather the skill of the senior manager or the owner-manager is to harness and adapt systems and processes to fit into a changed and changing organisational context. The key change factors identified in the literature include: an accelerating rate of technological change; intensifying competition (including globalisation of competition); new forms of relationships with customers and suppliers; and, diversity in the workforce. These factors are driving the imperative to innovate, while simultaneously increasing uncertainty and risk: Only if managers and workers rise to the high productivity challenge will they prosper and remain secure in the modern marketplace…. Private sector organisations that fail to enhance productivity risk losing Page 32


market share, are likely to experience a cut in profits and will ultimately face the wrath of discontented shareholders. (CIPD, 2001: 12) The final section draws on the literature review material to present an integrated framework for analysing management skills needs and reviewing what provision exists to meet those needs through management development, management education, and other learning opportunities. 3.2 Management skills – how have the ideas evolved? “You no longer control your assets as you used to. The assets own themselves” (Handy, 1995: 184). The questions “what makes a good leader?” and “what are the essential skills of the manager?” have exercised practitioners and researchers for decades, and have never had definitive answers. The dominant ideas, theories and practices which have shaped today’s British manager can be traced to three main roots, reaching back to the heyday of industrialism and extending through the second half of the twentieth century. Most major companies today are organised in a way that incorporates at least some of the thinking of the earliest writers on management and leadership (Huczynski and Buchanan, 1991). Unfortunately, some commentators have identified that too many UK organisations are locked into neo-Fordist, cost-based competitive strategies with associated Tayloristic forms of work organisation that perpetuate low skill (Keep and Mayhew, 1998). These authors argue that supply-side interventions to upskill the workforce will be largely ineffective unless complementary demand-side actions are taken to change the basis of competition in firms, to redesign jobs and to change the way that employees are managed and developed (Keep and Payne, 2002). This is an issue we consider of fundamental importance in the region given that it demonstrates the strong inter-dependence and the need for complementary policies between two of the main pillars of the regional economic strategy (a diverse and dynamic business base and a learning and skilful region). The roots of management skills The first root of knowledge about the role and skill of the manager is “classical” management theory, originating in the first decades of the 20th century with the work of Henri Fayol and others. Fayol put forward a classification of the main operations to be found in a business which can still be discerned in a typical business today – technical, commercial, financial, security, accounting and administration (or management, subdivided into organising, coordinating, commanding, controlling and planning). The contribution of the classical writers was to attempt to establish a set of universal principles for management based on rationality, the “logic of efficiency”, and observation from experience. Some of these principles include concepts of hierarchy, unity of command, span of control, and specialisations, all of which still have a firm place in business and public organisations, large and small. Although not a particularly coherent body of thinking, the classical school’s approach of learning from experience has survived, and is evident in the mountain of business books and case studies that present the experience of a successful entrepreneur or business leader, attempting to distil the universal lessons that can be applied in any business, at any time (Johannessen et al., 1999). We can also see the influence of classical Page 33


thinking in the Management Standards Centre’s current attempts to define a universally-applicable “functional map” of management, which will be featured later in this section. Going back to the tenets of Scientific Management, the chief exponents of which were F W Taylor (1947), F B Gilbreth (1908) and H L Gantt (1919), we see the second root - a development and refinement of measurement techniques applied to the study of mass production manufacturing, and a recognition of the need to apply scientific principles to the problems of work performance. Their ideas formed the foundations for later techniques of technology and work organisation, which in turn influenced dominant thinking about organisational design along functional lines. In spite of challenges from organised labour on the one hand and the competing theories of the Human Relations School on the other, the underlying philosophy of Scientific Management remained the basis of manufacturing systems until the advent of new informational technologies in the 1980s (McLoughlin and Clark, 1988; Bartlett and Ghoshal, 1995). It thus has an enduring impact on traditional approaches to management in the West Midlands. The Human Relations School is generally understood to have developed as a response to the shortcomings in practice of the Scientific Management and “Classical” approaches, being based on a study of human behaviour rooted in sociology and psychology. According to the traditions of this branch of management thinking, the manager needs to understand the inner motivations of the workforce, and the social dynamics of groups and teams, in order to be able to get the best performance and thus maximise productivity. Skill sets for the 21st century It is possible to discern these three traditions or roots in the ideas and practices that shaped management and leadership in the post-war industrial heartland of the West Midlands. They also help to explain the pattern of provision in standard management education offerings such as the MBA, which encompass the broad spectrum of management knowledge and which tend to balance “hard” management skill areas such as managing operations, financial management, managing information and project management techniques, with so-called “softer” skills of managing people and leading teams. Subsequent thinking about management and leadership, and the essential skills for management, has drawn on these roots to develop ideas about management style (managers need to develop a repertoire of styles and a set of analytical skills to know when to apply them); the “functional” skills of general managers (managing operations, quality management, financial management, information management, technical aspects of human resource management, and marketing); and the skills of working with teams. Recent years have seen attempts to integrate these approaches in holistic quality development tools such as the Business Excellence Model (Kanji, 1998). Also, as organisations have become more complex, a differentiation between the skills of general or middle managers and those of “top” managers has emerged, giving rise to an emphasis on qualities of leadership, the idea of “transformational” leadership, and strategic management. Page 34


One of the most influential new managerial schools of thought focuses on learning and the learning organisation. Responding to the imperatives for constant improvement, continuing change and innovation, the focus is not so much on the individual as on the capacity of the organisation as a whole to learn. Yeung et al.'s (1999) key concept, 'organizational learning capability', is defined as the organization's 'capability to generate and generalize ideas with impact (change), across multiple boundaries and practices (learning), through specific management initiatives and practices (capabilities)' (p. 11). Organizational learning capability consists of the three building blocks:   

Generation (acquiring, discovering, inventing and sourcing ideas); Generalization (sharing ideas across boundaries within the organization); and Identification of learning disabilities (detecting and correcting problems that lead to failure in generation and generalization).

Organizational learning capability is important because it mediates the influence of the organization's business context (which consists of industry characteristics, business strategy, and business culture) on the organization's business performance (i.e. its innovativeness and competitiveness). The themes resonate strongly with aspects of the regional economic and innovation strategies. Yeung et al. (1999) present a comprehensive model integrating organizational learning with the literature on business strategy ( Porter, 1980) and organizational culture (Quinn, 1988), and the literature on transformational leadership and teamwork. Gibb (1997) focuses specifically on the issues related to SMEs of adopting a learning organisation perspective to management development. The concept of the learning organisation takes management skill into a new dimension and any framework for the development of advanced management skills in the region must reflect this fact. 3.3 Competency frameworks The Management Charter Initiative, founded in 1989, was charged with identifying, from mapping management skills in practice, what were the essential occupational standards and competencies to form the basis of National Vocational Qualifications in management. This work was taken over in 2002 by the Management Standards Centre, which is a branch of the Chartered Management Institute (formerly Institute of Managers). Through a period of occupational mapping and consultation, MCI established a framework of seven key roles of managers, at various levels, each role having a set of key tasks or accreditation units attached to it. One of the major and most significant innovations of the MCI approach was to emphasise what managers actually do, rather than their abstract body of knowledge. Thus, the required knowledge and attitudes followed from the required activities, rather than activities following from abstract or theoretical “subject areas”. An advantage of this approach in terms of management was that it appealed to the highly pragmatic nature of British management. The seven original “key roles” were:    

Manage People Manage Activities Manage Information Manage Resources Page 35


  

Manage Energy Manage Quality Manage Projects

Each unit in turn comprised a number of “elements”, which each have a statement of requisite knowledge attributes. The MCI competences approach was welcomed as a sign of growing attention being paid to the notion of the competent professional, and to doing (outputs) rather than knowing (inputs) (see Jessup, 1991). It is supported by an empirical study of university management (Thompson and Harrison, 2000), which offers evidence of the validity of the standards and their usefulness as a platform for management development. But it has also been subject to harsh criticism for presenting only “a partial and fragmented view of the complexity of managing” (Jacobs, 1989; Burgoyne, 1989 and 1993; Everard, 1990; Grugulis, 1998). The notion of a universal set of standards is questioned by Mangham and Silver (1986), who argues that what managers do is determined by such variables as a manager’s function and level and by the size and structure of the organisation that the manager is located within. Jirasinghe and Lyons (1995) attempted to answer this problem by offering a framework for competences at three levels: generic management competences, occupational specific competences, and organisational specific competences. Generic competences reflect the traditions of the “classical” tradition in management thinking, that there exists a set of generic functions and tasks which a manager at a given level, time or place performs, and occupational and organisation specific competences may be understood to embed the contingency management approach (McAuley et al., 1997). A new functional map of management (to include all levels of manager and ownermanagers) is currently being undertaken by the Management Standards Centre (MSC), and this is due to be published later in 2003. The process consists of agreeing the key purpose of the occupation in question, in this case management, and then, through a series of iterations, asking the question “What needs to happen for this to be fulfilled?” An interim report on Stage 1 of the process, incorporating a questionnaire to 3500 organisations and individuals (to which a lamentable 202 responded), has been prepared and followed up by a revised Functional Map (Table 3.1). The new map consists of six key roles with subsets of functions. Each of these 15 subsets is made up of a number of separate functional statements (subset 15 – manage yourself - being the largest comprising 12 functions). This functional map aims to stake out a model of “good practice”, while also being comprehensive. The next stage will be to derive “units of competence” from these functions, which will then form the basis of national qualifications and management training schemes.

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Table 3.1: Management Standards Centre - Functional Map Role Providing direction:

Functional subsets 1) Develop a vision for the future 2) Gain commitment and provide leadership 3) Provide governance 4) Facilitating change 5) Lead innovation 6) Manage change Achieving results: 7) Lead business operations and projects, 8) Meet your customers’ needs Working with people: 9) Build relationships 10) Develop networks and partnerships 11) Manage people Using resources: 12) Manage financial resources 13) Procure products and/or services Manage physical resources and 14) Manage information and knowledge technology: Managing self and personal skills: 15) Manage yourself At this stage, there is no attempt to define at what levels of management these functions are carried out. This attempt at comprehensiveness is ambitious, and risks burying aspects of combined enterprise ownership and management within the SME under sets of standards that are more suited to the larger corporate or public sector organisation. However, the MSC survey data set shows that 31.3% of the respondents were from SMEs. Taking into account the fact that only 33.8% of the respondents were from the private sector, we can conclude that, for the time being at least, the perspectives of SMEs are being represented in the exercise. 3.4 In search of Advanced Management Skills The idea of “advanced management” may conjure images of senior and top managers in large organisations. Or, it might denote high levels of responsibility and/or risk, such as might be taken on by an entrepreneur staking all on an innovative product. Alternatively, “advanced management skills” might be taken to mean an advanced quality of skill, which could be displayed at any level of management. For example, Spencer and Spencer (1993) categorised competencies into:  

Threshold competencies - which were essential characteristics, knowledge or basic skills, that everyone in a job needs to be minimally effective, but that did not distinguish superior from average performers, and Differentiating competencies - which distinguished superior from average performance.

The concept of advanced management skills that this project proposes as being critical to regeneration, innovation and re-energising of business in the Black Country and Telford-Wolverhampton corridor is in fact an integration of all these meanings, but with an emphasis on the responsibilities for direction and leadership shouldered by entrepreneurial managers and owner-managers within SMEs. Recent trends such as Page 37


the quality movement, with its emphasis on team working and downsizing, have heightened the complexity of the roles of middle managers. With wider spans of management control, having lost an element of personal productivity through having to delegate more operational control, middle managers have demanded more autonomy and responsibility from senior managers, particularly in flatter organisational structures. So it is therefore unrealistic to make arbitrary distinctions between the skills needed for “top” management and those for middle management. A number of writers have put forward the idea of meta-competences, described as “the overarching ability under which competence shelters” (Brown and McCartney, 1995). Meta-competences are higher order abilities to do with being able to learn, to create, to anticipate and adapt. In recent years, these higher order abilities have become a critical feature of revised frameworks for understanding leadership skills and they provide a key to a meaningful concept of “advanced” management, which does not depend necessarily on position in an organisational hierarchy, but on the capacity to deal creatively with uncertainty, even chaos (Grint, 1997; Lucas, 2001, 2002). Thus we can think of “advanced management skills as being 3-dimensional:   

Qualities and competencies needed and employed by people in senior management positions in terms of level in the organisational hierarchy, degree of responsibility, or span of control Qualities and competencies that distinguish excellent management performance from “just good enough” performance. Qualities and competencies that are intrinsically more “advanced” in terms of being essential for effective performance in complex, uncertain, and personally and/or technologically demanding conditions (for example in innovation), as opposed to those required for managing in routine or steady state circumstances.

3.5 Leaders and managers Leadership is a thorny issue in management studies. Are we talking about people who occupy senior management positions when we talk about leadership, or does the concept of leadership apply to anyone, regardless of their position in an organisation who takes on a leadership role? The question whether leaders are born or made has fascinated many writers of history, politics, strategy, business and drama since Shakespeare. Current business literature is split on the issue (Senior, 1997; Senter and Sims, 2002). Adair (1997) has provided a simple and elegant model for leadership (balancing task, individual and team development) based on the assumption that managers can, and should aspire to be excellent leaders within their sphere of influence. In comparison, Sorcher and Brant (2002) suggest that management and leadership are fundamentally different things, asserting that firms often make the mistake of promoting the wrong people into leadership positions because they mistake the qualities of a good manager for the qualities of a leader. For example, a person who is adept at a consensus style of management might find it very difficult to make unpopular decisions, and prevaricate. What is more, consensus managers often tend to surround themselves with people like themselves, which might reduce the range of thinking within the organisation, and thus suppress creativity and innovation. The Page 38


best leaders, according to Sorcher and Brant, are not team players, and may even find it difficult to work in a group. Exceptional leaders are people who have the confidence to take risks, and one of these risks may be to choose people unlike themselves to take key positions. Sorcher and Brant also take issue with the idea that operational proficiency is a good indicator of leadership potential, suggesting that managers who show a high level of operational efficiency are often too wedded to systems and procedures that prevent firms from doing anything in a new way. Furthermore, superior problem-solving abilities (in operational terms) may mask a deficiency in conceptual, long-range or strategic thinking. Considering ambition, which might be expected to be a key characteristic of leaders, they assert that many great business leaders are in actual fact people of considerable personal humility, although they do possess a strong internal competitive drive. While the balance of Sorcher and Brant’s argument is that leadership is a function of personality, Bennis and Thomas (2002), in the course of their research on leaders, found that all those whom they interviewed were able to point to a transformative experience in their life that had shifted their perspective and “made” them leadership material. They discuss four essential skills they believe great leaders possess:    

the ability to engage others in shared meaning, a distinctive and compelling voice, a sense of integrity (including a strong set of values), and 'adaptive capacity,' i.e. an almost magical ability to transcend adversity and to emerge stronger than before.6

Of these, the last, adaptive ability, is seen as the most important, and consists of two elements, hardiness (the toughness to confront adversity without losing hope) and the ability to grasp context. Grasping context implies an ability to weigh a welter of factors, ranging from how very different groups of people will interpret a gesture to being able to put a situation in perspective. Without this, suggest the authors, leaders are utterly lost, because they cannot connect with their constituents. Goffee (2002) suggests that, far from presenting themselves as particularly exceptional people, leaders can connect more effectively with their constituency if they recognise and own up to the flaws in their personality or skill sets. Openness, and the willingness to share problems, can increase rapport, which is essential to developing effective relationships. 3.6 SMEs and Entrepreneurship Not only in the West Midlands, but in Western Europe as a whole, SMEs are a significant part of the economy. However, particularly in the West Midlands, too many SMEs are competing on cost, in well-established product markets with relatively standardized goods and services. This modus operandi will hardly be viable in the near future for SMEs as firms increasingly have to compete more and more 6

Those experiences (which they term “crucibles” for the intensity of their effect) were in almost all cases traumatic or very challenging situations. Typical situations involved being the victim of unexpected prejudice, confronting violence or life-threatening situations, in one case imprisonment. Page 39


with low cost companies from Eastern Europe and developing countries (a fact that was reported in several of the case studies to be reported later). To survive in the global economy they will rather have to seek to continually improve products and processes, providing customers with innovations that add value, and they will have to develop learning capabilities. According to Corso et al (2001), based on a study of SMEs in Northern Italy, this entails developing and exploiting their intellectual capital in more and more complex networks of knowledge-intensive relations inside and outside their boundaries. This view is entirely consistent with the resource dependency view of the firm outlined later and the industrial cluster strategy that is being developed in the region. SMEs are more at risk from volatile market conditions than large organizations (McAdam, 2002), and have little effective control over the market environment: as Westhead and Storey (1996) point out external uncertainty is a particular problem for SMEs. However, on the other hand, the relatively informal, flatter and highly centralized structures of SMEs allow them to be more flexible and responsive than larger organizations (Hale and Cragg, 1996) and thus they have the potential to be more entrepreneurial. However, the West Midlands region has lower rates of selfemployment than other regions, suggesting a weaker entrepreneurial culture, especially in the Black Country and parts of Birmingham (AWM, 2002). What is needed is a focus on the advanced management skills that will underpin the development of a more entrepreneurial culture through the creation of more innovative businesses. Vandermerwe and Birley (1997) coined the term “the corporate entrepreneur” (sometimes known as “intrapreneur”) to describe the change agent role of the manager within a corporate business environment who provokes and leads a process of organisational transformation. Hauschildt and Schewe (2000) define successful innovative organisations, those that drive technological change rather than follow it, as agile organisations, and describe the style of entrepreneurship needed as follows: “This entrepreneur creates new combinations on a discontinuous basis, in totally new forms, in an act of creative destruction. He/she brings forth new products, introduces new production methods, opens up new markets, conquers new sources of supply or re-organization. That means, that the dynamic entrepreneur is highly responsible for the agility of organizations. Looking at this, the management of innovations is without doubt a cornerstone in securing the agility of enterprises, where agility not only means to react quickly to changing technology as well as changing markets but also to be responsible for technical and market change” (Hauschildt and Schewe, 2000) A study by Perren (2002) carried out an analysis of the semantic “shared territory” between entrepreneurship and leadership, and those areas where they differ. It shows that entrepreneurship and leadership share the qualities of personal drive, innovation and vision, and risk acceptance. Entrepreneurship is more associated with belief in control of events, ambiguity tolerance, need for independence and identification of market opportunities. Leadership, on the other hand, is more associated with communication and social skills, dependability, ability to motivate, honesty and integrity, inspiring trust, intelligence and cognitive ability, knowledge of the business, genuine interest in others and team orientation. However, according to a study by Page 40


Baron and Markham (2000) social skills are equally important to entrepreneurs, and can enhance their success. A study by Sadler-Smith et al, 2003, revealed that there were differences between the managerial behaviours of managers they classed as either entrepreneurial or nonentrepreneurial managers: while entrepreneurial managers tended to focus more on managing culture and managing vision (i.e. a focus outside the company) , nonentrepreneurial managers tended to focus more on managing performance (i.e. a focus inside the company) though both groups did overlap on what Sadler-Smith et al labelled "generic managerial behaviours" (which included managing processes, managing stakeholders, managing environments and managing development). An orientation towards people is also indicated in a study of successful Taiwanese SMEs, which found, against expectations, that management skills were a more critical success factor than technical skills (Lin, 1998). Managerial skills were itemised as: managers possessing updated knowledge and skills, the skilful handling of labour relations; leveraging resources, resolving disputes skilfully, making accurate interpretation of market trends, good networking, good communication skills, and ensuring that employees the technical skills they need to be effective. The AMS framework developed later contains all of the elements. We can therefore conclude, as does the Council for Excellence in Management and Leadership (2002), that rather than management being superseded by leadership, our businesses today need senior personnel who can display a combination of management and leadership characteristics: “Managers today need to ensure that their organisations run efficiently; they need to motivate and inspire, but they also need to demonstrate that the vision they offer for their organisation fits with both the reality of the changing world and the interests of other stakeholders. Today this means integrating economic objectives with social and environmental ones.” (CEML, 2000: 10). Denton (1999) forcefully puts forward the view that, as times move on, the conceptual baggage of an earlier era needs to be jettisoned - this, we argue, is something that many businesses in the sub-region have failed to do though the case studies we have selected do reveal a number of businesses that have made the conscious decision to jettison the past and to engage with discontinuous change. This may be particularly true not only of the sub-region but of the industrial West Midlands generally, where traditional attitudes are reinforced by risk-aversion and generally low skills levels. Denton gives the example of Victorian Britain, when Birmingham was the workshop of the world, and high-technology British goods were sought and envied everywhere. Britain banned the export of its (then) high-tech machinery, and wallowed in its competitive advantage, not understanding that every new technology grows obsolete. Britain’s competitors were thus compelled to make their own technical innovations, and Britain was left behind at the starting block in the race for competitive advantage through innovation. Innovation, according to Denton, has to be continual, even while competitive advantage seems secure. This clear linkage of the AMS with the capacity to innovate Page 41


has implications for the Regional Innovation Strategy as more emphasis needs to be placed in that strategy on the development of the management skills needed to be able to deliver the strategy. Therefore we can also be confident that skills and qualities considered to be characteristic of entrepreneurs (drive, creativity, willingness to take risks) are needed in all organizations. The logic of this is that the principle of continual innovation must also apply to management skill frameworks, and this is borne out in the literature review, which has identified a number of different frameworks published in the last eight years, running into double figures. These frameworks are discussed in the following section. 3.7 Frameworks for management skill needs The previous section has provided an overview of the MSC competencies framework in order to set the context of recent thinking on advanced management skills7. The brief sections on leadership and entrepreneurship have demonstrated areas where the “fit”, between the functions of management described in a framework (designed to be universal) and what owner-managers in SMEs need in terms of advanced skills, might not be completely comfortable in all cases. However, frameworks for management skills have proliferated in recent years. These aim to move beyond a mapping of the outputs of managing, to define the underlying skills (often referred to as competencies) and behavioural qualities of effective managers. They may be seen as a sort of toolkit from which managers draw in order to meet the challenges and demands placed on them. Ten frameworks were selected from the literature for indepth analysis and comparison. These are:          

CEML Management and Leadership Abilities (CEML, 2001) Bartlett and Ghoshal’s skills for emphasis on people (Bartlett and Ghoshal, 1995) Personal competences of company directors (Gay and Dulewicz, 1997) “Euromanagement” competences (Eyre and Smallman, 1998) Competences for SME leadership (Eyre and Smallman, 1998) Future Skill Needs of Managers, as identified by a DFEE research project (Winterton et al.2000) Management Skill Needs as identified from the Quality of Working Life study (Worrall and Cooper, 2001a) Management skills for Europe (Whetten et al.1994). Skills for managing innovation in the knowledge economy (Johannessen et al, 1999). “Quantum” skills of managers (Shelton and Darling, 2001)

To a greater or lesser extent, all explicitly address the changing business contexts of today and the future. All except one (Shelton and Darling, 2001) are based on empirical research studies involving large samples of practising managers, and all have been published in reputable peer-reviewed journals. The “quantum” skills model, although not based on empirical research, was included in this comparison 7

The MSC and CEML initiatives need to be seen in a wider policy context, which includes the recent granting of Chartered Status to the Institute of Managers, thus developing the concept of management as a profession in its own right, independent of the industrial or sectoral context in which management is carried out. Page 42


because it takes an innovative and novel perspective, and gives the concept of management skills a rather radical treatment, by drawing on developments in quantum physics to extrapolate the new skill set required of managers in an age of chaos and disequilibrium. The remarkable thing about these frameworks is the amount of coherence and overlap between them, which is analysed in some detail below. One of the problems inherent in discussion about advanced management skills is the scope for misunderstanding, ambiguity and confusion caused by the language used in these frameworks. For example, several refer to “managing people” as set of skills, whereas in the MSC framework Working with People (which is a vaguer concept) is one of the key functional areas. Frequently, the same phrases may be used to denote both inputs (skills) and outputs (functions). To use an analogy with driving a car, the function of parking is carried out by drawing on skills such as hand and eye coordination, assessment of traffic conditions, anticipation of behaviour of other vehicles and pedestrians, and skills of manoeuvring the vehicle. All of these skills are independent of the function to which they are applied, in that they can be used in many other driving situations. Clearly, some of the skills outlined in the frameworks are of this type, i.e. generic skills that may contribute to effective performance in a number of functions or aspects of the management or business leader role. These include communication skills, gaining power and influence, organising skills etc. Others are more specifically aligned to activities or functions, such as Managing Information. A third category are those skills which fit the concept of “meta competences” as described above, overarching abilities that transcend the limitations of a particular situation, and mark the average competent manager out from the inspired entrepreneurial leader. These include the qualities of learning ability, adaptive ability, and creativity, along with the leadership skills identified by Bennis and Thomas (2002). The three categories of skill - generic skills; functional skills and meta-skills - are reviewed below. However, it is important to appreciate that the very “fuzziness” of some of these skills areas, and the degree of overlap between them, could be a benefit. Advanced management skills clearly cannot be simplified into a “one size fits all” checklist (notwithstanding the efforts of the Management Standards Centre). Attempts to construct watertight definitions and models of skills fall into the trap of conceptually separating things that are indivisibly linked. For example, excellence in leadership is contingent upon appropriate and effective communication. Generic skills Communication and Interpersonal skills This is a set of skills encompassing, in its narrowest form, spoken and written communication, listening skills, self-presentation, and formal presentation skills. Where communication is interpreted more widely, it is seen as possibly the core of management, encompassing relations with customers, business networking, motivating staff, counselling and mentoring, and facilitating knowledge creation and sharing within and across organisational boundaries. For some writers communication is clearly the most important area of advanced management skill. Alsop, (2002), for example, considers “soft” skills - interpersonal skills, communication skills, and team work - more important than technical skills thus Page 43


reinforcing the study of Taiwanese SMEs. Four of the eight skills areas making up the management skills framework of Whetten et al. are focused on interpersonal behaviours:    

Communicating supportively Gaining power and influence Motivating others Managing conflict

Gay and Dulewicz’ (1993) skills definitions in the category of communications are more specific and they isolate the following:      

Impact – Makes a strong, positive impression on first meeting. Has authority and credibility, establishes rapport quickly. Flexibility – Adopts a flexible (but not compliant) style when interacting with others. Takes their views into account and changes position if appropriate. Written communication – Written work is readily intelligible; ideas and opinions are conveyed clearly and concisely to the reader Oral communication – Fluent, speaks clearly, audibly and has good diction. Concise, avoids jargon and tailors content to the audience’s needs Openness – Is frank and open in his/her communications. Willing to admit errors and shortcomings. Listening – listens dispassionately, is not selective; key points are recalled and taken into account

Working with/Managing People The skill of working with people is obviously contingent upon good communication skills. In addition, it embraces a range of more context-driven skills, such as those identified by Gay and Duliewicz (1997):      

Organising – Effectively coordinates the activities of subordinates and colleagues to achieve goals. Organises resources efficiently and effectively Delegating – Allocates decision-making and other responsibilities to the appropriate subordinate. Distinguishes between what should be done by others or by oneself. Developing managers – Ensures the development of the skills and competences of senior management through training and development related to current and future jobs Coordinating – Adopts appropriate interpersonal styles and methods in guiding [the Board] towards task accomplishment. Fosters cooperation and effective teamwork. Sensitivity – Shows an understanding of the feelings and needs of others; and a willingness to provide personal support or take other actions as appropriate Persuasiveness – Persuades others to give their agreement and commitment; in face of conflict, uses personal influence to achieve compromise and agreement

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It is a starting point of this study that innovation is crucial to the regeneration of the Black Country economy and the development of the Telford-Wolverhampton technology corridor (Worrall, 2002). There is relatively scant literature on the direct links between skills in managing people and innovation, but in a US study of crossfunctional teams formed for new product development, Barczac and Wilemon (2001) investigated what factors are most critical for the effective functioning of a new product development team. They discovered that poor communication of goals was an important source of dissatisfaction among team members. The following were identified as being crucial to the effectiveness of the new product development process: visible support from senior management; clear goal setting; clear priorities; adequate resources; demanding but achievable work schedules and clear a sense of managerial commitment to the project. Other necessary conditions were found to be:     

Building an organizational culture that supports teamwork, by taking such action as emphasizing cross-functional integration, recognizing and rewarding cooperation, and providing training in teamwork skills Ensuring that team leaders possess three sets of skills: interpersonal, project management and technical Redefining recruitment criteria to include interpersonal skills along with functional expertise Improving how team members are evaluated and rewarded Being aware of the causes of stress and developing strategies to help team members deal with stress (recognising that many people find teamwork inherently stressful)

A recent study by the Chartered Institute of Personnel and Development (CIPD, 2002) investigated the human resource management challenges posed by the major changes taking place in the environment of the firm. It makes the point that the increased autonomy required by knowledge workers presents a challenge to traditional managers. This is an issue of particular concern within the sub-region, where, as has been noted above, the dominant management style, linked to older manufacturing industries, has been of the “command and control” tradition where managers manage and workers do as they are told. The challenge to this tradition is highlighted by Heifetz and Laurie (1997). They investigate the leadership skills sets required in adaptive change management and processes of organisational transformation. These include protecting voices of leadership from below in the hierarchy, in other words, being prepared to "let go" and to allow workers the autonomy to find their own leadership: “Effective change requires widespread involvement and participation across the whole workforce. Innovation arises in part from making it possible to question established expertise, received wisdom and authority. Many managers understandably find the implications of this difficult and threatening. Such potential obstacles need to be anticipated and addressed, often through the significant redesign of management roles and responsibilities as well as by developing new management competencies” (Heifetz and Laurie, 1997).

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Functional/Technical skills From the review of the literature, the “traditional” functional skill areas, such as operations management, project management, finance, information management and even marketing skills seem to be either eclipsed or subsumed under more wideranging categories in the most recent literature. For example, financial acumen is hardly mentioned, only one recent source emphasises financial skill (Gwither, 2001). But this should not imply that it has lost its importance. Rather, finance tends to be subsumed under the general heading of “knowledge and information” (e.g. CEML, 2002). Marketing has been absorbed into competitiveness and customer relationship management and, as such, it sits comfortably within strategy and communications as broad categories of skill. Managing Knowledge and Information As noted above, knowledge management within the context of organisational learning is a major influence on management thinking. The underlying theory of organizational knowledge creation borrows from Nonaka and Takeuchi's (1995) notion of creating a knowledge spiral in an organization. In their view, knowledge is transferred from one organizational member to another by the conversion of tacit knowledge (intuitions, unarticulated mental models and embodied technical skills) into explicit knowledge (a meaningful set of information articulated in clear language including numbers or diagrams). This explicit knowledge is then passed on to another member who must convert it into tacit knowledge (internalization) before he or she may use it (Salisbury, 2001). New product development (NPD) emerges in the literature as key to competitive advantage in the new business environment (see Denton, 1999; Pavesi and Corso, 2000; Bartezzaghi et al., 1997; Barczac and Wilemon, 2001). New product development is also dependent on effective knowledge creation and management within the firm. However, Woodcock et al. (2000) found that the British SMEs in their sample did not prioritise new product development. In most cases, where new products were envisaged, they were extensions or refinements of existing lines. Managers tended either to be satisfied with their performance against their competition, or to content themselves with very subjective or piecemeal information about what their competitors were doing. In all cases they gave the capture of hard and reliable data a low priority. This we regard as a fundamental issue of concern in the sub-region because prior research in the area (Levy and Worrall, 2002) has shown that large proportions of SMEs have neither developed new products or new markets in the year prior to their survey nor had these firms tended to engage with new ways of doing businesses using ICT. This finding also reveals that there be a major disconnect between the policy intentions of the regional innovation strategy and the innovation and new market development capabilities of sub-regional firms as senior managers in many firms do not appear to have the capability to deliver innovation.. Pavesi and Corso (2000) propose a model to explain how companies can gain a substantial competitive advantage by facilitating knowledge generation and transfer during the overall product life-cycle. They looked at NPD projects as steps within a corporate-wide process of knowledge creation, embodiment and transfer to which Bartezzaghi et al. (1997,1998) refer as continuous product innovation (CPI). In this Page 46


perspective, innovation is a continuous and cross-functional process of learning and improvement involving and integrating a growing number of competencies inside and outside the organisational boundaries (again this fits with the resource dependency view of the firm developed earlier). Stimulating knowledge creation, embodiment and transfer to foster innovation become primary managerial tasks. We can see that for knowledge creation to work, it cannot be seen as the responsibility of a manager in isolation. And this challenges the idea of “advanced management skill” as belonging to the individual. A more collective view is put forward by Reuber and Fischer (2002) in a study of the ways in which SMEs develop foreign sales. This study supported the view that foreign sales will grow more rapidly in small firms where the whole management team display “behavioural integration”, that is, where they engage in mutual and cooperative interaction which involves joint decision-making. Linked to the propensity for learning, Stockport (2000) stressed the importance of continual monitoring of the environment (including capturing detailed point-of-sale data about customers, information about competitors (particularly new entrants), and scanning for changes and trends in the market and among competitors. The ability to capture and use market intelligence from and about customers, suppliers, competitors is a management skill fundamental to business success. “Meta skills” Thinking/cognitive skills The implication of Bennis and Thomas’ (2002) work on leadership is that a proactive and positive approach to lifelong learning is a key attribute of business leaders. Above all, the ability and drive to welcome new experience, even negative experience, in order to learn from it is a crucial characteristic. Whetten et al (1994) identified creative problem solving as an increasing important skill. Pollock (2002) identified that managers need to detach themselves, distance themselves and take time to reflect which was reinforced by Worrall and Cooper's (2001) which identified "strategic and analytical thinking" as a key skill. Gay and Dulewicz (1997) define competencies of “analytic understanding” as follows:     

Problem Analysis – Identifies problems, transforms and relates information from different sources and identifies possible or actual causes Information Collection – Seeks all possible relevant information for the task systematically from a variety of sources Numerical interpretation – Assimilates numerical and statistical information accurately and makes sensible, sound interpretations Critical faculty – Probes the facts, challenges assumptions, identifies the (dis)advantages of proposals, provides counter arguments, ensures discussions are penetrating Detail consciousness – Insists that sufficiently detailed and reliable information is taken account of, and reported as necessary Page 47




Imagination – Generates and recognises imaginative solutions and innovations which are not obvious to less imaginative colleagues.

They also propose a set of competences in a category of “strategic perspective”, which put more flesh onto the bones of the CEML competence “thinking strategically”, i.e.     

Strategic Awareness – Is aware of the stakeholder, market, technological and governmental factors which determine the organisation’s opportunities and threats Vision – Is able to produce a clear and consistent picture of the long term future state and character of the organisation Organisational awareness – Is aware of the organisation’s strengths and weaknesses and the impact of the Board’s decisions upon them “Helicopter” sense – Rises above the immediate problem or situation and sees the wider issues and implications; relates disparate facts through an ability to perceive all relevant relationships Business sense – Identifies those opportunities that will increase the organisation’s sales or profits; selects and exploits those activities that will result in the largest returns

However, we argue that future management skill needs will be more tightly defined by the changing business and organisation environments that managers have to work within. The globalisation of markets, radically changing modes of competition, the need to innovate, the need to manage customer relations far more effectively, the need to manage more ethically, the need to manage in a more diverse context and the need to manage information and knowledge more effectively will have major implications. The move to flatter organisational forms, the continued erosion of authority structures and the great flexibility and diversity of forms of organising will also have major implications on the role of the manager. Managing the Self There is a growing literature that shows that the nature of managerial work is changing and that managerial work is both "intensifying" and "extensifying" (Worrall et al, 2003). Managerial work is intensifying in that managers now often work in flatter structures and have wider spans of control, the tasks that comprise their jobs have become more varied and the rise of modern technology has caused many managers to become overloaded with information (Worrall and Cooper, 2001). The extensification of work has arisen because managers are now having to work extremely long hours with managers in the UK working significantly longer hours than the EU counterparts (Worrall and Cooper, 2002). Consequently, managers are having to become more adept at managing themselves even though recent evidence on executive stress in the West Midlands (Worrall and Cooper, 1995) reveals that coping strategies may not be particularly effective. Both Eyre and Smallman and CEML (2002) feature stress management as a specific and distinct personal skill while Whetten et al (1994) identify developing self-awareness as an increasingly important skill.

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Gay and Dulewicz (1997), although they do not have a category for “selfmanagement” define a number of competencies that sit easily within this category. These include: 

     

Assertiveness – Is assertive and forceful when dealing with others. Ready to take charge of a situation (this begs the question what is meant by “being assertive”, but that may be understood as “communicating one’s wishes directly without using either aggression or manipulation to influence others”. Energy – Shows conspicuous levels of energy, vitality and output Resilience – Maintains effectiveness in face of adversity or unfairness. Retains composure when under pressure or opposition, does not become irritable or anxious Integrity – Is truthful and trustworthy, can be relied upon to keep his/her word. Does not have double standards and does not compromise on matters of moral principle. Determination – Stays with a position or plan of action until the desired objective is achieved or is no longer reasonably attainable, irrespective of setbacks or obstacles. Achievement motivation – Sets high goals or standards of performance for self and for others, and is dissatisfied with average performance. Independence – Takes action in which the dominant influence is his/her own convictions rather than the influence of other people’s opinions

3.8 A framework for analysing skills needs and reviewing supply of development opportunities This review of current literature has found support for the framework of management “abilities” presented by the Council for Excellence in Management and Leadership (CEML, 2002). The framework includes all key skills areas including those “metacompetences” which are found in the literature to be critical to the ability of the advanced manager to respond effectively to highly complex situations which might call on a number of different skills sets simultaneously. It is comprehensive (mapping fully against the other frameworks examined), up-to-date, and carries the policy advantage of central government sponsorship. The CEML framework consists of eight areas of ability, arranged into three groupings (Table 1), Thinking abilities, People Abilities, and Task Abilities. The lists reproduced in Table 1 show that the people abilities category comprises the majority of the abilities in the framework. This is supported in the literature, which demonstrates a sea-change in the emphasis on people in organisations, although traditional skills areas, such as financial acumen and “an ability to read the numbers" (Gwither, 2001) are still required.

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Table 3.2: The CEML Framework for management and leadership abilities Thinking Abilities

Think strategically

People Abilities

Manage Self

Manage and Lead People

Manage Relationships Lead direction and culture

Task Abilities

Manage Information Manage Resources Manage Activities and Quality

Balance agendas, Challenge status quo and opposition, Develop industry knowledge, Develop networks, Focus on customer, Set goals, Spot opportunities, Think conceptually and reflect, Think creatively, Think entrepreneurially, Think globally, Think markets, Think technologically Accept responsibility, Demonstrate dependability, Exude enthusiasm, Handle stress and health issues, Manage time, Possess adaptability and flexibility, Possess drive, Passion and hard work, Possess personal ethics and values, Possess self-confidence, Spontaneity, Possess stamina and perseverance, Possess tough-mindedness, Provide good instincts and common sense, Strive for consistency of approach, Strive for emotional stability Acknowledge and reward others, Assess and recognise people’s potential, Build teams, Consult and collaborate, Deal with politics, Delegate work and responsibility, Develop people, Facilitate and chair meetings, Handle diverse workforce, Know employment rules, Manage conflict situations, Manage level above, Motivate people, Possess patience and tolerate mistakes, Provide feedback, Recruit competent people, Support people, Trust people Bargain, sell, negotiate, Build empathy, relationships and trust, Create bearing and presence, Display assertiveness, Display humour, Listen to people, Present self and ideas Create good organisational communication, Create shared vision, Encourage creativity and flexibility, Handle change, Handle risk and ambiguity, Inspire people, Lead by example, Manage public relations, Plan small wins and reinforce Acquire information, Analyse information, Make plans, Manage accounts and finances, Manage budgets, Take Decisions Allocate resources, Marshal resources, Safeguard assets Attend to detail, Audit quality, Control and monitor activities, Develop knowledge of business, Develop systems and procedures, Establish priorities, Evaluate progress, Monitor, Plan and control projects, Provide practical and technical competence, Solve problems

The literature does, however, pinpoint some possible weaknesses in the CEML model. The framework recognises the semantic problem of the leadership/management debate, and the need to recognise the particular needs of SMEs for good management and leadership. Yet the framework proposed is limited, in that the thinking abilities that emerge from the literature as being central to an “advanced” approach to management, are categorised alongside the others. Rather, the literature suggests that categorising these as “meta-skills” characterising “advanced management” (in terms of its three dimensions as outlined above) would provide a better fit with current thinking and practices. This would also fit with the emerging Management Standards Centre functional map that contains the key functional areas within an all-embracing field of “Managing Self and Personal Skills”8. Also, it is rather curious that the CEML framework treats “information management” as a task ability, rather than moving towards a re-framing of knowledge management, rather than information management per se as a defining characteristic of excellent and competitive organisations. 8

Eventually, and before too long, the Management Standards Centre functional map and the CEML management skills frameworks will have to be harmonised in order to derive an integrated system for developing management qualifications. Page 50


3.9 A framework for Advanced Management Skills for the Black Country and Telford-Wolverhampton corridor Drawing from the literature reviewed above, and taking into account the local context that has been described and analysed in the previous section of this report, we propose a framework specifically for advanced management skills. The framework builds on the three main dimensions of the advanced management role already identified: Leadership and Direction, Innovation and Entrepreneurship, and Managing Activities and Resources. To these three we add two new dimensions. First, the “metacompetences”, skills of thinking, information handling, analysis, problem-solving, creativity, the ability to keep a grasp of the overview and the detail at the same time, etc. Second, the skills of managing the self, ability to handle stress, “emotional intelligence”, integrity, i.e. those qualities and skills that enable the business person to succeed at both “intensifying” and “extensifying” the management role both on a dayto-day basis and over the longer term. These two dimensions of skills transcend individual tasks and are diffused through all the other “advanced management skills”. Therefore, they can be seen as binding together and integrating the original three dimensions in the framework. This model first integrates higher order skills that are drawn on for the analysis of contingencies and the application of the other skills areas; and second, focuses explicitly and deliberately on those personal qualities (as opposed to skills) which can make the difference between success and failure in the application of skills. Personal qualities are those characteristics of leadership and entrepreneurship, such as selfconfidence, personal integrity and competitiveness. These pose a specific challenge for management development, because, although they may be learned, they are not “teachable”, in the sense that operative skills, or even cognitive skills, can be taught. This framework, presented diagrammatically in Figure 3.2, takes account of several key issues:     



The critical role of innovation in renewing and fostering competitiveness in the sub-region (the Entrepreneurship domain) The leadership imperative to harness the skills and knowledge of a diverse workforce (The Leadership domain) The continuing importance of developing and honing essential skills and knowledge of modern approaches and techniques of production, design, finance and information technology (the Management domain) The “extensification” of the senior management role and the need for senior managers and owner-managers to engage in continuous processes of personal development (Managing the Self) The role that thinking and cognitive skills play in forming those “meta-skills”, or advanced skills that are featured in the literature as being essential, whether accessed and applied in a primarily entrepreneurial or leadership context (Meta-skills). The model has the advantage of breadth in its scope, with simplicity in that the dimensions can be immediately grasped and used.

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Figure 3.2: A framework for Advanced Management Skills

Leadership domain

Management domain

Meta skills

Leadership & Direction

Managing Activities & Resources Managing the self

Innovation and entrepreneurship

Entrepreneurship domain

Components of the model Each dimension of the AMS model contains a group of skills items, which summarise the key advanced management skills according to the most up-to-date literature sources. The local business and policy contexts have also been factored into the list of skills items, as it is most important that local business people themselves recognise these skills as relevant, and have some ownership of them. For conceptual clarity and ease of use, and also logically, the two generic areas of meta-skills and managing the self may be grouped together to form a single grouping of skills items. This gives us four groupings, with a total of 25 advanced skills items, as follows: Meta-skills and Managing the Self:  Thinking strategically  Communicating inside and outside the business  Creative thinking and problem-solving  Negotiating  Handling risk and uncertainty  Handling own workload and personal development Page 52


Leadership and Direction  Providing leadership and direction  Building and managing teams  Developing and retaining talented employees  Managing change in the organisation  Developing new working practices  Managing equal opportunities and diversity Innovation and Entrepreneurship  Delivering customer service  Identifying market opportunities  Learning from customers, competitors, suppliers  Keeping up to speed with technological change  Managing innovation  Redesigning business processes  Networking in the industry Managing Activities and Resources  Using consultants  Managing quality  Financing new developments  Managing logistics  Managing projects  Managing supply chain relationships We have noted two potential problems with all previous attempts to come up with checklists of management skills. The first is perhaps the most obvious: a simple list can give the impression that skills exist both in isolation from each other, and in isolation from the context in which they are used. This criticism has been noted in the literature on the competences approach. The model of advanced management skills which is presented here, with its overlapping dimensions, recognises that, depending on the circumstances and the needs, skills are never used in isolation but always in combination with each other. The second potential weakness is perhaps more subtle, and is reflected in much of the literature that has sprung up on the subject of management training and development and on leadership. That is, that advanced management skills are commonly seen as being invested in a single individual. However, modern ideas about learning, skills development and organisational capability emphasise that competitiveness now rests on the skills levels of whole organisations. If advanced management means anything, it means the power and capability to harness the skills of the whole organisation to meet the challenges of change and innovation. The Framework for Advanced Management Skills recognises these issues by presenting the skills items worded in such a way that they can equally well apply to the skills of an individual, or the skills levels in a business as a whole. Having derived the framework, this research study then proceeds to ask the question; what are the appropriate ways of developing these advanced management skills within the Page 53


businesses of the Black Country and Telford-Wolverhampton corridor, and how well equipped are the current providers of management training and development to deliver them?

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SECTION 4: THE DELIVERY OF MANAGEMENT DEVELOPMENT AND TRAINING TO SMEs: WHAT ARE THE ISSUES? 4.1 Does training enhance the performance of SMEs? If the objective of this project is to better understand the needs of firms as a basis for the prescription of management development and training interventions, it is essential that we understand what the current literature has to say about the impact of management development and training on SME performance and on the problems and issues in delivering management development to SMEs. The recent past has been littered with a range of policies and programmes that have been designed to encourage SMEs to train more and yet Storey and his co-authors have, in a number of articles, identified that the link between the increased use of training and improved business performance is "weak". Westhead and Storey (1996) see management development and training as "the process by which managers acquire the knowledge and skills related to their work requirements by formal, structured or guided means" (Deloitte, Haskins and Sells, 1989, p3). In a later paper (1997) Storey et al. raise concerns about the "political correctness" that has grown up around training not only in SMEs but also in those intermediaries whose job in the labour market is to promote and broker training. Essentially, Westhead and Storey (1996) cast doubt upon Jennings and Banfield's (1993, p3) view that: "…training can, and should, be a powerful agent of change, facilitating and enabling a company to grow, expand and develop its capabilities thus enhancing profitability". If this is not happening, then we clearly need to know why and to use this understanding as a basis for the design, development and delivery of education, training and developmental interventions that will result in the companies using these interventions to change the way they do business and to enhance their capabilities in order to improve their performance. If we are to develop more effective approaches to management development and training we need to understand far better than we do at present the mechanisms whereby firms appropriate returns from their training investments. Westhead and Storey also draw a distinction between the training needs of two different types of managers in SMEs. The two groups are owner and non-owner managers: the former is more likely to engage with what they term "enterprise training" while the later is more likely to engage with "management development". Westhead and Storey cite a prior study by Marshall et al (1995) who identified a number of important points: 

Proprietors and managers in SMEs are sceptical about the value of training and thus need to be incentivised to engage with training in the first place and then supported through this process - they noticed that subsidies led to a significant one-off rise in the use of training in SMEs and while there was attrition, training use was increased after the initial subsidy phase

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  

They were unable to demonstrate a link between training use and improved performance which, they concluded, was "one of the reasons why many firms are reluctant to invest in human resources" They identified that management training was less effective in very small firms that lacked the management capacity to make the necessary commitments and absorb both management and business development They also identified that where firms has weak management structures that the pressures of running a small firm militate against firms securing returns from their investment in training.

Westhead and Storey also cited the Baldwin et al (1994) study of Canadian high growth SMEs which could also find no clear relationship between training investment and performance and concluded that "the more successful firms do no more training than the least successful firms". However, the measures of training here appear to be volume measures of training and we cannot know whether there might have been an issue with training quality differentials between firms. Indeed, Westhead and Storey cite a large number of research studies that have been unable to demonstrate a link between training investment and business performance. Why should this be so? In their attempt to develop an explanatory framework in which to test if training does or does not lead to improved performance, Westhead and Storey make a number of points: 





 



They argue a need to get inside the psychology of the SME and to avoid thinking that small firms are just scaled down large forms hence they argue that SMEs are qualitatively different than large firms and that we need to understand the motivations of SMEs, the way that they manage uncertainty and the constraints upon them They identify that they way that SMEs have to cope with uncertainty differs radically from large firms - SMEs have to cope more with "external" than "internal" uncertainty due to their lack of power in the marketplace; their dependence often on one major supplier; and their restriction to a small set of products and services Due to this focus on external uncertainty, SMEs have shorter planning horizons and so depend on being able to appropriate returns to investment in the short term - this causes problems in the appropriation of returns to training which are often seen as long term While this comment is valid, it implies that training interventions need to be reconfigured and redesigned so that they are more acceptable to the needs of the SME and better fitted to the short-term imperatives of the SME They also point out concerns about the lack of an internal labour market in SMEs which is in direct contrast to the career development ladders that exist in most large firms. As career paths are more constrained for non-owner managers of SMEs, this tends to promote a view among owner-managers that as owner managers are trained, this increases the probability that they will leave to develop their careers and secure their personal returns to training elsewhere Westhead and Storey express a view that non-owner managers might see firmspecific training as "narrowing" and thus increasing their ties to one particular Page 56




 





employer. Under these assumptions both owner and non-owner managers may become unfavourably disposed to training Westhead and Storey identify that the type of training that is "widening" as opposed to narrowing is that which is long term, formal and certificated - they argue that this form of training is the least attractive to owner managers as it is precisely this form of training that increases the attractiveness of non-owner managers in the market place. Therefore non-owner managers are more likely to have to pay for this form of training themselves which raises issues about who should be the target for the funding/subsidy of different forms of training - the firm or the non-owner manager? Westhead and Storey draw attention to the real cost of training for SMEs and large firms - they argue that as opportunity costs are greater for SMEs than SMEs will, consequently, purchase smaller quantities of training. A second element of relevance to the price and cost of training is that it is more expensive for providers to meet the needs of SMEs as they tend to be more bespoke and differentiated and, in larger firms, these costs can be spread over more people A further inhibitor in SMEs is that training may be perceived to be too general and provided by people or bodies that are perceived to lack business understanding - "the familiar cry is that training is provided by teachers rather than practitioners" In addition, SMEs are more likely to be less well informed about the availability of training as they are less well integrated within business and professional networks

Westhead and Storey thus raise a series of questions about SMEs and training and particularly their ability to internalise any of the "benefits" that result from it. The perceived and actual ability of SMEs to appropriate returns to training is thus a key issue that policy and programme interventions must address. There are a number of questions that emerge:         

How do we get inside the psychology of the SME? How do we develop programmes that fit into the business and the psychology of the SME? How do we widen the focus away from training per se and look at bundles of OD and HRD interventions so that training is part of a wider strategy to develop the business How do we deliver training that is better aligned to the business strategy? How should training be funded and subsidised? Who/what should be the funding target? How do we reconfigure delivery to meet the psychology of the SME? While there is analysis that looks at training quantity, there is little that looks at training quality and effectiveness - what constitutes quality and effectiveness in the mind of the SME training procurer? Given that training delivery and training needs are very homogeneous, how do we manage this homogeneity? Much of the analysis looks at the impact of training quantity on quantitative aspects of business performance, but does training have more of an effect at the qualitative level - on measures such as the confidence of managers - that Page 57


do not easily manifest themselves in hard measures of business performance or "the bottom line" – if so, how can these softer outcomes be incorporated into the evaluation of training In a later article by Storey et al (1998) entitled "Medium-size firms waste money on training", the authors are somewhat forthright in their criticism of training which they see as having been overtaken by political correctness and conventional wisdoms based on the blind acceptance of many firms that training is "a good thing". The authors identified a number of important issues:     



 

The research aimed to show that training boosts company profits - but they were unable to do so While 76% of medium-sized have an education, training and development policy, only 30% of these link it to their overall business plan - i.e. there is a clear disconnect between business strategy and HRD strategy in many firms Businesses are insufficiently critical of their education, training and development policies and many seem acts of faith. Many HRD strategies do not contain an evaluation framework and are not evaluated 91% of firms think that good managers need to be committed to their own personal development yet only 40% provide managers with the opportunities to do so - this they identify as a dichotomy between belief and action Only 54% regularly review their training plans to ensure that they fit the changing environment; only 47% have a formal planning process; only 35% measure the effectiveness of their education, training and development programmes They identified differences between leading and lagging companies: o Leading companies give significantly more training days per year especially to supervisors, operative and clerical staff o Laggers spend more on training than leaders o Laggers are more likely to have a training department (does this imply less integration with the business?) o Leaders are more likely to give responsibility to training to a board member - this indicates that the positioning of accountability for HR is an important issue as positioning at senior management level seems to be less effective than positioning accountability at Board level. They make a fundamentally important point when they state that "We conclude from this that the effectiveness of education, training and development in medium-size firms cannot be attributed to spend, but that companies which consider education, training and development as the core responsibility of a board director, so demonstrating the importance placed on the function within the organization, are more effective than those which consider it to be a less important process within the organization." Companies that performed better tended to pay more attention to development and skill formation throughout the company Companies do not plan and evaluate their investment as they would any other capital investment - HR is often seen in input terms not in output terms and Page 58




thus getting businesses to refocus their thinking on HRD in output terms is critical Education and training were often seen as vocation while development was seen as "exposure to experiences (formal and informal) which develop character, self-awareness, confidence and other traits that complement basic skills".

Johnson and Winterton (1999) found, in their review of management development in SMEs that:        

The vast majority of SME owner/managers do not hold formal management qualifications Many have undergone no management training prior to business formation and many had no prior management training Very few SMEs have formal policies about management development and most "react to immediate, short-term needs" While many SME owner/managers recognise the value of management development, most have difficulty in articulating needs and how they might be met Informal on-the-job training is preferred to more formal off-site delivery As SMEs get larger so does the volume and formality of training Owner managers use a variety of means but most rely on themselves, other members of the firm, technical literature, suppliers/customers, trade bodies and private training suppliers Less than 10% of SME owner/managers who engage in management development gain a formal qualification as a result

Storey (2003) describes two means of explaining why SME owner-managers do not see the need to invest in their workforce's or their own development: these are the "ignorance" and the "market" explanations.  

He argues that the ignorance model is at the heart of many public policy interventions which are addressed at making SME managers see "training as a strategic tool in the management of the enterprise" The market explanation is based on the premise that the real costs of training are higher for SMEs and the returns to training are more difficult to appropriate. In this model, SME owners are aware of training but are not convinced by it.

Storey assembles a range of research to demonstrate his view that the market explanation is more significant than the ignorance explanation though his analysis is confined to "formal management programmes for SMEs" as these exist in all OECD countries. Storey (2002) defines formal management training as: "Group taught formal learning, external to the firm, provided for owners and managers of independent enterprises with 250 employees or less, and at least part funded by the organisation." Page 59


Formal training is defined as: "occurring when employees are taught skills or given information to help them do their jobs better, when it is planned in advance and when it has a structured format and a defined curriculum". Informal training is "unstructured, unplanned and easily adapted to situations or individuals". Storey compares and contrasts the US model of operations and the European model. In the US business failure is not stigmatised as it is the Europe and consequently there is a far stronger emphasis on learning by doing and institutional rules and structures (especially in banking) mean that finance is easier to raise than in Europe for someone who has experienced a business failure. There the emphasis is far more on learning-by-doing than on the training and development of managers. The US model, Storey (2002) argues, "implicitly assumes the entrepreneur learns less effectively by being formally 'taught' or 'trained'". Only those at the margins of the labour market such as immigrant groups or women are the focus of publicly funded programmes. This contrasts strongly with the German model based on strong local institutional structures centred on local Chambers of Commerce. Here all firms are required to be members of the local Chamber that then provide tailored training to meet local needs. Clearly, the institutional settings of training differ markedly in different areas. Eyre and Smallman (1998) carried out a survey of SMEs in Bradford and found that of 32 that responded, the average level of exports was 17% (maximum 80% and minimum 0). Only 7 (22%) had an export department. When asked what skills they would expect of an export manager, most identified technical skills and language skills. International skills and experience were placed low on the list of attributes. This study also contained a comparative element, a similar survey being carried out in France. The Rhone-Alpes is a member area of a European partnership involving Lombardy, Catalonia and Baden-Wurtenburg. Here, 54% of SMEs had an export department and in the remaining 46% the Managing Director took responsibility for exporting him/herself. In 59 per cent of firms it was found to be common practice to speak at least two foreign languages, of which one is English. Storey points to evidence from Canada to show that management weaknesses are a prime cause of business failure (though he is not convinced that by training these managers that business failure would have been prevented). He quotes Baldwin (1997) who states that:    

"Almost half the firms in Canada that go bankrupt do so primarily because of their own deficiencies rather than externally generated problems" "Overall weakness in management, combined with a lack of market for their product, cause these firms to fail…" "The main reason for failure is inexperienced management…" "The managers of bankrupt firms do not have the experience, knowledge or vision to run their businesses".

Storey goes on to cite Betcherman, Leckie and McMullen's (1997) study that revealed that organisations with training programmes had more favourable performance in revenues, profitability, employee relations, quality, productivity, viability and Page 60


outlook. He also cites the study by Cosh et al (2000) that found a positive association between training and employment growth "where training is persistent and where it is closely embedded in a range of other HR practices - such as TQM, quality circles, job rotation and performance-related pay". This reinforces the notion that training cannot be seen as an isolated initiative but that it needs to be seen as part of an "HR bundle" of activities. The Cosh study also shows that while prior performance is important for generating the funding for training, investment in training cannot be shown to directly yield future performance. This later finding also reflects Storey's (2002) view that while there is no direct link between training and firm performance, "bundles of both 'attitudes to', and 'practices of', HR are, however, positively linked to firm performance. In his study of the auto industry, MacDuffie (1995) was led to conclude that: "…plants using flexible production systems, which bundle human resource practices into a system that is integrated with production/business strategy, outperform plants using more traditional mass production systems in both productivity and quality…..these results provide the strongest statistical evidence to date of a positive relationship between innovative human resource practices and economic performance…" Here MacDuffie demonstrates that the development of HR practices that are aligned with and complimentary to business strategy do actually yield performance gains over more traditional forms of "Tayloristic" work organisation which seem to be endemic in the UK. This raises the issue of how to embed training into a wider set of HR practices and how to embed these HR bundles into the delivery of the business strategy. Indeed, the Betcherman, Leckie and McMullen's (1997) study actually reveals that performance is more strongly related to other aspects of the HR bundle than training. Storey (2002) was led to make the following statement about formal management training in SMEs: "We therefore conclude that, despite substantial public spending in this area, there is currently no satisfactory assessment of the link between small firm, formal management training and firm performance. This should be a matter of deep concern for government, taxpayers, businesses and human resource professionals". While this statement is somewhat damning, it should be remembered that a significant amount of management development conducted in SMEs is not formal (using the earlier definition) and this quote may say more about the suitability of formal training in SMEs than the training and development that takes place within a wider definition of the term. This research raises many questions about the suitability of formal training in SMEs and indicates that a more valuable focus might be to explore the possibility of less formal, more flexibly structured training and development interventions.

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Regarding formal training for SMEs, Storey regards it as unfortunate for small firms that “governments favour formal over informal training", largely because formal training leads to qualifications and many government performance measures are based on certificated outcomes. The emphasis on formal qualifications leads to a sense of tradability - which is precisely what SME owners are concerned about as this makes their managers and workers more able to compete in the external labour market. Governments also tend to favour certificated outcomes because it is easier to measure and fund than informal training. Storey thinks these are difficult problems but offers no solutions except to say that government agencies need different solutions for administering training in small firms. Storey (2002) suggests a more radical solution using a market solution rather than an interventionist government solution - "this assumes that the most effective 'learning' for small firm owners is not through formal training, but through experience, with perhaps some of this experience being through failure". This reflects practice in the US where failure is not seen to reflect lack of competence and where banks are less judgemental in the way they make support decisions. The whole emphasis here is that experience is more effective than formal training. Storey also does not adhere to the ignorance view but considers that SME owners are able to assess the costs and benefits to their firm of investing in training. He concludes: "It suggests the relatively low take up of formal management training is an informed decision on the part of the owner manager. This implies that seeking to increase formal small firm training activity by 'raising the awareness of owner managers of the benefits of training' is misguided." 4.2 Key issues: training and SMEs While many public and private training suppliers would no doubt be delighted to “prove” that training positively affected a firm’s bottom line, it would seem that there is no hard, unequivocal evidence to support this view. However, the review of the literature does provide us with some useful insights that will help in the development of policy. First, it is important to distinguish between education, training and development. While we see education and training as being primarily delivered by structured and formal means, we see development as being more amorphous and delivered in less structured and less formal ways. We see the three elements being interlinked as research has shown that better educated managers are more likely to engage with training and more concerned about their continued development (Bosworth, 2002). Consequently, we have developed a hierarchical view of these three activities (which is shown as Figure 4.1). While we see them as being fundamentally different, there are strong inter-relationships between these activities: as managers develop their careers in management that the blend of activity will change. The model is also instructive if we take a developmental view of managerial human capital in the region. Considering that a managers’ propensity to engage with training Page 62


and development is contingent upon their basic education it is essential that effort is directed at producing younger managers who are both better educated than their predecessors and more motivated to engage with lifelong learning, training and development. The training layer is also essential in that it is important to develop the functional skills of managers as a foundation for the development of more advanced skills. While this model is likely to apply to medium sized and larger firms with structured internal labour markets, we argue that this model will break down in SMEs in that career progression routes often tend to be less well defined and the separation between levels in the hierarchy often tends to be more blurred. Figure 4.1: Education, training and development

Senior management

Flexible, focused on behaviours, mentoring, bite sized, on-line

Professional Development

MBAs and vocational masters

Formal, structured, on-site and off-site

Middle management Graduate entrants ‘Junior’ management FE level entrants

Training

Supervisory Education

e.g. NVQs, through FE, colleges, schools, etc.

Operational Staff (entry point into management) The literature poses a question fundamental to the study: why do SMEs not engage with training and development? Is it because SME owner/managers are unaware of how “off the pace” they are and do not realise that there is a problem (an explanation that would put the onus on them)? Is it perhaps because of a conscious evaluation by SME owner/managers that training is, simply, “not worth it”? Is it because of information imperfections where SME owner/managers know what they want but they don’t know where or how to access it? Alternatively, do they know what they want but find that it is unavailable? There is no unambiguous evidence from the literature than any one of these inhibitors is dominant and, it is our view that in any local economy there will be a mix of responses. Understanding the local mix of inhibitors is important as each of these three explanations of low SME engageement with training will require different policy responses. It is clearly an issue of some concern if a sub-regional economy contains a high proportion of unconsciously incompetent firms. This term we do not use in any perjoritive sense as we use to imply the term that this state exists are unaware that there is something they need to learn. However, later we will show that several firms that feel that they are locked into particular product markets do rate identifying new markets as their key skill deficiency implying that several of our firms clearly exist within a state of “conscious incompetence”. Unfortunately, the review of the subPage 63


regional economy in Section 3 gives some indication that the number of firms in a state of unconscious incompetence might be relatively high locally. Elsewhere, we have identified that various events such a management buyouts or the decision of family run businesses to buy in professional management often creates a stark realisation in firms that their managerial capability is not all it should be. Within the cycle, getting firms to become consciously incompetent is often the hardest task as it is in the south-west quadrant of the table that inertia is greatest. Figure 4.2: From unconscious incompetence to unconscious competence

Competent

Incompetent

This box contains forms that are unconsciously competent. They just do it right

This box consists of firms that are unconsciously incompetent and may be either unaware of their deficiencies, or unable to articulate them or unaware of where and how to secure support or all of these. The intervention task is to get firms to become conscious of the incompetence Unconscious

This box contains firms that are conscious that they are competent but they might not have the routines in place that they do competent automatically. The intervention task here is to assist firms to develop the routines where competence is more deeply embedded into the firm through interventions like the EFQM This box consists of firms that are conscious that they have deficiencies and see the need to do something about it. The intervention task here is to support firms in securing support to assist them improving and addressing their weaknesses

Conscious

The information imperfection issue poses a related but slightly different problem to the unconscious incompetence problem. Given our use of the resource dependency view of the firm (RDT) this indicates that firms have a weakness in securing the support that they consider they need. This can either be because these firms are poor at scanning their environments or because service providers are poor at promoting and marketing their services. These issues are explored in a later section of the report. If firms have made a conscious decision not to procure training because it is perceived not to add value then this raises a series of issues about the ability of providers to meet the needs of potential customers at a mutually agreeable price. In the case of SMEs, these issues are often exacerbated by the inability of SMEs to generate economies of scale where providers can supply a cost-effective solution. These market problems arise from a mixture of quality and cost considerations. Quality issues can only be solved by the development of a better mutual understanding between providers and users while cost issues can be addressed by the development of more focused public policy: it is interesting to note that firms who use subsidised initial training are more likely to use training more intensively even when they have to pay the full price.

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A very important finding is that the use of training alone is unlikely to yield radical performance improvement in businesses. A number of authors have argued that firms need to develop complementary “bundles” of HR initiatives of which, training, is a central element. Consequently, this observation means that any narrow focus on training is unlikely to yield significant gains to the bottom line of any firm unless training is embedded within a wider organisational development framework within the firm. A singular focus on training without these complementary activities will clearly be insufficient if the objective is significantly to improve business performance. This emphasis away from the singular focus on training towards bundles of HR initiatives essentially relocates the problem into the domain of organisational development with an emphasis on a wider spectrum of issues such as job redesign, worker participation, effective organisational communications, organisational learning linked to a clearer view of business strategy. This wider approach does not sit well with some of the more Tayloristic and Neo-Fordist approaches which are at the root of the business practices that underpin the low wage/low skill cycle outlined earlier. Training and development for managers and workers thus needs to be seen as part of a much wider approach to organisational development if significant bottom line gains are to be achieved. It is also important to note that this more holistic approach is well suited to the approaches contained within business development tools such as the balanced score card (Kaplan and Norton, 1996) and the European Foundation Quality Model (EFQM) which is now being used extensively in some of the more progressive business organisations in the region (see the discussion of Midlands Excellence 9 in Neely, 1998). The great advantages of using tools such as the EFQM and the balanced scorecard is that they force businesses to make a clear series of links between business strategy, business processes, resources and people.

9

Midlands Excellence website is at http://www.midlandsexcellence.com Page 65


SECTION 5: A CRITIQUE OF THE EXISTING PROVISION FOR ADVANCED MANAGEMENT SKILLS 5.1 Introduction The objectives of this section of the report are to review existing provision of management development in the sub-region; to produce a sub-regional map of provision; to analyse the map for overlaps and gaps; to critique sub-regional provision; and, to develop a base for subsequent development. An important finding from the research is that were problems at two levels of awareness: first, at the level of self-awareness (i.e. firms existing in a state of unconscious incompetence where they did not realised that they had developmental needs); and, second at the level of provider-awareness (where firms that realised that they needed development did not know how to procure it or where to procure it from). Many studies of workforce and management development have pointed to “information imperfections”, “information asymmetries”, “supplier-driven approaches”, “lack of provider flexibility” and “the over-formalisation” of training as factors that prevent firms being more effective in procuring the support they need. The critique of the sub-regional provision matrix will explore these issues. A key problem seems to lie in raising the awareness of the need for and importance of AMS development and training in SMEs, particularly in the Black Country. One training provider stated that there is a distinct difference in business culture between the Black Country and surrounding areas of Birmingham, South Staffordshire and Telford (although the uptake in Telford is still low amongst smaller firms) with firms in the Black Country being far more difficult to access. This view was reinforced by several other business support providers. The study area, particularly the Black Country, is largely made up of relatively small, traditionally managed industrial and industrial service companies. Based on our interviews, local firms often hold some or all of the following views:     

They don’t see the need to develop personnel They don’t see the need for or the immediate benefit of management training They don’t see a relationship between training and growth They view AMS development and training as an unnecessary expense They view consultants, providers and often intermediaries with suspicion

This is borne out that even when AMS training and development is offered free to companies through funded development schemes, there is often negligible uptake from, particularly, the Black Country. Unfortunately, the sub-region seems to be characterised by a very strong resistance to business, organisational, management and workforce development. 5.2 National agencies that could provide local support While it is important to have a view about what provision for the delivery of advanced management skills is available locally, it is also important to identify what national resources could be access from the sub-region. One important source of advice is the Small Business Portal (http://www.smallbusinessportal.co.uk). It lists the key UK centres, Institutes and agencies providing management advice, training, research and Page 66


development to SMEs. This is not a definitive list: for example, Perren, Davis and Kroessin (2002) have produced a list of 85 organisations active in SME management and leadership that is somewhat different to the list contained on the small business portal. Consequently, we can see that nationally there is no shortage in the quantity of advice to SMEs and the quantity of the agencies there to provide it. While we were able to prove that a large "quantity" of advice and advising bodies appears to exist, we can give no similar view of the quality of advice that is on offer. 5.3 Local provision for Advanced Management Skills This section of the report identifies specific issues, problems and challenges with AMS development provision. A first step was to identify the key providers in a catchment area that would be regarded as "accessible" to firms in the locality and then to determine what management development opportunities were available before trying to identify weakness, strengths, overlaps and gaps. There are a wide range of AMS providers within the project area and within the West Midlands in general. However, several businesses we contacted were willing to seek some forms of AMS development from elsewhere in the UK and, in some cases, from the US and/or Europe. One business even used a "university" located within its own corporate structure. This section breaks down the key providers into sectors, maps the provision and assesses the suitability of the provision. The key providers were identified as:      

Providers of AMS training and support can be broadly divided into: Further Education Colleges Higher Education Colleges and Universities Private Management Training and Support Institutes and Professional Bodies Intermediary Agencies

Below is a brief description of each sector, followed by the mapping of provision for each sector in more detail. Further Education Colleges Although AMS is largely outside the remit of FE institutions, a number operate higher-level courses at NVQ Level 5 (which incorporates some aspects of AMS). The main programmes offered by FE Colleges, within or bordering the project area, are Chartered Management Institute (CMI) qualifications: NVQ Level 5 in Operational Management and in Strategic Management; and the CMI Executive Diploma in Management. While these courses cannot be considered to be strictly "advanced management", they contain significant elements of some of the AMS identified. Additionally, several managers we interviewed, especially those in larger companies, considered FE Colleges to be familiar with, and responsive to, the needs of management development and to provide a good value service (though this did vary considerably by FE College). Elsewhere, in the report, we have identified that some of our case study organisations and key informants from intermediaries had some reservations about FE Colleges and voiced concerns that FE Colleges did not see Page 67


higher levels skills as being at the high volume end of the market arguing that FE Colleges were too focused at NVQ Level 1 and 2. Consequently, we do not see FE College having much to offer in the AMS arena. Higher Education Colleges and Universities (HEIs) There are eight Universities within the West Midlands, and one (the University of Wolverhampton) is situated within the project area. All of these have Business Schools and/or Departments of Management. Two Universities in the region have business schools with excellent international and national reputations: both Aston and Warwick run MBAs that are AMBA accredited with Warwick being accredited by AMBA, AACSB and Equis. All the Universities offer post-graduate business qualifications, generally MBAs and other masters level courses in specific management functions (especially human resource management and development, marketing and finance and accounting). Many offer MBAs within specific areas of management. Most of the schools offer management consultancy and tailor-made services for industry and businesses and some focus specifically on SMEs and regional development. Consequently, the West Midlands is well served as a region in terms of the volume of business and management educational and consultancy offerings. Programmes also exist that are focused specifically on SMEs such as the Business Investment and Growth programme at Warwick. Warwick University also contains the Centre for Small and Medium Sized Enterprises - one of the leading centres for SME research and enterprise teaching in the UK. In addition to the region's universities, the Mercia Institute was established in 2001. This is a consortium of the region's universities working together to promote enterprise and entrepreneurship teaching. Private Management Training and Support There is a small number of management training companies within the Black Country/Telford corridor offering true AMS training and support. There are a large number of training providers providing lower level training, and most of these do not see a business advantage in providing higher-level skills (for example, Pitman Training in Wolverhampton provide few courses over level 4 as, they argue that the returns get progressively smaller as the time, effort and trainer skills required escalate with higher levels of training). Additionally, there is more funding available (such as core LSC funding) for lower level training. There is also a large number of independent management consultants operating in a wide range of fields, though many of these are unregulated and of mixed quality. The AMS training companies provide an important role in principally tailor-made training and management development solutions. A common cause of complaint among the firms we have spoken to about private training providers was that they were often seen as "sales organisations" attempting to pass off "stock offerings" as "tailor-made interventions". Concern was also raised about the use of the term "management consultant" as it was an often-voiced concern that so-called "consultants" had minimal business knowledge and their claim to the status of consultant was not validated by any professional body. Most of the large management consultancy companies have offices based within the West Midlands, Page 68


and operate throughout the sub-region, although their charges are often considered too high by SMEs. Institutes and Professional Bodies There is a range of professional bodies providing AMS training and support, in the form of training packages/courses, seminars, mentoring and continuing professional development (CPD). Key amongst these (particularly in the West Midlands) is the Institute of Directors (IoD). The IoD offers executive coaching and mentoring services, bringing senior business people in to act as coaches or mentors for directors and senior executives. They also offer the "Director Development West Midlands" (DDWM) programme, run in conjunction with the Universities of Warwick and Wolverhampton Business Schools which was launched in late 2002. The West Midlands IoD DDWM programme is regarded within the IoD nationally as an innovation that other regions are soon to follow. Consequently, this is regarded as an element of best practice that needs to be integrated within a wider framework for AMS development regionally and sub-regionally. A later section also reveals that the IoD tends to appeal most to certain sub-groups of the regional population of senior managers that other agencies find it difficult to access. Other important organisations are the Chartered Management Institute, Institute of Marketing, the Chartered Institute of Management Accounting and the Chartered Institute of Personnel and Development - all have active branches in the West Midlands and the sub-region. Agencies There are a large number of organisations and initiatives operating in the area of AMS. Most of them do not have a mandate for direct provision of AMS or training but act as intermediaries and information suppliers between business and industry and providers (see below). However, some of them do have a direct role in provision. The Black Country Business Link has a ‘high-growth’ team that advises, helps and supports businesses with strategic business development. They provide project management and consultancy support and access to outsourced external providers for identified specific training needs. The agencies also support and run schemes that enable SMEs to obtain management development and support in a fairly seamless manner: Mustard.com being a prime sub-regional example of this. This scheme, operating through Business Link, allows SMEs to obtain management support and consultancy, identified and specified by the company, from private consultants, largely funded by the scheme. 5.4 A map of provision It is outside the scope of this study to produce a definitive source of all AMS provision for the sub-region, and this is probably an impossible task, given the unregulated and unregistered nature of many private providers. However, to inform the discussion it is important to identify the range and type of support and training that is supplied by various providers. This will help to identify whether the problems in overall AMS acquisition in the sub-region are primarily with provision or lie elsewhere. Table 5.1 below identifies key providers and what they provide.

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Table 5.1: Key Providers of Advanced Management Skills in the West Midlands Further Education

Higher Education

Telford College of A&T

NVQ 5 in Operational Management

Walsall College of A&T Dudley College of Technology Sandwell College of Further & Higher Education Aston Business School

NVQ 5 in Strategic Management CMI Executive Diploma in Management

Birmingham University Business School Coventry University

Keele University Staffordshire University

University of Central England

Warwick Business School

In-Company Training Programmes/Tailor-made Solutions Management Development Programme and Management Development Centre Consultancy & Business support Services Extensive MBA programme, Specific strengths in many AMS areas, Strong regional focus (but not Black Country and Telford) A variety of MBAs and MScs with a range of delivery mechanisms. Individually tailored programmes for local organisations including organisational culture and change, and HRM A range of MBAs, including marketing, HRM and an MBA for executives A Post-graduate Diploma in Management (work-based learning) with flexible delivery A range of consultancy offered, including change management and other AM skills An executive MBA, and post-graduate courses in HRM and management. Have an MBA studied at weekends and evenings, partly based in UK, partly in Netherlands. The business school is split between the Stoke and Stafford campuses, providing an accessible business school for the north Black Country and Telford. Innovation in Management Centre, and specialise in e-business for SMEs. Centre for Professional Management based in Stafford. A programme of MBAs and business Master’s courses, including people management and development, strategic management and managing through information Wide range of MBAs and post-graduate courses, including by distance learning delivery mechanisms. One of the largest business schools in the country, with the Enterprise Research Development Centre, and the Knowledge management Centre, both designed for engagement with SMEs. Internationally recognised as a leading business school Extensive programme of post-graduate MBAs and degrees A range of management development activities, including tailored programmes – executive development programmes specifically designed for an organisation, open courses for executives and a range of consultancy activities providing business support

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Higher education

Wolverhampton Business School

University College Worcester Private Management and Training Agencies

Ca. 4,500 management and business trainers in West Midlands region Business Link LSC Chamber of Commerce

Of particular significance as the only HE provider based in the study area, with campuses in Wolverhampton and Telford. Range of MBAs (full-time, part-time) and consultancy MA and MSc in Human Resource Management and Development Strong links to CIPD, CIMA Masters Degrees in Company Direction; Enterprise and Coaching/Mentoring planned for 2004 Linkage to West Midlands Director Development programme Management Research Centre with specific regional skills and experience Consortium and in-company management development programmes Executive development This is too far from the study area to be of great significance. Run a range of Post-graduate business and management courses, and runs a small business management programme Most individuals and organisations provide low level skills (principally NVQ 1-3). Although some specialise in advanced management development and support, agencies within, particularly, the Black Country, feel that the provision of AMS support is lacking, and limits the effective implementation of AMS support. Although primarily intermediaries, agencies conduct some direct AMS support and consultancy, through AMS business advice and mentoring. They have schemes directly supplying these services, and schemes they operate which fund provision for SMEs (for example, Mustard.com)

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It can be seen from Table 5.1 that there is an extensive range of AMS provision available for the Black Country and Telford. Interviews and discussions indicated that organisations generally approach trade organisations and professional institutes for sector-based management support and development as they feel the sector-specific skills are not available from elsewhere. This includes AMS support where there are specialist requirements that are sectoral (for example, where supply chain management or specific change management issues are sector-specific in needs). In these cases companies tend to liase directly with trade organisations and institutes, who then either provide the AMS solution directly or use an approved third party provider. For more transferable AMS training and development, the private sector and FE/HE organisations are used more often. 5.5 The Suitability of Provision Table 5.1 demonstrates that "volume" of provision is not an issue. However, given our findings of substantial skills deficits in many firms locally, it would seem that issues related to modes of delivery, cost, accessibility, lack of awareness and perceived or actual lack of relevance assume a greater significance. The provision of training suitable for, particularly SMEs, and the difficulty of getting SMEs to engage with HE and other providers are known to be difficult problems particularly when the local economy falls into the "low wage, low skill, compete on price" category. While there is a large volume of supply, it would appear that many firms locally are strongly resistant to training and development. From our research, we argue that the following issues are significant sub-regionally:    

Firms not having a predisposition towards development either organisational, managerial or workforce; Firms generally not being aware of and/or being confused by what is on offer; Firms wanting a form of delivery (i.e. mentoring or coaching) that providers cannot provide either cost effectively or because they do not have the people who can provide it; and, Firms not being convinced that training and development will have an impact on their bottom line

Modes of Delivery and Accessibility of Provision It is often cited that the modes of delivery are, particularly in HE and to a lesser extent FE, inflexible and impractical for working managers. It is generally considered that private providers better meet the needs of SMEs through being more flexible and more willing to enter the workplace. Many managers do not consider Universities to be meeting the needs of SMEs and industry in general, and that provision is not targeted at them. From the mapping exercise above it appears that HE institutes have a plethora of possible offerings from undergraduate degrees (for example, BA Business Administration; BA Business Enterprise, BA Business Information etc ranging through MBAs (full-time, part-time, distance) to "named" Masters in Marketing, HRM, HRD, Finance etc). The plethora of awards is seen by many managers as a Page 72


classic example of "confusion marketing". Indeed, the managers we spoke to considered HE to be the worst culprits in offering a wide array of courses and programmes that, while they have different names, differ little in content. While all the HEIs we spoke to are actively trying engage with local companies and SMEs, in particular, following the recent White Paper on Education, this would not seem to be being especially successful. Telephone interviews with FE and HE providers indicated that the great majority of enrolments onto a range of management courses were often from the public sector and larger companies with relatively few from SMEs. Several of our SME respondent also felt that HE was "not for them". Most HE institutes do offer their courses in a flexible manner. There are several oneyear full-time courses for career-break professionals, which as we shall see later have relatively little appeal to SMEs, and there are also block release courses, which, we were told, often create serious management problems for smaller companies. There are also more innovative approaches including weekend sessions, flexible start and finish dates, work-based learning and distance learning using ICT learning support. HE providers also offer consultancy and mentoring services that are designed to put professionals into companies rather than taking management off-site. Teaching Company Schemes are also well developed sub-regionally though there is clear potential for further developments here. HE and FE both appear to have responded to the needs of industry in providing a greater range of delivery methods and increased flexibility. There is a move towards ‘blended learning’, integrating a number of different delivery mechanisms and support structures into a truly flexible learning environment, however, further work in this direction would undoubtedly be beneficial. SMEs still regard HE as being inflexible, they do not understanding the delivery requirements of HEIs and there do not appear to be the mechanisms where SMEs or their representative bodies can work more effectively with HEIs to address these issues. It appears that there may also be a timelag between HEIs having changed and the SME community realising that such a change has taken place. All the HEIs we spoke to are keen to work more closely and more flexibly with SMEs to provide a range of products and delivery mechanisms that better meet their needs but the stereotypes seem to be taking a long time to break down. There is still a perception amongst SMEs that HEIs and their business schools are not ‘for them’. They see them as ivory tower institutes for large companies and large public sector organisations. They often do not realise the range of services and flexibility of delivery that are available. Very few SMEs consider Universities when they are determining where to source their training and development. It would appear that this is largely a marketing and promotional issue for HEIs and also for intermediaries who also have often not got the message that HEIs have changed and seeking to provide solutions specifically tailored to the sub-regional needs of SMEs. Despite these extensive attempts by some institutes to ensure that the methods of delivery increase accessibility and meet the requirements of SMEs, there is still a failure to gain high levels of penetration in SMEs. A problem with a lack of engagement remains even though HE and FE have changed their approaches and offer more relevant and accessible courses. Page 73


Content While there is no apparent shortage of business education and management development within the region, there is a real question about how well current providers could deliver against the set of 25 Advanced Management Skills developed in this study, and how well these AMS are embedded within more traditional offerings such as MBAs. In the recent past, there has been a rapid growth in the provision of leadership training (see the Leadership Trust10 and the Centre for Excellence in Management and Leadership). There has also been a huge growth in consultancies offering developmental advice in organisational change management with mentoring and coaching looking likely to be the next boom (or fad?). In the time available to conduct research it has not been possible to audit, say, MBAs against the 25 item AMS framework but MBAs are often strongly based on covering those skills we would see as functional skills (e.g. marketing, finance, strategy, HRM) rather than advanced management skills (such as negotiating, strategic thinking, leadership and direction and communications). Consequently, there is still concern that AMS development, support and training is lacking within the sub-region. It appears that this may also be true for private management and training support, where most is either geared towards lower levels of training or is prohibitively expensive for SMEs. However, a search for subject specific private training provision identified over 250 providers of change management development and training within England with many of these based in the West Midlands. Some advanced skills are however lacking: for example Black Country Business Link identified a need to provide companies with support for bidding for funds and project management. The research also revealed that there is a significant awareness gap within agencies (such as Business Links) about what is actually available and what is perceived to be available. There is no database or single information source on what is offered and it is very difficult to keep up to date with developments in this field locally, regionally and nationally. Type of Provision In terms of the suitability of provision, it appears that many FE/HE providers still focus on long-term academic qualifications such as postgraduate diplomas and MBAs. Some business school websites do not address in-company training or working with SMEs, and the overriding priorities communicated through websites are still firmly on recruiting undergraduates, on "traditional" courses and on research. The prevailing ethos of website and prospectuses is also primarily on individuals coming onto a campus for long periods of time. Interviews indicate that this is generally not what SMEs require. They want AMS training and development that visibly addresses immediate needs and issues; that is business problem focused; that is of short duration; that will provide a return within days or weeks rather than months or years; and, that is delivered primarily one-to-one and onsite. Our concern is that the way that Universities generally present themselves to the SME community effectively precludes the development of a "first touch" from which more long lasting and deeper relationships can be developed. Research shows that securing 10

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the first touch is often difficult but that if links can be established then firms are often likely to come back particularly if the SME thinks it is getting value for money and that the provider shows an empathy with the SME's needs and the issues it is having to face. Consequently, strategies for generating "the first touch" are clearly essential. Of some concern also is the potential dissonance in approaches between training providers and SMEs. The emphasis within most SMEs is usually on business development rather than personal development: if the two can be combined through the medium of organisational development, so much the better. But AMS training and development has to show tangible benefits for the business and, from our discussions, we feel that this fact may be poorly understood by FE/HE providers. The need is for small, discrete topical packages of learning that can be delivered in a flexible and blended way. HEIs need to be able to respond rapidly as an SME often wants an input within days or weeks and they cannot wait until the end of a semester or until batch of marking has been done Our analysis shows that there is a lot of overlap in provision in both formal offerings (such as MBAs between HEIs) and less structured offerings (such a executive short courses between HEIs and private sector providers). While this is not necessarily efficient it does serve to increase competition and, hopefully, to improve the quality of provision. The HE institutes still provide the vast bulk of high-level qualification oriented development while private providers often offer no formal qualifications, or focus on elements of CPD or credit towards achieving membership of a professional body. 5.6 A review of the functioning of local intermediaries There are a host of organisations providing support to SMEs. On the positive side this means that extensive and wide-ranging support is available, but it also has resulted in a confusing number of schemes, mechanisms and information providers. The efforts, approaches and remits of the organisations often overlap and it is acknowledged that communication and cross-agency approaches need to be improved. The House of Commons Trade and Industry Select Committee (1999) described small firms policy in the UK as "an excess of loosely connected and apparently uncoordinated policy initiatives shooting off in all directions, generating noise and interest, but not commensurate light". There appears to have been little critical assessment of the value of business and management development support and even though there appears a degree of unanimity about the desirability of small business support in the UK, there seems to have been little attention paid as to whether the support represents good value for public money. Perren, Davis and Kroessin (2000) also noted: ‘There are a plethora of organisations and initiatives that have been identified as having some part to play …The continuing churn and name changes of organisations adds to the challenges….. The aim may have been to respond to perceived needs, but instead it appears to have resulted in a tangled and confusing assortment of dislocated organisations and initiatives. Indeed, the term ‘intitativitis’ has entered the vocabulary of many policy-makers and intermediaries.’

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Although the situation has probably become better since the above was written, this was something that was raised repeatedly in interviews, by both the agencies themselves and companies. It quickly became apparent that there is no single agency responsible for advanced management skills development, and it is a grey area as to whether it is formally contained with in any agency remit. Additionally, it became apparent that agencies do not prioritise AMS provision. This is principally due to the impact being difficult to quantify, results difficult to equate against targets (NVQ levels), and the cost and complexity of provision and advice. Another key problem is the level of awareness and contact the intermediaries have with companies, particularly SMEs. The vast majority of SMEs have no contact with the Chambers or Business Links. It is an interesting finding from the interviews that many SMEs and larger companies do not source their AMS training and development requirements through intermediaries and have little to do with them. They prefer to operate independently, sourcing their needs often through personal contacts (many consultants are contracted on the basis of previous training or facilitation they have conducted) or by the recommendation of a colleague or another organisation. Results from our interviews suggest that if agencies are to engage more effectively with, what are in many cases, increasingly cynical companies, they need to get better organised; develop more clearly defined roles; focus more clearly on developing companies than on meeting "tick box" objectives; and more demonstrably being seen to address the needs of clients rather than those of funding agencies. 5.7 A critique of AMS provision locally This section provides a SWOT for AMS provision, accessibility and awareness. It appears that the quality, appropriateness and method of delivery of AMS training and development for the Black Country and Telford corridor are already generally good. It would seem to be an outdated view that the provision is not designed for SMEs, and richer pickings can be found in the public sector and large companies. One important Black Country AMS provider estimated that 60-70% of their business is with SMEs. Table 5.2: SWOT analysis of provision, accessibility and awareness for AMS Strengths        

A consensus view that management skills and workforce skills need radical attention A wide range of quality providers at HE level A wide range of delivery mechanisms Most AMS areas are covered adequately Business Links that have strongly engaged with the sub-regional skills agenda E-learning and distance are learning available and HE providers are keen to develop them Providers are now more willing to go into the workplace Strong emphasis in HEIs to deliver against a regional development agenda LSC’s have identified the need for upskilling managers

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Weaknesses            

Some gaps in provision – the private sector has been identified as being weak with regard to AMS provision. Private sector is largely unregulated, not standardised and distorted by the greater funding opportunities for, particularly NVQ Level 1-2 training Agencies/intermediaries are wary of AMS as outside national learning targets and hard to evaluate and monitor indicators There is as yet no overarching learning and skills strategic approach for the sub-region There are a plethora of players and no "one-stop shop". It is difficult for SMEs to keep informed and to know where to go for information Agencies/intermediaries are not fully aware of the available AMS provision AMS are often not seen as a priority for agencies, intermediaries or SMEs Lack of engagement between FE/HE and SME’s There are too few examples of blended learning and other innovative, bestpractice delivery and learning mechanisms HE is still primarily focussed on long-term on-campus provision Funding routes complex

Opportunities          

Improved coordination between agencies, intermediaries and SMEs The private sector providing more and higher quality AMS support FE/HE to engage more with SMEs and promote activities better Intermediaries and agencies could better identify and promote what AMS development services are available from themselves and providers Raise awareness amongst SMEs of the real and direct benefits of AMS development Provide a one-stop shop for AMS Develop a blended learning strategy Produce better evaluation criteria and performance indicators for AMS for publicly-funded bodies. Have 1-stop dedicated AMS coordinator LSC remit may be about to change as a result of the "Great Skills Debate" and forthcoming White Paper

Threats     

Disenchantment amongst SMEs leading to long-term disengagement with agencies and intermediaries SMEs do not become motivated to engage in upskilling Inter-agency power struggles and politics detracting from a needs-based approach to SME AMS provision SMEs, and to a lesser extent agencies and intermediaries, becoming aware of the need for AMS too late Intermediaries/agency targets continue to measure contact rather than impact Page 77


  

HEIs' remaining inflexibilities are not addressed Narrow view taken on the model of AMS provision Skills strategy not sufficiently pragmatic

5.8 Key points and issues We have identified a number of key points and raised several issues. The primary issue is not the lack of AMS provision, but the lack of effective engagement between providers and firms, especially SMEs. Given that the main role of government in these areas is to step in to overcome market failure our review has revealed a number of issues and tensions between intermediaries and their market-making role. Recent research on the West Midlands, conducted by the Federation for Small Businesses, has, unfortunately, identified problems with the complexity and over-bureaucratic nature of the structure put in place to administer funding to small businesses11 that seems to be further alienating whole tranches of small businesses in the region. While SMEs are notoriously difficult to engage, several of our informants have suggested that firms locally are particularly difficult to engage. Consequently, the need to develop effective mechanisms for engaging with the hard to engage business is paramount. While, in many areas, provision is available, this is often not realised by SMEs and, more worryingly by intermediaries, whose role it is to point demand towards supply. Our analysis is pointing to a number of information imperfections and rigidities and inflexibilities that prevent the more effective diffusion of management knowledge into businesses. While HEIs are intent on moving closer towards SMEs and responding to the regional development agenda, there is some distance left to travel. The plethora of awards on offer, often with little substantive difference between them, create confusion; HEIs often have no unified point of contact and the SME can often be "bounced around" between central departments, different schools and departments. More work needs to be done in HEIs and other providers to address specific AMS needs explicitly and to develop new content that focuses specifically on delivering quantifiable benefit on those issues that are most worrisome to businesses. While the HE offering needs to be academically rigorous, it also needs to be relevant to the explicit needs of businesses. HEI also need to develop new modes of delivery based on e-learning, action-learning, blended learning and one-to-one/one-to-few interventions in the workplace. While many are aware of this, a recent report by Burchall and Smith (2002) that showed that many business schools were dragging their feet on e-learning, is an issue of some concern. There is a need to raise the profile and importance of AMS development and training for SMEs through a targeted and sustained marketing campaign that resonates with the business issues as SMEs see them. A "one-stop shop" for AMS advice and provision is required, combining provider information, intermediary support programmes and agency strategy in an easy to use, transparent and customer focussed manner.

11

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Our prime finding here is that is it not that there is insufficient supply but there are resistances among firms, actual and perceived rigidities among suppliers and evidence of ineffective market making among intermediaries.

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SECTION 6: BASELINE ANALYSIS OF SUB-REGIONAL BUSINESSES 6.1 Introduction Key outcomes from previous sections were a framework for advanced management skills (AMS) for the sub-region and a series of questions that require answers if the objective is to develop effective strategies, policies and programmes to address the sub-region’s skills deficits. In Section 2 we have developed the view that the AMS project exists at the interface of Pillars 1 and 2 of the regional economic strategy, given that building better businesses and developing the region's workforce both depend on the region having excellent managers with advanced skills. Consequently, in this section, we have attempted to examine a range of advanced management skills development issues in the context of firms' business strategies and in the context of firms' innovation, product development and market development strategies. The report reveals that considerable added value is obtained by looking at advanced management skills in the context of business strategy. The aims of this section of the research project are first, to develop a clear view of the management skills development issues affecting the sub-region; to develop a baseline view of the sub-region, setting in context the aims to be achieved; and to make a connection between advanced management skills and business strategy. A questionnaire was designed to test several propositions derived from the project proposal that were reinforced by a review of the literature. The main objectives of the questionnaire were to:          

Identify which advanced management skills local business see as being most important Assess how firms thought they performed on these skills and to identify priorities for action Identify which business support agencies businesses had used and their views about those agencies Identify business opinions about advanced management skills providers Identify business perspectives of and awareness of providers Identify business resistances to management skills development Identify business preferences for management skills development delivery approaches Identify if training development infrastructures existed within firms Relate skills development to business strategy, product and market development strategies in the firm Relate senior management attitudes to management development to a range of background characteristics of their businesses and to their personal characteristics

This section contains an analysis of interviews with 104 company directors and senior managers from the sub-region. The interview schedule/questionnaire is included as Appendix 1.

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6.2 Respondent characteristics and background details Of the 104 respondents, 39 (37.5%) were from manufacturing and 65 (62.5%) were from the services sectors; 69% were male and 31% were female. While 94% were White (European), 6% were members of ethnic minority groups. The average respondent was aged 46 (the average age for males was 49, the average age for females was 41). The academic qualification profile is shown in Table 6.1 below. Table 6.1: Highest academic qualification achieved Educational qualifications Number Percent None 30 29.4 At least 5 O levels/GCSE Grade 1s 27 26.5 At least 1 A level 16 15.7 Degree 23 22.5 Postgraduate (Postgraduate diploma or above) 6 5.9 Total 102 100.0 The table reveals that almost 30% of the senior managers who responded had no formal academic qualifications and almost 72% were educated to below degree level. Only 6% had a Postgraduate qualification or above. While the highest educational qualification profile was quite low, 47% of respondents had achieved some form of professional qualification though this was highest for respondents with a degree (65%) and lowest for those without a degree (4%). Almost 18% of respondents neither had any formal academic qualifications nor a professional qualification. There was a very strong relationship between a respondent's age and the possession of educational qualifications, with respondents aged 55-59 being most likely to have no educational qualifications and respondents under 45 being most likely to have at least a degree. The table shows a distinct generation effect with, interestingly, a hiatus around the 45 mark where the propensity to have qualifications declines after 45 and the likelihood of having a degree increases under 45. Table 6.2: Age and the possession of educational qualifications Grouped aged None O levels A levels Degree 30-34 18.2 18.2 18.2 36.4 35-39 13.3 33.3 20.0 33.3 40-44 12.5 37.5 12.5 37.5 45-49 33.3 16.7 25.0 16.7 50-54 41.7 16.7 12.5 20.8 55-59 50.0 8.3 25.0 8.3 60-64 37.5 50.0 Total 29.3 25.3 16.2 23.2

Postgraduate Total 9.1 100.0 100.0 100.0 8.3 100.0 8.3 100.0 8.3 100.0 12.5 100.0 6.1 100.0

An analysis by industrial sector (Table 6.3) reveals that senior managers in the manufacturing sector are rather more likely to have no formal educational qualifications than those in the services sector. Senior managers in the services sector were also more likely to have a professional qualification (53%) than those in Page 81


manufacturing (41%). While senior managers in manufacturing are slightly older than those in the services sector (48 years compared to 46 years), this difference is not significant. Table 6.3: Industrial sector and the possession of educational qualifications Industrial sector Manufacturing Services Total

None O levels A levels Degree Postgraduate Total 35.9 25.6 12.8 20.5 5.1 100.0 25.4 27.0 17.5 23.8 6.3 100.0 29.4 26.5 15.7 22.5 5.9 100.0

6.3 Participation in formal management development and training Respondents were asked how many days of formal management development and training they had received in the last year. The average respondent had received 2.2 days of management development or training in the last year. The differences by sector were stark. with senior managers in manufacturing having received only 0.7 days of development or training compared to 3.1 days in the services sector. An analysis of training undertaken in the last year by highest educational qualification reveals that those with five O Level equivalents and at least one A Level had undertaken the least training in the last year. Those with a degree or no educational qualifications had undertaken 2.4 days, while those with a postgraduate qualification had, on average, taken over six days. Table 6.4: Formal training and educational qualifications Highest qualification None 5 O levels/GCSEs At least 1 A level Degree Postgraduate Total

Average days training 2.4 1.4 1.8 2.4 6.3 2.2

Respondents 27 26 15 21 6 95

A comparison of management development and training received by the nature of the firm’s competitive strategy also revealed stark differences that are shown in Table 6.5. Table 6.5: Formal training and competitive strategy On what basis does your company compete in the marketplace We compete mainly on price We compete mainly on the quality of the product We compete by offering something different We compete mainly on delivery times Overall Page 82

Average days training 1.0 2.3 6.6 2.4 2.1

Respondents 27 44 5 5 81


The finding that the volume of training that senior managers have received is strongly related to the nature of the firm's competitive strategy is consistent with the findings from the review of the literature. In firms competing by differentiation, managers received 6.6 days of formal training while senior managers in firms competing on price received, on average, one day of training in the last year. The crude training rate for firms that competed on quality was over twice that of firms competing on price. This is hugely significant as it shows a strong linkage between a firm’s competitive strategy and the propensity for senior managers to receive training. Competition on price indicates that firms have to control their costs and are thus very cost sensitive. Earlier research by Worrall and Cooper (2001) reveals very clearly that “cost reduction”; the control of costs and transforming fixed costs into variable costs (by the increased use of, for example, outsourcing) have been the primary drivers of organisation change in the UK. Here, we are implying that a competitive strategy based on price is related to low training investment, particularly compared with organisations that compete by “offering something different”. The limiting effect of price-based competitive strategy on training is also not amenable to supply-side interventions; rather it relies on a transformation of the firm's competitive strategy. A relationship also exists between product/service innovation and the number of days training undertaken. Where firms have not undertaken any product or service innovation, the crude training rate is at its lowest (1 day per year) and at its highest (3.3 days) where firms have introduced products new to the company. Senior managers in firms that have developed new markets also tend to have undergone more training than senior managers in firms that have not. Almost 73% of firms had not sought to develop new markets in the year prior to the survey and 32% of firms had not innovated. Table 6.6: Formal training and innovation activity In the last year have you introduced new products and Average days Respondents services training The products have not changed 1.0 28 We have modified an existing service 2.4 25 We have introduced products that are new to the company 3.3 27 We have introduced new products that are new to the market 2.1 7 Total 2.2 87 Table 6.7: Formal training and new market development In the last year have you changed the markets you sell in We are still selling to the same market We have entered a new market Total

Average days Respondents training 2.0 66 3.2 25 2.3 91

If we examine innovation and new market development jointly, the lowest crude training rate is located in firms that have neither innovated nor developed new

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markets (0.7 days on average in 20 firms) and it is at its highest in firms that have both innovated and developed new markets (4.0 days on average in 16 firms) Table 6.8: Formal training and new market development and innovation In the last year have you changed the Innovation markets you sell in We are still selling to the same market No innovation Innovation We have entered a new market No innovation Innovation

Days training 0.7 2.3 2.0 4.0

Respondents 20 42 7 16

While the tables above take a retrospective view of management development and training, respondents were asked if they were currently involved in training. Interestingly, managers with at least 5 O Level equivalents and at least 1 A level were most likely to be currently involved in training. However, senior managers in manufacturing (Table 6.9) and those based in firms that competed on price (Table 6.10) were significantly less likely to be involved in training than managers in the services sector or those that competed on quality or differentiation. Table 6.9: Current involvement with management development and industrial sector Sector Manufacturing Services Total

Yes 25.0 46.8 39.4

No 75.0 53.2 60.6

Total 32 62 94

Table 6.10: Current involvement with management development and competitive strategy Competitive strategy We compete mainly on price We compete mainly on the quality of the product We compete by offering something different We compete mainly on delivery times Total

Yes 28.6 46.5 40.0 20.0 38.3

No 71.4 53.5 60.0 80.0 61.7

Total 28 43 5 5 81

The above analysis has revealed a number of important factors that will affect the design of management development policies and strategies: 



The likelihood that a senior manager had undertaken training in the last year appears to be related to their educational qualification, with senior managers who have either 5 O Level equivalents or at least 1 A level having received the lowest volume of training in the last year. This though is somewhat counterbalanced by this group having the highest rate for managers who are currently undertaking some form of management development The crude training rates for those with no formal qualifications are similar to those with a degree Page 84


 



Those with postgraduate qualifications had the highest crude training rate indicating that having higher educational qualifications is related to a higher propensity to undertake training A senior manager's propensity to engage with training is strongly related to the business strategy of the firm - training rates were at their lowest where firms competed on price but at their highest where firms had a strategy based on differentiation Innovation and new market development were both related to higher training rates with the lowest crude training rates being located in firms where no innovation or new market development had taken place in the last year

6.4 The importance that managers ascribed to the Advanced Management Skills In Section 3, we developed an advanced management skills framework that merged a number of antecedents from work by earlier researchers on the theme A listing of the skills derived is shown as Table 6.11. The responses were on a six-point scale that ranged from "not at all important" (1) to "very important" (6). Table 6.11: Advanced management skills

S01 S02 S03 S04 S05 S06 S07 S08 S09 S10 S11 S12 S13 S14 S15 S16 S17 S18 S19 S20 S21 S22 S23 S24 S25

Advanced Management skill Building and managing teams Communicating inside and outside the business Creative thinking and problem solving Delivering customer service Developing and retaining talented employees Developing new working practices Financing new developments Handling risk and uncertainty Identifying market opportunities Keeping up to speed with technological change Learning from customers, competitors & suppliers Managing change in the organisation Managing equal opportunities/diversity Managing innovation Managing logistics Managing my own workload & personal development Managing projects Managing quality Managing supply chain relationships Negotiating Networking in the industry Providing leadership and direction Redesigning business processes Thinking strategically Using consultants

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The objectives here are:    

First, to identify which skills our panel of Directors and Senior Managers considers are most important to the success of their business Second, to identify how well respondents think their business performs on each of these skills Third, to develop a prioritised listing of skills to inform the development of policy and strategy at the "overall" level Fourth, to identify how importance, performance and priorities vary for different sub-groups of businesses given that we have identified significant differences in training uptake by managers' personal characteristics, by the basis of a firm's competitive strategy, by sector and by product and market development strategy

A basic analysis of the data on the perceived relative importance of our twenty-five skills is shown in Table 6.12. (An "importance index" score of 100 would have occurred if each respondent had given an item a maximum score of 6 in the questionnaire.) Table 6.12: The relative importance of the set of 25 advanced management skills Advanced Management Skill Delivering customer service Communicating inside and outside the business Providing leadership and direction Developing and retaining talented employees Managing quality Building and managing teams Learning from customers, competitors and suppliers Creative thinking and problem solving Identifying market opportunities Thinking strategically Managing change in the organisation Managing my own workload Negotiating Managing projects Handling risk and uncertainty Developing new working practices Keeping up to speed with technological change Managing innovation Managing supply chain relationships Redesigning business processes Financing new developments Managing equal opportunity Managing logistics Networking in the industry Using consultants Page 86

Importance index 96 92 92 90 90 90 86 85 84 84 84 83 81 80 80 77 75 74 72 71 71 71 71 64 50


Of the twenty-five skills listed, fifteen achieved an importance index score of 80 or more with six achieving a score of 90 or more (these were delivering customer service, communicating inside and outside the business, providing leadership and direction, developing and retaining talented employees, managing quality and building and managing teams). In an attempt to develop a more focused approach, factor analysis was used to collapse the twenty-five advanced management skills into a smaller number of categories. In some cases, groups of skills could be seen to cluster together, in other cases (for example, managing equal opportunities and diversity) a skill did not correlate sufficiently with other skills to form a cluster and was thus treated as a separate category. Since "using consultants" scored low in importance as an item, it was excluded from the analysis. The broad skill categories ranked by importance are shown in Table 6.13 below. Table 6.13: Broad skill categories and their relative importance Skill category

Customers and quality Communications Strategy, leadership and direction Teams and projects

Managing the self Learning and innovation

Risk Processes and practices External relationships

Equal opportunities Resources

Average Individual skills importance index 93 Delivering customer service Managing quality 92 Communicating inside and outside the business 88 Thinking strategically Providing leadership and direction 86 Building and managing teams Managing projects Creative thinking and problem solving Developing and retaining talented employees 83 Managing my own workload and personal development 81 Identifying market opportunities Managing change in the organisation Keeping up to speed with technological change Learning from customers, competitors and suppliers Managing innovation 80 Handling risk and uncertainty 74 Redesigning business processes Developing new working practices 72 Managing supply chain relationships Negotiating Managing logistics Networking in the industry 71 Managing equal opportunity 71 Financing new developments

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Clearly, any strategy to deliver advanced skills to the sub-region would be more likely to resonate with key training investment decision makers in businesses if these broad categories of skill were emphasised. An analysis of senior managers' assessments of the importance of the set of twentyfive skills by industrial sector, by business strategy and by innovation/new market development revealed some interesting differences: 









Senior managers in the manufacturing sector rated eighteen of the advanced management skills more highly than senior managers from the services sector indicating that the set of skills resonated more strongly with managers in manufacturing than those in services The areas where senior managers in the manufacturing sector gave significantly higher score than managers in the services sector were (in order of ascending difference): managing projects; thinking strategically; managing innovation; negotiating; redesigning business processes; managing supply chain relationships; managing logistics; and, learning from customers, competitors and suppliers. Where firms compete on price, compared to where they competed on other criteria, respondents were less likely to see the skills listed as important. We can conclude that firms whose basis of competition is price have significantly less empathy with the notion of advanced management skills than firms competing on quality or differentiation. This is a point of some concern given that the sub-region generally is typified by firms that compete on price: though we admit that this is not reflected in our sample. Those areas where there are significant differences in ascribed importance between firms competing and price and those competing on quality and differentiation include (in ascending order of difference): building and managing teams; managing change in the organisation; creative thinking and problem solving; developing new working practices; thinking strategically; managing my own workload; developing and retaining talented employees; managing quality; providing leadership and direction; managing innovation; managing projects; handling risk and uncertainty; identifying market opportunities; managing equal opportunity; communicating inside and outside the business; and redesigning business processes (in all these cases managers in firms that compete on price are less likely to see these skills as important as managers in firms that do not compete on price indicated something of a different skills mindset between managers in these two types of business) A similar pattern emerged after comparing firms that had not innovated and were still selling into the same market as a year ago with firms that had innovated or developed new markets and, particularly those firms that had innovated and developed new markets . Again, managers in firms that have either innovated or developed new markets tend to have different skills and mindsets from managers in firms that are locked into existing products and markets.

From the analysis, we can conclude that the basis of competition and whether firms have innovated and/or developed new markets can be used as effective discriminators between firms. They are indicative of managers in different types of firm having different attitudes to the entire notion of advanced management skills, and to the Page 88


importance that they ascribe to particular skills. Those firms competing on price and those locked into existing markets with existing products are much less likely to empathise with the concept of advanced management skills than firms that compete or price, that innovate and that prospect for new markets. The fact that the sub-region is characterised by firms that compete on price and relatively high levels of product and market inertia is indicative of the scale of the task facing a strategy radically to reinvent the business base of the area. 6.5 How well did respondents think they performed on the set of Advanced Management Skills? Having asked senior managers how important they considered the set of AMS to be, we then went on to assess how well managers thought their businesses performed on the same set of skills. Responses were on a six-point scale that ranged from "perform badly" (1) to "perform well" (6). The responses on the twenty-five AMS items are shown in Table 6.14 where a "performance index" of 100 would imply that all respondents had assessed themselves to be performing well and given themselves a "6" rating. Table 6.14: Self-assessed performance on the 25 advanced management skills Advanced management skill Delivering customer service Building and managing teams Providing leadership and direction Creative thinking and problem solving Communicating inside and outside the business Managing quality Developing and retaining talented employees Negotiating Learning from customers, competitors and suppliers Managing supply chain relationships Managing projects Managing change in the organisation Thinking strategically Managing logistics Managing equal opportunity Financing new developments Identifying market opportunities Handling risk and uncertainty Managing my own workload Developing new working practices Keeping up to speed with technological change Managing innovation Redesigning business processes Networking in the industry Using consultants Page 89

Performance Index 85 82 80 80 79 79 79 78 76 75 74 74 74 74 73 73 72 71 71 71 71 69 67 66 59


The respondents clearly have reasonably high scores on many of the measures but it must be borne in mind that these are self-assessments and likely to be biased. However, it is noticeable that they rate themselves less highly on using consultants; networking in the industry; redesigning business processes; managing innovation; developing new working practices; managing own workload; and, handling risk and uncertainty. There were also some sectoral differences in that services sector respondents rated themselves higher than those in manufacturing on identifying market opportunities, developing new working practices, managing equal opportunity, using consultants, networking in the industry, communicating inside and outside the business, providing leadership and direction, handling risk and uncertainty, building and managing teams, and delivering customer service. Managers in manufacturing rated themselves higher in learning from customers, competitors and suppliers; managing change in the organisation; managing logistics; and managing supply chain relationships than did managers in the services sector. Managers in the services sector, thus, tended to rate themselves higher overall than did managers in manufacturing. An analysis based on firms' competitive strategies revealed that firms that compete on price usually assess themselves less well than firms competing on quality or differentiation. The areas where the differences are most marked are shown below (in descending order):               

Developing new working practices Communicating inside and outside the business Managing innovation Identifying market opportunities Creative thinking and problem solving Financing new developments Providing leadership and direction Managing equal opportunity Redesigning business processes Managing change in the organisation Building and managing teams Delivering customer service Managing projects Networking in the industry Thinking strategically

This finding is important, as it shows that in a number of critical areas such as managing innovation, identifying market opportunities, developing new working practices and communications, firms competing on price do have some level of awareness that they are "off the pace" in that their self assessments are generally lower than those of managers in companies who compete on quality and/or differentiation.

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6.6 Priorities for Advanced Management Skills Development and their relationship to type of business By analysing the data on the importance of the twenty-five AMS in conjunction with the data on how well managers consider that their businesses perform on these measures, we can, using a technique called "gap analysis", identify priorities for AMS development. "Performance deficit gaps" are those between the importance that managers ascribe to an AMS and their self-assessed performance on that AMS. On the assumption that it is critical to do the important things well, we would hope to find that managers have given themselves high performance scores on the areas they regard as important. The objective here is to identify those areas where the difference between the importance index and the satisfaction index is at is widest. By analysing the widths of the performance-importance gaps, we can rank the AMS items based on the relative size of the gaps on the assumption that the wider the gap, the higher the priority we must attach to taking action on that AMS item. The relative gaps for the entire data set (expressed as a percentage deficit12) are shown in Table 6.15 below. Where the gaps are negative, this reveals that managers' self-assessed performance does not match up to the importance they ascribe to a give skill. Table 6.15: Priorities for AMS development AMS area Identifying market opportunities Managing my own workload Communicating inside and outside the business Developing and retaining talented employees Providing leadership and direction Thinking strategically Learning from customers, competitors and suppliers Managing quality Delivering customer service Managing change in the organisation Handling risk and uncertainty Building and managing teams Developing new working practices Creative thinking and problem solving Managing projects Redesigning business processes Keeping up to speed with technological change Managing innovation Negotiating

Percentage deficit -14.8 -14.4 -14.1 -12.9 -12.4 -12.0 -11.5 -11.4 -11.3 -11.2 -10.1 -7.7 -7.4 -6.2 -6.1 -6.0 -5.7 -5.6 -3.8

The analysis reveals that three items score relatively highly. These are a) identifying market opportunities, b) managing my own workload; and c) communicating inside and outside the business. It should be noticed that only one of these (communicating inside and outside the business) is rated among the top three measures in the 12

The percentage deficit is calculated as 100 * ((the performance score of an item - the importance score) / the importance score of an item) Page 91


importance index table shown as Table 6.12. In terms of focusing on the top priorities for AMS development, the table indicates where the widest performance deficits exist for the cross section of firms taken collectively. Given that firms exist in different sectors, have different competitive strategies, different product market strategies and are managed by people with different educational backgrounds, it is important to analyse, first, if differences exist between different types of firm in the ranking of skills items that emerges and, second, to identify any differences in the relative size of the percentage AMS performance deficits. Tables 6.16 and 6.17 compare the priorities and relative performance deficit gaps of the manufacturing and services sectors. The most obvious point is that the scale of the deficits in the manufacturing sector is greater than those in the services sector. In manufacturing, five AMS items have a percentage deficit greater than -15% while none in the services sector achieve this score. The highest deficit in manufacturing (identifying market opportunities at -19.3%) is substantially higher than the item in second place (communicating inside and outside the business at -16.3%). While the manufacturing and services sector have eight of the top ten items in common, the rankings do differ. Consequently, an AMS strategy focused on different sectors will need to reflect similar issues; but it would need to reflect the fact that skills deficits are somewhat higher in the manufacturing sector and the fact that priorities do differ between the sectors. Table 6.16: Priorities for AMS development: Manufacturing AMS area Identifying market opportunities Communicating inside and outside the business Managing my own workload Learning from customers, competitors and suppliers Thinking strategically Providing leadership and direction Delivering customer service Managing quality Handling risk and uncertainty Developing and retaining talented employees Managing innovation Managing projects Redesigning business processes Developing new working practices Managing change in the organisation Building and managing teams Creative thinking and problem solving Negotiating Keeping up to speed with technological change Managing equal opportunity Managing logistics Page 92

Percentage deficit -19.3 -16.3 -15.4 -15.1 -15.1 -13.8 -13.6 -13.4 -13.2 -12.4 -10.4 -9.7 -9.6 -9.2 -8.9 -8.8 -8.7 -7.7 -6.6 -2.3 -0.3


Table 6.17: Priorities for AMS development: Services AMS area Managing my own workload Developing and retaining talented employees Communicating inside and outside the business Managing change in the organisation Identifying market opportunities Providing leadership and direction Managing quality Thinking strategically Delivering customer service Learning from customers, competitors and suppliers Handling risk and uncertainty Building and managing teams Developing new working practices Keeping up to speed with technological change Creative thinking and problem solving Managing projects Redesigning business processes Managing innovation Negotiating


We conducted a similar analysis, comparing those organisations that compete on price and those that compete on quality of differentiation. These differences are shown in Tables 6.18 and 6.19. While the manufacturing and services sector have a number of points in common in the identification of priorities for AMS development (having eight out of their top ten priorities in common), a comparison of the top five measures for firms who have different bases of competition reveals that they share only one item in common (communicating inside and outside the business). While those firms that compete on price emphasise identifying market opportunities, providing leadership and direction, delivering customer service and learning from customers, competitors and suppliers as priorities, firms competing on quality or differentiation emphasise managing my own workload; developing and retaining talented employees; thinking strategically; and managing quality as the main AMS deficits. The item "building and managing teams" figures much less prominently for firms that compete on price than firms with other forms of competitive strategy. These differences would need to be reflected in the crafting of strategies for AMS development as firms that compete on price require a different mix of skills interventions than those competing on quality or differentiation.

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Table 6.18: Priorities for AMS development: companies competing on price AMS area Communicating inside and outside the business Identifying market opportunities Providing leadership and direction Delivering customer service Learning from customers, competitors and suppliers Thinking strategically Managing my own workload Developing and retaining talented employees Managing change in the organisation Negotiating Managing quality Developing new working practices Redesigning business processes Handling risk and uncertainty Managing innovation Managing projects Creative thinking and problem solving Keeping up to speed with technological change Building and managing teams


Table 6.19: Priorities for AMS development: companies that compete on quality or differentiation AMS area Managing my own workload Developing and retaining talented employees Thinking strategically Managing quality Communicating inside and outside the business Providing leadership and direction Managing change in the organisation Identifying market opportunities Delivering customer service Building and managing teams Handling risk and uncertainty Learning from customers, competitors and suppliers Creative thinking and problem solving Managing projects Developing new working practices Redesigning business processes Managing innovation Keeping up to speed with technological change Negotiating Page 94



Elsewhere, we have identified that the propensity of managers to engage with management development varies not only with the form of competitive strategy that prevails within a company but also with their product development and market development strategies. The AMS deficits for the four types of firms we have defined by their product and market development strategies (same market/no innovation; same market/innovation; new market/no innovation and new market/innovation) are shown in Tables 6.20 6.23. Table 6.20: Priorities for AMS development: same market/no innovation AMS area Identifying market opportunities Redesigning business processes Learning from customers, competitors and suppliers Developing new working practices Handling risk and uncertainty Managing quality Delivering customer service Thinking strategically Communicating inside and outside the business Managing my own workload Providing leadership and direction Creative thinking and problem solving Managing change in the organisation Keeping up to speed with technological change Managing innovation Negotiating Developing and retaining talented employees Networking in the industry Building and managing teams

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Table 6.21: Priorities for AMS development: same market/innovation AMS area Communicating inside and outside the business Developing and retaining talented employees Providing leadership and direction Delivering customer service Managing change in the organisation Thinking strategically Building and managing teams Managing my own workload Identifying market opportunities Managing quality Learning from customers, competitors and suppliers Managing projects Developing new working practices Creative thinking and problem solving Managing innovation Handling risk and uncertainty Redesigning business processes Negotiating

Percentage deficit -13.2 -13.1 -12.5 -11.7 -9.7 -8.4 -8.3 -8.0 -7.7 -7.1 -6.0 -4.3 -4.1 -3.6 -2.0 -1.2 -0.6 -0.2

Table 6.22: Priorities for AMS development: new market/no innovation AMS area Developing and retaining talented employees Thinking strategically Creative thinking and problem solving Developing new working practices Communicating inside and outside the business Managing change in the organisation Providing leadership and direction Learning from customers, competitors and suppliers Negotiating Handling risk and uncertainty Managing my own workload Managing projects Networking in the industry Financing new developments Keeping up to speed with technological change Redesigning business processes Managing quality Building and managing teams Delivering customer service

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Table 6.23: Priorities for AMS development: new market/innovation AMS area Managing my own workload Managing quality Identifying market opportunities Communicating inside and outside the business Handling risk and uncertainty Developing and retaining talented employees Keeping up to speed with technological change Building and managing teams Managing innovation Learning from customers, competitors and suppliers Managing projects Thinking strategically Delivering customer service Providing leadership and direction Managing change in the organisation Financing new developments Negotiating Redesigning business processes Creative thinking and problem solving Developing new working practices Managing logistics

Percentage deficit -21.5 -20.1 -19.5 -17.6 -16.6 -15.7 -15.4 -14.1 -14.0 -12.8 -12.2 -12.0 -11.8 -11.6 -7.4 -4.8 -3.2 -2.8 -2.4 -1.9 -1.8

A comparison of the four different types of business based on their product and market development strategies reveals some significant differences. First, for firms that have neither innovated nor developed new markets, the deficit on identifying market opportunities is considerable and significantly higher than all the other measures. Interestingly, these firms also have significant performance deficits on redesigning business processes; learning from customers, competitors and suppliers; developing new working practices; handling risk and uncertainty; and, managing quality. For firms that have developed new products or services for an existing market, the perceived AMS deficits are somewhat different from those that have neither innovated nor developed new markets. Innovators in the same markets tend to identify communicating inside and outside the business, developing and retaining talented employees, providing leadership and direction, and delivering customer service as key AMS deficits. For those firms having taken an existing product or service into a new market, a different set of priorities and skills deficits from the two listed above are revealed. The AMS deficits identified here focus on developing and retaining talented employees; thinking strategically; creative thinking and problem solving; developing new working practices; and, communicating inside and outside the business. For firms that have developed new products for new markets, the percentage scores on the AMS performance tend to be somewhat higher than firms that have innovated but stayed in the same market. Three AMS deficits emerge as being quite pronounced Page 97


- these are managing my own workload, managing quality and identifying market opportunities. This type of firm is the only one to list "managing my own workload" in the top five AMS items. Four further items emerge as being prominent AMS deficits in this type of company: communicating inside and outside the business; handling risk and uncertainty; developing and retaining talented employees; and keeping up to speed with technological change. The analysis by product and market development strategy reveals some interesting differences. In firms that have neither innovated nor developed new markets, the main deficits focus on identifying new markets (very strongly) followed by redesigning work practices, learning from customers and suppliers and developing new working practices while firms that have either innovated or developed new markets are more likely to emphasise communicating inside and outside the business, developing employees, leadership, thinking strategically and managing change. In firms that have both innovated and developed new markets, "self-management" in the form of "managing my own workload" predominates though these forms are more aware of the need to handle risk and uncertainty; develop and retain talented employees; and keep up to speed with technological change. The previous section has revealed that a strong degree of differentiation exists in firms when analysed by sector, competitive strategy and by their product and market development strategies. The analysis strongly indicates that any AMS development strategy would need to be tailored to the differing needs of different types of business and that different approaches and tactics would be needed if the concept of AMS development is to be effectively marketed to different type of business. 6.7 Priorities for Advanced Management Skills Development and their relationship to the educational qualification of respondents To obtain a further insight into how AMS deficits vary between different types of respondents, an analysis by the educational qualifications of respondents was undertaken in which respondents were categorised as those with no formal qualifications; those with 5 or more O Level/GCSE Grade 1 equivalents; and those with a degree or above. The results are shown as Tables 6.24 to 6.26. Surprisingly, the AMS deficits were at their lowest for those with no formal educational qualifications. The difference in the performance scores for those without formal qualifications was also substantially lower than those of the other two groups. Earlier analysis has revealed that older managers (i.e. those over 50) tend to be less qualified and consequently these differences are likely to be explained as much by age as by a manager's level of educational achievement.

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Table 6.24: Deficits and priorities for AMS development: no qualifications AMS area Identifying market opportunities Managing innovation Delivering customer service Developing and retaining talented employees Learning from customers, competitors and suppliers Managing change in the organisation Managing my own workload Handling risk and uncertainty Managing quality Communicating inside and outside the business Redesigning business processes Providing leadership and direction Financing new developments Managing projects Keeping up to speed with technological change Developing new working practices Thinking strategically Negotiating


Table 6.25: Deficits and priorities for AMS development: 5 O Levels/1 A Level AMS area Managing my own workload Identifying market opportunities Communicating inside and outside the business Providing leadership and direction Thinking strategically Managing quality Developing and retaining talented employees Handling risk and uncertainty Building and managing teams Creative thinking and problem solving Delivering customer service Developing new working practices Managing change in the organisation Learning from customers, competitors and suppliers Negotiating Managing projects Keeping up to speed with technological change Networking in the industry Managing innovation Redesigning business processes Managing equal opportunity Managing logistics Financing new developments Page 99

Percentage deficit -20.2 -19.2 -17.4 -15.2 -15.1 -13.8 -13.5 -12.8 -10.9 -10.4 -10.3 -10.2 -10.0 -9.0 -7.9 -6.5 -5.7 -4.5 -4.1 -3.7 -2.0 -0.6 -0.3


Table 6.26: Deficits and priorities for AMS development: degree or above AMS area Communicating inside and outside the business Learning from customers, competitors and suppliers Providing leadership and direction Developing and retaining talented employees Thinking strategically Delivering customer service Managing change in the organisation Building and managing teams Identifying market opportunities Managing quality Managing my own workload Creative thinking and problem solving Redesigning business processes Handling risk and uncertainty Developing new working practices Keeping up to speed with technological change Managing projects Managing innovation


Managers with either O Level equivalents or at least 1 A Level identified two main performance deficits: managing my own workload; and, identifying market opportunities followed by communicating inside and outside the business; providing leadership and direction; and, thinking strategically. Managers with a degree or higher identified a different set of AMS deficits and priorities from managers with lower level qualifications. These were: communicating inside and outside the business; learning from customers, competitors and suppliers; providing leadership and direction; developing and retaining talented employees; thinking strategically; delivering customer service; and, managing change in the organisation. The analysis reveals that the educational qualifications of managers, though confounded by age particularly for those lacking formal qualifications, do have an effect on AMS performance deficits and the resultant priorities for development. These findings have implications for the crafting of an AMS development and for the marketing of this strategy to managers with different qualification levels. Marketing to the unqualified (who are often older managers) is likely to be somewhat more difficult than marketing to managers who have higher qualifications. The way that skills would need to be bundled also differ by the educational level of managers. 6.8 Which skills impact most on "the bottom line": managers’ perceptions In the design of the questionnaire, based on an extensive review of the literature, every attempt was made to ensure that the skills listed in the 25-fold categorisation of AMS were valid. At the beginning of the interview schedule, managers were asked, unprompted, what skills they thought had the greatest impact on the bottom line of their businesses. The listing, in order of those skills cited most often, is shown in Table 6.27. Page 100


Table 6.27: What skills would make the greatest impact on the bottom line Skill Communication Employee development and management Strategic Planning Self-management Quality management Marketing Leadership Financial Management Customer Service Sales Team building IT use Securing resources and grants Production planning Negotiation Time Management Managing Change Creativity and innovation Programme/project management Generating new business Managing the supply chain

Number 15 14 9 9 9 9 9 9 9 8 6 6 4 4 4 3 3 3 2 2 1

Of the twenty-one listed, all except sales and production planning are represented in our list of 25 measures. Within the scope of this study, we see sales and production planning as important skills but skills that we would describe as "functional" rather than "advanced". Consequently, we feel that this strong degree of overlap further validates the AMS framework we have developed. 6.9 Sources of business advice Elsewhere in the report, we have identified the importance of intermediaries (both public and private) in brokering or delivering business support. These findings will be further reinforced by research to be published on June 25th 2003 by the Centre for Business Research at Cambridge University13 that will reveal some vitally important facts and issues: 1. The proportion of SMEs that failed increased threefold from 7.1% between 1997 and 1999 to 21.8% between 1999 and 2002. 2. “Ailing firms" are no more likely to contact Business Link for assistance prior to failure than other firms but, more important, no one knows why they don't. 3. Firms that carrying out less training and innovating less were more likely to fail. 13

Enterprise challenged: policy and performance in the British SME sector 1999-2002. Centre for Business Research, Cambridge University. To be published 25 th June, 2003. Page 101


4. Firms that had invested in training, had innovated and had expanded their markets particularly into exports were more likely to have been successfully sold to other firms. In Table 6.28, we reveal the views of our 104 respondents about the perceived quality of various intermediaries and also the level of contact between firms and intermediaries. Table 6.28: Contact with and views about intermediaries Source of advice Accountant Bank Business Link Consultants Chamber of Commerce Trade Body Local FE College Local authority Local University Federation of Small Businesses Learning and Skills Council CBI

% using 84.3% 73.3% 43.6% 35.3% 33.7% 32.7% 20.8% 19.8% 17.8% 12.0% 8.9% 4.0%

% poor 3.4% 10.5% 6.8% 10.8% 8.1% 14.7% 17.4% 26.0% 5.6% 0.0% 25.0% 40.0%

% good 76.2% 60.6% 56.8% 77.6% 59.4% 58.8% 47.8% 21.7% 55.6% 61.6% 33.3% 40.0%

Net (*) 72.8 50.1 50.0 66.8 51.3 44.1 30.4 -4.3% 50.0 61.6 8.3 0.0

(*) "Net" is the percentage saying good minus the percentage saying poor The table above reveals, as other studies have done, that the prime sources of business advice to firms are Accountants and the Banks with Business Link, Consultants and Chambers of Commerce occupying the middle ground. Clearly, the prime links between businesses and business advice are accountants and banks. It is disconcerting that over 10% of respondents who had used banks as a source of business advice considered them to be poor. As one of our case study respondents said: "Banks sell you umbrellas in the sunshine and take them back when it rains". However, only 3.4% of firms that had used accountants as a source of advice regarded them as poor. The highest levels of net satisfaction were with accountants (+72.8), consultants (+66.8), and the Federation of Small Businesses (+61.6 though only 12% of respondents had contacted them). Business Links, the banks, local universities and Chambers of Commerce occupied the mid-ground in terms of net satisfaction. While 56.8% of respondents thought that Business Link were "good" or "very good", this compares unfavourably with research to be published by the Centre for Business Research at Cambridge in June 2003 which shows that Business Links on average were achieving a satisfaction score of 81% with this having risen from 69% in 1997. The report will conclude that the old Business Links tend to perform significantly better than the newly created Business Links. Overall, 92% of firms had contacted at least one of the eleven sources of business advice listed in the survey. The "average firm" had contacted 3.7 agencies with firms that competed on price (3.5), firms that did not innovate (3.6), respondents with at Page 102


least a degree and firms that were persisting with the same product in the same market (3.4) having the lowest number of contacts. Firms that were trying to get an existing product into a new market had the highest average number of contacts (4.4). Consequently, we are let to conclude that there is a high penetration rate of business advisers into firms though penetration tends to be highest for private bodies than public. The contact rate for LSCs was particularly low and this seems to reflect evidence to be published in June 2003 by the Centre Business Research that reveals that the use of LSCs is significantly lower that the use of Training and Enterprise Councils. These finding have substantial implications for the design and delivery of an AMS strategy. While public bodies and quasi-public bodies are regarded positively, they have levels of market penetration significantly below that of accountants and the banks. Clearly, the diffusion of the message about the need to develop AMS as a means of business regeneration would need to exploit the resources of those organisations that have channels to market that have both a high level reach and are held in high esteem. A wider set of issues surrounding the perceptions firms about the role and effectiveness of intermediaries and the views of intermediaries themselves are explored and discussed in the case studies in Section 7. 6.10 Training and development infrastructures within the firm A key theme from the literature review was that training and development should not be seen in isolation from other aspects of business development. Several authors have noted that training, when used as part of a bundle of interventions, is more likely to yield business value than when training is used in isolation. It is here that business tools such as the EFQM provide holistic frameworks where the linkages between business strategy, leadership and workforce development can be made explicit. Firms were asked if they had conducted a training needs assessment in their company. Overall, 69% had, but in firms competing on price this declined to 55% compared to 76% of firms that competed on quality or differentiation. A series of questions was included in the interview schedule to assess the extent to which firms had a) developed formal business plans, b) produced formal training plans (preferably linked to each other), c) had someone accountable for training and d) whether the effects of training were formally assessed. The results, in total and for firms competing on price compared to firms competing on quality or differentiation are presented in Table 6.29 below.

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Table 6.29: Business planning and training infrastructures by competitive strategy Item

% having

Formal business plan Formal training plan linked to the business plan Someone responsible for training at Director level Someone responsible for training below Director level Training budget Regular review process to evaluate the effectiveness of training and development Regular and formal appraisal process

62.1% 44.8%

% having (Price-based competition) 53.3% 36.7%

% having (non-price competition 66.7% 49.1%

69.0%

70.0%

68.4%

51.7%

53.3%

50.9%

42.5% 49.4%

40.0% 53.3%

43.9% 47.4%

62.1%

53.3%

66.7%

While 62.1% of firms have a business plan, only 44.8% have a training plan linked to the business plan. Where firms compete on price, they are less likely (than firms that compete on quality and differentiation) to have both a business plan and a training plan linked to the business plan. In 69% of cases, someone at Director level in the firm is responsible for training, but less than a half of firms (42.5%) do not have a training budget and just under one half (49.4%) regularly evaluate the effectiveness of training and development. In only two areas (regular review process to evaluate the effectiveness of training and development and regular and formal appraisal process) were the differences between the manufacturing and services sector different. The fact that only about a half of firms evaluate the effectiveness of training and development is a significant issue, particularly as Storey and Westhead (1996) developed the view that firms do not invest in training because they perceive it not to be worthwhile. Our findings reveal that half of firms are not in a position to know (from objective evidence) whether their investment in training and development has yielded a business benefit. Consequently, if Storey and Westhead's view is correct then it is likely that managers are not making informed judgement but more subjective judgements. Indeed, in a later section if the questionnaire, we asked managers if they felt that their investments in management development had had a positive impact on the bottom line. While 48% thought that they had, around 12% thought that they had not, and 40% had no clear view either way. Despite the likely validity of Storey and Westhead's view, we suggest that managers' negative view of the value of training may be more "dispositional" than based on an objective and robust evaluation of the evidence. Consequently, we argue that much has to be done to change the predisposition of some managers to training. Our evidence suggests that these managers are more likely to be less qualified, and based in firms competing on price and in firms who have neither innovated nor developed new markets.

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6.11 Managers' perceptions of which training providers they would use In order to develop some insights into managers' possible resistances to different potential training providers, respondents were asked to identify which of a range of possible training providers they would consider using. Overall, Business Link, Trade Bodies or Associations and the University of Wolverhampton achieved over 40% approval though over 12% said they would not use any training provider. Where firms were competing on price, they were less likely to cite Business Link or the local Chamber of Commerce than firms competing on quality or differentiation. Manufacturing firms were more likely to use Business Links and the local Chamber of Commerce than service companies. Over 70% of manufacturing firms would NOT consider using commercial training suppliers while 15% of manufacturing respondents would NOT consider any of the training providers listed. Table 6.30: Managers' perceptions of which training providers they would use Training provider

% would use

Business Link A Trade Body or Association University of Wolverhampton Commercial supplier/consultant Chamber of Commerce Another University in the West Midlands Local FE College A University from outside the West Midlands/Open University None of these A Sector Skills Council

41.4% 40.3% 40.2% 36.8% 34.4% 32.2% 26.4% 20.7% 12.6% 10.3%

% would use % would use (Price-based (non-price competition) competition 33.3% 45.6% 46.7% 36.8% 43.3% 38.6% 40.0% 35.1% 26.7% 38.6% 36.7% 29.8% 23.3% 28.1% 13.3% 24.6% 16.7% 6.7%

10.5% 12.3%

6.12 Managers' preferences for types of managerment development An essential input to the development of an AMS strategy is an understanding of managers' degree of receptivity to different forms of training and development delivery. Respondents were asked to identify the means they favoured from a list of differing forms of delivery. Table 6.31 reveals the responses for all respondents collectively and then shows the responses for firms that compete on price compared with firms competing on quality or differentiation.

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Table 6.31: Managers' preferences for the type of training and development they would use by basis of competition Mode/means of delivery

% would use

Mentoring/coaching programme on site Executive short course on site Executive short course off site (open programme) Onsite short course Executive short course off site exclusive to my company Distance learning short course E-learning Institute of Directors Director Development programme MBA programme (distance learning) Diploma in Management Studies (part-time) Local “drop-in” facility Learndirect MBA programme (part-time) Outdoor management development Other

62.1% 58.6% 57.5%

% would use (Price-based competition) 60.0% 73.3% 66.7%

% would use (non-price competition 63.2% 50.9% 52.6%

36.8% 32.2%

36.7% 40.0%

36.8% 28.1%

28.7% 26.4% 25.3%

23.3% 23.3% 30.0%

31.6% 28.1% 22.8%

17.2% 17.2% 16.1% 13.8% 11.5% 9.2% 9.2%

13.3% 10.0% 6.7% 10.0% 10.0% 13.3% 10.0%

19.3% 21.1% 21.1% 15.8% 12.3% 7.0% 8.8%

Three forms of delivery emerged as somewhat more acceptable to managers than others. These were mentoring/coaching programme on-site, executive short courses on-site and executive short courses off-site in "open programme". These findings resonate closely to the findings derived from our case studies where one company in particular expressed a clear preference for executive level training to be delivered to them only and in their own training facility. Around 1 in 4 managers overall said they would use e-learning, and the Director Development Programme of the Institute of Directors. Formal training (such as the MBA and the DMS) appeared to be less popular in that only 17% would consider a distance learning MBA, 17% would consider a DMS and 11% would consider a parttime MBA. Around 1 in 6 said they would use a local drop-in facility, though the proportion that would do so was significantly higher for firms that compete on quality/differentiation than for managers in firms that compete on price. The firms that compete on price (i.e. those that are highly sensitive to costs) are also more likely than other firms to say they would use executive short courses on-site, executive short courses off-site (open programmes), on-site short courses, the IoD Director Development Programme, and executive short courses off-site exclusive to their companies. Firms competing on factors other than price are more likely than firms competing on price to say that they would use distance learning short courses; elearning; the Diploma in Management Studies; and a local “drop-in” facility.

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The analysis thus reveals some significant differences in the propensity to use different modes of training delivery by competitive strategy which would need to be reflected in the design and marketing of an AMS development strategy. Differences in the willingness to use different modes of training delivery by industrial sector are shown Table 6.32 where it is noticeable that differences by sector are less marked than those by competitive strategy. Table 6.32: Managers' preferences for the type of training and development they would use by industrial sector Mode/means of delivery

Manufacturing Services % would use % would use Mentoring/ coaching programme on site 61.5% 56.9% Executive short course on site 66.7% 50.8% Executive short course off site - open 48.7% 52.3% Onsite short course 41.0% 29.2% Executive short course off site - exclusive 38.5% 27.7% Distance learning short course 15.4% 33.8% E-learning 17.9% 29.2% Institute of Directors - Director Development Programme 23.1% 21.5% Dip in Management Studies - P/T 12.8% 20.0% MBA Programme - distance 10.3% 18.5% Local "drop-in" facilities 10.3% 18.5% Learndirect 2.6% 20.0% Other 7.7% 12.3% MBA programme - P/T 10.3% 9.2% Outdoor management development 10.3% 6.2%

Total % would use 58.7% 56.7% 51.0% 33.7% 31.7% 26.9% 25.0% 22.1% 17.3% 15.4% 15.4% 13.5% 10.6% 9.6% 7.7%

While differences by sector are not particularly marked, there is a much greater degree of differentiation in the receptivity of managers according to their level of educational attainment. While it is not surprising that managers without formal qualifications (who are often older) are less receptive to different forms of training delivery, what is surprising is the extent of the differences, particularly on executive short courses off-site (open programmes); onsite short courses; executive short courses off site (exclusive to the firm); distance learning short courses; e-learning; formal programmes; and even local drop-in services. The IoD Director Development Programme is one form of training delivery that appears to appeal more strongly to managers without qualifications than those with educational qualifications. Mentoring and on-site coaching programmes have a high level of appeal to managers at all educational levels. The analysis reveals that managers with different educational backgrounds have different opinions of the relative attractiveness of different means of delivering management development. Managers without qualifications emerge as a particularly difficult target, particularly for more innovative and modern forms of training delivery. Page 107


Table 6.33: Managers' preferences for the type of training and development they would use by educational attainment Mode/means of delivery

56.7% 56.7%

O and A levels % would use 58.1% 48.8%

26.7% 23.3%

58.1% 32.6%

65.5% 44.8%

51.0% 33.3%

16.7% 6.7% 10.0%

30.2% 27.9% 25.6%

48.3% 44.8% 37.9%

31.4% 26.5% 24.5%

20.0% 13.3% 3.3% 6.7% 3.3% 6.7% 6.7% 3.3%

18.6% 14.0% 14.0% 16.3% 16.3% 14.0% 7.0% 9.3%

27.6% 27.6% 31.0% 24.1% 20.7% 10.3% 17.2% 10.3%

21.6% 17.6% 15.7% 15.7% 13.7% 10.8% 9.8% 7.8%

None % would use

Mentoring/ coaching programme on site Executive short course on site Executive short course off site - open programme Onsite short course Executive short course off site - exclusive to the firm Distance learning short course E-learning Institute of Directors - Director Development Programme Dip in Management Studies - P/T MBA Programme - distance Local "drop-in" facilities Learndirect Other MBA programme - P/T Outdoor management development

Degree or Total higher % would % would use use 58.6% 57.8% 65.5% 55.9%

6.13 Attitudes to management development and training In an earlier section, we developed the view that it is important to try to understand the psychology, attitudes, motivations and behaviours of senior managers if we are to develop an effective strategy for the delivery of AMS to businesses. The purpose of this section is to gain some insights into these areas. Most of the respondents (81%) were of the opinion that they has a clear strategy for the development of their business though better educated managers (those with a degree) and firms that had neither innovated nor developed new markets were rather less likely to consider that their businesses have a clear strategy for the future. Respondents were then asked if the managers they currently employed had the skills needed to deliver the business strategy. While 69% of respondents thought they did, 31% of firms were indifferent or disagreed. Consequently almost 1 firm in 3 is not firmly convinced that the managers they currently employ have the skills to deliver their business strategy. In firms competing on price, firms that had neither innovated nor entered new markets, and firms that had innovated but had not entered new markets the ratio was relatively high. In these three types of firm there was a much stronger view that current managers would not be able to deliver the strategy of the firm. Page 108


When asked if they had a clear idea of their management development needs over the next five years, 45% replied that they did not, with a further 27% saying that they did not know. Consequently, 72% of respondents were prepared to agree that they did not have a clear view of future management needs. Managers with a degree or above were much more likely to say that they did not know what their future skill needs were likely to be compared with managers who had no qualifications or only O and A levels. Thus the better qualified were prepared to admit they were less aware of future management skills needs than other less educated managers. When asked if past investment in management development had had a positive effect on the bottom line, 12% thought that it had not, but over 40% did not know, indicating the difficulties of formally evaluating the impact of management development. Around 48% thought that their investment in training had had a positive effect on their bottom line. Managers without qualifications were less likely than better-qualified managers to agree that past investment in management development had had a positive business impact. This may be indicative of a less positive disposition to training among those with lower educational qualifications. One of the key issues to emerge from our review of the literature on management development and training delivery (particularly to SMEs) was the question whether the lack of uptake of development and training was due to lack of knowledge, or due to firms making a considered and conscious decision that investment in training and development was not worth it. We identified above that 48% of firms felt that their previous investments had had a positive impact on their bottom line but we show in Table 6.31 that over 54% of respondents disagreed or strongly disagreed with the statement that they knew precisely what management development is available locally. Thus, we conclude that there is widespread ignorance among managers about precisely what management development is available locally. Curiously, those with a degree were much less likely to report that they know what management development is available locally than those without any formal educational qualifications. From this we conclude that there is a very low level of awareness about what management development is on offer locally (particularly for better educated managers). Indeed, one of our key informants concluded; "Without a doubt, SME awareness of training provision is a problem". Table 6.34: We know precisely what management development is available locally Education level Strongly disagree Disagree Neither None 7.1 21.4 50.0 O and A levels 7.0 53.5 25.6 Degree or higher 14.3 57.1 17.9 Total 9.1 45.5 30.3

Agree 17.9 9.3 3.6 10.1

Strongly agree 3.6 4.7 7.1 5.1

Net -7.1 -46.5 -60.7 -39.4

Another issue from the literature review was a concern that management development was often considered to be too expensive. While 62% agreed or strongly agreed that training was too expensive (see Table 6.32), managers who had a degree or above were much less likely to consider training to be too expensive than less qualified Page 109


managers (42% of managers with a degree compared to 67% of managers with O or A levels and 65% of managers without any qualifications). Managers in the manufacturing sector were less likely to consider training to be too expensive (51%) than managers in the service sector (70%). Table 6.35: The training that is available is too expensive Education level Strongly disagree Disagree Neither None 34.5 O and A levels 2.3 4.7 25.6 Degree or higher 10.7 10.7 28.6 Total 4.0 5.0 29.0

Agree 41.4 46.5 35.7 42.0

Strongly agree 24.1 20.9 14.3 20.0

Net 65.5 60.5 28.6 53.0

The analysis reveals that the cost of training is perceived to be an issue locally and indicates that subsidies to training might be an essential element of a management development skills delivery strategy. A further issue of concern identified in the literature review was that firms could not find management development programmes that met their needs. From Table 6.31 it can be seen that while 28% disagreed or strongly disagreed that they could not find management development programmes to meet their needs, 33% agreed or strongly agreed with the statement while 38% did not have a clear view. Obviously, the jury is still out on this issue. However, it is an important finding that more firms were likely to agree with the statement that they could not find management development programmes that met their needs than were likely to disagree with it. What is also important is that managers without formal educational qualifications were much less likely to be able to find programmes that met their needs than managers who had a degree or above. Table 6.36: We cannot find management development programmes that meet our needs by educational level of manager Education level Strongly disagree Disagree Neither None 3.4 20.7 27.6 O and A levels 7.1 19.0 47.6 Degree or higher 14.3 21.4 35.7 Total 8.1 20.2 38.4

Agree 27.6 19.0 25.0 23.2


Net 24.1 0.0 -7.1 5.1

An analysis of the same question by the innovation/market development strategy of the firm reveals some insightful information. For firms who have not innovated and have stayed in the same market, a much larger proportion of managers are likely to agree with the statement that they cannot find management development programmes that meet their needs. Interestingly, 44% of managers in firms that have both innovated and developed new markets tend to agree or strongly agree that they cannot find management development programmes that meet their needs. It is disconcerting that firms that are locked into existing markets with existing products are more likely Page 110


to think that they cannot find management development programmes that meet their needs than other more innovative firms. Table 6.37: We cannot find management development programmes that meet our needs by innovation/market development strategy Product/market strategy Same market/no innovation Same market/innovation New market/no innovation New market/innovation Total

Strongly disagree Disagree Neither 9.1 4.9 16.7 9.5 7.8

4.5 26.8 50.0 19.0 21.1

31.8 46.3 16.7 28.6 36.7

Agree 36.4 12.2 16.7 33.3 23.3


Net 40.9 -9.8 -50.0 14.3 5.6

While it is essential that managers are aware of management development programmes, it is equally important that they regard them highly. Respondents were asked for their views on the quality of local management development provision. While 11% thought it was poor, 19% did not think it was poor and 66% could not express a view about whether provision was poor or not. This lack of awareness is clearly an issue of some concern. A recurrent theme, particularly in the SME literature, to explain why managers do not engage with training, is that they claim not to have enough time to do so. Table 6.33 reveals that, overall, 40% of managers agreed or strongly agreed that they did not have time to undertake training and development. This view was stronger for less qualified managers than it was for managers with a degree or above. Table 6.38: Managers here do not have enough time to undertake training and development (by educational attainment) Education level Strongly disagree Disagree Neither None 0.0 27.6 34.5 O and A levels 11.6 23.3 18.6 Degree or higher 14.3 46.4 7.1 Total 9.0 31.0 20.0

Agree 31.0 41.9 28.6 35.0


Net 10.3 11.6 -28.6 0.0

The response by innovation and market development is even more striking in that managers who are located in firms that have neither innovated nor moved into new markets were much more likely to agree (64% agreed or strongly agreed) that they had insufficient time to engage with training than any other type of firm. In firms where there has been some form of market development or innovation, managers were less likely to use shortage of time as an inhibitor to engaging with training, possibly because training is seen as a more integral part of business and organisational development. It could be that managers in firms that have neither innovated nor developed into new markets see training as something "extra" or "additional" and, consequently, an activity that is not integral to the development of the business or the organisation. Information from one of our case study businesses can cast some light Page 111


on this issue. The director of the company argued that before he consciously restructured his company to devolve decision making he used to have no time for anything and was constantly fielding phone calls, complaints, rumours and was generally a fire-fighter. However, the restructuring of the business and the definition of clearer management roles has enabled him "to escape the treadmill" and to allocate more time to higher value adding activities. Table 6.39: Managers here do not have enough time to undertake training and development by innovation and market development Product/market strategy Same market/no innovation Same market/innovation New market/no innovation New market/innovation Total


13.6 43.9 28.6 42.9 35.2

13.6 17.1 42.9 23.8 19.8

Agree

Strongly agree

Net

45.5 34.1 0.0 28.6 33.0

18.2 0.0 14.3 0.0 5.5

40.9 -14.6 -28.6 -19.0 -3.3

Perhaps the greatest "old chestnut" in the world of training and development is that if you train people, they just move on and get a job elsewhere. This rather short-sighted view is often put forward to rationalise decisions not to invest in people. Overall, 42% of managers either strongly disagreed or disagreed with the assertion that if firms invested in training the recipients of training will leave for a job elsewhere, while 22% were neutral to the view. Around 36% of respondents agreed or strongly agreed with the view that if you train people, they are likely to move on. Interestingly, this view only prevails in forms that have neither innovated nor developed into new markets in the last year again, perhaps indicating a more general negative predisposition to training and development. Table 6.40: We are concerned that if we invest in training those who receive it will then leave and get a job elsewhere by innovation/market development Product/market strategy Same market/no innovation Same market/innovation New market/no innovation New market/innovation Total


22.7 37.5 14.3 38.1 32.2

18.2 22.5 28.6 23.8 22.2

Agree

Strongly agree

Net

40.9 27.5 14.3 23.8 28.9

9.1 5.0 14.3 4.8 6.7

18.2 -12.5 -14.3 -19.0 -6.7

In those organisations where there is a better developed HR and business planning infrastructure, managers are much less likely to consider that developing and training a person will lead to the recipient leaving than in organisations where these infrastructures are less well developed. For example, in those organisations with a formal appraisal system, 50% of managers disagreed with the statement "we are concerned that if we invest in training those who receive it will then leave and get a job elsewhere" compared to 30% of managers in firms having no formal appraisal Page 112


system. In those firms where there is a training and development budget 58% think that investing in employees will cause them to leave compared to 34% in firms without a budget. The equivalent figures for organisations with someone directly responsible for training and development are 53% and 32%. Attitudes also differed between firms with business plans and those without with firms with business plans have more positive dispositions to training and development than those without. These finding indicate clearly, that training and development is most effective when it is embedded within a wider bundle of HR activity and within the business plan of the organisation, and seen as an integral element in the delivery of the business plan. 6.14 Summary of key points and issues This section of the report has identified a number of fundamental issues of direct relevance to the development of an AMS development strategy. These are summarised below: There is a substantial connection between AMS needs and issues and a firm's competitive strategy, its innovation strategy and its market development strategy. Not only do training and development needs and precise training rates differ between firms with different strategies, but so do attitudes, behaviours and predispositions to development and training. Consequently, the development of a one size fits all approach to advanced management skills development is singularly inappropriate and a more differentiated approach needs to be developed to reflect the different strategy positioning of different companies. Attitudes and dispositions to training and development appear more favourable in firms competing on quality or differentiation; in firms that innovate and firms that are developing new markets for their products. Firms that compete on price and those locked into existing markets with existing products are likely to be the most difficult to access and engage. Significant differences in skills needs and dispositions to training have also been identified between managers with different educational backgrounds, indicating that the more qualified are more amenable to further development and to more modern forms of delivery. The research has validated our selection of 25 AMS and has given some clear insights into what skills managers see as important and how they think their firms perform on the set of measures. The gap analysis technique has revealed that some wide performance deficits exist on many of the measures and it has allowed us to develop priorities for skills development, not only for the cross-section of businesses but for different groups of businesses defined by sector and their strategies, as well as for different groups of managers by educational background. AMS development priorities have been shown to differ significantly for different types of manager and different types of business. This intelligence will allow the development of an AMS strategy tailored and tuned to the needs of different businesses. The questionnaire also explored managers' view on their use of intermediaries and their views about the usefulness of different intermediaries. Accountants and the Banks were shown to be the prime source of business advice with Business Link, Consultants and Chambers of Commerce occupying the middle ground. Accountants, Page 113


Consultants and the Federation of Small Businesses were rated highest in terms of the quality of their advice. The existence of business planning and HR infrastructures within firms was seen to be somewhat variable; firms that compete on price generally having less mature infrastructures than those competing on quality. The analysis revealed that firms with better infrastructures, and particularly those linking HR activities to business planning, tended to have more favourable attitudes to training and development. The link between HR and business planning and the existence of bundles of HR activity indicated that management development was more likely to be seen as something integral to the firm rather than a "bolt on" activity. Unfortunately, there was considerable about the business impact of training and development. The study also revealed a level of ignorance about the local availability of management development programmes. Business Link, Trade Bodies and the University of Wolverhampton emerged as the three providers locally that most firms said they would consider using as suppliers of management development. A wide range of AMS delivery means and modes were presented to respondents in order to identify what means of delivery they favoured most. Mentoring/coaching programmes and executive short course both on and off site emerged as the three means of delivery that were most acceptable to managers though some significant differences did emerge by the educational background of managers and by type of business. This further echoes the view that a one size fits all strategy is unlikely to be effective and an approach that reflects the differing attitudes of managers to training, their differing learning styles and their starting point in terms of education need to be clearly reflected in any learning environment that is created. The final part of the section revealed that managers' attitudes to development and training do differ significantly. There is a view, particularly in firms that compete on price and are thus likely to be more sensitive to costs, that training is too expensive. Managers in firms that competing on price and those that have neither innovated nor developed into new markets are most likely to say that they don't have the time to engage with training. Whether they do not have the time or just have a predisposition against training that they rationalise by claiming not to have the time is an open question. As one pundit once remarked "If you think training is expensive, try ignorance".

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SECTION 7: CASE STUDIES AND KEY INFORMANT INTERVIEWS 7.1 Introduction A central feature of the research strategy used in the project was to develop a mixed mode approach using a questionnaire survey, desk research, case studies and key informant techniques. Our view was that over-reliance on one approach would yield a partial and incomplete view of a very complex subject. While the questionnaire survey was used to provide “breadth of analysis”, case studies and key informant interviews were used to provide the “depth of analysis” needed to craft an effective strategy. The case studies were selected to identify aspects of exemplary practice that can be used to develop guidelines of “what works”. However, we are strongly of the view that what works is often context dependent, so a key element of the case studies is to identify the aspects of context that appear critical in the process of management skills development. As noted in the introduction, firms often take a more radical view of their development after major events such as a management buyout or when family firms decide to buy in professional management to counteract exposed weaknesses. This accords with Bennis and Thomas’ (2002) findings that senior managers often develop their leadership qualities through a crisis situation. An effective management development strategy will thus be contingent on the business, product and market strategies of firms. Consequently, the case studies focus on issues such as:      

Clarifying the business context Identifying the key triggers in the process of management development Identifying expressed needs, attempting to reveal latent or unexpressed needs Identifying firms frustrations with providers, exploring information imperfections Revealing top managers’ perceptions of providers Revealing top managers’ view of what training should be provided, by whom and in what form.

The key informant stage of the research focused primarily on interviewing respondents who have in depth knowledge of advanced management skills development, respondents working with local firms in related areas or with senior managers from agencies with a remit that embraces workforce and management development support to sub-regional firms. While the case studies attempt to provide a “user” perspective, the key informant research focuses on both providers and intermediaries. Implicit in the research at this point is that it is important to develop an understanding of the differing perspectives of users, providers and intermediaries. By comparing and juxtaposing these views, the objective is to develop a more complete or rounded view that will help the development a more effective strategy to enhance the senior management capability of local businesses. This we hope to achieve by developing more effective transmission mechanisms for getting management knowledge and skill into local businesses by developing interventions, products, services and delivery systems that are better tailored to the needs and everyday realities of local firms.

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7.2 Rationale and approach The character of businesses, particularly SMEs, in any locality, is unique, with local customs and practices having emerged over many years. This is typified by the study area with its long history of family-run metal pressing, parts-supply businesses to the automotive sector and other manufacturing clients comprising a unique sociological and ethnic mix of owners and employees. The questionnaire that was administered for part of this research aimed to cover a breadth of questions to businesses, especially SMEs. However the questionnaire could not pick up on the depth of the local experience or how influential location and history has been on the development of advanced managerial skills. By including in the analysis interviews to investigate the viewpoints not only of the businesses themselves, but also brokers and providers of advanced management skills, the pattern of information becomes much richer and insightful. The interviewees were drawn from four discreet groups as follows:    

Eleven interviews with directors/owners of SMEs with good experience to share of advanced management skills/management development. (case studies); Four interviews with intermediaries (key informants) Four interviews with skills providers (key informants) Telephone interviews with Further Education Colleges and providers (discussed elsewhere)

The interviewees supplied invaluable primary data that was then supplemented by checking secondary data from the web and company brochures. The interviews each took an average of about two hours. They used a “Semi-structured interviewing” or SSI technique14. SSI is a tool drawn from an investigative approach called Participatory Analysis and it seeks to draw out the essential points that will lead to an accurate analysis of the critical issues. A key concept in Participatory Analysis is ‘triangulation’ where perspectives are drawn from a range of sources and their similarity or dissimilarity are then analysed. The interview usually began with the key informant sharing information about a critical incident that led to them or their company displaying, learning about or realising a need for a set of specific advanced management skills. It would then go on to eliciting the interviewees’ experiences and views on how those needs were addressed. The interviews were written up as notes. The company case studies, though not the intermediary or provider interviews were further subjected to an initial layer of analysis and were framed in a standardised format for ease of cross reference. The heading for each section was an indicator of relevance to this study. The interview transcripts were sent back to the informants for corroboration before finalisation.

14

In this type of interview a basic checklist of questions is prepared but it is not adhered to strictly rather it is used as a framework for a discussion in which the respondent is encouraged to "tell it as they see it". Thus, the interviewee is able to follow their own thread of logic with the interviewer probing for more depth to clarify issues. However, the interviewer ensures that, by the end of the interview, all relevant questions from the checklist have been answered. Page 116


Using PA seeks to give depth and additional understanding but is limited to working with people who want or who are willing for their voices to be heard along with the time available for the overall study. The interviews and case studies cannot therefore be seen as a random or representative sample of the total range of SMEs in the BCWTC. In this case, the SMEs giving interviews were those who were considered by the Intermediaries to be “successful” and have displayed AMS in re-orientating their companies to compete in a rapidly changing market. Hence “unsuccessful” businesses were not interviewed. These models of success provide several useful lessons for policy-makers about what works. However each company has its own unique history and set of circumstances that may not be able to be replicated and learning lessons from this (biased) sample can only infer what does not work. Further research is needed, if future funds allow, to analyse, in more depth, the perspectives of “unsuccessful” companies and whether AMS inputs or other types of interventions would be able to turn them around. However, gaining access to unsuccessful SMEs is often difficult. Basic data about the eleven companies involved in the case studies are presented at Table 7.1 and the individual case studies can be seen in Annex 2. The geographic distribution of the companies is that they are all in the Black Country and eight of the eleven are the manufacturing sector. By concentrating on the manufacturing cluster, the sub-region’s SME manufacturing prevalence is emphasised. There were two service companies (C5 and C11) and these represent another cluster of relevance to the region. One case study (C8) represents a new generation of manufacturing business that has comprehensively made the jump to design and marketing, keeping control of the manufacturing, whilst not actually undertaking it with company staff, premises or any overheads. Although the companies have been selected for their good practice, the measure of success used is not restricted to the bottom line. As can be seen in Table 7.1, several are still in loss, following buy-outs or major restructuring. The measure of success used by the research team applies more to the methods and skills they have used to accomplish their present day position. Detailed analysis can be found in a later part of this section. Two types of key informant were interviewed: intermediaries of Advanced Management Skills development and actual providers of advanced Management Skills for companies in the sub-region 7.3 Triggers for management development/change of company direction Given our objective of linking AMS to the dynamics of companies, one of our key objectives was to obtain from respondents what they thought the key drivers for change were. Understanding the nature and selectivity of the drivers would give us a better insight into understanding the dynamics of AMS and how they were emerging. This section is intended to draw out key issues emerging from the range of experience collected in the case study interviews. The context of the discussion around advanced management skills for each company is set out in Table 7.1.

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Both intermediaries and companies agreed that the strongest underlying commonality triggering change in the Black Country manufacturing sector is the wind of intense competition on labour costs blowing in from the East (both Far East and Eastern Europe). Until the early 1990s it had been possible to ignore this competition but this became impossible with the breaking up of the communist bloc and with China and India opening up to global markets15. Hence countries with basic infrastructures for metal work production and latent engineering skills were now coming into head to head competition with metal work production businesses in the Black Country. This unfettered global free market competition has triggered many Black Country companies to make harsh decisions and drastic changes due to significant import penetration and the loss of more traditional markets. Businesses have had to acquiesce to this changed environment (where labour costs can be as little as 1/20th the price of the Black Country) or die. Many have died and more seem likely to as recent forecasts from organisations such as BDO Stoy Hayward16 are forecasting significant company closures over the next three years. A number of respondents, when asked what their future business strategy was, simply said ‘survival’. The businesses that are surviving have, in the last 10 years, typically:       

Made manual labourers redundant; Proactively sought to increase productivity and quality standards; Scaled down labour intensive primary production and scaled up computer aided product design; Shifted from producing metal parts to supplying knowledge-based management services such as managing supply and quality control of (more cheaply) imported parts on behalf of supply chain clients; Dramatically improved communications within the organisation particularly between shop floor and management; Listened more attentively to customer needs; Started using the Internet for sales, networking and marketing.

A number of managers regretted they had not made these drastic changes years before. Even though the transition and treatment (usually involving shedding labour) had been traumatic and unpleasant they recognised their company was now fitter and far more efficient. An ironic analogy that springs to mind is the middle-aged man who, knowing his lifestyle is unhealthily, is only frightened into changing it after a heart attack – having made the change, he feels better than before. From these initial discussions with managers, we were able to draw out several pointers that have major implications for AMS development. First, since they had been slow to react to change, questions must be asked about how effective managers had been in reading market signals and using intelligence about the changing basis of competition in the world economy. Clearly, if firms cannot sense market signals and interpret them they are going to be unable to develop effective business strategies that 15

While the emphasis here would appear to be on Far Eastern competition in the manufacturing sector, recent forecasts have implied that as many as 200,000 jobs in banking may be "exported" to India by 2008. See the Great Indian Takeaway, Sunday Times (Business) p.5, June 8 th,2003. 16 The June 2003 BDO Stoy Hayward Industry Watch Survey has forecast that 63,000 companies will fail between and 2006 with a year-on-year rise of 35% between end-2002 and end-2003. Page 118


will drive how they decide to develop or change their organisation. From this we conclude that "thinking strategically" (in which we incorporate activities such as reading and interpreting market signals and crafting effective strategies) is an essential skill that our respondents have only recently acquired. In addition to this, it is clear that some firms have had to reposition themselves within the value chain by moving towards a quality or differentiation basis for competition rather than competing on price. As a result of these changes, firms have also realised that they need to do a number of things differently within their organisations such as adopting quality management techniques, deploying technology more effectively, and developing new marketing strategies based on the Internet. While many of the drivers and triggers for change came directly from the changing intensity and basis of competition, other immediate triggers for management development had been some kind of business crisis such as:         



Succession (EngDesMktgCo) A management buyout (MBO) following a parent company going into receivership (EngCo_02 and ManufCo_03) A serious declines in sales (ManufCo_01 and EngCo_01) A stock turnover problem (ManufCo_01) A buyout of the company by a new parent that brought in a new MD who began to take the business in a new direction (ManDesCo_01 and ManufCo_03) A result of a poor management decision to launch a new product that resulted in a tarnishing of the brand The intention to join a supply chain to find that the company at the top of the supply chain requires firms to comply with certain quality management standards or to hold IiP A family run business getting as far as it can as a family run business and then deciding that it needed to employ professional management either to get out of a problem or to take the business forward A decision to "go-it-alone" followed by a realisation that while the entrepreneur had the necessary functional skills, they realised that they did not have the requisite business skills to take the business forward (TelesalesCo and EngCo_03) A company wishing to grow by raising capital and, after being audited by venture capitalists, being required to "professionalise" its management in order to secure the funding

In one company we interviewed (EngManCo - a large company with 730 staff) we were unable to identify any specific trigger to engage with AMS as the company had been applying lean manufacturing and other TQM models for some time. It did, however, display a specific interest in acquiring advanced management skills. What we can tell from instances of change triggered by crisis or critical incident is that change was need-based. That is, it did not happen because of fortuitous marketing from development providers or from intermediaries. Crucially, it came from within the companies. This we regard as a key finding as it provides us with a vital insight about the location of the problem that our AMS development strategy Page 119


must address. While much effort has been applied in the recent past to increase the level of "touch" between intermediaries and businesses, the direction of the arrow seems to point from the intermediary to the business. Our finding seems to imply that business development and organisational development seems to have a higher chance of success when contact is initiated by the business. The question is: how do we get businesses to be better initiators and not leave management development until the last minute? We have already developed one health care analogy and it seems that there are more parallels: For example, in health care many people only go to the doctor when they are ill and few people make use of well-man/well-woman clinics designed to identify early signs of illness or to educate the person into following routines and modifying their behaviours to prevent illness. The more life threatening, the more carefully we are likely to listen. But just as in the health arena, too many businesses wait until they are ill before they call in an expert. The lesson from this is that intermediaries who are looking to help firms, or providers who want to sell a service, need to be demand-led and develop a more robust diagnostic orientation. Given that all firms have an accountant, we think that there is considerably more scope for accountants to provide a diagnostic service to businesses rather than simply undertaking the statutory minimum end of year audit. The promotion of business development tools such as the EFQM through Midlands Excellence is also a possible avenue of approach in encouraging managers to think more strategically and holistically about the future of their businesses.

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TABLE 7.1. Case Study Company Biodata CODE I Date C1 1st C2 1st

Company

Sector/ Cluster

EngCo_01

C3 8th C4 9th

ManufCo_01

C5 12th C6 14th

TelesalesCo

Engineering manufacturing Engineering Manufacturing – some design Engineering manufacturing Roofing Manufacturing Design Telesales Service Engineering Manufacturing

C7 15th C8 20th

ManufCo_03

C9 21st

EngManCo

C10 21st C11 22nd

EngCo_03

EngCo_02

ManDesCo_01

FoundryCo

EngDesMktgCo

FinServCo

Bicycle parts Manufacturing Engineering Design and marketing Engineering (fluids) Manufacturing Engineering Manufacturing Financial Services

No. of Staff 208

Compete On Price

25

Growth Factor * Growing but still in loss Profit

Geographic linkages 25% product exports National

Corporate status

Family Corporate with head office

Professional organisations Private trainer

Quality

Imported parts, exports National, import materials Local

Sources of AMS advice/information Engineering employers federation Bank, B Link, Mustard Accountant, MAS, Environmental NGO Supply chain, Uni’ oW

102

Rationalising

Price

130

Growing

Price

22

Medium Rationalised

Price & quality

Imports and exports

9

Loss now but growing High

Quality & brand Quality

Imported parts Exports 80% Regional with exports

B Link, Chamber, Professional exchange Family Chamber, SBAB, Cast Metals Federation, Supply Chain MBO now Italian B link, Chamber, Uni’ CE parent company Family Self-chosen, Uni’ oW & Staffordshire, MAS

100

22

730

Growth

Quality/ Cost/waste

International ownership

Corporate with head office

26

High

Price

National

Over 750

Medium

Quality

National

Partnership of friends Corporate with head office

Price

* interpreted from other information

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Corporate, head office in US Partnership of friends (MBO)

Family

Cranfield, CMI, Dudley College, Supply chain leaders Chamber, informal Private trainers

Advanced Management Skills

Therefore intermediary supply-led interventions are likely to be unsuccessful unless they can frame the problem in the way that resonates with, particularly, SMEs. Discussions with a group of well-experienced Business Advisors at the Shropshire Chamber of Commerce17 identified some of the key issues they perceive as important in gaining access to type of companies that desperately require assistance. One advisor talked of "cynicism, defensiveness and initiative overload". Another put forward the view that companies needed to be "incentivised" to make an initial contact as a basis for the development of longer-term relationships with business support services. In the firms we have interviewed, there were no instances of the services the intermediary could provide being the trigger. However, the precise nature of the trigger necessitated a specific search for a partner in the change process. As this was not a random process we concluded that the businesses we had spoken to had shown a level of sophistication in their search for service providers. Consequently, we were led to conclude that the decision to seek support was often a reaction to a crisis though having got through the crisis often led organisations to make fundamental changes. For instance, although EngDesMktgCo changed as a result of succession in management they have subsequently consciously focused on being more aggressive strategically by developing the capability to better read and make sense of market developments. In line with the notion of the resource dependency view of the firm developed earlier, the capabilities that our case studies all possessed were the ability to recognise that things were going wrong and then the ability to search successfully for outside support to address the problems. 7.4 Where do the skills reside in organisations? Of major practical management importance is the answer to the question: where do the skills reside in organisations? From our discussions, we conclude that in several of our case study organisations, the skills largely reside with individual managers. In organisations that have developed more maturity in the skills development arena, mechanisms are being put in place to ensure that these skills become more organisationally embedded. Developing approaches to ensure that the advanced management skills acquired by individuals become more embedded into organisations through changed attitudes, behaviours, systems, process and cultures is an important step if organisations are to reap the value of their investments in skills development. This process can be enhanced by cascading training through the organisation, developing better communications practices within the organisation, developing more enlightened people management practices and redesigning working practices based on more devolved and decentralised approaches to decision making. It is here that the concept of "high performance work organisations" discussed earlier assumes a much greater significance and this further reinforces our view that training and development needs to be more effectively integrated with businesses strategy and bundled with HR initiatives involving new forms of organising and new forms of working. We see the FinServCo and EngManCo as good examples of this "transformational" process.

17

Shropshire Chamber Manufacturing Group, 9 th June 2003

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7.5 Why the survivors had survived As "surviving" is perhaps the most crucial of "skills", an attempt was made to identify what attitudes, behaviours and, more importantly, skills had helped our case study firms survive. Many of the items identified resonated strongly with the list of AMS that we had already developed. Companies cited the following areas:       

              

Developing a clear mission and then communicating this effectively within the company in one case by removing a layer of the organisation that was seen to be a blockage to the free flow of information. Developing and implementing better target-driven management systems, processes and procedures Buying in new management with industry know-how and experience Buying in new management that would provide leadership and champion the drive to quality Consciously becoming more open to new ideas Learning how to become more discerning about the use of external business advisers Delegating more decisions lower down the organisational hierarchy (this contrasted markedly with the data derived from our survey which revealed that 55% of managers disagreed with the statement that "Decision making in this company is delegated to the lowest level possible" while 28% agreed with it) Moving up the value chain by building and selling integrated systems rather than individual products (i.e. by re-envisioning the firm as solution providers rather than product sellers) Actively seeking to achieve IiP and EFQM recognition Developing a belief in team working and building capacity in the workforce Management sharing their knowledge and skills with the rest of the organisation Constant innovation in markets, products and "ideas" Re-orientation of business strategy and business processes away from production to sourcing product from overseas and supplying it Focusing on computer-based design skills and R&D skills rather than production (i.e. a shift in the value chain) Going for quality and not for quantity Moving to a niche market in their traditional market Maintain the brand but move away from production Getting out of the supply chain and learning to compete on quality not quantity Building value into the product by the more creative use of design Becoming more innovative and flexible Moving to sustainability rather than short term profit Developing better trade knowledge

Two of the companies we interviewed had developed complex structures to increase their chances of survival. EngCo_03 and TelesalesCo are both recent start-up businesses but both are in effect operating as two businesses in one in that they offer a core business and a secondary business based on the core business. In both instances the companies offer advice, training and coaching on how to set up and run similar

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businesses to their own using their own company as real life exemplars. EngDesMktgCo employ a different risk aversion technique. The company has several different businesses to its name, each one dealing with a well-defined and streamlined set of products with only one or two staff members. An investigation in to the survival and risk management strategies of these companies provides a useful insight into the advanced management skills that these companies have adopted. All have got better at strategising, communicating, managing quality, managing communications, innovating, moving in the supply chain; re-envisioning their businesses, marketing, improving systems, procedures and processes, and spreading their risk. All these attributes resonate with the AMS that were included in our questionnaire to business. 7.6 Partners in the change process The resource dependence view of the firm is based on the notion that no firm has all the skills and competencies it needs and that the ability effectively to secure and deploy outside help is a defining characteristic of a good firm. Indeed, managing external relationships has been shown to be a key skill factor in our earlier analysis. A theme within the semi-structured interview was to explore the way that some case study firms had used external support to help them reinvent their businesses. The partner organisations used by each of our case study businesses are summarised in Table 7.2 below.

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Table 7.2: Sources of external advice, support and knowledge Business ManufCo_01

ManDesCo_01

FoundryCo TelesalesCo

ManufCo_03 EngDesMktgCo EngManCo

EngCo_03 FinServCo

Name of Partner/ organisation Consultant Uni. Wolverhampton

Character of Partners in Management Development18 Consultant. Company Chairman Trainers of middle level management Sony Supply chain customer Dale Carnegie Trainers in management development and rolling out new business systems Uni. Warwick Computer-aided design course Holset Supply chain customer Black Country Business Coaching. Management Link Development during business setup year. Advisor consulted at manger’s request Uni Central England CAD R& D Selle Royal Parent company Templeton College, Oxford Strategic Marketing Cranfield Management Institute Company "University" Most Training CECO Ltd

Senior Management development Generic and tailored training incompany NVQ Trainers in Management Development – coaching for life

* Note that these responses were to questions on management training and do not, in fact, all equate to advanced management training. However in the managers’ eyes, they were as a result of top managers’ thinking and were about improving management within their companies.

Several interesting points emerge from the table above. First, several companies have had active involvement with universities in either management development or in technical knowledge and skills transfer. This finding validates the concept of business clusters in which universities and businesses work closely together either in management and workforce development or in the transfer of technical skills and knowledge into businesses where those skills and knowledge can be commercially exploited. It is interesting to note that EngManCo (part of a much larger organisation) have made use of their own "University". "Corporate Universities" of this type have been and are being developed in many large organisations often because "real" universities are allegedly not providing the products and services that businesses need, as well as to reinforce a corporate approach to organisational learning.

18

Note that these responses were to questions on management training and do not, in fact, all equate to advanced management training. However in the managers’ eyes, they were as a result of top managers’ thinking and were about improving management within their companies.

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Some companies have used private trainers (EngCo_03, ManDesCo_01, FinServCo), while one other has used a "trusted individual" (ManufCo_01). While publicly funded service providers like Business Link Black Country do a certain amount of direct working with companies, it is normal for this to be passed on to private trainers (or, in Telford, private trainers associated with the Shropshire Chamber of Commerce). In the cases cited above, the interventions were largely non-standard and configured to the precise needs of the company. Only in the case of ManDesCo_01 had a private training company gained access to the company to deliver an off-the-shelf package of training although the ready-made training for this company had been combined with more tailored work. In the majority of cases a mentoring style of intervention is preferred and this accords closely to our findings in Section 6 of the report where mentoring, coaching and executive development programmes emerged as the most preferred form of delivery. Where private trainers have been involved, the character of the relationship has been as “trainers” or of "coaches" of advanced management skills or management development programmes. The mentoring/coaching model is exemplified in the FinServCo’s approach to management development. An interesting point to emerge was that several firms used a "trusted partner" approach where the firm used someone they knew or someone who had been recommended to them by someone they trusted, “trust” being the operative word. The "normal" model of intervention here is that a trusted individual is invited in to look at a specific issue and, once involved, that person's remit usually widens to embrace larger organisational development issues, such as senior management development and/or restructuring the firm. Usually, the trusted individual works collaboratively with the client to redesign structures or resolve bottlenecks. Theoretically such relationships could be quite friendly or could involve boardroom conflicts. In practice though conflicts seem to have been managed in a very constructive way with relationships enduring (ManufCo_01’s Chairman was formerly their consultant) or ‘project’ bound (EngDesMktgCo). These relationships could also be characterised as mentoring or coaching. It is also interesting to note that some case study firms acquire advice from inside their companies: this reflects the findings of an earlier section. In the cases where a coaching or mentoring mode of operation had been used, change had often been less traumatic and enduring relationships between mentor and mentee had often evolved. However, where restructuring had been more traumatic, the relationship between the company and their advisers had been more "transactional", more short-term and possibly less effective. In those companies where effective transformational change had taken place, individual consultants had been involved with a company over the medium to long term. From this relationship new business structure, strategies and cultures seemed to emerge. Whereas examples of intervention by, for example, Business Link – even those that had undergone a MAP19 diagnosis had not been deeply changed by the contact. Even TelesalesCo, who have a close relationship with the local Business Link, which had definitely benefited the company, had most systems and innovations developed in-house and in the past year claimed only to use the Business Link for ‘agony-aunting’.

19

MAP (Managerial Assessment of Proficiency) is diagnostic tool for assessing managers skills as a basis for their subsequent development: it is being used by, for example, the Shropshire Chamber.

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A further source of support and advice that emerged was that which was obtained through supply chain relationships. EngManCo (through their company “University”) showed that they thought educating their suppliers was an important part of their remit as, clearly, they regard having better quality suppliers as yielding business benefit to them. FoundryCo (main customer Holset20) and ManufCo_01 (main customer Sony) gave useful information about how they were being "educated" by their clients further up the supply chain. The philosophy of the supply chain educators shows that there is a sense of commitment to improving the quality and capabilities of suppliers that should be mutually beneficial to supplier and buyer alike. One of our key findings was that SMEs seem to have most confidence in copying the actions of or learning from firms within their own sector or their supply chain. Methods for disseminating good practice or new developments through a business sector "laterally" (through Trade Associations or the Manufacturing Advisory Service) or vertically (through the supply chain) seem likely to yield high levels of success, as these channels seem to confer a sense of value and credibility on the messages being communicated. The training, education and knowledge transfer provided in this way was considered of very high quality and also highly focused on specific business issues, key skills and specific knowledge. The other advantage of this form of delivery is that recipients often see it as mandatory if they wish to remain within a particular supply chain. The other great advantage of this form of delivery is the creation of opportunities for informal knowledge and skill transfer through networking. This mode of knowledge and skill transfer resonates strongly with the notion of an industrial cluster: clearly, if the regional cluster strategy is to be effective it must seek to embed within it the opportunities and forums that already exist within supply chains. The informal spinoff value of this form of knowledge transfer was exhibited by the directors of ManufCo_01 who initially formed links with the person who was to become their "trusted partner" through a seminar at Sony, their main client. Where companies had used publicly funded service providers, a degree of cynicism was evident. One company saw publicly funded bodies as merely about "disbursing grants and earning commission on it". Their view was that disbursing grants was a means to an end and not the end itself. Some respondents criticised the current SBS/BL policy of trying to drive up the quantity of penetration as a measure of success, as opposed to measuring the quality or impact of the intervention. Others thought that the focus on "touch" degraded the process of intermediary intervention to a mechanical and brainless ‘tick box’ process. The sentiments expressed here compared starkly to the notions of high trust used when referring to "trusted partner" interventions listed above. Our research on the nature and form of the business/service provider partnership relationships has exposed a set of criteria that will need to be reflected in the development of policy and strategy. First, the most effective, transformational case studies we have examined seem to have been based on high trust, and long-standing relationships between the business and its service provider. The firms themselves have initiated them, admittedly in response to a major external change stimulus. 20

“We are totally committed to dedicated and genuine partnerships with both our customers and suppliers. A company philosophy that has proven to be highly effective when introducing tomorrow’s technology to today’s marketplace” (http://www.holset.co.uk/flash/index.html)

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Second, in the area of advanced management skills development, the skills development and transfer process has often been based on a mentoring/coaching relationship in which the mentor has been strongly embedded into the business. Third, the supply chain seems to be an effective vehicle for the transfer of managerial, technical, sectoral, product and business knowledge and an approach that needs to be better exploited and developed within the context of the regional approach to cluster development. Finally, several of our respondents expressed a degree of cynicism and distrust about publicly funded service providers who were characterised as "tick collectors" and more concerned about generating a high quantity of contacts or touches rather than delivering a smaller number of high quality, high impact interventions. A number of the companies we interviewed provide narratives describing the process of change that they went through and the AMS that were developed and used. EngDesMktgCo, for example, had gone through a major transformation in moving from actually manufacturing products, with a 600 strong workforce, to outsourcing the manufacturing function. The firm was then transformed into a business that sold the same products as before but no longer made them. While this change displays a great deal of business acumen, it was accompanied by the wholesale loss of production jobs. The owner/manager who is from a marketing (as opposed to a technical or production) background said that: “The difference between a subcontract supplier within a supply chain and that of a manufacturer of products is that the manufacturer, with a little research can change, evolve and create new products in a crisis, whereas the subcontract supplier can only cut material costs, wages and overheads.” EngDesMktgCo represents the most transformed business we interviewed but other firms are clearly following a similar path. For example, FoundryCo are investing in expensive design staff to move towards computer-aided design; EngCo_02 plan to move to Autocad designing; ManufCo_03 have taken on a CAD graduate; and, ManufCo_01 are thinking of making the shift to CAD. (However, while moving to CAD and increasing the use of technology in the firm is indicative of change, it must be noted that CAD is hardly a new technology). The FoundryCo case is worthy of elaboration as it is a logical and tactical response to the changed global market. But unlike EngDesMktgCo they have chosen to remain within a supply chain. FoundryCo is a 100-year-old iron foundry faced with the reality that suppliers from the East were out-competing with them on price. As a management group they faced up to this situation in the mid-1990s by restructuring, closing down the two less specialised on-site production processes but maintaining some production capacity with their highest tech production process, radically reducing labour force, making contract agreements with Indian iron foundries for the supply of parts and guaranteeing quality of both imported and locally made products to customers. As with EngDesMktgCo, FoundryCo has repositioned itself in the supply chain and moved (partially not wholly) out of manufacturing. As with EngDesMktgCo, job loss has been considerable. In discussing the effect of change on job loss, employers talked about their concerns over their responsibility to their employees and to local communities. In some cases, this seemed to have acted as a

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brake to radical change as some managers claimed to have tried to keep people in jobs while their firm was sinking into the red. As one respondent said "An owner manager needs to know when to let go". Another owner manager identified worker issues and worker resistances in a discussion about equal opportunities One respondent stated that they had tried to practise an equal opportunities policy that would enable female employees to move further up the hierarchy into leadership positions within the business. However they had had no success and their view was that this was due not to discrimination within the business but because of female perceptions of "management" and gender roles. There was no corroborating information from female employees of the extent of any pressure they feel from the home or their work. However, women in that company apparently do not wish to take on a supervisory or management role within the company making the delivery of an equal opportunities strategy difficult without the radical redesign of working practices to fit with the role of women outside work and without taking actions radically to change socially and culturally based attitudes to the perceived division between "managers" and "workers". 7.7 Advanced Management Skills in use An important feature of the research design was that the case study approach was developed to complement the questionnaire study reported earlier. During the interviews attempts were made to make note of the key AMS that respondents explicitly referred to or raised implicitly. By so doing, this would allow the two research strands to be cross-referenced in order to provide a more robust basis for the design of an AMS development strategy for the area. A summary of the AMS from our list of 25 items and the number of companies that referred to them explicitly or inferred their use can be found at Table 7.3. From the analysis of the interview transcripts, two advanced management skills were explicitly mentioned more than the others. These were strategic leadership and communication skills. Several comments were made by managers attesting to their importance: for example on strategy and leadership the interviewee at ManufCo_01 remarked that “We were very head down and needed someone to help us get our heads up and see what was happening in strategic terms”. The FinServCo interviewee also remarked; "Coaching gives a facilitative, team working, listening, problemsolving approach to management as opposed to a control-centred approach where people are afraid to take their own decisions". Indeed, ManufCo_01 is an exemplar of an "open" organisation. Within the company a culture of confidentiality has been built whereby sensitive information is shared with the workforce as long as they assure management they will respect that confidentiality. Every month, all staff are given a statement of how the company is doing. In the hierarchy, the same "piece of paper" goes to management level and shop floor. The results of these changes in communication practice are that rumours have been wiped out, which has led to staff feeling valued and having trust in their line management. Earlier, attention was drawn to the notion of high performance work organisation and to the notion that training, unless it is part of a bundle of complementary HR practices, is unlikely to be effective. In this instance, we can see that the firm has made significant changes in the way that it is organised and how it operates. We feel

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that this example is indicative of how AMS are being deployed radically to transform an organisation. EngCo_03, for example, had a clear workforce development and succession management approach in place. As the directors considered that "We both had good training ourselves", this indicates the importance of developing effective training procedures for senior managers as then it appears more likely that a training orientation will be cascaded down the organisation. One example here was a young lathe operator who "had shown promise, interest and commitment" and so he had been put onto an NVQ management programme (MOST). A former lathe operator is now filling the role of general manager that had "freed up" the Directors to concentrate on strategic management issues. Clearly, the creation of a learning and developmental environment in a business is critical as one intermediary argued that investment in training was often wasted in some companies because after the person had been trained, the working environment was so badly developed that the trained person could not deploy the skills they had acquired. Our informant argued that this was all to common in SMEs with the view developing in the SME and the trainee that the training had been "useless". This point further reinforces our view that training and workforce development needs to be embedded within a wider organisational development plan. Strategic and product/market thinking were also evident in our case study companies. Both ManDesCo_01 and EngCo_02 have also reinvented their interface to their customers and have both adopted a "cellular structure" to customers give what they want in product specification, communications and response times. ManDesCo_01 have also cellularised production with each of the 3 (soon to be 4) sites able to manufacture all they sell, with a different pricing system and different suppliers for each site. In these two instances, both firms have radically redesigned their structures to be more customer facing and responsive and to adopt processes and procedures that yield greater product quality. Again, EngCo_03 also provides a good example of this and it was clear from the discussions not only that this type of thinking was deeply embedded in the company’s ethos but that it also cascaded down into other plans and strategies particularly training and development. Here we identified a good instance of where strategic thinking, business planning and workforce development were aligned. Interestingly, the directors of EngCo_03 spoke of the need for a "just-in-time approach for training". This clearly resonates with the notion of a blended learning environment which we will develop in the next section and with views we have had expressed from key informants within at least two publicly funded business support bodies. The directors at EngCo_03 went on to say that "we wanted to develop the perfect little company" and that "the firm won’t get bigger than 50 people. That way you can see what’s going on by walking around. At 50 people we’ll start another company". EngDesMktgCo had also decided to limit growth to a given size and structure that would minimise risk. "The company is lean and focussed on selling. It is designed to survive shocks and disappointments". EngDesMktgCo is also demonstrated an advanced strategic thinking and market awareness orientation in a company which combines innovation, design and attention to profit-margin thus:

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"We have tried to leave the old culture of men managing machines and look forward to a new dawn where men manage new ideas. In a nutshell, to develop products, we select the product range and then study the market and distribution channel structure, if there is a sufficient margin, we evaluate our resources and if we think we can achieve positive results, we buy the product in question, strip it down, value engineer it, add three unique selling points without increasing costs, if this achieved, we employ the services of a design house and then follow it up by testing the products to failure and if successful achieve test approvals before a market launch." Several respondents made interesting comments about developing a greater innovation orientation in the sub-regional economy that would be reflected in the regional innovation and cluster strategies. One identified the need to bring together, "in a dynamic fashion", those SME managers who display openness to new ideas and risk; craftspeople and artists; management experts; technical experts; "theoreticians" and information technologists to brainstorm the creation of new products in a process of "applied research and development". This type of activity, one informant argued "should be at the core of the sector cluster approach promoted by AWM and SBS". He identified that the MAS (Manufacturing Advisory Service) was carrying out such an approach but he felt it was "rather burdened by procedures and the rationing out of 5 free days". He felt that the problem of grant disbursement (the tick box mentality), focused on quantity of interventions rather than quality of intervention, was getting in the way of progress. He said "Never mind how many days it takes! Because one brilliant product idea might employ a thousand people once developed and be worthy of greater investment in R&D than another". This attitude is by no means uncommon and we argue that more flexibility needs to be built into the provider system. The tension between SBS "touch" targets and the perceived business need to deliver for more "intervention effectiveness" has been referred to elsewhere. In a private communication, one respondent also commented on the vast number of innovative ideas within existing companies that go untapped because the company has neither the skill nor the resources to develop them. He outlined an example where a regional university had left him "disillusioned" and "sitting on the shelf" until he found new contacts: "If I can just get the right people to listen, then I am sure we can generate new manufacturing opportunities for our area and hopefully the whole country." Clearly the ideas are "out there" but the means of linking these ideas to agencies that can assist in their realisation may not be working as effectively as it could. The purpose of this sub-section of the report has been to report on the Advanced Management Skills currently in use within our case study organisations. The table below identifies how many times our respondents either explicitly or implicitly referred to our set of skills items.

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Table 7.3 Advanced Management Skills important in Case Studies (E= Explicit, I = Implicit) Advanced Management Skills Building and managing teams Communicating inside and outside the business Creative thinking and problem solving Delivering customer service Developing and retaining talented employees Developing new working practices Financing new developments Handling risk and uncertainty Identifying market opportunities Keeping up to speed with technological change Learning from customers, competitors and suppliers Managing change in the organisation Managing equal opportunities/diversity Managing innovation Managing logistics Managing my own workload and personal development Managing projects Managing quality Managing supply chain relationships Negotiating Networking in the industry Providing leadership and direction Redesigning business processes Thinking strategically Using consultants Managing Motivation Listening Lean management

Companies who mention skills as important FinServCo (E), TelesalesCo (E), EngCo_03 (I), EngDesMktgCo (E), EngCo_01, ManufCo_03 EngCo_02 (E), ManDesCo_01 (E), EngCo_01 (E), FinServCo (E), FoundryCo (E) FinServCo (E), TelesalesCo (I), EngDesMktgCo (E) EngCo_02 (E), ManufCo_01 (E), FinServCo (E), EngCo_03 (I), FoundryCo FinServCo (E), ManufCo_01 (E), TelesalesCo (E), EngCo_03 (E) FinServCo (I), TelesalesCo (E) EngDesMktgCo (E), EngCo_03 (E) EngDesMktgCo (E) EngCo_02 (I), TelesalesCo (E), Brooks (E), EngDesMktgCo (E) EngCo_02 (E), FoundryCo (E), EngDesMktgCo (E) EngCo_02 (E), ManufCo_01 (E), TelesalesCo (I), FoundryCo (E), ManufCo_03 (E), EngCo_03 (E) ManDesCo_01 (E), EngDesMktgCo (E) TelesalesCo (E) EngDesMktgCo (E), TelesalesCo (I), ManufCo_03 (I), EngManCo (I) ManDesCo_01 (I), EngCo_03 (I) ManufCo_01 (I), FinServCo (I), TelesalesCo (I) EngDesMktgCo (E) EngCo_02(E), EngDesMktgCo(E), EngManCo (E), EngCo_03 (E) ManufCo_01 (E) (as supplier), EngManCo (E) (as leader), EngCo_03 (I), FoundryCo, EngDesMktgCo EngCo_03 (E) TelesalesCo (I), FoundryCo (E), EngDesMktgCo (E) ManDesCo_01, ManufCo_01, EngCo_03 (E) EngDesMktgCo (E), ManufCo_01 (E) EngDesMktgCo (E), ManufCo_01 (E), EngCo_03 (E), FoundryCo (E) ManufCo_01 (E), EngDesMktgCo (E), TelesalesCo (E), FoundryCo (E) ManDesCo_01 (I), FinServCo (I), TelesalesCo (E), EngCo_03 (E) FinServCo (E), FoundryCo (E) EngManCo (E), ManufCo_01 (E), EngCo_02 (E), EngCo_01 (E), ManDesCo_01 (E), EngCo_03 (E)

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Having obtained the perspectives of senior managers in our case study companies of the AMS they deploy, we compared and contrasted this image with the views of a number of key informants. One argued that some businesses had an inaccurate view of what "strategy" actually is: “The way that strategic teams often do not discuss strategy but concentrate on day to day stuff (i.e. 'where shall we put the photocopier') does mean that there is a lack of real strategic management thinking within some struggling companies. If you ask them, they’ll say they do the thinking, and planning, but if you observe what is discussed, another picture will emerge.” Key informants were also rather uncompromising on issues such as business planning, feeling that it is often somewhat of a token gesture in many small firms. One informant asserted that locally 45% new businesses fail in the first three years and pointed out that those that do are usually those without business plans. For other firms, the plans and strategies are often produced but not referred to from one end of the year to the next. This contrasts strongly with EngCo_03, for example, where the business plan is revised at least every 10 months and "comes out onto the desk for every strategy meeting the company has". Networking is another area where many firms in the sub-region have problems, according to a number of our key informants. The company case studies show that networking in these companies is one of their strong points. However, the networking these firms do is generally more effective because each firm seems to have developed an informal way of 'filtering-out' particular types of network that they consider will be unproductive. Our case study firms maintain many links – from supply chains to business breakfasts to Chambers/Business Links and to banks. But many companies, the key informants assert, focus on keeping themselves to a very few trusted contacts and networks. Our key informants asserted that where firms are poor at networking, there is usually also a lack of awareness of what training and development is on offer. Key informants also saw the ability to promote the right person as being a critical skill that many businesses lack locally. Here attention focused specifically at the interface between the production worker and the supervisory level or those with functional skills (such as sales) being recruited into marketing management posts. In family-run businesses issues of succession management were also noted by several respondents where the argument was that recruiting a professional manager was often more likely to be the correct decision than handing over control to one's son or daughter. Earlier in the report, we developed the notion of the high performance workplace. In our case studies, we have identified that several of these organisations are taking steps in this direction. Perhaps the most widely recognised of these organisations is the FinServCo - a company that has achieved a number of major awards in the recent past. We described how this organisation has been transformed from one that was characterised by Tayloristic work practices to an organisation with radically different characteristics. Other organisations we have spoken to have also displayed some of these characteristics. For example, a number of our case studies have:

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        

Become far more people-centred, Encouraged workers to generate ideas and solve their own problems; Sought to build effective teams; Developed better communications within the company and between the company and customers and suppliers; Encouraged the sharing of knowledge; Emphasised building capacity; Promoted individual and organisational learning; Sought to drive out poor managerial behaviours such as "blame cultures" and bullying; and Sought to build high trust relationships in the workplace.

As one respondent neatly put it: “Treatment of people is key throughout the business from customer through the workforce …business is about people and relationships. The rest is tools!” 7.8 Business attitudes to and experiences of intermediaries Many of the firms we have listened to often have only a partial and imperfect view of what training and development providers exist and what they can provide. In this confusing domain, effective intermediation is essential if the market for skills is to become more efficient. In this section we discuss business attitudes to, and experiences of, intermediation and service provision in the realm of advanced management skills development. It has to be recognised from the start that the boundaries between intermediation and service provision are quite blurred and, in the eyes of many businesses, confusing. While training providers were a good source of information on SME needs, they also had had some interesting insights into the operation of various intermediaries. Some public funded institutions, for example, provide a dual role in that they both channel funding and to offer business advice through an advisory service. Advice is also offered on a dual basis too with some being carried out ‘in-house’ and some put out to tender and/or contracted out to training providers. Here, some of our informants raised concerns about conflicts of interest and blurring of boundaries. It would appear that for some intermediation services, the "commercial provider" is wholly or partially owned by public body. There were instances where publicly funded intermediaries were clearly regarded favourably by our case study businesses. TelesalesCo, for example, asserted that the advice supplied by one of their Business Advisers had proved invaluable. Other companies had been able to access Business Links for small grants. EngCo_03 attend Chamber of Commerce meetings for networking purposes. EngCo_02 commented favourably on MUSTARD21 to which Business Link had referred them. However other case study companies raised concerns over accessing funds from intermediaries. First, a number expressed frustration at the opportunity cost of how long it took them to chase grant funds that ultimately didn’t materialise. Second, several mentioned that

21

MUSTARD is an initiative designed to help high growth potential, new and growing businesses see http://www.mustard.uk.com

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the rules governing who could apply and how to apply were confusing and ultimately unfair. For example: 

EngCo_01 was excluded from access to training funds because it is owned by an American conglomerate. EngCo_01 employs local staff and argues that they should also qualify for grant aid for training and development



ManufCo_03 had had a CAD student placement from UCE funded by AWM when, in mid-2002, ManufCo_03 was bought out by an Italian company. This meant that the student placement was terminated half way through creating bitterness and frustration for both ManufCo_03 and the student.

In summary there is a perception amongst SMEs that the intermediaries are distant and inaccessible and that "it is not worth jumping through all the hoops" in order to discover that they do not, after all, qualify for help. This is compounded by a common SME perception that while the funds are there, that public bodies, advisors, Universities and Colleges etc. are accessing funds and that they - the SMEs - are last in line. Given that networking and managing external relationships has been identified as a key AMS, several of our respondents considered that Chambers of Commerce and Business Links could do more and better in providing networking opportunities to enable them to meet with like-minded managers in a structured environment and exchange experiences on what does and doesn’t work in practice. Essentially, this was not asking for training or education by intermediaries, but rather asking for an intermediary body to facilitate meeting to promote the exchange of ideas in the form of case studies and brainstorming sessions related to their business and/or its products. This is in essence buying into the concept of ‘business clusters’ and many asked why Business Link was not linking businesses in this way. As one respondent said “Surely linking businesses is what Business Link is supposed to do”. In fact, Business Links do hold such meetings but they are not always well attended and have been criticised by some of our respondents. One respondent said that since he had joined the Chamber of Commerce, the only thing he had noticed was a rapid increase in website firms approaching him from the Chamber's membership list. A number of firms were also critical of the networking opportunities that Chambers of Commerce currently provide. "Business Breakfasts", for example, were characterised as being "full of service businesses trying to make a sale". The interest in networking also, on a more fundamental level, illustrates their wish to learn from, by dialoguing with, others struggling with similar problems to themselves on equal terms. Some respondents felt that the problems with Business Link, for example, were not problems with individual personalities and capabilities as "some very dedicated and knowledgeable advisers can be found pounding the board rooms of the area" but were related to the set-up of Business Links and Chambers. It was felt that the SBS emphasis on penetration actually militated against effectiveness. This is an issue that has been raised elsewhere. Several respondents, and some intermediaries themselves, felt that current SBS targets were distorting behaviour and that the service would be

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more effective if fewer companies were targeted so that advisers could "stick by" the companies until an impact is achieved. Worryingly, some respondents were concerned about the lack of "clear blue water" between intermediaries and service providers, particularly where the outcome of business diagnostic tool application was increasingly being seen as a market or a sales lead. Others expressed concerns that the remedial actions needed to address issues surfacing, for example through an application of MAP, were not fully in place, thus raising the possibility that senior managers might feel a sense of frustration following their "diagnosis". Some key informants and companies were not sure just how training and development contracts were awarded and where the boundary lay between intermediary staff having direct contact with training companies and private independent consultants taking over. While we are not inferring any improper actions here, we are concerned that issues like these only serve to reduce trust and confidence in an arena that we have shown depends on trust and mutual confidence if the process of intermediation is to operate effectively. Some of our respondents also raised issue with the attitudes of intermediaries (but this also extends to suppliers of training and development). Even if this is uncorroborated in reality, the perceptions of the businesses are what counts. Much effort will need to be expended in order to change this attitude. The businesses that commented on this perceived attitude problem characterised it as "We are full of knowledge and you are empty" or "We are the experts and you are not". These attitudes are resented by SME managers who consider themselves the experts in their business. There was also a concern that some advisers are too keen to offer a predetermined, untailored package of advice - again, businesses resent this. Other respondents raised concerns about the business knowledge and experience of some advisers and felt that some do not have the weight of experience or business "savvy" to make them credible. As one respondent said, "we want to be told something we don’t already know". However, despite these concerns, examples like TelesalesCo reveal that effective interventions based on mutual trust do happen. Not surprisingly, a few niggles were also aired about access. One respondent claimed to have phoned Business Link repeatedly and "failed to get through to anyone on a Friday afternoon after 2pm because everyone was out to lunch". Similarly ManDesCo_01 had contacted the same intermediary and had been left waiting a month for a reply. If the objective is to build a high trust relationship based on professionalism and competence, these types of apparent trivialities can often become critical. Since our central argument here is that an effective intermediation process is essential, we have identified some factors that seem to be reducing the perceived effectiveness of the current process and militating against the creation of a high trust environment. While our concerns range from the strategic and structural to the operational and perceptual, we feel that more effort needs to be applied to developing a more effective intermediation process.

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In essence, the nature of the relationship between Business Link and the firms it contacts has to change from being a short-term, transient contact to a sustained and long term partnership based on mutual trust and understanding. 7.9 Training and development provision: attitudes and experience No clear view emerged about preferred forms of training and modes of delivery. In ManDesCo_01 and EngCo_03, for example, we heard that going off-site for off-theshelf sessions could provide some extra benefit to trainees, such as networking. On the other hand, the owner of TelesalesCo said that her preferred mode of delivery would be half-day sessions with time for networking. For her, this was the optimum time to be away from her business as she was very much at the head of operational and strategic management decisions. The training providers, Key Dimensions and the Peplow Group, preferred to get their managers off-site in order to free them up from the day-to-day problems that could impinge on their concentration if training occurred in the work place. However, these suppliers focussed on short diagnoses (2 days initially in the case of MAP programme run by Key Dimensions) with skills development interventions taking place in the form of off-site training and development. Follow up consultancy work was far more likely to occur on-site and in the manner of coaching and mentoring. However, while modes of delivery do vary, and may be considered to be ‘less-than-perfect’, mode of delivery was never stated as the reason why a training or development intervention had not been entered into. While firms were clearly sensitive to cost, value for money emerged as a more important criterion with providers often being criticised for not being able to demonstrate how their training would yield real returns to the business. While the price of a particular intervention was not the criterion, proving return on investment was. Time out and away from urgent work was seen as a major constraint and opportunity cost. Some of our respondents (both the case studies and the key informants) were quite vocal in their criticism of some providers. Further Education and the Local Learning and Skills Councils were criticised for being "pitched at an outdated and low level" with NVQs attracting much criticism. Other criticisms levied at the FE level were that:       

The LSC and FE colleges need more research-based information on what management needs are required Capacity is a serious problem with management training for SMEs needing a high-level input and tailor-made solutions There are not the training organisations within the area that have both the capacity and ability to deliver There is no single "portal" or point of contact between SMEs and FE It is difficult to keep up with changes in qualifications Links between companies and FE/HE establishments minimal The economics of provision do not stack up as it proves difficult to provide quality higher level training at a reasonable price to a small number of people

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

Lower levels of provision are preferred because of "big numbers" being more economical for providers

Again, a number of minor issues were raised that while they seemed trivial did much to undermine the development of a more effective inter-relationship between businesses and FE. As the Personnel Manager of one company said, "poor service delivery means to us that FE do not see us as being very important". From discussions with our case study, it was argued that Higher Education was playing a role in the provision of training, development, advice and technical support in several organisations. One organisation was using Cranfield University for the provision of senior management development, principally because the company thought that Cranfield "had the name" in this area. Another firm was using the University of Wolverhampton for middle management but did not equate "Wolverhampton" with the provision of executive level education. Another responding firm felt that executive level education was a niche that was not covered in the sub-region. In contrast, one personnel manager asked why local universities did not focus on middle management training courses and strongly argued that top managers were served by national centres of excellence such as Cranfield and Warwick. He argued that the priority locally should be middle managers in medium sized firms. Our analysis of local provision, elsewhere in this report, shows that these services are available sub-regionally and that these conflicting perceptions are indicative of a considerable lack of awareness about just what is available locally. However, from discussions with key informants, we concluded that the general perception of many SME managers was that "HE business schools are not for me". Innovation is a key issue regionally and is one of our advanced management skills. Indeed, the cluster approach depends on there being an effective link between firms and universities. It enables a process of knowledge transfer in that either researchbased ideas from universities can be taken to market, or firms that have ideas but lack technical knowledge can secure the advice they need. Some of the case study firms had recognised the need to move away from labour-intensive to knowledge-intensive work and thus that they needed University-based applied R&D capacity to help them in designing new products and new production systems. Several of our respondents expressed dissatisfaction with the way some universities in the region had treated them. For example, one of our case study firms has been working with the School of Engineering and the Built Environment at the University of Wolverhampton. The firm's view was that the University staff involved in a joint project with the firm saw teaching full time students as their core business and, effectively, had little time to focus directly on the business project. As he said, "they talk the talk but don’t walk the walk". Hence, he thought that the relationship has been somewhat artificial and not as fruitful as it could have been. Additionally, Staffordshire University and Birmingham University were cited as regional universities that had both failed to deliver on projects with our case study firms. The two firms involved had felt let down and also felt that opportunities had been lost. However, while there had been some disappointments, there had been a number of successes.

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Our discussions with case study firms identified a demand for higher-level flexible analysis, and dialogue with thinkers and cutting edge R&D people in Universities about strategy development for their companies and product and market development. These are areas that are identified as weaknesses regionally elsewhere in this report. Here, firms want tailored, often one-to-one support delivered in mentoring mode rather than off-the-shelf, one-size-fits-all packages. However, firms and intermediaries identified problems on the supply side of this relationship: the first is related to the attitudes and abilities of staff in Universities and the way Universities are (or, usually, are not) set up to deliver support and, the second, is the availability of funding through intermediaries to fund such work. In summary there is interest by the SMEs to link to Universities on design and management but frustration that Universities are not providing the type of interaction the companies require. Clearly, effective HE to business links are essential in the realisation of innovative ideas and in the delivery of management education. Consequently it is important that firms know where to go, that they find it easy to make contact with the "right person" and that the University can deliver service at the levels of reliability and the pace required by a commercial organisation. In the innovation process, and in the delivery of management development, which both require high trust between partners, our case study organisations identified that they were looking for high quality, high reliability partnerships. What came across strongly from case studies was a plea for a genuine engagement with education providers, in which business links were not something that a university "also did" but seen as a core activity. 7.10 Summary of key points Our discussion with the case study companies have revealed a number of important issues that will have direct implications for the development of an AMS development strategy for the locality. We found that the companies that have actively engaged with AMS acquisition, even though some have not done this consciously, have largely been stimulated by a major triggering event or critical incident. These triggers could be a management buyout, the loss of a market, succession, bringing in professional management or the need to raise capital radically to refocus the business. Given these triggers, it is important that service providers are able to respond to these issues. However, we were led to conclude in all our instances that the demand for change and skills development had come from within the firm and not in response to initiatives from publicly funded service providers. Interventions thus seem to have a better chance of success when they are demanddriven rather than supply-side or intermediary initiated. Here we developed a health care analogy and argued that efforts are needed to change the industrial and business psychology of the area to one of preventative health rather than "accident and emergency" or reactive health care. We have, again, emphasised the need to link AMS development, and training and development more generally, to bundles of HR activity to ensure that the AMS brought into the business by senior managers are diffused throughout the organisation

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in the form of changed organisational ways of working and ways of organising. The concept of the "high performance work organisation" is one that needs to be more effectively developed and communicated locally. A review of why the survivors had survived revealed a number of our AMS in action and demonstrated the validity of the 25-item framework we have developed. Getting the strategy right, reading the market, moving in the value chain, innovating and learning how to acquire and use external advice were also shown to be essential survival skills. Though in several firms, tough decisions about the firm's survival had let to massive job loss. The firms we spoke to in depth had used a number of external partners to help them make the changes they had to make if they were to survive and develop as businesses. High trust and long standing relationships seemed to be a prerequisite of an effective intervention. Several organisations used a trusted partner in "mentoring" mode that appeared to be a particularly effective approach in these businesses. The acquisition of management, business, product and market knowledge through the supply chain where major customers saw it as being in their interests to develop better suppliers was seen as an effective model and one that could be developed in the subregion. While some of our case study businesses had had good experiences with publicly funded providers, there was a degree of cynicism in that the current emphasis on touch seems to militate against the development of more longstanding, meaningful, high-trust relationships. Both the businesses and many of the intermediaries themselves would seem to think that a model of support based on intervention effectiveness rather than touch was needed. Our analysis of AMS in use, again, validated our 25-item framework and gave some useful insights about how these skills had been developed and utilised in case study organisations. The case studies provide some rich material on how companies have changed their strategies, behaviours, cultures, structures and their value systems as a result of developing new advanced management skills. We contend that effective intermediation is essential between firms and potential service providers, yet, our discussion of business attitudes to, and experiences of, intermediaries identifies a number of issues and tensions which must be addressed. These range from major structural issues such as the potential service distortion effect of existing target and performance measurement regimes, through operational issues, to more "trivial" issues that nevertheless can lead to the erosion of mutual trust and credibility between businesses and intermediaries. One particular concern related to the perceived lack of transparency between the role of intermediaries and providers. However, there is much good work going on and it will be essential "not to throw the baby out with the bath water". When asked about their experiences with particular training and development providers, our case study respondents had some strong views. There were concerns about FE Colleges and Learning and Skills Councils (which was seen to be too

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focused on too low a level of skills and on NVQs which were not highly regarded 22) and their ability to deliver skills at a higher level. HE also received some criticism for having, in some cases, failed to respond, for being difficult to contact and for not seeing the delivery of services to local businesses as a "core business". Earlier in the report we outlined a model of business learning that placed firms into four categories based on how they stood on consciousness/unconsciousness and competence/incompetence. Our case study firms are clearly not incompetent, though they would all probably agree that they are not fully competent either, and they are all conscious of the need to engage with business development and improvement thorough advanced management skills acquisition. The case studies serve to emphasise the difference between these dynamic successful firms and those in the locality that are still firmly entrenched in the unconscious incompetence box. It is these firms, we argue, that Section 6 of this report has shown to be still competing on price, not having developed new products or service and not having developed new markets for existing or new products. Our earlier research has shown that these firms are far less aware of the need to develop advanced skills. How can we raise their consciousness for the need to change or do we have to leave it to a crisis or a critical event?

22

In Section 6, 17.4% of firms rated FE Colleges as poor or very poor in their delivery of support and advice, while 25% rated Local Learning and Skills Councils are poor or very poor. Only local authorities (26%) achieved a higher percentage of respondents saying poor or very poor.

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SECTION 8: REVIEW OF INNOVATIVE MODES OF DELIVERING MANAGEMENT DEVELOPMENT TO BUSINESSES “Informants, and by implication their organisations, appear to have a relatively narrow sphere of knowledge and relationships in the area of SME management and leadership development. They can be seen as occupying micro-worlds that are embedded within a wider system of which they have partial knowledge. No single organisation emerges as providing a central bridge between the various informants’ worlds, instead informants and their organisations appear to operate with a restricted view. The inevitable consequence is that any new initiatives run the risk of being developed in isolation from what presently exists.” Perren et al. 2002: p.7. 8.1 Introduction There is not a single recognised pathway for an individual to learn how to be a manager, or to qualify for management as a profession. For every manager we could trace a different pathway to becoming one, and managers and entrepreneurs seeking sources of information about training and development opportunities are faced with a plethora of qualifications, courses, programmes and consultancy support. Research indicates that levels of training for managers in SMEs are low (Worrall and Cooper, 2001). Owner-managers of SMEs in the Black Country and Wolverhampton-Telford corridor may perceive that there is little provision obviously directed at their needs. They are not helped by the fact that, despite the claims regularly made for the latest management “fads”, no single form of provision is as yet able to meet all the needs for advanced management skills as defined within this study. The type, quality and relevance of much management provision available in the UK has repeatedly been called into question. For example, Goodge (1998) reported a study in which 25% of senior managers surveyed considered that their company’s investments in management development courses, programmes and workshops had been “a waste of resources”. This level of dissatisfaction was also identified by Worrall and Cooper (2001) in a later study where 16% of managers stated that the training they had received had been ineffective though this was lower for the most senior managers (7%) than it was for the most junior managers (25%). The question is how to increase the relationship between business performance and the development of advanced management skills. Nonetheless, an Institute of Managers survey published in 2000 (Mabey and Thompson, 2000) indicates that companies are investing more resources in management development, both in the corporate and SME sectors, and that they are starting to see quantifiable returns on the investment. Over the previous study in 1996, there was a major increase in management training - an increase of 18% in larger organisations and of 25% per cent in smaller companies. The average was sixand-a-half days per year in both large and smaller organisations - an increase from five days in SMEs (Worrall and Cooper, 2001) and 51% of companies reported having a written statement covering management development. The survey indicates that UK business is starting to see training as an investment rather than simply a cost with four in ten managers saying their organisation has an explicit management development budget. The positive correlation between management qualifications

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and performance is reinforced by the DfES Employers Skill Survey which indicates that companies where managers have high-level qualifications also have a more highly-skilled workforce and, interestingly, this effect is heightened for singlemanager companies (Bosworth et al. 2002). Bosworth (2002) cited Barry et al, 1997, p.57 who found that: "The fact that companies headed by qualified (top executives) tend to outperform those with unqualified (top executives) is not too surprising. What is a surprise to us is the starkness of the latter's underperformance." While Bosworth (2002) was of the view that UK does have some excellent managers, he raised concerns about the "long tail" of poor UK managers. This section of the project report reviews the literature on the forms of management development available within the UK market, with particular emphasis on innovative and non-traditional forms. We begin by placing the forms of management development provision within the context of the overall stated and inferred purpose of education and training for managers. Each category is then presented along with brief information about the debates surrounding it between its aficionados and its detractors. “Traditional” forms are presented first, followed by more recent initiatives designed to counteract or complement some of the perceived disadvantages of the traditional forms. This process of review brings out issues of quality, relevance, access and flexibility, which we then apply to the situation facing senior managers and owner-managers of SMEs. 8.2 The purpose of management development In order to make sense of the range of training and education on offer, different perspectives on management itself have to be acknowledged (Trim, 1999). Is it a technical pursuit, rational and morally neutral, or as pragmatists suggest, more a process of making sense of a chaotic and unpredictable “bricolage” of factors, making it difficult to systematise management knowledge and putting the onus on the individual manager to construct a personal practical and analytical toolkit of skills and strategies? Alternatively, the “critical management” school of thought sees management as an essentially political activity, shaped and constrained by dominant patterns of power within society. Each of these perspectives can be traced and has an impact on the shape and content of contemporary management education. Holman (2000) suggests that there is an intimate link between ideas of what management is about and ideas about the “ideal” way of delivering management education. We do not have to delve far into the literature to discover debates about the nature of knowledge in management. For instance, is knowledge drawn from “objective” or universal laws, or is it drawn from direct personal experience? Our answer to this question leads to ideas about the learning process and methods of teaching, which we can then trace through the different forms of provision on the management development market. “The distinction between academic and experiential theories of learning, a distinction also reflected in methods of teaching, is considered to be one of the most important in management education” (Holman, 2000).

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Provision within educational institutions, above all business schools, is often criticised by business people for having “too much theory”, focusing too much on the acquisition of knowledge (knowing that) at the expense of the acquisition of skills (knowing how, and more importantly, being able to in practice). Given our notion of the resource dependence view of the firm, "knowledge-who" is an element that is largely missing in the more formal domains of management education and development. Management educators will counter this argument by pointing to the strong elements of personal development in some programmes, and the reliance on project work, often based in the student’s own organisation. A more fundamental debate exists as to the aims of management education. What should be the driving force of efforts to improve advanced management skills? - the enhanced autonomy and potential of the individual, the instrumental strategy of the sponsoring organisation (improvements in competence) or a broader social goal (increasing the nation’s or the region’s competitiveness)? From within the literature there is an assumption that management education or management development is a core activity for practising managers and/or their organisations. Viewing it from the outside the assumption is different. Management education is in fact a minority pursuit, in spite of the tremendous growth in MBA programmes and all forms of delivery. Much “formal” higher education in management, particularly the MBA, is based on a traditional liberal perspective, assuming that managers need to acquire bodies of managerial knowledge (verified by scientific research into business and management) which are then subject to rational logic and empirical testing and subsequently integrated with experience. Acquiring knowledge in this way facilitates the development of generic skills that aid the scientific application of knowledge. These generic skills represent the specific aims and include decision making, planning and rational problem solving. A second perspective, experiential liberalism, shares many fundamental axioms with the traditional model, but its starting point is that “traditional” modes of teaching (lectures, seminars) fail because the student is more passive than active. It is, therefore, thought that learning should be primarily rooted in a manager's experience and context and that the manager should be put into situations where it is necessary to engage in various forms of action leading to reflection (Mabey and Thompson, 2000). Adherents to this perspective often draw heavily on Kolb’s cyclic theory of learning (Kolb et al, 1974) as involving a process moving from concrete experience, through reflection and reconceptualisation, to active experimentation using new mental models or strategies. Management learning is then essentially seen as a social process because the phases of reflection and reconceptualisation require a degree of interaction and learning from others (Mumford, 1997). Many MBA and specialist Masters programmes have in recent years injected a strong element of experiential learning into their programmes in order to accommodate this need. Some forms of experiential learning, such as action learning sets, rely explicitly on group interaction and avoid the formal role of the teacher, requiring instead a facilitator, a different kind of educator from the traditional “instructor”. Recent research by the CIPD (2002), for example, has also shown that almost 45% of UK managers favour office based training and development that is focused on projects and action learning - i.e. learning experiences that are directly focused on resolving the issues and problems that managers currently face in the workplace.

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The vocational model proposes that management education exists expressly to meet the requirements of markets for managers skilled in the appropriate skill sets to meet organisational or industry objectives. Providers must therefore view themselves as businesses providing a service to other organisations and to the economy as a whole. They operate within a market and thus have to compete with other providing organisations. This is a particular challenge for the business schools. The educational focus is on the development of courses, programmes and learning products that are relevant to the needs of managers and organizations and standardized in order that they can be delivered flexibly and their quality assured. This type of approach is exemplified by the Management Charter Initiative (DTZ Pieda, 1998a,b). The aim is to produce a “competent manager” who can work to the required occupational standard. “Innovative” forms of provision, as will be shown below, are often more innovative in their method of delivery than their content (i.e. the content remains the same, only the mode differs leading some to argue that the full potential of more advanced forms of delivery is not being achieved). Thus, the flexibility and accessibility of the product reflects a desire for market responsiveness typical of the vocational perspective. Nevertheless, the underlying assumption is that knowledge exists “out there”, is external to the (individual) manager undergoing the programme, i.e. the traditional liberal assumption about knowledge and skill development remains intact. A fourth, highly influential perspective or model is rooted in organisational development. This owes a lot to recent developments in thinking about the nature of knowledge and learning within organisations as systems and maintains that the skills of management and cannot be isolated from the organisational context in which management or leadership are displayed (Fisher, 1996; Burgoyne and Reynolds, 1997; Burgoyne, 1998; Shafsma, 1997; Testa, 2000). Management development is understood as an integral part of strategic human resource management within the organisation (i.e. part of a "bundle of strategic HRM initiatives) and closely bounded up with strategy formulation and organisational change. This reinforces the view outlined earlier that training and development interventions are more likely to be effective and yield tangible results when they are part of a bundle of interventions and approaches focused on organisational development). Indeed, based on their experience of a management development programme within a public sector organisation, Broussine et al (1998), echoed by Vloeberghs (1998) propose that the “worst” times for an organisation, in terms of upheaval, struggle and change, might be the “best” times for management development. It follows from this that the style and content of management development provision needs to use the organisation as its starting point, and that the “provider” is more of a consultant or facilitator than an educator as such. The organisational development perspective on advanced management skills has become dominant in recent years, fed by the concept of the learning organisation. Our research into sub-regional firms also reflects this assertion that periods of organisational turbulence may be the most effective time for an organisation actively to engage with organisational, management and workforce development. Discussions with local intermediaries have revealed that major events in organisations such as a management buy out, a family run business deciding to buy in professional management and venture capitalists refusing to fund firms because of management

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weaknesses have proved important triggers to firms actively to engage with various forms of management development or organisational strengthening. Vaill (1996) in his book Learning as a Way of Being presents a typical definition of the learning organisation as being one which has “an internal structure and process marked by an imaginative flexibility of style in its leadership and by empowered contributions from its membership”. Voci and Young (2001:158) paint a visionary picture of advanced management skills in such an organisation: “The leadership of learning organisations is creative, unafraid of change, highly receptive to innovation, and inclusive of diverse or unique ways of thinking. Senior leaders admit mistakes and are able to change course when needed; they believe that leadership resides in everyone, not just at the top. Such leaders are also great storytellers, inspiring others around them to strive for the best, to take reasonable risks, to learn from mistakes, and to share with others, rather than hoard information as an expression of power.” The general belief, propounded by Porter and others, that knowledge is now the single source of competitive advantage, implies that knowledge has to be created within the company, rather than sourced from external experts, who are now seen not as the fount as knowledge but as facilitators and catalysts for learning (Porter, 2000; De Geus et al, 1997; Probst et al, 1997; Schott Kerr, 2002, Longenecker and Ariss, 2002). The critical school of management education attempts a radical alternative by aiming to free managers and employees from the constraints of oppressive power relationships institutionalised within organisations. The aim, as in the experiential liberalism model, is to produce “reflective practitioners” who are also able to reflect on their own processes of learning and the ways in which social and power relationships are replicated through managerial action. Learning itself is seen as part of a social process. On the surface this might seem of little relevance to the day-today needs of businesses but current thinking on advanced management skills, as the literature review on skills discovered, is pointing in the direction of precisely this form of self-knowledge, autonomy and willingness to take a fresh look at assumptions. Also, an emphasis on the social and group aspects of learning echoes a concern for social relationships that resonates with the critical perspective (Lave and Wenger, 1991; Bagshaw, 2002). These five models provide some insights into the proliferation of types of provision, and help to explain some of the differences in aims and emphasis between the many forms of provision on offer. In particular, “innovative” ways of delivering management education can be viewed in terms of the main model that they reflect. This helps the analysis of the strengths and weaknesses, the disadvantages and advantages, of innovative modes of management learning. It will be evident from the above discussion that these models tend to share a common conception of the “manager” as a senior employee, working within an “organisational” context. Management education has evolved overwhelmingly in response to the needs of, first, large-scale industrial organisations, and latterly, private and public corporate bodies. The position of the lone entrepreneur acting perhaps as

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the single manager in a small enterprise, or the leader of a small team of managers, does not sit easily with this perspective on the target population for management education. Even the manager within a medium sized enterprise might find that the majority of the body of knowledge "dished out" on a management education programme does not relate immediately or obviously to his or her situation, but has to be adapted. This tendency has not been greatly altered by innovations such as elearning or blended learning, although these new forms of provision do have the potential to meet the specific needs of managers in small and medium enterprises, given certain conditions, which will be discussed below. 8.3 “Traditional” forms of management education The MBA In the absence of an industry-led professional qualification for managers, the Masters in Business Administration has taken the lead as the “flagship” degree in management for the majority of higher education providers. In 2002, over 10,000 new MBAs graduated in the United Kingdom23 from well over 100 higher education institutions that can provide MBAs (some of which are accredited by organisations such as AMBA, EQUIS and the AACSB, others are not). This is in addition to about 18,000 graduates per year in business and management (Bosworth, 2002). A rough estimate would indicate that around 28,000 people a year in the UK are achieving MBAs or undergraduate business education. The key question given the low skill/low wage view of the UK economy is can UK business organisations create enough jobs for these skills to be effectively deployed? The numerical inflow of people into management would not appear to be the problem but it is disconcerting when it has been identified that 34% of people with degrees are doing jobs that do not require a degree and that people with degrees in business and management are more likely than other disciplines to be in jobs where they appear to be over-qualified for the jobs they are doing (Keep and Payne, 2002; Green and McIntosh, 2002) 24. 23

Source: Association of MBAs. Recent research by Green and McIntosh (2002) into the utilisation of skill has raised a number of issues relevant to business and management education: first, they found that graduates in business and management were more likely that graduates in other disciplines to be "over-qualified" for the jobs they are doing (i.e. having degree level qualifications in jobs where A level qualifications would suffice); and, second, they found that graduates from the new (post 1992 universities) were more likely to be in jobs that only required A level skills. The authors went on to speculate that the large number of business and management graduates (they form almost 50% of students in the social sciences) may be creating a demand for higher skilled jobs that the sector cannot provide. They also cited that the field of business and management is less structured in terms of professional bodies which might account for the relative lack of graduate level jobs. The authors also speculated that the skills being created within degree programmes in business and management might also not map onto the skills needed by businesses and that business and management might appeal to less able students. The paper by Green and McIntosh raises some questions that are fundamental to policy: 24

1) Can the economy create enough high skills jobs to adsorb the entrants into management each year so that the skills on offer match the skilled positions available? 2) Are there too many business and management graduates? 3) Are the skills delivered through business and management education those that are required by employers? 4) Are the skilled posts being created by employers at "graduate level" and above? 5) Does the lack of professionalisation in business and management hinder the creation of high skilled posts given that skills are defined by social processes such as professionalisation?

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Despite this huge annual increase in qualified managers, Patricia Hewitt, in October 2002, still felt able to define the average British manager as ‘lagging well behind the rest’. The overriding motivation for aspiring and practising managers to undertake an MBA has been career progression. An AMBA survey in 1994 found that after qualification there was a fourfold increase in those involved in corporate strategy and planning, generally associated with senior levels of decision-making, and a corresponding decrease in specialist functions such as IT and administration. Over half of the graduates surveyed changed function and two-thirds reported that their salary and benefits package had improved. Of those who remained with the same employer during and after studying for the MBA, 50% reported that they were promoted or given increased responsibilities and of those who were not in employment, 60% took up new positions commensurate with an MBA immediately after completing their studies (AMBA, 1994). Simpson (2000) reported a longitudinal study that indicated that men rather than women benefit most in career terms from graduating with an MBA, whereas women tend to give higher ratings to the educational and developmental benefits of the MBA programme itself. However, it is interesting to note that male managers in the West Midlands have been shown to have some rather unenlightened attitudes to women managers (Liff and Worrall, 1997). Despite the recent growth in the number of MBAs available in the UK in the last twenty years, they do have their detractors (see Pfeffer and Fong, 2002). Indeed, on pundit (Harold Leavitt, 1989, p.39) once commented that "we have built a weird, almost unimaginable design for MBA-level education" that distorts those subjected to it into "critters with lopsided brains, icy hearts, and shrunken souls". 8.4 “Specialist” Masters in Management programmes In recent years the MBA has been joined in Business School portfolios by several forms of “specialist” Masters programmes. These are designed to meet the needs of: a) established professionals (such as accountants) who already have a professional qualification in their specialism and are seeking enhanced or updated knowledge, plus an injection of management knowledge to equip them to move on in their career development (essentially as a senior manager within their specialism) or b) recent graduates with specialist bachelors’ qualifications (for example, a BA in Marketing) who wish to take their CV to a higher academic level. Examples of such specialist Masters programmes include MAs in subjects such as Marketing Management. While the target market, and the nature of the specialism might be innovative, the mode of delivery tends to be rather traditional, i.e. term- or semester-based programmes requiring attendance and

Green and McIntosh (2002) also go on to argue that £there are substantive numbers of people with qualifications at (NVQ) levels 1 to 3, in excess of the numbers of jobs which ostensibly require these qualifications " (p. 24). Perhaps the skills production system in the UK may be out of phase with the processes of skills creation in businesses?

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completion of assignments at set times reflecting the schedule of the providing institution. 8.5 Short courses Short courses, provided either in-house, by universities or other public educational institutions, or by the burgeoning private sector in training, have long been a mainstay of management training and development. An increasing number of “micro” management briefings and seminars are now available to meet the growing demand for short meetings and discussion groups to enable executives to keep in touch with new management theories. However, while some business schools are offering such services, many are resistant to the idea of offering very short courses: one reason cited is that this might have a negative impact on their reputation for high academic standards. Further, and perhaps more pertinent, short courses do not allow schools to develop long-term relationships with organisations and managers. Conference organisers and consultancies have stepped into the gap and are offering a growing range of short courses. The Chartered Institute of Management currently offers 40 different short courses in its portfolio, of between one and five days: Capita (formerly the Industrial Society) offers 42. Most higher education establishments have by now accepted that the short course is an important sector of the management skills development market, and indeed it is lucrative, but remains very fragmented. One of the major problems for potential buyers in the market is this fragmentation. It is extremely difficult to judge, from the plethora of products on offer, where to find real quality, both in terms of content and delivery. 8.6 Competence approaches The Management Charter Initiative was set up to tackle the perceived shortcomings of British management compared to its foreign competitors, and, by implication, to provide an alternative form of skills development to that traditionally provided through attendance at courses. By assessing observed management behaviours against sets, or “units” of competence, it would be possible to accredit competence, and also to identify gaps or shortfalls, which could then be selectively addressed through focused and “just-in-time” training. An unsuccessful candidate for accreditation of competence is not labelled “incompetent”, but “not yet competent”; thus opening the door to ameliorative training, and introducing the idea of continuous improvement. Qualifications were designed to reflect competence in core units recognised as being generic to all managers at the specific level of autonomy and responsibility designated by the level of the qualification. Thus, supervisory posts were set at Level 3, junior management at Level 4, and middle to senior management at Level 5. Early signs that all was not complete and settled in the competences movement appeared in early in the 1990s. Henderson (1993) pointed out that there is no apparent distinction made between competence to perform a task well and “threshold competence”. Fisher (1996) makes a criticism of the competency “movement”, that competencies are incomplete unless all contextual aspects are considered alongside the actual behaviours (and underlying knowledge and understanding) of the manager being assessed. Contextual aspects include the manager’s assumptions and concerns, which are not explicitly included within a competency-based view of the “job-role

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environment”. Furthermore, Fisher considered that a manager’s basic assumptions may alter as he or she moves from one career stage to another, leading to more developed and more sophisticated ways of thinking. Similarly, Sorcher and Brant (2002) caution against relying on a competency checklist to identify levels of skill (for example in an assessment centre) and maintain that it is necessary to investigate an individual’s behavioural characteristics within the context in which the behaviour actually is carried out. This theme is elaborated by Grugulis (1998), who argued that MCI committed two very serious errors in first assuming that it is both possible and desirable to synthesise the work of all managers everywhere, and secondly, by concentrating only on what managers do, it neglects to engage in any reflection on what management is. As the literature review on management skills pointed out, attempts to distil the purpose and practice of management into a set of universal principles and statements go back to the beginning of management science as a discipline. However, Grugulis presents compelling arguments that such attempts are overly simplistic and tend to negate the actual complexity and multiplicity of management roles and contexts particularly when those contexts are subject to rapid and discontinuous change. In other words, a skills framework is a framework rather than a straitjacket. She asserts that “if the function is heterogeneous, locally determined, based on status rather than task, involves the exercise of authority and is problematic to assess and measure, then these factors need to be taken into account in the training process” (Grugulis, 1998). On the other hand, one of the immediate benefits of a competencies framework, identified by Henderson (1993) is that it provides a ready point of reference for entrants to programmes to define what managers do, a need that may often be overlooked by blasé educators who have become over-familiar with definitions of the management role. From the point of view of management in SMEs, in particular, it is noteworthy that there is little in the existing or proposed management standards that would be immediately and specifically identifiable with the level of responsibility and accountability of the owner manager. Indeed, the perceived need within the standardsetting process to derive a set of universally applicable competencies, leads to a conflation of all managerial roles, so that the role and task of the owner-manager is not seen as distinct from that of an employee manager. This may act as a disincentive for SME owner-managers to investigate the developmental possibilities of involvement with programmes based on a competency framework (Gibb, 1997, 1999). More work on identifying the specific needs of owner-managers/entrepreneurs as distinct from employee managers would seem essential. 8.7 Evaluation of traditional forms Not many independent studies evaluating the business impact of management training and management development have been conducted. Still fewer focus specifically on the impact of management development on the propensity of organisations to be innovative, or on the specific participation of SMEs in management training provision. Storey and Westhead (1994) examined research literature from Europe, Canada and the US, and Australia, concluding that, while some management development provision is beneficial, the link between participation in management training and the success of an enterprise was not well established. Furthermore, when

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focusing specifically on small business start-ups, they found no evidence that participation in an enterprise training programme prior to starting up a business had any impact on the owner manager’s success in keeping the business running after three years. Westhead and Storey (1996) in a further study claimed that: “Our highly subjective impression is that some types of management training may be effective in enhancing firm performance whilst others are not. However, our review is unable to consistently document well-conducted research evidenced which shows that the provision of management training for SMEs clearly leads to improved performance on the part of a recipient firm.” These views may explain Westhead and Storey's assertion that it is not through ignorance that SMEs do not engage with management and workforce development but from an assessment that training and development do not positively affect the "bottom line". 8.8 Innovative approaches to management development The Continuous Professional Development Model and the Chartered Manager scheme, based on the national management standards project, is the foremost current example of the vocational perspective put into action. The purpose of the Chartered Manager scheme is to:    

Give managers a structured CPD environment within which to develop themselves across the full range of generic management skills Sign-post learning and development opportunities in support of the above Give access to a number of self-assessment diagnostics to monitor progress Provide managers, and their employers, with independent confirmation of their management skills and the positive impact they are having in the workplace.

The scheme requires a range of interlinked and complementary sources of evidence of the manager’s skill set which are both set in context and embedded within the manager’s individual practice. This “portfolio” of forms of evidence/activity comprises:      

Continuing engagement with the Institute's CPD scheme Annual completion of the mandatory sections of the CPD Profile 360 degree assessment by self and six other people against the Chartered Manager Assessment Questionnaire Evidence of learning and development against one of the Chartered Manager Skills categories, and evidence of positive impact in the workplace against at least two of the Chartered Manager Skills categories Online assessment of the candidate's CPD Profile records by an Institute assessor Panel Interview

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It is noteworthy that the scheme makes no specific requirements about the form of the learning and development to be incorporated. The logic is that the individual will make an informed selection from the full range available on the market. 8.9 Coaching and Mentoring The development of coaching and mentoring schemes in recent years can be seen as an attempt to shift the locus of power in the learning relationship away from a providing institution, or a universalistic conception of what management is, and firmly towards the individual manager in context. Thus it fits the developmental model. A recent development here is that one University in the Midlands is about to launch a Master's programme to provide formal training for coaches and mentors. Coaching, as a method of delivery of learning for managers draws a great deal, as might be expected, on analogies with sport (Burdett, 1998). Highly results-oriented, it is broadly defined as a cyclical three-stage process of managing expectations, monitoring performance and providing feedback. In the first stage, the coach works with the person being coached to build a shared vision of future success. In the case of management coaching, that will be placed within the context of the organisation’s strategic vision and the manager’s specific role in achieving that. The second stage, “following the play” focuses on and develops the specific behaviours where the individual can “make the most difference”. The third stage, giving feedback, is a process not only of passing on observations, but probing and questioning to build the individual’s own understanding of what works and what doesn’t work in a particular context, what needs to be improved, and how the individual can introduce further changes in behaviour in order to deal with perceived problems (Burdett, 1998). Coaching is as often seen as a function, even a duty, of senior managers with regard to “bringing on” managers at more junior levels, or developing skills, particularly in micro organisations where the owner-manager might not only be the key source of strategy but also the key source of expertise. Thus, developing the skills of coaching is seen as part of management development, of particular relevance to smaller organisations. Burdett suggests that, while coaching and advising becomes more and more critical to organisational success, it is invariably the skills of coaching, rather than the spirit of coaching, that are lacking. In other words, both managers themselves and external advisers lack specific skills of coaching communication that result in actual behavioural change. An example is giving feedback using vocabulary and constructing scenarios that are focused on the past or present rather than the future. Like athletes and sportspeople, managers need the opportunity to taste successful performance, to “live in the future”, and thus activities such as scenario-building, simulation and role-play are important techniques in the coach’s repertoire. Mentoring differs from coaching in the sense that, while coaching is focused primarily on the achievement of extrinsic results, mentoring is a relationship set up to focus primarily on the development of the individual. Therefore, while coaching is very much bound to the context in which managers and employees are performing, mentoring might be to some extent removed from it. A mentoring relationship is one in which a senior manager, either from within the firm or even from outside, is assigned to a manager at a more junior level hierarchically, in order to set up a supportive relationship in which the junior partner can explore problems, challenges, and construct paths to advancement. Mentorship is generally seen as an altruistic

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relationship, which is open-ended in the sense that the goals and objectives are set by the individual being mentored rather than being dictated by the contingencies of the business context (as in the case of coaching). The Work Foundation25 recently published research which suggests the most innovative form of management education and training is coaching, project work or career moves. The Work Foundation argued that: "genuinely self-directed management learning is relatively rare and the organisation continues to determine to a large extent how individuals should develop and what knowledge and skills are relevant. This approach inhibits change, pushing managers and their organisations towards incremental approaches to organisational change, rather than encouraging a more radical approach or transformation". The reference to transformation in the above quote given that we have identified that sub-regional businesses need to break out of the low wage/low skill equilibrium position that they have gravitated into: its also identifies that demand-side interventions and actions are needed to trigger this break with the habit patterns, attitudes and behaviours associated with less modern forms of business strategy and organisation. Recently, there has been discussion about the role and effectiveness of Non-Executive Directors (NED) in businesses 26. The Higgs Report (p.27) lists the role of the NED as:    

Challenging and contributing to the development of business strategy Scrutinising the performance of management and assisting with the setting of objectives and targets Ensuring that the systems for risk management are sufficient and effective Assisting in succession management, making management appointments and removing badly performing managers

Despite these more formal roles, the appointment of an effective NED could have additional advantages to a business particularly if the NED has in depth product, market or sector knowledge or if that NED had developed managerial skills that could be "infused" into the management team of the host businesses. We argue that the more constructive uses of NEDs, rather than the more cynical use of NEDs as "door openers" that often prevails, could lead to radical improvements in business performance in the sub-region. One of the prime roles of the NED is to challenge and assist in the development of business strategy: as we shall see in a later section of the report, a substantial proportion of businesses we have interviewed in our research into local directors have problematic strategies since too many companies in the subregion are competing on price and too few have active product and market development strategies. In our case studies, we will reveal the "turn around" 25

www.theworkfoundation.com Review of the role and effectiveness of the non-executive director - the Higgs Report, January 2003 is available from http://www.dti.gov.uk/cld/non-exec-review 26

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companies we have spoken to have all reinvented their strategy often using a "trusted partner" rather than more formal approaches. While an NED is not strictly a coach or a mentor, we feel that an effective NED could assist in the process of transferring management, technological, market and product skill and knowledge into local companies. 8.10 Business advisers The role of the business advisor can be seen as a form of coaching and/or mentoring relationship. The relationship itself, in terms of the broad support given, may be more significant to a small business than the simple transfer of information or advice. Mole (2002a) points out that developing business acumen or managerial capability involves a transfer of knowledge over and above any advice given. He also identifies a "dissonance" between the policy guidelines on SME from central government, the way that PBAs (Personal Business Advisors) actually deliver services and the wants of SME owners/managers. His view is the PBAs play "piggy-in-the-middle" between policy guidelines on the one hand and the views of the SME on the other. He also argues that PBAs do not often have deep sector/market/product specific knowledge that reduces their perceived effectiveness to SMEs. In addition, issues have also been raised about the degree of penetration that Business Links achieve in the SME market (recent figures indicate a "reach" or penetration rate of 7.1% at the national level though this is subject to considerable local variation 27). Local interviews with key informant have also exposed tensions between the targets for Business Links driven by the Small Business Service that emphasise "touch" (i.e. the number of businesses contacted in an accounting period) rather than "intervention effectiveness" (i.e. the desire to achieve impact). These issues are discussed in more depth elsewhere in the report as discussions with local key informants and the case studies has raised a number of important issues about the effectiveness of business advice in the sub-region. One respondent drew attention to a policy tension that exists between agencies and even within agencies where Small Business Service targets based on maximising the "touch rate" are seen as counterproductive in that while business are being "touched", the are not being effectively helped which is leading to a degree of cynicism in some businesses who, as we show later, are inclined to see some publicly-funded service providers as "box tickers" rather than trusted and credible business advisers. Consequently, the appropriateness or success of business intermediaries is the subject of considerable debate (see Mole, 2002a; Mole, 2002b; Storey and Westhead, 1994; Westhead and Storey, 1997; Kailer and Scheff, 1999). This issue needs to be resolved in the direction of developing a support regime that is based on delivering and rewarding effective interventions. Our research later will reveal that in those companies that have reinvented themselves, the business/service provider has been based on a long term, high trust relationship. However, given that agencies such as Business Link are not funded to undertake long term interventions, 27

Page 39 in "In Demand: Adult Skills in the 21st Century", Performance and Innovation Unit Report December 2001. http://www.cabinet-office.gov.uk/innovation/2001/workforce/report/index.html. Recent estimates of the touch rate from the Shropshire Chamber/Business Link for example place this at 18%.

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perhaps their role needs to be better defined in terms of a market making role where BL assists firms to assemble a portfolio of service providers. Given this study's focus on advanced management skills, some doubt was raised about whether the skills sets of current business advisers were "wide" enough to incorporate these skills considering that the training of PBAs seems to focus more on skills which we would term functional rather than advanced. Perhaps the whole model of BL intervention needs to be rethought? This is, however, beyond our remit. Factors that potentially or actually impede co-operation between business advisers and their SME clients, as identified by Kailer and Scheff (1999) are many and varied, and include:      

The time problem: owner managers are beset by general work overload, but there is also an element of poor time management impeding co-operation between entrepreneurs and external experts. The cost/benefit relationship remains unclear. To a large extent the onus is on the external advisers to demonstrate the business benefits of time spent on the relationship. A lack of transparency within the business advice/consultancy market regarding the nature of the offer. Lack of correspondence between supply and demand Difficulties experienced by SMEs in defining their own needs. Problems in the acquisition phase (search, selection and contact).

Regarding this last problem (i.e. problems in the acquisition of advice), the authors suggest that training and consultancy organisations should try to establish a personal contact with the potential SME client at a very early stage and suggest that it might be better to use “intermediates” such as accountants, lawyers, tax consultants or the local Chambers of Commerce as: “The acquisition strategies pursued by external know-how experts comply only partly with the search strategies of SMEs. SMEs use preferably ‘trusted’ intermediates and respectively employ their personal network. Know-how providers only partly comply with the search strategies of SMEs and see the basic selection criteria of SMEs very differently” Kailer and Scheff (1999). This, we regard as a point of fundamental importance which has major implication for the design of policy and programmes. Our discussions with know-how providers, intermediaries (both public and private), service providers to SMEs and SMEs themselves identified a number of issues with the interface between these many agencies. The resource dependency theory of the firm and the regional cluster strategy depend on there being an effective network of relationships between firms and a multitude of service providers. Where information imperfections exist, this calls for intermediaries who can effectively broker services and ensure that demand and supply are matched. Within any market or pseudo-market mechanism, trust is essential and, given the well-known marketing maxim that it costs many times more to recruit a new customer than to win one, it is important that long term relationships based on trust and mutual understanding are encouraged.

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Given this set of assertions, it is disconcerting that know-how providers, in particular, have been found to be somewhat less than proactive in developing long term, trustbased relationships with SMEs (Kailer and Scheff, 1999). Clearly, making complex set of relationships between SMEs, service providers and intermediaries work effectively by building trust and mutual understanding is an important issue that will effect the successful delivery of public policy in the fields of both business support and management and workforce development. Given the importance of the role of private sector bodies such as accountants and lawyers, we regard it as important that these organisations become more effectively involved in the delivery and brokerage of effective business support. These issues are discussed in more depth elsewhere in the report. 8.11 Action learning The term Action Learning refers to a specific management development technology developed by Reg Revans (1981) and popularised by a generation of management education professionals since. Action learning is broadly defined as a system of group-based learning in which managers work on specific problems which they themselves (as individuals or collectively) have identified and use these “projects” for experiential learning. Pedler's (1991) definition is often referenced: “Action learning is an approach to the development of people in organizations which takes the task as the vehicle for learning. It is based on the premise that there is no learning without action and no sober and deliberate action without learning . . . The method . . . has three main components-people, who accept the responsibility for taking action on a particular issue; problems, or the tasks that people set themselves; and a set of six or so colleagues who support and challenge each other to make progress on problems.” (Pedler, 1991 pp 22-23) One key aspect of action learning is that the group, or “set”, members act to support each others’ learning, by providing monitoring and feedback. In this respect, action learning is a kind of fusion of process consultancy and group-based coaching. Sets are distinguishable from general discussion groups or quality circles in that each member is expected to “contract” with the other members of the set to carry out some action between set meetings and report on it at the next meeting. In this respect action learning takes participants around the “learning cycle” from concrete experience, through reflection and observation, to generalisation and explanation, and on to active experimentation (Kolb et al, 1974). The term action learning is often used to denote any form of work-based development organised around a real-life, real-time project carried out by a manager and subjected to evaluation within the organisational setting. It is generally agreed, however, (see Wallach, 2001) that project used as a medium for learning and development should be “owned” by the people carrying them out (in other words, not prescribed externally). Thanks to the element of reflexivity, in its “pure” form as propounded by Revans, action learning unites elements of the critical management perspective with the developmental perspective. A professional management development expert who can "model" the behaviours and norms required for the group to function effectively

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generally facilitates action Learning Sets, in their early stages. For example, the use of time, norms about trust, confidentiality, styles of questioning and giving feedback, are generally viewed as fundamental. But it is part of the philosophy of Action Learning, linked to the ideas of Argyris and Schon (1978) about “double loop learning”, that groups will become self-reflective and learn collectively about their own internal processes, thus eventually becoming autonomous and self-regulating. Action Learning Sets are found in several contexts. Wolverhampton Business School in the early 1990s was one of the first business schools to incorporate action learning sets into its part-time MBA programme. Elsewhere, the technique has been adopted in-house by corporate organisations attracted by its potential for supporting organisational development as well as the development of individual managers. Its proponents claim that it has immense potential for developing those skills within management skills frameworks that are least amenable to delivery by means of more formal instructional methods, i.e. leadership, communication, insight, understanding of others, willingness to experiment and take risks (Marsick and O’Neill, 1999; Marquardt, 2000; Smith, 2001). Given our definition of advanced management skills, developed earlier, with their focus on softer skills, we see action learning sets and management development interventions, which use this methodology as likely to be particularly effective. 8.12 E-learning Claims that e-learning has taken business and management by storm (Mortlock, 2002) are premature but there is no doubt that learning through electronic media is generally regarded as the future for business training (Fry, 2001; McConnell, 2000; Sloman, 2001; Schofield, 2001; Burgoyne, 2001). Our observations lead us to conclude that many of the e-learning experiences currently available simply host existing material in a new form of delivery. While the mode of delivery is new, the pedagogic paradigm that underpins the content and its delivery often is not. In the jargon of the industry, much e-learning can be defined as shovel-ware where existing material is digitised but not materially transformed before being "shovelled" into an electronic delivery vehicle. The term e-learning refers to the application of internet-based technologies to learning processes. E-learning products or processes may be delivered through a commercial company (including training companies, and significantly, publishing companies, through an educational institution, or in-house through a corporate intranet system) (CIPD, 2001; Schofield and Rylance-Wilson, 2001). Some definitions take a wider perspective, regarding e-learning as any mode of delivery with a strongly electronic component, and therefore including such features as use of CD ROMs (e.g. Burgoyne, 2001). It is not surprising to note from the burgeoning literature on e-learning that the widespread adoption of electronic learning “solutions” to company training needs has been largely technology-driven. The connectivity of the Internet has, in a remarkably short period of time, opened up a range of unprecedented opportunities to provide training content, some of it interactive, on a global scale. It is no coincidence that the rise of e-learning initiatives has occurred in parallel with the globalisation of big business and the rise of the notion of knowledge management and the “learning

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organisation”. Both of these trends rely on networks of knowledge, know-how and information moving more or less freely and instantaneously through a fully networked organisation. Thus some writers go further and assert that e-learning should be developed as the key methodology through which organisational knowledge should be created and shared (Wild et al, 2002). E-learning is heralded as enabling delivery flexibly across geographical and time boundaries. In other words, two managers, one in Singapore and the other in Buenos Aires, could within the same few hours access the same management training material through the company intranet, one at her desk and the other at his kitchen table. Ernst & Young have used e-learning to reach 80,000 workers worldwide (Sbarcea, 2000) and at Cisco Systems e-learning was used for 38,000 employees across 225 offices in 80 countries (Gill, 2000). Some writers are eulogistic about e-learning. Pantazis (2002) suggests that “the power of e-learning comes from the opportunity to leverage technology and information to alter the basic tenets of learning by eliminating the one-size-fits-all approach to instruction and customizing content to meet individual needs and learning styles”. This assumes that e-learning is an appropriate tool for development beyond the simple transfer of information, or developing fairly low-level generic vocational skills. However, computer-based training, whether delivered on the Internet or via a CD-Rom, can be inflexible in the extreme (Croft, 2003). Indeed, it could be argued that it is the learner who is required to put the flexibility into elearning, by making him or herself available and being prepared to “interact” with the machine. “Anytime, anyplace learning” (Schott Kerr, 2002) is a seductive slogan, but may obscure the fact that in many cases it is the learner who supplies both the time and the place. Advocates of e-learning point out that, as well as increased flexibility, it also offers considerable economic advantages over traditional training. High quality e-learning can improve speed to capability by significantly reducing the amount of time it takes to train workers on new products and processes (Pantazis, 2002). It is also seen as a potential leveller in terms of equal opportunities, if the issues of access for those on the other side of “the digital divide” can be addressed (Fry, 2001). The annual surveys of training and development undertaken by the Chartered Institute of Personnel and Development (CIPD) indicate a significant growth in the use of webbased technologies for delivering training (up 17% in 2001 over the previous year). Although becoming more widespread, companies report that e-learning still occupies only a small proportion of the time spent in training activities. The very novelty of e-learning is part of its appeal, but it also means that there are few independent studies that seek to evaluate its success in terms of the perceptions of organisations adopting e-learning as part of their training and learning strategies. One such study (see Beamish et al., 2002) carried out in-depth interviews of senior managers concerned with e-learning initiatives in seven major British/European corporations, including British Airways, Cisco Systems, Barclays plc, BP Amoco, Consignia, Ford Motor Co, Unipart Group, and Whitbread plc. Their aim was to identify the rationale for adoption of e-learning strategies and also to pinpoint some of the obstacles or barriers to adoption. In three of the companies, the reach of elearning extended beyond employees to involve customers and suppliers as well. In one company it was estimated that 15% of training was now being delivered through e-learning, with an average of approximately 10% (lower than some studies suggest,

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intimating that much of the literature on e-learning is currently being produced by people with an interest in “talking up” the impact of the technology). In general, the managers interviewed were very positive about the flexibility and accessibility aspects of e-learning. They were confident of its appropriateness for learning “hard skills” while the study noted that, currently, the use of e-learning for “soft skills” learning only accounts for 10% of the e-learning delivery. This partly reflects the managers’ perceptions that e-learning is less effective as a medium for learning soft skills. There are strong indications that e-learning is currently most useful, and most used, for the types of training where a high level of compliance is required, for example, in health and safety issues in production, or where there is a relatively high proportion of standardised knowledge input required, such as in the case of familiarisation with legal or procedural requirements. As one proceeds from standardised aspects of the work process to more complex, contextualised, or complex situations, the usefulness of e-learning of and by itself becomes less. Training in “soft” management skills such as teambuilding and communications is less likely to be delivered through electronic or computer-based means, but evidence from the CIPD 2001 survey is that it is gaining increasing acceptance. All organisations in the Beamish (2002) study were positive about e-learning and intended to increase its use over the next five years. Burgoyne’s (2001) report focuses not only on the diffusion of e-learning, but also makes an attempt to link it to learning styles, using the Honey and Mumford (1989) framework. It suggests that e-learning seems to be most suited to reflectors and theorists, whereas those with a more activist or pragmatic style of learning, i.e. those who like to experiment, are less likely to find it complements their learning style. This is an indication that the focus of thinking is moving away from simply the technological capability and towards a consideration of the receptiveness of the learner, i.e. becoming more learner focused. Simultaneously, for larger corporate organisations, including some in the public sector, e-learning is becoming more integrated with strategy, some organisations commissioning bespoke e-learning solutions. For example PricewaterhouseCoopers has commissioned specific materials from XebecMcGrawHill, including CDRombased multimedia packages on key aspects of business strategy, and internet-based “management bytes”, small chunks of management learning material around key management skills areas. Within the public sector, the NHS is setting up a “virtual university”. The concept of the “bite-sized” chunk of learning material has been picked up by call centre trainers, who have noted the potential of e-learning for providing short modules (perhaps of 15 minutes duration) that can be accessed by workers without leaving their workstations, in order to address specific skills deficits. For call centre managers, Paynitch (2003) notes that, while electronic learning is appropriate, it works better when the delivery is synchronous (perhaps in training sessions lasting an hour or so) and when the managers have an opportunity to interact electronically with each other. Where does all this leave the SME? Much of the hype about e-learning is based on case studies of global companies, many of them technology companies themselves. Little information is available on the take-up of e-learning among smaller organisations, although there is evidence that it is becoming used widely by large organisations (but still representing a relatively small proportion of training spend).

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Schofield and Rylance Watson (2001) observed that “as with training in general, small firms are less likely to be able to find what they need and use it than large organisations are”. Although the authors contend that the nature of e-learning makes it unsuitable for the wholesale transfer of management and leadership development to an e-learning platform, it is likely that the scope and extent of such learning opportunities will increase. E-learning carries the potential to remove the need to travel and spend time away from the business for training (Beckel and Lukey, 2002). Smaller organizations will need much improved access to information and advice about what products would be most suitable for their needs. The government’s University for industry (Ufi), through the learndirect programme, has the training needs of SMEs as one of its three priority areas. They have a portfolio of about 10 courses specifically targeted at SMEs, which take about 15 hours each to complete. In addition learndirect offers a portfolio of about 250 short courses (some as short as 20 minutes) mainly sourced from other providers, such as the elearning arms of publishing companies. While there are possibly 40,000 people who have registered on courses in the “business and technical” part of the learndirect portfolio, which includes management subjects, the vast majority of learndirect’s business is in the field of ICT training. In fact, some learndirect centres do not offer the management courses at all. There is thus a question of access for smaller companies and individuals, which is exacerbated by the complex range of products and providers on offer. “For small and medium-sized organisations, growth is likely to come through increased understanding and capacity on the part of intermediaries. Further education is likely to be particularly important in this respect – both in direct terms, through integrating elements of e-learning into course delivery, but also through the familiarity with e-learning that the students get as a result – so that they may choose to use e-learning themselves on another occasion. But equally developments by Ufi to make clearer links with qualifications, and to make it easier for colleges to integrate learndirect courses with other learning will play a part. And finally specific broker models will probably develop, often on a sector basis” (Schofield and Rylance-Wilson, 2001:18). SMEs may also be able to access e-learning through the supply chain, for example when they are dependent on a single main customer or supplier (for example, distribution companies). A typical example is in the United States, where the brewing company Anheuser-Busch have implemented a wholesale inventory management training system which incorporates the use of Internet-based materials and interactive satellite to involve 32,000 distributor employees, thus increasing the volume (in terms of participants) of their training tenfold (Tyler, 2002). Again in the US, the Healthcare Financial Management Association is offering new web-based training courses covering healthcare industry topics through its web site http://www.hfma.org. The courses cover more than 1,000 healthcare industry topics and can be purchased either by individuals or as customized packages by organizations. The web-based courses are said to provide the advantage of flexibility to learners, who can examine the study material at their own pace and at a time most convenient to them, and the HFMA sees the provision as a way of meeting its mission

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to provide “professional development through education, information, and leadership training of the highest professional standards” (HFMA, 2002). There is some evidence that private management development providers are becoming increasingly interested in the development of online learning as a viable offering to the market. Cambridge Online Learning28, despite being based in Barnsley, is offering management development to MBA level and the company is explicitly marketing its services to SMEs who it sees as a key market segment for its offerings as SMEs often find it difficult to make time for employees to engage with personal development. A recent review of the scope and scale of e-learning in UK business schools, conducted for CEML by Birchall and Smith (2002) 29, found that business schools were taking a cautious approach to e-learning, that many were trying to protect their existing portfolio of more face-to-face offerings and that "cultural issues" in moving away from conventional delivery methods were "holding back elearning development". It is disconcerting that UK business schools appear not to be more actively engaging with e-learning, perhaps because e-learning actually causes power shifts within the learning domain. Birchall and Smith were led to conclude that:  

the contribution of e-learning to management and leadership development is poorly understood "blended" or mixed format solutions combining the use of ICT alongside more traditional approaches were preferred to the exclusive use of e-learning.

It is to a discussion of "blended learning" that we now turn. 8.13 Blended learning The concept of “blended” learning can be understood as the next stage in the development of e-learning. Designed to counteract some of the perceived limitations of “pure” e-learning outlined above, blended learning is described by Croft (2003) as “the marriage of distance learning methods – computer-based teaching courses which people can complete in or out of the office, Internet-based material, written course work and classroom sessions according to the training needs of the company and the individuals concerned”. A more integrated and holistic definition of blended learning unites technologyenabled distance learning with face-to-face sessions. The face-to-face element could consist of:   

28 29

Coaching and/or mentoring, to provide an intensive focus on the individual manager within the context of his or her role Classroom based courses on the traditional model Group-based learning such as action learning sets, to address organisational as well as personal development needs

http://www.cambridge-online-learning.co.uk http://www.managementandleadershipcouncil.org/ downloads/r19_1.pdf

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 

Structured activities to provide off-the-job experiential learning, such as outdoor adventure or drama, in order to challenge the individual (or group) to think and tackle problems in innovative and creative ways A combination of the above.

Voci and Young (2001) give an account of the benefits of developing a blended learning approach on an established corporate leadership development programme. Some accounts of blended learning describe a process of integrating varied elements into an e-learning approach. In this case, the leadership programme had been running for several years on a classroom-based format (one morning a week, plus assignments). To this has been added a series of six online courses in project management, reinforced by in-company presentations. The introduction of patented on-line learning products was seen to carry the following benefits:     

It obviated the need for costly and time-consuming development costs, involving the company and a local provider The on-line courses selected carried external certification The products were popular with participants as they allowed them to absorb key concepts and techniques at their own pace. The blended approach led to evaluations citing increased camaraderie and teamwork The curriculum was enriched without increase in contact time.

It is noteworthy that the online elements of the leadership programme were those with a more technical or generic aspect, while the “soft” skills, such as building trust, change management, and team processes, continued to be taught by more traditional face-to-face methods. The apparent limitations of electronic learning modes for softer skills development are being tackled on a number of fronts. In some cases, niche training agencies are developing the know-how to build greater interactivity and cultural sensitivity into elearning packages, so that they can be used by global companies (Stewart, 2002). In another, a radical Swedish approach to blended learning, taking as its starting point the motivation of the employee (Bagshaw and Bagshaw, 2002), combines web-based learning with personal coaching. It is our view that blended learning provides the most effective means of developing a suite of management development interventions in a single environment. Some of the issues that have been raised by respondents during our interviews with managers in companies and key informants within intermediary organisations are that:   

To SME owners and managers, time is precious and many have a distrust of formal learning environments Managers expressed a need to access management knowledge and developmental material in bite-sized chunks which they can consume at their own pace Managers have different learning styles which can be accommodated with a blended learning environment

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

Managers need to be encouraged to make an initial engagement with learning and development - a blended environment if it is perceived to be useful and non-threatening is more likely to stimulate this initial engagement of managers with learning

The Electronic/digital dimension of a Blended Learning Environment. To date, much of what has developed in e-learning has been technology-driven rather than driven by user needs. As e-learning technology becomes more diffused, and as users of management development services and products become more attuned to the range on offer, they will no doubt become more discerning about quality. Indications are that quality criteria may be grouped under three main categories. The first is the quality of the e-learning experience itself (in comparison with a different mode of learning); the second is the quality of the service and support backing up the delivery of e-learning; and the third is related to the quality of the technology. Taking note of a range of commentaries on the diffusion of e-learning (Birchall and Smith, 2002; Fry, 2001; HFMA, 2002; Mortlock, 2002) there are numerous indicators at this stage of the emerging criteria which will increasingly be used by senior managers to judge whether or not to adopt a blended learning “solution” with a significant level of electronic delivery: 1. Quality of the e-learning experience a. Learning experiences should be engaging and challenging b. The quality of learning should drive the deployment of technology and not vice versa c. Products should enable appropriate levels of both surface learning and in-depth learning d. Use of the materials should be intuitive e. There should be a high level of peer to peer interactivity f. Materials should stimulate authentic problem-solving through using action learning approaches g. The user should be able to negotiate his or her own use of the materials, to ensure relevance and context h. E-learning content will be relevant to the target audience 2. Quality of service and support a. Technical support services should be accessible 24 hours a day, 365 days a year. b. User will have a choice between previously defined routes through the material or self-defined routes. c. Those servicing and supporting e-learning will be familiar with the uses to which it is being put d. Providers of other forms of learning in the blended package will be familiar with the e-learning components e. Services and support will be seamless across an integrated blended learning platform

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3. Quality of technology a. Technologies will be robust and reliable b. Technologies will afford equality of access, regardless of place, technical ability or disability c. Learning opportunities should be independent of time and location d. Technologies used should be integrated, and “future-proofed” i.e. not subject to immediate obsolescence e. Delivery should be at reasonable cost, both in terms of initial outlay and in terms of usage. f. Technologies should carry a security guarantee to users The challenge is to develop a mixed-mode framework for Just-in-Time Learning that is accessible both physically and linguistically and focused on providing guidance on the kinds of issue and problem that managers are currently facing. Below, we discuss an example of the emergence of such a blended learning environment that is being pioneered by the Birmingham Chamber of Commerce. 8.14 The Birmingham Chamber of Commerce Learning Zone Model The mission of the Birmingham Chamber management development function is "developing business through people". Here the approach is based on the notion of developing leading edge, innovative solutions to the problem of developing long term relationships with businesses, particularly SMEs, that have, in the past, proved difficult to reach. It has been recognised that it is essential to raise the level of demand for workforce and management development interventions particularly, though not exclusively, from SMEs. Improving the capability of businesses particularly their senior managers - is seen as essential if those organisations are to become more productive and competitive and if workforce development is to be cascaded through those companies. The objective is to develop a targeted approach based on the use of various diagnostic tools such as MAP and the Business Toolbox30 and to link into other programmes that are running locally and nationally such as Accelerate31 and MUSTARD32. Sub-projects within the overall programme include the development of an effective e-learning community and the development of effective learning networks (though the term "effective" is not precisely defined). A key component of the Birmingham Chamber model is the "Learning Zone" which is, in effect, a prototype blended learning environment comprising an integrated suite of learning resources that can respond to the different needs and learning styles of different managers (see Figure 8.1). There is an on-line element that will contain elearning modules (50 modules are planned for year 1), reports and surveys and other web-based knowledge resources. It will also contain an "Ask the Expert" module in 30

The Business Toolbox is a self-administered diagnostic accessed through the Birmingham Chamber/Business link website. 31 Accelerate was established in 1996 to help improve automotive sector businesses in the West Midlands. The programme offers development grants, capital grants, supply chain improvement programmes and innovation networks. 32 MUSTARD is an initiative designed to help high growth potential, new and growing businesses see http://www.mustard.uk.com

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which managers can interact with business experts on specific themes. A final on-line component will be moderated business forums that will facilitate the transfer of knowledge between the "learning community" that accesses the resource. The offline element will provide access to Chamber and Business Link consultancy resources, a formal programme of management development activities and events and access to a wide range of Business Link programmes. While the model is embryonic it does give a valuable insight into the type of model that could be developed for delivery by the web and by more traditional modes of delivery.

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Figure 8.1: A proto-type learning environment: the Birmingham Chamber Learning Zone Model

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8.15 Discussion and conclusions One of the few books to present an overview of recent trends in management development is Woodhall and Winstanley’s Management Development; Strategy and Practice (1998). Their argument is that the movement towards less “formal” and more “on-the-job” learning may already be out of date. The authors expressed the fear that the move towards informal learner-centred approaches might be another “fad”. The literature on training and management development, over the last five years, has clearly been moving away from traditional programmes, based and delivered within educational institutions, towards an approach focused on the development of management skills within the context of the strategy of the organisation. Flexibility, interactivity, and return on investment are over-riding concerns. However, the research findings of Simpson (2000) and Hilgert (1998) provide a caution to those who would dismiss the traditional educational offering, such as the MBA, as lacking in developmental opportunities for the individual. A balance has to be struck. Above all, management development initiatives have to be closely aligned to the strategy of the organisation and to the value chain. Towards the end of the 1990s, the power of the internet seemed to hold the promise that, once the technical glitches were worked out, e-learning solutions to organisational training needs could be rolled out beyond compliance training, through “hard” skills and techniques development, into “soft” skills such as those found in the framework of advanced management skills. No provider of management development can afford to ignore the trends. Indeed, with their size, allowing economies of scale, access to research, and links to IT departments offering state-ofart solutions, university business schools should be in an ideal position to develop innovative responses to the need for advanced management skills. Using e-learning technologies leads to a change in the working style of the teacher/trainer, who is challenged to be both more precise (as an expert), and more democratic (as a learning facilitator). Coppola et al (2002), in a survey, found that faculty involved in e-learning programmes reported a change in their teaching persona, toward more precision in their presentation of materials and instructions, combined with a shift to a more “Socratic” teaching style, emphasizing “multilogues” or virtual conversations with numbers of students. Beamish et al (2002) refer to training systems carrying the baggage of traditional approaches as “legacy” systems. “Legacy” training systems have trouble adapting to new methods (Beamish et al., 2002) that could lead to the development of learning management systems (LMS). Learning management refers to current networked information systems that are designed to provide access to, integrate and manage all types of learning (from traditional classroom to e-learning) across an organisation. It is not difficult to construct a scenario in which an intermediary organisation could provide such a learning management system to a networked cluster of small and medium companies. The paradox of e-learning is that, while it is most innovative in terms of technology and delivery, in its simplest form it tends to reinforce traditional approaches or perspectives on management development. Because of the need for standardisation of

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content, it is more suitable as a delivery mechanism for knowledge and information created “out there”, in line with the traditional liberal and vocational perspectives. The developmental and critical perspectives, which are fundamental to advanced management skills, need to be fostered through the manager’s interaction with peers (networking), colleagues (group learning), experts (coaches and mentors) and customers. It is not enough for flexibility to be provided through the technology in terms of time, place and pace (the individual manager or owner at his or her workstation). Flexibility also has to be assured in the sense that knowledge and skills are the product of a process of self-development, defined, managed and controlled by the individual, with outside support. This can be provided electronically (Schott Kerr, 2002) through self-paced courses, email and voicemail interaction, chat sessions, discussion boards, online resources and reference libraries, activities and readings and multimedia presentations. Blended learning promises the potential for combining these electronic means of learning delivery with face-to-face group and individual contact, and other learning opportunities built upon experience in the organisation. For fairly obvious reasons, dominated by cost, scale and level of investment in information technology, customised blended learning programmes have so far been the exclusive domain of large corporate organisations. Where smaller companies have had access to e-learning and blended learning, it has tended to be because of a supply-chain relationship in which the corporate enterprise has extended access to the smaller companies. The blended learning concept could expand the prospect to the owners and senior managers of small and medium enterprises in the West Midlands to participate in management development if the following factors are taken into account:          

The current level of awareness within the AMS "supply system" of innovative forms of delivery. The current level of investment, take-up and expertise in using advanced IT systems within SMEs The need to exploit and build on existing networks and infrastructural elements (Beamish, 2002). The availability of suitable electronic “architecture” to support advanced management learning systems (McConnell, 2001). The current levels of access e.g. broadband capability, within SMEs and the region, problems of connectivity and speed (Fry, 2001). The provision of a learning management system (which raises the question of locus and ownership of such a system) (Beamish et al 2002) The level of preparedness of existing providers to embrace new modes of delivery, and new roles for trainers and educators (Coppola et al, 2002). Stimulating demand for advanced management skills development through the development of a marketable concept around the notion of AMS Adequate and appropriate materials, timely production and delivery The reduction of psychological and commercial barriers to group-based learning among small firms (fear of disclosing commercially sensitive information)

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Companies no longer buy products – they buy value. The challenge for AMS providers is to demonstrate that they are able to provide value by aligning the learning infrastructure with the strategic and operational organisations of the business. Customers for advanced management skills learning “products” will increasingly expect to see evidence of their expected return on investment. Up to now adoption of new information technologies has been largely supply-driven. However, the IT industry is growing up and even maturing, and the growth of recent years cannot be expected to continue exponentially. Thus it could be argued that the IT needs business learning more than business learning needs IT. It is therefore important for trainers, educators, and above all business people themselves to shape the future of e-learning development, to make sure that what is offered meets real needs (Trasler, 2002).

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SECTION 9: KEY FINDINGS AND POLICY ISSUES 9.1 Introduction The prime aim of this research project has been to build a better understanding of the issues affecting advanced management skills development in the Black Country/Wolverhampton-Telford Corridor as a basis for the development of strategies and policies to improve managerial capability and thus enhance the competitiveness of the sub-region. Developing advanced management skills is seen as crucial to the future development of the sub-region given that it exists at the interface of two of the central pillars of regional development: developing a diverse and dynamic business base; and, promoting a learning and skilful region. The structure of the report is straightforward in that the first task was to paint a statistical picture of the locality to provide a context for the research. We then reviewed the literature on management development to develop an operation definition of what we consider advanced management skills (AMS) to be based on a synthesis of a range of prior definitions. More important, the AMS framework developed from the literature was then set in the context of various regional strategies to ensure that the final framework would be consistent with the aim of delivering various regional strategies. As the sub-region contains a large number of SMEs, our next task was to review the literature on issues surrounding the delivery of training and development to SMEs. This literature review identified that the issues are serious and complex: strong arguments have been put forward implying that SMEs often fail to appropriate any returns from training and seem to display a series of negative dispositions towards training and development, training providers and the intermediaries who try to "make markets" between supply and demand. Two explanations are developed that seek to explain why SMEs do not engage with training: these are the "lack of knowledge" explanation and the "training does not yield a sufficient bottom line return" explanation. Our analysis later goes on to reveal that not only do a significant proportion of businesses not have a clear idea of what training and development is on offer locally, neither do the intermediaries, implying that ignorance is rife. Our next task was to review and critique the local supply of training and development. Here we found that there is a considerable local and regional supply of AMS development and training, not only from the HE sector but also from professional bodies and private training providers. However, while training is available locally, we found that there are significant problems with the interfaces between supply and demand and with the intermediation process that should be trying to ensure that this interface is seamless. In the next section of the report, we develop an understanding of the views, experiences and attitudes of primarily directors of local firms to a host of AMS development issues. Here, we demonstrate a strong link between, on the one hand, the competitive strategies of firms, their product development strategies and their market development strategies, and on the other, their attitudes to an engagement with management development. Our findings further substantiate the position that AMS development is an issue of prime importance if the regional objectives of building

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better businesses and developing the quality of the region's work force are to be achieved. The clear link between business strategy and attitudes to management development also reinforce our view that AMS development lies at the interface of these two broad regional strategies. The analysis provided clear insights into managers' experiences and attitudes to training, training providers and intermediaries that must be reflected in the design of local strategies for AMS delivery. In order to explore and explain some of the issues revealed by the survey data, we conducted face-to-face interviews with key informants (drawn from Business Links, Chambers of Commerce and accountancy firms etc.) and carried out case studies of firms that had informative "stories to tell" about how they had engaged with AMS development as part of a wider strategy of growing and reinventing their businesses. Having developed a strong sub-regional basis of evidence, we then explored the approaches currently being used to deliver AMS to firms and to managers. We conducted in depth review of traditional approaches to management development (such as MBAs and short courses) but went on to look at emerging approaches to management development such as e-learning and mentoring. We conclude that what is needed is the creation of a learning environment containing a blend of approaches (using technology where appropriate and where it adds value) to meet the learning styles, the preferred delivery styles and the working patterns of managers. We also recommend that the development of content for the blended learning environment should also reflect local issues, problems and challenges currently being faced by managers. It should be geared to delivering results in the short term, and be both practitioner-relevant and academically rigorous. This, then, was the logical path of our research. Below, we identify the key issues that emerged and make recommendations for the development of policy and strategy. 9.2 The issues posed by the local economic and social context The picture painted of the sub-region demonstrates that the task facing an AMS development strategy faces a steep uphill challenge. While it does have some excellent businesses and some that have made radical turnarounds, the area has a long tail of businesses that are locked into the "low wage/low skill/compete on price cycle". The key issue is how to get firms to break out of this spiral. Our research shows that those firms that have broken out of the spiral have often been confronted by a critical event (such as a management buyout) that has triggered radical change. In confronting this crisis senior management has understood their own learning needs. It is at this point where firms are most in need of effective guidance and support. However, we have identified that there seems to be a large number of firms have not yet understood how and what they need to learn; to use a rather brutal expression we can say that they exist in a state of "unconscious incompetence". Gaining access to these firms will clearly be difficult and our key informants often told us there seems to be something about, particularly Black Country firms, which makes them harder to access than similar firms in other localities. Of clear concern is the persistence of structural problems in the locality, despite significant publicly-funded action and intervention. This raises issues about the effectiveness of public policy and intervention - a point to which we shall return later.

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A key point to emerge was that AMS development, in particular, and management development more generally, are not given adequate weight in either regional strategies (particularly the FRESA) or in the strategies of LSCs, Chambers of Commerce or Business Links. While most of the strategies emerging around the development of clusters cite "management development" as an issue, this is as far as the discussion goes. There is no discussion of what type of skills or how they should be delivered to firms. This we regard as a major omission and a key deficiency with regional and local strategies considering that AMS development underpins the successful pursuit of Pillars 1 and 2 of the regional strategy. We have developed a three tier model in which AMS development goes beyond training and education. This model is important when we consider the dynamic aspects of workforce development, given that a number of routes into management exist. These routes need to be made more explicit and better managed by developing clearer training and development paths. Of local concern is the low proportion of people educated to Level 3 or 4 (NVQ) and the attitudinal barriers that appear to preclude some people, particularly women, from ascending the career ladder into management. We see these as both important long-term issues that need to be addressed. Achieving a better alignment between the innovation strategy, strategies to promote new market development, the diversification strategy, wider workforce development strategies and the AMS development strategy are essential, as without better senior business managers in place, it is unlikely that other strategies will be achieved. The concept of cluster development has recently become the vogue in industrial development. While the cluster approach does have its critics, it makes a contribution in one key area in that it emphasises the links and the relationships between firms and the external bodies they need to function effectively. The effective functioning of these links is an essential element in the economic development process. Allied to this notion, we have made use of the "resource dependency" view of the firm where we argue that a firm's likelihood of survival and success depends on how well it manages its relationships with external bodies and agencies to secure the resources (financial, skills, knowledge, advice, intelligence, technology) it needs to make the firm succeed. No single firm alone will have all the capabilities it needs. Here, we see as critical the effective functioning of the links with customers, suppliers, banks, accountants, competitors, collaborators, the universities and a host of other agents . These relationships are unlikely to arise by magic. Thus, the role of publicly-funded intermediaries is particularly important here. Just as the environment outside the firm is important, so too is the environment inside the firm. Here, we are concerned that too many outmoded forms of work organisation exist and firms need to be encouraged to engage with more modern approaches by moving from "Tayloristic" forms of work organisation (where you go to work but leave your brain at home). Our research has shown that too many businesses locally are based on modes of work organisation that are redolent of the Tayloristic paradigm. More contemporary approaches to work organisation are based on the concept of the "High Performance Workplace" where structures are flatter, there is much less of a

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command and control ethos and workers are expected to solve their own problems using their initiative and team work. In summary, the research identifies that the local economic and social environment is a major problem and that progress will only be made by reinventing aspects of the local industrial culture. Any AMS development strategy will need to be linked to an array of other strategies designed to reorient local firms away from competitive strategies based on price and cost minimisation towards strategies based on competition on quality or differentiation, on innovation and on new market development. 9.3 A framework for advanced management skills for the locality As several authors have identified that "managerial work" is becoming more and more demanding and that the skills sets needed to be an effective manager are becoming more complex. An earlier study, based on the perceptions of 1000 of the region’s senior managers, showed that the quality of management was holding back the development of the region. Thus we decided to cover the literature on management skills and their development in some detail, and several important issues were brought to the surface. First, there is a large body of evidence that shows that UK managers generally have much to learn and that they perform unfavourably when compared to managers from other countries (particularly the USA, France and Germany). Second, that if we are to create high performance workplaces then management development alone will be insufficient: it must be accompanied by "bundles of complementary HR practices" designed radically to change patterns of work organisation and employee involvement. From an analysis and synthesis of ten published frameworks we have developed a framework for AMS that we consider to be exhaustive (in that it covers all the key skills domains) and yet parsimonious (in that it is limited to a set of 25 items). The AMS framework that we have developed is shown below: Meta-skills and Managing the Self:  Thinking strategically  Communicating inside and outside the business  Creative thinking and problem-solving  Negotiating  Handling risk and uncertainty  Handling own workload and personal development Leadership and Direction  Providing leadership and direction  Building and managing teams  Developing and retaining talented employees  Managing change in the organisation  Developing new working practices  Managing equal opportunities and diversity Innovation and Entrepreneurship

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 Delivering customer service  Identifying market opportunities  Learning from customers, competitors, suppliers  Keeping up to speed with technological change  Managing innovation  Redesigning business processes  Networking in the industry Managing Activities and Resources  Using consultants  Managing quality  Financing new developments  Managing logistics  Managing projects  Managing supply chain relationships In later sections of the report, the objective was to validate this framework. The survey of senior managers, our case studies and our discussions with key informants yielded information to validate our framework and we have confidence in it as a basis for policy development. 9.4 Understanding the resistances and issues in the delivery of training to SMEs The link between training and improved business performance being "weak" and it being notoriously difficult to get SMEs to engage with any form of business development, we proceeded to review the literature on the delivery of management development to SMEs, to better understand the problems involved. Indeed, in our discussions with key informants from Business Links, there was a strong view that many SMEs had become cynical and lacking in trust. While we understand the arguments developed (mainly by David Storey from Warwick), we are mindful of the growing evidence that firms who are more likely to engage with training are also more likely to innovate. If their first engagement with training and development is business-focused and effective, they are likely to continue and deepen their engagement as reciprocal trust is developed between firms and their advisors. The literature does provide useful insights into the psychology of the SME ownermanager and the review provided a number of testable propositions subsequently built into the questionnaire that was completed by 104 directors of local firms. The testable propositions embraced the following issues:    

What is the relationship between a firm's business, product development and market development strategies and its propensity to engage with AMS development and their attitudes towards it? Do different types of firm (based on their business) strategy see different skills (from our 25 AMS) as more or less important? How do attitudes to AMS development vary by the educational background of managers? How do firms use the intermediaries and sources of business advice that exist and what do they think of them?

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 

What are managers' resistances to engaging with AMS development? Are managers aware of what AMS development opportunities exist locally and, if they are, what prevents them from using them?

The section identified a number of key points that will need to be reflected in any AMS development strategy. First, a large proportion of business failure is directly or indirectly attributable to managerial incompetence; second, the need to see skills development of part of an HR bundle of activities is emphasised; third, the need to establish a clearer link in the mind of the SME owner/managers between investing in development and an increased likelihood of survival or better business performance; and, fourth, the need to understand in more detail why certain types of firm are not prepared to engage with management or workforce development. 9.5 Existing provision of advanced management skills - what are the issues? A mapping of provision revealed that the West Midlands contains a large number of potential suppliers of AMS development opportunities ranging from FE Colleges to universities with established national and international reputations. Our study reveals that there are large number of offerings ranging from well-established MBAs delivered full-time, part-time and by distance learning, to recent additions to the regional portfolio such as the Institute of Directors (IoD) Director Development Programme - a programme developed jointly by the IoD and the Universities of Warwick and Wolverhampton. Several issues accompany this wide portfolio of offerings: 1. First, while the quantity of AMS development on offer was high, concerns were expressed about quality, the focus on current business issues and the accessibility of existing programmes. 2. Second, HE in particular was held to be responsible for creating confusion in the market place by having a plethora of offerings (when, in reality, there was little to differentiate programmes). 3. Discussions with HE indicated that universities had realised the need to be more flexible; yet discussions with SMEs gave the impression that many SMEs still regard the HE sector as too inflexible, too advanced in academic level and "not for them". 4. Concerns were also raised about the attitude of academic to SMEs; the lack of a common access point to most universities and that many universities and their staff "did not understand" SMEs. 5. A wide range of private sector providers and consultants exists locally, yet many SMEs regarded these with some distrust and saw them as sales organisations trying to foist "stock solutions" into businesses where these solutions were felt, by SME owner/managers, to be inappropriate. 6. Significant concerns were raised about the effectiveness of publicly funded intermediaries. 9.6 Key issues arising from the baseline analysis of sub-regional businesses Our prime finding is that there is a substantial connection between a firm's engagement with, and attitudes to, training and development and its strategies for

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competition, innovation and market development. Attitudes to development were found to be more favourable in firms that competed on quality or differentiation, in firms that had innovated and firms that had developed new markets for their products. Firms that competed on price and those that were locked into existing markets with existing products had the lowest propensity to engage with development Both training rates and development gaps differed between firms with different strategies. Senior managers' attitudes, behaviours and predispositions to development and training also varied by a range of personal characteristics, particularly, educational background. We were led to conclude that the development of a "one size fits all" approach to AMS development would be inappropriate and that programmes would need to reflect the different strategic positioning of businesses and the backgrounds of managers. The findings validated the 25-item four-dimensional list of Advanced Management Skills and gave clear insights into the skills managers that see as important; how well managers think they perform on those items and managers priorities for AMS acquisition. The study showed that wide "performance deficits" exist on many of the measures and that these vary by type of firm and by the educational background of managers. This information should be used to inform the development of an AMS strategy tailored to the needs of different businesses. The questionnaire also explored managers' view on their use of intermediaries and their views about the usefulness of different intermediaries. Accountants and the Banks were shown to be the prime source of business advice with Business Links, Consultants and Chambers of Commerce occupying the middle ground. Accountants, Consultants and the Federation of Small Businesses were rated highest in terms of the quality of their advice. Satisfaction with Business Link was found to be lower than levels prevailing nationally: this is an issue of some concern. The existence of business planning and HR infrastructures within firms was found to be variable, with firms that compete on price having less mature infrastructures than those that competed on quality or differentiation. Our review of the literature identified that integrated human resource development activity and well-developed internal infrastructures were essential if firms are to maximise their returns from their investments in training. Our concern is that the absence of these “HR bundles” (such as some of AMS i.e. building and managing teams, communicating, developing and retaining talented employees, developing new working practices, managing equal opportunities and diversity and providing leadership and direction) and internal infrastructures means that too many firms see training and development as a "bolt on" activity rather than something that is deeply embedded within the firm. Unfortunately, there was considerable ignorance about the business impact of training and development on the bottom line. This supported our view that "ignorance" or more positively lack of knowledge is a better explanation of firms' non-engagement with training and development than the "it's not worth it" explanation. The ignorance explanation was also reinforced by the low level of awareness about the local availability of management development programmes. Business Link, Trade Bodies and the University of Wolverhampton emerged as the three providers locally that most firms said they were most likely to consider using as suppliers of management development.

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Mentoring and coaching programmes and executive short courses both on- and offsite emerged as the three means of delivery that were most acceptable to managers. There were, however, some important differences according to the educational background of managers and type of business. This reinforces the view that a one size fits all strategy is unlikely to be effective. Any approach to delivering AMS must reflect the differing attitudes of managers to training, their differing learning styles and their "starting point" in terms of education. These criteria need to be reflected in any learning environment that is created. Managers' attitudes to development and training do differ significantly by their educational level and by the strategies on which their firms compete. There is considerable ignorance about what is available locally and the quality of local provision. Training is considered to be too expensive particularly in firms that compete on price. This factor is made worse by the fact that AMS is a low volume area in which economies of scale cannot be achieved: Also, crucially, AMS development also seems to exist largely outside the available funding regimes. Managers in firms competing on price and those that have neither innovated nor developed into new markets are most likely to cite that they don't have the time to engage with training. We question whether this is actually to do with lack of time or just a predisposition against training (particularly as for this group this does not correlate with a high rating for the AMS item “managing my own workload”). The section provides rich insights into the attitudes, experiences and behaviours of managers and it has helped us better understand the psychology of managers and their predispositions and resistances. The strong link between business, product development and market development strategy and attitudes management development is insightful as it strongly indicates that managers in different types of firm have different training needs and priorities which any AMS marketing scheme needs to reflect. 9.7 The views of case study companies and key informants Our research strategy was designed so that the data collection exercises in the project would produce information that would allow us to cross check responses to ensure that our findings were valid and reliable. An important finding was that analysis of case study firms' views about the relevance of the items contained our AMS framework tended to confirm the evidence obtained from the questionnaire survey. Firms that have actively engaged with AMS development have often done so in response to a major triggering event such as a management buyout. Our findings imply that the decision to engage with AMS development usually comes from within the business in response to a crisis rather than in response to the exhortations of organisations such as Chambers of Commerce or Business Links. This is somewhat worrying as it mimics the actions of those of us who only go to the doctor after a heart attack, and presents a challenge for communication. Given the possible impact of these triggers, it is essential that service providers are able to respond and to provide the services these businesses need. It also appears that

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interventions have a better chance of success when they are demand-driven rather than supply-side or intermediary initiated. Our case studies emphasised the need to link AMS development to new approaches to of Human Resource Management activity and organisational development, to ensure that the AMS brought into the business by senior managers are diffused throughout the organisation in the form of changed ways of working and changed organisational cultures. The concept of the "high performance work organisation", together with the learning organisation, needs to be more effectively developed and communicated locally. However, the case studies suggest that the therapy will not be pain-free. In several firms, decisions about the firm's survival and its reinvention had led to massive job losses. A review of attributes related to survival revealed the relevance of several items of our AMS framework, particularly those falling into the category of entrepreneurialism: getting the strategy right, reading the market, moving in the value chain, innovating and learning how to acquire and use external advice were shown to be essential survival skills. While the firms we spoke had used several external partners to help them make changes (between 3 to 4 partners on average) they all seemed to infer that they valued high trust and long standing relationships as a mode of operations. Several organisations had used a trusted partner to mentor senior managers and this approach seemed to have been particularly effective. We believe that this has major implications for the modus operandi of organisations like Business Link where several firms identified that they did not find Business Links' emphasis on a high touch rate as being conducive to the development of long-term, high trust relationships. Both the businesses and many of the intermediaries themselves seem to think that a model of support based on intervention effectiveness rather than touch was needed. Consequently, we consider that the metrics used to monitor Business Link performance and their modus operandi both need to be radically changed. Our view is that much could be done to improve the effectiveness of the intermediation process. One particular concern was the perceived lack of transparency and neutrality between intermediaries and providers in the delivery of training and development. While some of the necessary changes are structural, others are more linked to communication and accessibility, and can lead to a reduction in the credibility that businesses have in intermediaries. The acquisition of knowledge related to management, business, product and market through the supply chain emerged as a valuable means of firms acquiring information and business guidance. The supply chain, perhaps using the industrial clusters model more effectively, emerges as one possible route for the better dissemination of management knowledge to hard-to-reach SMEs. The case studies provided useful insights into how companies locally have changed their strategies, behaviours, cultures, structures and their value systems as a result of developing advanced management skills, particularly the “metacompetences” and entrepreneurial skills. These messages need to be effectively communicated to

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demonstrate that change is possible and that the low wage/low skill cycle can be broken. Respondents had strong views about their experiences with particular training and development providers. There were concerns about FE Colleges and Learning and Skills Councils (which were seen to be too focused on low level skills and "obsessive about" NVQs which were not highly regarded among local businesses). HE also received some criticism for having, in some cases, failed to respond, for being difficult to contact and for not seeing the delivery of services to local businesses as a "core business". In summary, the case study and the key informant interviews provided rich insights into the issues affecting businesses and their attempts to change and into how both intermediaries and services providers had changed in their attempts to assist businesses. While there are several good points to build on, we argue that there are many things that could be done to develop more effective business support networks and, more important, long standing relationships based on mutual understanding and trust. 9.8 Creating a blended learning environment While our earlier review of the matrix of provision identified that a wide portfolio of AMS development offerings are available, we concluded that it was important not to mistake volume for fitness of purpose. We also identified that managers have different learning styles, different needs in terms of the mix of skills they need and that they have different preferences about the mode of delivery. A majority of managers in the survey identified that they would prefer AMS to be delivered using mentoring and coaching and on site executive programmes. Others still identified the need for more traditional forms of learning and skills acquisition. Only a minority identified a preference for e-learning. Managers identified that they were more attracted to management learning experiences that are project-based, based on an issue currently affecting their firms and based around action-learning styles. These differences show that it is not possible to design a one-size-fits-all approach to AMS delivery as different approaches and modes of delivery will resonate differently with different managers at different times. A framework for AMS development in the sub-region must incorporate different modes of delivery and different offerings ranging from formal and traditional learning to e-learning and the creation of management knowledge that can be infused into the business in "bite-sized chunks" (as small as half hour units in some cases). We have put forward the notion of a "blended learning environment" based on prototype model developed by Birmingham Chamber of Commerce. This environment contains a flexible mix of formal modules with learning resources as wide-ranging as articles from trade journals through to chatrooms to facilitate the free flow of information and to get managers to engage with a wider community of learning. The integration of this approach with the regional cluster strategy might also provide opportunities for the development and diffusion of the concept, using the cluster as the hub of a blended learning environment.

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9.9 Final comments The concept of advanced management skills does not immediately resonate either with many firms or with many intermediaries. This was a fundamental issue that the project had to address. Nevertheless, the Advanced Management Skills base of the locality must be radically improved if the sub-region is enhance its competitiveness, improve its productivity, diversify its economic base and provide better, more stimulating jobs for its workforce. This is the only way to break of the cycle of low wages and low skills onto a higher plane. Firms must be encouraged to learn it is up to them to move out of this cycle. They individually cannot bear the responsibility of the underperformance of the region, but it is on them that an improvement in performance largely depends. Firms must learn that competing on quality and differentiation and not on price is the way forward for them. They must be enabled to shed the attendant fixation with reducing costs and not investing in the future of the business. Firms must learn to diversify, to innovate and penetrate new export markets but to do this they need managers with well defined leadership skills, managers who understand business strategy, managers who can recruit and develop their work forces an managers who now how to innovate and develop new markets. The Advanced Management Skills framework provides a reference point for what must be done: our case studies show that it can be done. Managers must know how to use the resources external to the firm that are available to them. Despite huge publicity campaigns by Universities, training providers and intermediaries, there is still a massive lack of awareness reinforced by lack of trust and cynicism, and perpetuated by outdated stereotypical views. If managers are to develop these skills they need to be effectively supported. Much could be done to improve the effectiveness of the intermediation process with intermediaries by focusing on developing long term, effective relationships with businesses rather than trying to maximise the number of businesses they touch. Universities also have much to learn. Many have recently become increasingly aware of the government's intention to make them engage more effectively with businesses to support innovation, to bring about the commercialisation of R&D and the delivery of high quality vocational experiences. But they still have a long way to go in developing a clearly defined product set that resonates with businesses, and much to learn about developing new forms of delivery and more effective front offices or portals that increase the attractiveness of their offerings to businesses.

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Tamkin, P, Hillage, J and R Wilson, (2001). Indicators of Management Capability: Developing a framework. London: Council for Excellence in Management and Leadership. Taylor, F.W. (1947). Scientific Management, New York: Harper and Row. Taylor, R. and J. Humphrey, (2002). Fast Track to the Top: 10 Skills for Career Success. London: Kogan Page. Testa, G. (2000). How to develop leadership: the ISVOR Fiat training proposal, EFMD Forum 3 pp. 27-31. Thompson, J.E. and J.Harrison, (2000). Competent managers? The development and validation of a normative model using the MCI standards, Journal of Management Development, 19 (10): pp.836-853. Trasler, J. (2002). Effective Learning depends on the Blend Industrial and Commercial Training 34 (4/5): pp.191-193. Trim, P. (1999). Management Learning: Integrating Perspectives in Theory and Practice Human Relations, 52 (9); pp.1217-1223. Tyler, K. (2002). Take e-learning to the next step, HR Magazine, 47 (2): p56. Vandermerwe, S. and S. Birley, (1997). The corporate entrepreneur leading organisational transformation, Long Range Planning, 30 (3); pp.345-352. Vas, A. (2001). Top management skills in a context of endemic organisational change, Journal of General Management, 27 (1); pp. 71-89. Vaill, P.B. (1996). Learning as a Way of Being; strategies for survival in a world of permanent white water. New York: Jossey Bass. Vloeberghs, D. (1998). Management development in the context of drastic changes, Journal of Management Development 17 (9); pp.644-661. Voci, E and K.Young. (2001). Blended learning working in a leadership development programme. Industrial and Commercial Training 33 (4/5): pp.157-160. Wallach, E. (2001). Management learning groups: Continuous quality improvement for managers Journal for Quality and Participation 24 (2); pp. 30-33. Westhead, P. (1998) Factors associated with the provision of job-related formal training by employers. International Journal of Entrepreneurial Behaviour and Research. 4(3), pp.187-216.

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Westhead, P. and D.J. Storey, (1996). Management training and small firm performance: why is the link so weak? International Small Business Journal, 14 (4); pp. 13-24. Whetten, D., K Cameron, M Woods, (1994). Developing Management Skills for Europe, London; Harper Collins Publishers. Wild, R.H., Griggs,K.A and T. Downing, (2002). A framework for e-learning as a tool for knowledge management Industrial Management and Data Systems, 102 (7): 371-380. Winterton, J, M.Parker, M.Dodd, M. McCracken and I Henderson (2000). Future Skill Needs of Managers, DFEE Research Brief 182 Woodall, J. and D. Winstanley, (1998). practice, London: Sage.

Management Development; strategy and

Woodcock, D.J., S.P Mosey, and T.B.W. Wood (2000). New product development in British SMEs. European Journal of Innovation Management 3 (4); p 212 Worrall, L. (2001) The Black Country economy and labour market: evidence from the West Midlands Business Survey. Working Paper. Management Research Centre, University of Wolverhampton Business School. Worrall, L. and cooper, C.L. (1999) Working hours and their impact on managers. With C.L. Cooper. Leadership and Organization Development, vol. 20(1), 6-10. Worrall, L. and Cooper, C.L. (2001a). Management skills development: a perspective on current issues and setting the future agenda, Leadership and Organization Development Journal, 22 (1); pp. 34-39. Worrall, L., and Cooper, C.L. (2001b) The long working hours culture. European Business Forum. Issue 6 (Summer) pp. 48-53. Worrall, L., Cooper, C.L., Campbell, F.K. (2000) Perpetual change and employment instability: the new reality for UK managers. Work, Employment and Society 14(4), 647-668. Worrall, L., Cooper, C.L. (2001a) The quality of working life: the 2000 survey of managers' experiences. Institute of Management Research Report, London: Institute of Management. Worrall, L., Jones, B. and Cooper, C.L. (2003) Redefining organization wellbeing: just what is a work/life ‘balance’ in today’s climate? Paper to the Standing Committee on Organisational Symbolism, Cambridge University, July, 2003 Yeung, A., D. Ulrich, S.W. Nason, M.A Von Glinow (1999). Organizational Learning Capability. Oxford; OUP.

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APPENDIX 1: QUESTIONNAIRE SURVEY

Page 194


Top Managers' Survey Advanced Management Skills ABOUT YOUR BUSINESS Q1. What is the name of your company? _______________________________________________

Q2. What is your full postcode?

_________________

 

Q3. How would you describe your business? _____________________________ (i.e. What is your main activity)



ouo

ouo

WHAT IS THE MAIN CHALLENGE FACING YOUR BUSINESS AT THE MOMENT Q4. Briefly describe the main challenge that is affecting your business at the moment WRITE IN



ouo

Q5. Do you think you have the necessary skills successfully to address this challenge? Yes/No/Don’t know

Q6. If NO, what skills do you think you need? WRITE IN



ouo



Q7. If you have or wanted to obtain advice to help you solve this challenge, who would you contact? WRITE IN



ouo

Page 195

ouo


WHICH MANAGEMENT SKILLS DO YOU THINK ARE MOST IMPORTANT TO THE SUCCESS OF YOUR BUSINESS? Look at the list below and consider how important you think each of the following management skills is to the success of your business. TICK  THE BOX THAT IS CLOSEST TO HOW YOU FEEL.

Management skill Q8

Building and managing teams

Q9

Communicating inside and outside the business

Q10 Creative thinking and problem solving Q11 Delivering customer service Q12 Developing and retaining talented employees Q13 Developing new working practices Q14 Financing new developments Q15 Handling risk and uncertainty Q16 Identifying market opportunities Q17 Keeping up to speed with technological change Q18 Learning from customers, competitors & suppliers Q19 Managing change in the organisation Q20 Managing equal opportunities/diversity Q21 Managing innovation Q22 Managing logistics Q23 Managing my own workload & personal

development

Not at all important



               

               

        

Q24 Managing projects Q25 Managing quality Q26 Managing supply chain relationships Q27 Negotiating Q28 Networking in the industry Q29 Providing leadership and direction Q30 Redesigning business processes Q31 Thinking strategically Q32 Using consultants

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HOW WELL DO YOU THINK YOU PERFORM ON THOSE SKILLS Compared to the businesses you compete with, how well do you think your business performs on each of the management skills listed below? TICK  THE BOX THAT IS CLOSEST TO HOW YOU FEEL.

Management skill

Perform badly

Q8

Building and managing teams

Q9

Communicating inside and outside the business

Q10 Creative thinking and problem solving Q11 Delivering customer service Q12 Developing and retaining talented employees Q13 Developing new working practices Q14 Financing new developments Q15 Handling risk and uncertainty Q16 Identifying market opportunities Q17 Keeping up to speed with technological change Q18 Learning from customers, competitors &

suppliers

               

Q19 Managing change in the organisation Q20 Managing equal opportunities/diversity Q21 Managing innovation Q22 Managing logistics Q23 Managing my own workload & personal

development

        

Q24 Managing projects Q25 Managing quality Q26 Managing supply chain relationships Q27 Negotiating Q28 Networking in the industry Q29 Providing leadership and direction Q30 Redesigning business processes Q31 Thinking strategically Q32 Using consultants

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

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Perform well



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SOURCES OF BUSINESS ADVICE Which of the following sources of business advice have you used in the last year? And, for those sources that you did use, how did you rate the quality of advice they gave you? PLEASE TICK  THE BOX THAT IS CLOSEST TO HOW YOU FEEL.

Q58a,b

Accountant

Q59a,b

Bank

Q60a,b

Business Link

Q61a,b

CBI

Q62a,b

Chamber of Commerce

Q63a,b

Consultant

Q64a,b

Federation of Small Businesses

Q65a,b

Local Further Education College

Q66a,b

Local authority

Q67a,b

Local Skills Council

Q68a,b

Trade Body or Trade Association

Q69a,b

Local University

Tick if used in last year

Very poor quality

Poor

           

           

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Very good quality

           

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YOUR COMPANY AND TRAINING & DEVELOPMENT Q70. How much did your business spend on training and development last year? Please estimate if you do not know exactly.

Q71. How many people in your company received training and development in the last year? Please estimate if you do not know exactly.

Q72. Have you conducted a training needs assessment in your company in the last 2 years?

Q73. Which two aspects of management development do you think would have the greatest impact on your bottom line? Please write in.

£_________________

_________________

Yes/No



ouo

1.

______________________________________



ouo

2.

______________________________________



ouo

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Does your company have any of the following: PLEASE TICK  ALL THAT APPLY Q74

A formal business plan

Q75

A formal training and development plan that is linked to the business plan

Q76

Someone responsible for training and development at Director level

Q77

Someone responsible for training and development below Director level

Q78

A training and development budget

Q79

A regular review process for evaluating the effectiveness of training and development

Q80

A regular and formal appraisal system covering all staff

      

1

1

1

1

1

1

1

If you wanted to send senior managers on a management development programme, which suppliers would you consider using? Would consider

Q81

Business Link

Q82

Chamber of Commerce

Q83

Commercial supplier/consultant

Q84

Local FE College

Q85

A Sector Skills Council

    

1

1

1

1

1

Would consider

Q86

University of Wolverhampton

Q87

Another University in the West Midlands

Q88

A University from outside the West Midlands/Open University

Q89

A Trade Body or Association

Q90

None of these

    

1

1

1

1

1

If you wanted to send senior managers on a management development programme, how would you prefer that development to be delivered? PLEASE TICK  ALL THOSE YOU WOULD CONSIDER. Would consider

Q91

Mentoring/coaching programme on site

Q92

Executive short course on site

Q93

Executive short course off site exclusive to my company

  

Q94

Executive short course off site (open programme)



1

Q95

Outdoor management development



1

Q96

MBA programme (part-time)

Q97

MBA programme (distance learning)

Q98

Distance learning short course

  

Page 199

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Would consider

  

Q99

E-learning

Q100

Learndirect

Q101

Onsite short course

Q102

Institute of Directors Director Development programme



1

Q103

Diploma in Management Studies (part-time)



1

Q104

Action learning sets

Q105

Local “drop-in” facility

Q106

Other

  

1

1

1

1

1

1


To what extent do you agree or disagree with the following statements. PLEASE TICK  THE BOX THAT IS CLOSEST TO HOW YOU FEEL.

Strongly Disagree

Disagree

Neither

Agree

Strongly Agree

1

 

2

 

3

 

4

 

Q107

We have a clear strategy for developing the business

Q108

The managers we currently employ have the skills needed to deliver the business strategy

 

Q109

Our investments in management development have had a positive impact on the bottom line



1



2



3



4



5

Q110

We have a clear idea about what our management development needs will be over the next five years



1



2



3



4



5

Q111

We know precisely what management development is available locally



1



2



3



4



5

Q112

We think informal management development on site is more effective than formal programmes



1



2



3



4



5

Q113

Our inability to recruit good quality managers is holding back the development of the business



1



2



3



4



5

Q114

The training that is available is too expensive

Q115

This company has never considered the need to develop its senior managers

 

Q116

Managers here do not have enough time to undertake training and development

Q117

1

1

 



1

We cannot find management development programmes that meet our needs



Q118

The management development programmes this company has used have been very effective

Q119

2

2

 



2

1





1

We don't see the point of managers when we can recruit managers with the skills we need



Q120

Decision making in this company is delegated to the lowest level possible

Q121

3

3

 



3

2





2

1





1

All employees go through a regular appraisal where their training needs are identified



Q122

We are concerned that if we invest in training those who receive it will then leave and get a job elsewhere

Q123

The provision of management development locally is poor

Page 200

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ABOUT YOUR COMPANY Q124. On what basis does your company compete in the marketplace? TICK  ONLY ONE BOX.

   

We compete mainly on price We compete mainly on the quality of the product/service we offer We compete mainly by offering something different to the customer We compete mainly on delivery time and reliability

1

2

3

4

Q125. In the last year have you introduced new products or services? TICK  ONLY ONE BOX.

   

The products/services we offer have not changed We have modified an existing product or service We have introduced products and services that are new to this company We have introduced products and services that are new to the market

1

2

3

4

Q126. In the last year have you changed the markets you sell into? TICK  ONLY ONE BOX. We are still selling to the same market(s) that we were selling into a year ago We have entered a new market/new markets

 

1

2

Could you provide some information about how your business is performing this year compared to last year? If so, can you provide "BALL PARK" figures for the financial years 2001-2 and 2002-3 (or the latest years you have available)?

2001-2002

2002-2003

Q127a,b

Turnover

_______

_______

Q128a,b

Capital expenditure

_______

_______

Q129a,b

Numbers employed

_______

_______

Q130a,b

Overall training expenditure

_______

_______

ABOUT YOU PLEASE TICK THE APPROPRIATE BOX  FOR EACH QUESTION OR WRITE IN THE SPACE PROVIDED.

Q131. What is your age:

_________years

Q132. Are you:

Q133. Do you consider yourself to have a disability?

Page 201

Male

Yes



1



1

Female

No



2



2


Q134. What is your ethnic background? Black African Black Caribbean Black Other

  

Pakistani

2

3

  

Indian

1

Bangladeshi

Chinese

4

Mixed

5

6

White European

  

7

8

White other Other

 

10

11

9

What formal educational qualifications do you have? PLEASE TICK ALL THAT APPLY. Q135 No formal qualifications Q136 5 or more GCEs/CSE Grade

1s/GCSEs at Grade C or above Q137 1 or more A levels Q138 Degree

   

1

1

1

Q139

Postgraduate diploma (e.g. DMS)

Q140

Masters degree or above

Q141

Professional qualification

  

1

1

1

1

Q142. What is your position in the business? PLEASE TICK ONLY ONE BOX. Sole proprietor/owner Managing Director with equity

 

1

2

 

Managing Director without equity Other Director/Manager

Q143. In the last year, how many days of formal management development training have you had? If NONE, write 0.

Q144. If YES to Q143, what type of formal training was that? Please write in.

4

__________Days

________________________

Q145. Are you personally involved in any management development programmes or development activity at the moment?

Q146. If YES to Q145, what programme is that? Please write in.

3



Yes/No

_____________________



ouo

ouo

 ouo

AND FINALLY……. What do you think could be done to improve management development provision to local businesses?

THANK YOU FOR COMPLETING THE QUESTIONNAIRE, WE APPRECIATE YOUR HELP

PLEASE RETURN IT IN THE PREPAID ENVELOPE

Page 202