MANAGEMENT 2020 Leadership to unlock long-term growth
THE COMMISSION ON THE FUTURE OF MANAGEMENT AND LEADERSHIP July 2014
CMI management2020_COVER SPREADS.indd 3 10/07/2014 12:41 CMI management2020_COVER SPREADS.indd 4 10/07/2014 12:41 CONTENTS
About the Commission 05 Forewords 06 Introduction 07 Purpose, people and potential – a snapshot of current practice 08 Key insights 09 Summary of recommendations – pathways to progress 12 1. The state of UK management and leadership today 14 2. The world of Generation Y 20 3. The working world in 2020 24 4. High-performing individuals – top ten traits 30 5. Pathways to progress – purpose, people and potential 34 6. Bridging the gap – current UK performance on purpose, people and potential 46 Full recommendations 50 Conclusion 53 Appendices 54 A. About the Commission 54 B. The student view – essays on the future of management 55 Acknowledgements 57
3
03_CMI management2020.indd 3 10/07/2014 12:42 5
04-13_CMI management2020.indd 4 10/07/2014 12:43 ABOUT THE COMMISSION
In 2013, the All-Party Parliamentary Group on Management (APPGM) decided to investigate how management and leadership in the UK will need to change by 2020 to deliver sustainable economic growth. The Commission on the Future of Management and Leadership was created with the Chartered Management Institute (CMI) to pursue that inquiry, bringing together members of both Houses of Parliament, across the main parties, with leaders from a wide range of sectors. The Commission considered evidence from academic experts, vibrant entrepreneurs, up-and-coming young managers and world-renowned business leaders alike. Our conclusions are outlined in depth in this report.
THE COMMISSION MEMBERS
Peter Ayliffe CCMI (Co-chair) President of CMI
Barry Sheerman MP (Co-chair) MP for Huddersfield, Chair of the APPGM
Lord Bilimoria CBE DL Chairman and Founder, Cobra Beer
Dame Carol Black DBE CCMI Principal, Newnham College Cambridge; Adviser on Work and Health, Department of Health
Tamara Box Global Co-chair of the Financial Industry Group, Reed Smith
Professor Sir Cary L Cooper CBE CCMI Distinguished Professor of Organizational Psychology and Health, Lancaster University Management School
Hushpreet Dhaliwal Chief Executive, National Association of College and University Entrepreneurs
Jez Frampton CCMI Global Chief Executive, Interbrand
Ann Francke MBA CCMI CMgr FIC Chief Executive of CMI
Professor Abby Ghobadian Head of School of Leadership, Organisations and Behaviour, Henley Business School
Dr Jules Goddard Fellow, London Business School; author of Uncommon Sense, Common Nonsense
Lord Haskel Peer, House of Lords
John Hemming MP MP for Birmingham Yardley
Mark Hoban MP MP for Fareham
Dr Liz Jackson MBE CCMI Founder, Great Guns Marketing
Darren Jarvis Chief Auditor, Global Institutional Client Group at Citigroup
Sir Paul Judge CCMI Chairman, Schroder Income Growth Fund Plc; Chair, CMI’s Academic Advisory Council
Seema Malhotra MP MP for Feltham and Heston
Derek Mapp CCMI Chairman of Informa
Dame Mary Marsh CCMI Founding Director, Clore Social Leadership Programme
Lord Mitchell Enterprise Adviser, Labour Party
Terry Morgan CBE CCMI Chair, Crossrail; Immediate Past President, CMI
Meg Munn MP MP for Sheffield Heeley
Baroness Prosser OBE Peer, House of Lords
Dr Martin Read CBE CCMI Chairman of Laird Plc, Low Carbon Contracts Company, Electricity Settlements Company and Remuneration Consultants Group; Non-executive Director of Lloyd’s and the UK Government Efficiency and Reform Board
Lynva Russell Director, Policy Connect
David Rutley MP MP for Macclesfield
Andy Sawford MP MP for Corby
Andrew Summers CCMI Former Chair, Companies House
5
04-13_CMI management2020.indd 5 10/07/2014 12:43 FOREWORDS
It was my great pleasure to co-chair the Commission on the Future of Management and Leadership.
Our work focused on the role of management in driving economic growth. The Commission consisted of a diverse group of parliamentarians and business leaders who desired to investigate one very important question: how can the UK produce the right kind of managers to galvanise business expansion and growth over the coming years?
To address this issue, we sought to understand three things. Where are we going wrong today? What are the management skills that will be needed in the future? And how can our managers acquire these critical skills?
Ultimately, our inquiry was underpinned by the desire to fi nd out how we can equip the leaders of today and tomorrow with the skills needed to succeed in 2020. We hope that the results of our research will help to drive change in management practice in the UK and contribute to our continued economic growth between now and 2020.
Barry Sheerman MP Co-chair of the Commission on the Future of Management and Leadership; Chair of the All-Party Parliamentary Group on Management
The UK boasts world-class organisations and some of the best managers in the world. We heard from several in the course of this Commission. The insights they offered about the future of management and leadership, and what we need to do to deliver long-term growth and prosperity, are at the heart of this report.
But the truth is that those shining examples are just too rare. From the evidence seen by this Commission, it’s clear that we’re faced with a ticking time bomb of myopic management. We neglect the importance of sustainable growth in the long term in favour of cutting costs to deliver profi ts in the short term. Our managers are not encouraged to take risks or given space to be innovative. They bear a heavy responsibility for driving economic growth yet they are not given the training and coaching that they need to do their jobs properly.
As a result, the UK falls short in the leadership stakes.
Fortunately, however, the Commission found that the current shortcomings of UK management can be addressed. There is a clear way forward if organisations choose to take it.
In this report, we explain how organisations can focus on purpose, people and potential in order to thrive in 2020. Whatever their sector – business, public services or civil society – the demands on managers are changing fast.
It has been my privilege to co-chair this Commission. Its recommendations provide a blueprint for a better managed Britain.
Peter Ayliffe CCMI Co-chair of the Commission on the Future of Management and Leadership; President, CMI
6 7
04-13_CMI management2020.indd 6 10/07/2014 12:44 INTRODUCTION
The financial crisis of 2007/2008 plunged So it was against this backdrop that the All- the UK economy into the doldrums and Party Parliamentary Group on Management shattered trust in business leaders. decided to found the Commission on the High-profile leaders who had been Future of Management and Leadership with publicly fêted were shamed. Businesses CMI, launching in October 2013. Over several that looked like world-beaters teetered months, the Commission asked three key on the brink of collapse, exposed as questions. How good are management and being built on false foundations, driven leadership in the UK today? What are the by skewed short-term priorities. skills that managers will need in the future? And how can UK management be improved in The resulting economic collapse unleashed order to deliver success by the year 2020? a cost-cutting agenda that only reinforced the short-termist outlook that got us into Evidence considered by the Commission trouble in the first place. Managers were identified major changes that are not only under pressure to “do more with less”, reshaping the world of work, but creating often without adequate training. Many profound challenges for managers. lacked belief in the moral purposes of their businesses or their senior leaders. Instead Responding to these challenges is vital if the of viewing people as valuable human capital, UK economy is to fulfil its true potential over many organisations started to treat them as the coming years. This report outlines the a drag on the bottom line. findings and recommendations in detail.
THE CHALLENGES WE FACE THE UK LAGS BEHIND MANY COMPETITORS ON KEY ECONOMIC INDICATORS Productivity is 21% lower than that of the rest of the G7 and measures of management are similarly lower than those of many rivals.1 Time wasted by poor management could be costing the economy as much as £19bn a year.2
YOUNGER GENERATIONS WILL DRIVE NEW WAYS OF WORKING “Generation Y” and “Millennials” will make up 75% of the workforce by 2025.3 Their expectations about the employment relationship and ways of working demand new approaches. There are also major employability challenges for young people in the UK.
MANAGERS WILL NEED TO BE ADEQUATELY TRAINED Government data shows that the UK labour market will need one million new managers by 2020 – yet 71% of the leaders surveyed by CMI confess they could do better at training first-time managers, or don’t train them at all. This could leave 150,000 employees a year taking on management roles without adequate preparation.
TECHNOLOGY DEMANDS BETTER PEOPLE SKILLS New technology doesn’t only demand new technical skills – increased connectivity between people puts a premium on managers’ personal, communication, network-building and collaboration skills.
GLOBALISATION WILL DRIVE DIVERSITY AND MORE CROSS-CULTURAL WORKING More organisations will operate across borders and need to navigate cultural differences. But too few young people take opportunities to study and work abroad.
LONG-TERM SUSTAINABILITY IS FUNDAMENTAL The global economic crash exposed the danger posed by short-termism in management thinking and incentives. But those who cut costs and overheads still seem to earn more respect than those who take the riskier, more innovative paths that lead to growth in revenue, profits and jobs. Leaders need to define their organisation’s long-term purpose and resist pressure for short-term results.
1 Statistical Bulletin: International Comparisons of Productivity – Final Estimates, 2012, ONS, 20 February 2014 2 Leadership and management in the UK – The key to sustainable growth, Department for Business, Innovation & Skills, July 2012 3 www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-dttl-2014-millennial-survey-report.pdf
6 7
04-13_CMI management2020.indd 7 10/07/2014 12:44 PURPOSE, PEOPLE AND POTENTIAL: A SNAPSHOT OF CURRENT PRACTICE
The Commission identifi ed key areas of good practice that form the basis of our Management 2020 Framework. It comprises three sections.
PURPOSE PEOPLE POTENTIAL What social benefi t How does the How does the does the organisation organisation prepare organisation support exist to achieve and managers and leaders the next generation how are its leaders at all levels? of managers and held accountable for leaders? these aims?
We surveyed 2,113 managers – split almost equally between CMI members and non-members – asking them to score their organisation out of 10 on each indicator. A summary of the results is outlined below.
HEADLINE SCORES – OVERALL AND PER SECTION
MEAN SCORE N/A Not at all/poor Could do better Good/very good PER SECTION
Overall 5.9
9% 27% 30% 34%
Purpose 6.8
9% 18% 27% 46%
People 5.8
6% 29% 34% 31%
Potential 5.2
11% 35% 29% 24%
8 9
04-13_CMI management2020.indd 8 10/07/2014 12:44 KEY INSIGHTS Overall, UK organisations were rated by Although organisations achieved the managers and leaders at an average of best score in the area of purpose, with 5.9 out of 10 across the Management an average score of 6.8 out of 10, this 2020 Framework – the equivalent of is still equivalent to a “could do better” “could do better”. This shows signifi cant mark. Organisations scored lower on potential for improving management. commitments to their people, at 5.8, and lowest, at 5.2, on how they invest in the Strikingly, growing organisations next generation – their potential. scored higher than declining ones across all 18 measures.
PURPOSE When it comes to purpose, the bigger over the business, and commented: “I the organisation, the better it is at don’t consider my role at the top of Paul Polman, Chief Executive, reporting on its aims and commitments anything, hierarchically. Great CEOs Unilever to stakeholders. have to consider themselves in the centre of the vortex and they have to “Our model is built on a total For example, only 36% of small be able to gather quality information organisations (one to 50 employees) say from all communities, both inside and value chain approach, on they defi ne and publish their commitment outside the business.” growing our business, reducing to their employees, compared to our environmental impact, 58% of large organisations (over Overall, 51% of managers say their 1,000 employees). organisations are poor or could do reaching a billion people better when it comes to escalating with health and well-being Thomas Cook Chief Executive Harriet bad news and ensuring that the programmes and moving our Green summed up the crucial role that senior management team receives employees play in giving feedback when feedback directly from employees whole business to sustainable she told the Commission: “People in around the organisation. Among the sourcing. We do this on the the company can tell you what is sectors, the public sector scores basis of a common purpose.” wrong. They may not be able to fi x it, worst: 25% say such feedback but they can tell you what’s wrong.” mechanisms are poor or non-existent, Paul Polman, Chief Executive, Unilever. As a result, Green prides herself on compared to 18% in the private Unilever recorded a 9% rise in pre-tax exchanging emails with people from all and 16% in the charity sectors. profi ts for the 2013 fi nancial year.
PURPOSE: CURRENT PRACTICE
Average score out of 10 N/A Not at all/poor Could do better Good/very good
Q1. We defi ne and publish the long-term purpose of our 6.5 organisation, ensuring it covers measurable commitments 10% 21% 27% 42% to all stakeholders.
Q2. We track the annual progress towards our overall 7.5 stated purpose at our AGM/annual review and discuss 10% 12% 22% 58% during at least one board meeting.
Q3. Our CEO/top team is rewarded on the basis of 6.2 delivering value to all stakeholders and not just on meeting 17% 21% 25% 37% fi nancial targets.
Q4. Our senior leaders champion the organisation’s values 7.0 and act as role models. 4% 16% 30% 51%
Q5. Senior leaders are recruited for their values and track 6.7 record of delivering long-term performance. 9% 17% 31% 44%
Q6. Feedback mechanisms exist to escalate both good and 6.7 bad news, and ensure the senior management team hears 5% 19% 32% 44% directly from employees at all levels.
8 9
04-13_CMI management2020.indd 9 10/07/2014 12:44 PEOPLE The best score for people practices relates improve their practical skills and make an Sean Taggart, Chief Executive, the Albatross Group to the extent to which people are assessed impact at work. for their behaviours, not just their results. “We always believe This was a key theme that emerged during There were key links between the people the evidence sessions. scores and organisational growth. Almost management 60% of organisations in decline do not train is our biggest “We have put much more emphasis their staff or do so poorly, compared to only differentiator, a on how, as well as what, managers around a quarter of growing organisations. source of competitive and leaders achieve. We now bring it into appraisals, throughout the Equally, only about 13% of managers advantage.” organisation.” Sir Charlie Mayfi eld, in declining organisations say training Sean Taggart, Chief Executive Chairman of the John Lewis Partnership. of staff immediately after a promotion is at travel company the good or very good, compared to almost Albatross Group Echoing submissions made to the 30% of growing organisations. Those that Commission, management training is are struggling also use mentoring and usually too little, too late: only 23% of coaching programmes far less. organisations rank as good or very good in terms of whether staff are trained in Smaller organisations are much better at management and leadership before, learning from mistakes: 48% of managers in or within three months of, taking on a large organisations say they do not do this at management role. all well, compared to only 20% in small ones.
The use of mentoring and coaching also appears very limited, rated good or very good by only 24% of organisations, despite persuasive testimony about its effectiveness in helping managers
PEOPLE: CURRENT PRACTICE
Average score out of 10 N/A Not at all/poor Could do better Good/very good
Q7. All staff are trained in management and leadership 5.2 before, or within three months of, being promoted into a 7% 37% 34% 23% management role.
Q8. Our organisation uses mentoring and coaching 5.3 programmes to support all newly promoted managers. 7% 36% 33% 24%
Q9. We use performance assessment and appraisal tools 6.6 that evaluate people on their behaviours and not just their 6% 20% 30% 43% results.
Q10. “Off-the-job” development opportunities focusing on core 5.7 interpersonal and people-management skills are offered to 7% 31% 34% 29% managers and leaders at all levels.
Q11. We learn from our mistakes and encourage risk-taking 6.2 and innovation. 3% 24% 38% 35%
Q12. We champion the diversity of our talent pipeline at all 5.9 levels and set targets to benchmark our achievements in terms 7% 28% 34% 32% of equal pay and promotion.
10 11
04-13_CMI management2020.indd 10 10/07/2014 12:47 POTENTIAL The third area of the framework, the Kim Winser OBE, founder of of business is about giving back Winser London development of potential, is the area to the community, and sustaining where employers are currently the communities, in the broadest sense “Every division of weakest, scoring just 5.2 on average. of the word. We don’t see that as a burden. Actually it’s quite liberating.” the company adds A particular weakness relates to the to the existing talent recruitment of young people and school Not only does supporting potential with university leavers, leavers. Employers also scored poorly represent the weakest area of current in terms of reporting on how they work practice among employers, but it’s also school leavers or career- with educational institutions. Measures the area where Government action may break women wanting to to encourage people back to work after be most effective, for example through get back into business.” career breaks, which could include education and skills policy. This is parental leave, appear to be weak too. refl ected in our recommendations. Kim Winser OBE, founder of fashion company Only 24% of managers say their Winser London organisation is good at reporting on their cooperation with schools. The private sector is lagging behind when it comes to reporting on how organisations are working with schools, colleges and universities: 41% of organisations say they are bad at doing this, or aren’t doing it at all, compared to 35% in the public and 21% in the charity sectors.
One witness said: “Our owners are great believers that one of the roles
POTENTIAL: CURRENT PRACTICE
Average score out of 10 N/A Not at all/poor Could do better Good/very good
Q13. We offer opportunities for young people to 6.3 gain practical experience and skills within our 7% 22% 35% 38% work environment.
Q14. We report on how our organisation is working 5.0 with schools, colleges and universities. 14% 38% 26% 23%
Q15. Our organisation sets targets to focus recruitment 4.4 on school leavers and young people. 14% 45% 24% 17%
Q16. Our organisation supports others in our supply 4.9 chain or local community with development 11% 39% 31% 19% opportunities and mentoring.
Q17. We have a programme that actively encourages 4.9 parents, carers or others to return to work after 13% 39% 29% 21% career breaks.
Q18. We collaborate with different sectors and other 5.6 organisations to exchange ideas and people. 8% 32% 32% 28%
10 11
04-13_CMI management2020.indd 11 10/07/2014 12:47 SUMMARY OF RECOMMENDATIONS: PATHWAYS TO PROGRESS
FOR EMPLOYERS for employers. The recommendations greater transparency, professional To ensure successful long-term are as follows. bodies and other partners can work leadership, we recommend that together to help promote excellence organisations should review and focus Build employability into education. and showcase best practice. on three critical areas: how they define We recommend a series of practical their purpose, how they lead and proposals to help embed practical IMPLICATIONS FOR INDIVIDUALS develop their people, and how they management, enterprise and Coach and champion your team: invest in their potential. leadership experiences into the as a manager, be a role model, world of education. Secondary be authentic and start mentoring But, with official data showing that schools should be measured on others. Support new managers the UK labour market needs almost employability outcomes, and pupils and review and reward behaviours, 200,000 new managers a year, the provided with much greater real- not just performance. scale of the challenge is clear.4 life experience, perhaps through Developing these new managers’ the “Enterprise Advisers” scheme Embrace change: challenge the skills, mentoring them and helping recommended by Lord Young. status quo, embrace and lead change. them maximise their potential is a The standing of business studies clear priority. courses should be reviewed to Collaborate and connect: keep ensure they are relevant, attractive learning, extend your networks across For more detailed recommendations, to young people and respected by generations, different sectors and see page 50. employers and higher education. cultures, and stay connected.
To help kick-start the process, we’ve In addition, the apprenticeships FURTHER RESOURCES developed the Management 2020 trailblazers could be expanded to The full report includes further detail Benchmarking Tool, which is freely included management, putting young on our findings and recommendations. available. The tool enables managers people on the track to professional It’s available at www.managers.org. to benchmark their organisation management status. In higher uk/management2020 – where you’ll against best practice in the three education, all management degrees also find short videos, reports on the areas distilled from this inquiry. should include experiential learning oral evidence sessions, additional and work placements. papers and the Management 2020 With our survey revealing an average Benchmarking Tool. score of just 5.9 out of 10, there’s Develop exchange networks. clearly huge scope for improvement Government should work with Other useful sources include: to create a better managed Britain. partners to encourage placements, • A Blueprint for Better Business, an secondments and much more initiative aiming to unite corporate FOR GOVERNMENT extensive exchanges of ideas and purpose and personal values to serve Our recommendations for Government people across different sectors, society: www.blueprintforbusiness.org focus on where employers need the through supply chains, and between most support, as evidenced by the business and education. • Valuing Your Talent, a framework for low scores around how they develop better measurement of the contribution their potential. With unemployment Encourage reporting and promote that people make to organisations: of young people running at over 18%, excellence. Government can www.valuingyourtalent.co.uk it’s critical that employability outcomes do more to encourage employers to are improved – giving young people expand annual reports to include both • The Supper Club, the UK’s better prospects and helping to create social purpose and broader people leading club for entrepreneurs: a much stronger potential talent pool metrics about their people. With www.supper-club.net
4 Based on IER estimates in Working Futures 2012-22, UK Commission for Employment and Skills, 2014
12 13
04-13_CMI management2020.indd 12 10/07/2014 12:45 WITNESSES
Ruth Ambrose Director, Legal, AMEC Plc Professor Julian Birkinshaw Professor of Strategy and Entrepreneurship, London Business School Tom Bromley Student and Entrepreneur, University of the West of England Alex Cheatle Chief Executive, Ten Group Duncan Cheatle CEO, Prelude Group (including the Supper Club); Co-founder, StartUp Britain Peter Cheese Chief Executive, CIPD Mark Goyder Director, Tomorrow’s Company Professor Lynda Gratton Professor of Management Practice, London Business School Harriet Green Group Chief Executive Officer, Thomas Cook Anthony Hesketh Senior Lecturer, Department of Management Learning and Leadership, Lancaster University Management School
Brian David Johnson Futurist, Intel Shivam Kagadada Assistant Tutor, Explore Learning; and Owner, Original Karma Arthur Kay Co-founder and Chief Executive, bio-bean Debbie Klein Chief Executive, The Engine Group Thomas Lawson Chief Executive, Leap Confronting Conflict Alastair Lukies CBE Chief Executive, Monitise Cary Marsh Chief Executive and Founder, Mydeo Sir Charlie Mayfield Chairman, John Lewis Partnership Ry Morgan Co-founder and Chief Executive, PleaseCycle Kevin Murray Chairman, The Good Relations Group Professor Kai Peters Chief Executive, Ashridge Business School Paul Polman Chief Executive, Unilever Rebecca Ray Executive Vice President, The Conference Board Clare Reinhold Engineering Associate, Building Design Partnerships Sean Taggart Chief Executive, Albatross Group Duncan Tait Head of EMEIA and Corporate Senior Vice President, Fujitsu Ltd Dylan Valentine Bid and Delivery Excellence Apprentice, Fujitsu Robert Wilson Student and Entrepreneur, University of the West of England Kim Winser OBE Founder and Chief Executive, Winser London Mike Wright Executive Director, Jaguar Land Rover Professor Mick Yates Visiting Professor, Leeds University Business School
The full list of those who gave written evidence can be found on page 54.
12 13
04-13_CMI management2020.indd 13 10/07/2014 12:45 1. THE STATE OF UK MANAGEMENT AND LEADERSHIP TODAY
“We need a change in attitude in the UK, whereby KEY POINTS
management is seen as The UK lags behind its competitors in terms of productivity and management practice: a highly professional role, output per hour is 21% lower than the average across the rest of the G7.
where integrity is seen as Poor management could be costing UK businesses over £19.3bn a year in a virtue, and where ethics lost working hours. are valued as highly as Fourty-three per cent of UK line managers rate their own managers as ineffective. profitability. Until attitudes change, we’ll continue to Four-fifths of workers don’t think their manager sets a good moral example. Less than one-fifth are aware of their organisation’s values. focus on the short, rather than the longer, term.” UK managers are underqualified and undertrained: two-thirds (71%) of employers give either no training or inadequate training to new managers. John W Stephens, written evidence to the Commission Risk-taking and innovation is scarcely encouraged at three-fifths (62%) of UK companies.
Low levels of engagement are damaging productivity, while hierarchical and silo-based organisational structures are detrimental to innovation.
At its heart, the art of management The perception that leadership is the preserve of the talented few is a myth. is the art of managing people. But, worryingly, this is where British managers fall down most today. Taken together, these findings paint a The UK is undoubtedly a major force The Commission examined a vast picture of shortcomings in many aspects in the global economy. It is the world’s range of evidence that highlighted of UK management in 2014. It is crucial sixth-largest economy and may overtake a wide range of issues. Economic that we address these concerns. The France to claim fifth place by the end of analysis shows a productivity gap underlying weakness in management 2014.1 It was ranked 10th in the world on between the UK and its international and leadership is holding back our the World Bank’s “ease of doing business competitors. Other research suggests economic performance. index” in 2014.2 Overall, it remains an we trail behind many of those attractive location for business. competitors on scores of management 1.1 ECONOMIC INDICATORS practice. Evidence also highlighted AND INTERNATIONAL But the evidence suggests that there are organisations’ failures to provide COMPARATORS underlying weaknesses in the UK economy adequate training for their managers The UK lags behind its competitors that do need to be urgently addressed and weaknesses in managers’ abilities in terms of productivity and management to ensure long-term competitiveness. to motivate and engage employees. practice. Compared with other major countries in the
14 15
14-19_CMI management2020.indd 14 10/07/2014 12:48 Organisation for Economic FIGURE 1: Co-operation and Development, the UK ranks mid-way down the table for GDP PER HOUR WORKED FOR MAJOR OECD COUNTRIES productivity. In particular, it suffers from a significant productivity gap compared with the US, Japan and Germany (see Figure 1). United States Furthermore, statistics released by the Office for National Statistics (ONS) in 2014 France show that output per hour worked in the UK Germany is 21% lower than the average for the other six members of the G7 – the US, Germany, Sweden France, Italy, Japan and Canada.3 Austria
Meanwhile, the UK also lags behind United Kingdom its international competitors in terms Switzerland of its management practices. A 2012 report by the Department for Business, Australia Innovation & Skills (BIS) found that its Canada average management score is some way below that of the US, Japan, Spain Germany and Canada (see Figure 2).4 Italy Since management and productivity are intrinsically linked, it is likely that Japan management practice is one of the Greece major factors holding the UK back from achieving its full economic potential. Korea Turkey The cost in lost productivity is potentially huge. Research by CMI Poland in 2012 suggested that poor management Mexico costs UK businesses over £19.3bn 5 a year in lost working hours. 0 20 40 60
1 www.dailymail.co.uk/news/article-2615425/UK- GDP per hour worked (2008 at $ purchasing power parity) economy-fifth-biggest-world-year-banker-says.html 2 www.doingbusiness.org/rankings 3 Statistical Bulletin - International Comparisons of Productivity - Source: OECD STAN productivity statistics (see www.oecd.org/statistics/productivity) Final Estimates, 2012, ONS, 20 February 2014 4 Leadership & Management in the UK – The Key Notes: Reported for all OECD countries with 2008 GDP of $30bn or greater. Purchasing to Sustainable Growth, BIS, July 2012 power parties benchmarked at 1 for US dollars 5 Leadership & Management in the UK – The Key to Sustainable Growth, BIS, July 2012
14 15
14-19_CMI management2020.indd 15 10/07/2014 12:48 THE STATE OF UK MANAGEMENT AND LEADERSHIP TODAY
1.2 CONCERNS ABOUT MANAGEMENT EFFECTIVENESS Good management is crucial to driving growth and productivity, but many of today’s managers are simply not up to the job. FIGURE 2: AVERAGE SCORE ACROSS 18 MANAGEMENT PRACTICES BY COUNTRY The Commission was privileged to hear from many talented managers working in well-managed organisations during the course of its inquiry. Witnesses United States emphasised that the UK has many Japan world-class businesses and there are many examples of excellence. Germany
Sweden But the Commission also received substantial evidence raising concerns Canada about management and leadership United Kingdom shortcomings affecting organisations of all sizes. There was widespread consensus Italy that the quality of managers plays a France crucial role in performance, productivity and ultimately growth. Nevertheless, Australia research suggests that many of today’s Mexico managers are simply not up to the job.
Poland A study by CMI in 2012 found that nearly Ireland half (43%) of UK managers rated their own line managers as ineffective.6 Going New Zealand on to explore the impact of management Portugal and leadership development, it suggested that developing managers can make a Chile real difference: effective management Argentina development was linked to 23% higher organisational performance scores. Greece
China Meanwhile, a survey of UK employers by Cranfield School of Management Brazil in 2013 revealed that nearly two-thirds India (64%) of employers think that a lack of leadership and management skills 2.4 2.6 2.8 3 3.2 3.4 is holding back growth.7 Even more Average management score (1-5) (68%) believe these deficiencies Source: Constraints on Developing UK Management Practices, BIS, 2011 are preventing their employees from reaching their full potential.
16 17
14-19_CMI management2020.indd 16 10/07/2014 12:48 1.3 ETHICS will not be given sufficient training and Even when employers do train their Four-fifths of workers don’t think their development in their new roles.11 managers, they can be reluctant to let manager sets a good moral example them employ their new knowledge and and less than a fifth are aware of their The evidence suggests that a lack of skills, meaning that the limited investment organisation’s values. skills, qualifications and training appears that employers do make in training often to be one of the principal reasons why UK goes to waste. Not only are managers ineffective, they line managers are underperforming. Just also appear to be unethical. This is a one in five managers has a management Worryingly, senior leaders are likely grave concern, since ethics are core qualification, according to BIS.12 to miss out most, according to 2007 to the transformation that needs to take research by US-based global consulting place if businesses are to fulfil their true John Board, Dean of Henley Business and training firm Novations Group.14 economic potential. School, argued in written evidence Its study found that just 59% of senior to the Commission that the fact most executives were expecting to receive Eighty per cent of workers don’t think their managers do not have a qualification is an training that year. manager sets a good moral example, important factor as to why UK companies according to research undertaken by are less productive than their overseas CMI’s Management 2020 Survey for the CMI in 2013,8 while less than a fifth competitors. He also said that the UK’s Commission confirmed many of these (17%) are aware of their organisation’s competitors spend significantly more on indications. Some 71% of respondents values. This is also echoed in research management training than we do. “More reported that their organisation’s from the Chartered Institute of Personnel attention, therefore, needs to be paid to commitment to training staff before, or and Development (CIPD), which found the development of managers,” he added. within three months of, being promoted that only 37% of employees trust their He suggested that two potential ways of into a management role was either organisation’s senior management.9 encouraging this would be by providing non-existent or could be improved. Furthermore, only 36% of UK employees tax breaks for CPD activities and creating (See Chapter 6 for more details.) think their senior leaders take an interest regional hubs of business schools to offer in their well-being, according to Towers training to SMEs. Giving oral evidence to the Commission, Watson (2012).10 Ruth Ambrose, Director Legal at Other evidence highlighted the fact AMEC, observed that there is no lack 1.4 TRAINING IS “TOO that managers only receive very limited of management talent in the UK, but LITTLE AND TOO LATE” amounts of training. The Employer across industry generally there is a lack UK managers are underqualified – Skills Survey from the UK Commission of training, a lack of focus at an early and many are left without the training for Employment and Skills found that a enough stage and a lack of career-path and development they deserve to staggeringly low 34% of all employers development. “As a country, we tend to succeed in their jobs. provide management training.13 focus on management very late,” she said. Management was the occupation in
Estimates on the changing needs of which skills gaps were most likely to be 6 Leadership & Management in the UK – The Key the UK labour market suggest that the attributed to low levels of training. to Sustainable Growth , BIS, July 2012 7 The New Vocational Currency: Investing for Success, management workforce will grow by some Cranfield School of Management, July 2013 586,000 people between 2012 and 2022. At In written evidence to the Commission, the 8 Managers and the Moral Maze, CMI, September 2013 9 Are organisations losing the trust of their workers?, the same time there will be a “replacement Institute of Leadership and Management CIPD, December 2013 demand” created by people exiting the (ILM) noted that “managers are likely to 10 Global Workforce Study, Towers Watson, 2012 11 Based on IER estimates in Working Futures 2012-22, labour market – retiring, for example – of have an average of four days training per UK Commission for Employment and Skills, 2014 some 1,378,000 managers. Combined, that year”. It added: “For many new managers, 12 Leadership & Management in the UK – The Key to Sustainable Growth, BIS, July 2012 means around 1.96 million people will enter there is unlikely to be access to more 13 dera.ioe.ac.uk/19271/1/evidence-report-81-ukces- management roles over the decade, or, on substantial training prior to appointment or employer-skills-survey-13-full-report.pdf 14 www.trainingzone.co.uk/topic/leadership/senior- average, 196,400 per year – many of whom during the early months in the role.” managers-least-likely-get-development
16 17
14-19_CMI management2020.indd 17 10/07/2014 12:48 THE STATE OF UK MANAGEMENT AND LEADERSHIP TODAY
Her observation is backed up by The ILM echoed this, warning in Despite extensive debate over the years, independent research. According to its written submission that, if the there remains a perception in the UK the Harvard Business Review,15 the development of new managers is that leadership is the preserve of a few average age at which managers left solely to current managers, there talented individuals who were fortunate first get leadership training is 42 – is a “risk that existing underperformance enough to enter the world equipped with about 10 years after they first began will become the model that these natural leadership skills. Witnesses to the supervising people. new managers learn from”. Commission argued that not only is this perception wrong, it is also potentially Should leadership development start The SME sector has particular issues. For harmful to growth, since it discourages in childhood? According to a survey many, cost is seen as a barrier to training people from stepping up into managerial by the Center for Creative Leadership, – something cited by 61% of businesses and senior leadership roles, thereby nearly a quarter (21%) of leaders believe (mainly SMEs) surveyed by the FPB, with depriving businesses of their input. it should begin when people are less many trying to take advantage of low-cost than five years old and half (50%) say development routes.17 Forty per cent of That point is particularly relevant in the it should take place before the age FPB panel members said that availability context of the debate about gender of 10.16 of training was a problem; more than a equality, with recent CMI research quarter (28%) indicated quality of courses highlighting the need for more female role 1.5 TRAINING FALLS VICTIM was an issue; and 22% reported that time models in senior management roles.19 TO SHORT-TERM PRESSURES was a barrier. With SMEs accounting for Why are employers neglecting managers’ over half of private-sector employment But the effects of this misconception are development? We were told that in growth in 2012, these shortcomings are of widespread. Giving written evidence to many cases it was because organisations some concern.18 the Commission, Dr Mark Pegg, Chief are too focused on other short-term Executive of the Leadership Foundation priorities elsewhere. Duncan Cheatle, Chief Executive of for Higher Education, observed: “As a Prelude Group, told the Commission nation, we have collective psychological The economic downturn has undoubtedly that CEOs often play a deciding role barriers to break: a belief that leaders are had an effect on the degree to which in whether this training is provided, in short supply, that too few natural leaders companies have invested in their especially in SMEs – but, as they may lack are born, that leadership can’t be taught managers since 2008. A Training and training themselves, they are often blind to and the problem is intractable. Many of Skills Panel Report by the Forum of the potential for improvements. They need my students arrive brainwashed to believe Private Business (FPB), published to lead the change. “It can be enlightening this and start 100m behind the starting in January 2014, revealed that two for CEOs to have the opportunity to view line because of it. But it is a myth. Some out of five panel members felt senior their business through the eyes of their leaders are born, but most are made and management skills had been neglected peers in a group setting. Hearing first- the supply of leaders is expandable.” during the recession, since employers’ hand from those who have benefited from primary focus tended to be on the training – both themselves and their teams 1.7 INNOVATION IS survival of the business. – can be very persuasive, especially when SQUEEZED OUT it’s coming from someone with no vested A focus on the short term also means In its written evidence, the British interest in trying to sell something. Getting many organisations lack the patience Psychological Society also noted the business leader bought in first is required to innovate for long-term results. leaders and managers are under crucial. The rest follows.” pressure to focus on the short term. The Commission heard that many But it emphasised the importance of 1.6 LEADERS CAN managers are risk-averse and unwilling these individuals being aware that they BE DEVELOPED to take the risks required to innovate. are “powerful role models”, not only for The perception that leadership is the There was a feeling that this has been setting standards of ethical behaviour but preserve of the talented few – that exacerbated by the economic crisis, for “creating an open, learning culture leaders are born, not made – is still making managers more risk-averse and within an organisation”. holding us back. less willing to contemplate failure. CMI’s
18 19
14-19_CMI management2020.indd 18 10/07/2014 12:49 Management 2020 Survey found that and rapid promotion. They are also wedded 62% of organisations were rated either to social media. “It’s not out of the ordinary poor or mediocre at encouraging risk- for them to be in the meeting room on two taking and innovation. screens and they are doing their jobs,” she said. “They are listening, they are hearing An aversion to risk-taking is holding back and they are passing on.” Generation Y is both managers and their businesses, discussed further in Chapter 2. according to Leadership Coach Kevin Murray, who gave oral evidence to the 1.9 SILOS ARE A PROBLEM Commission. “To take some risk to grow The rigid, hierarchical organisational is a requirement of leadership and that structures favoured by most businesses “WE LEARN FROM means having the courage to do things, today are hampering performance. OUR MISTAKES AND even though you’re going to be under In written evidence to the Commission, the spotlight.” Strategic Development Mentor Colin R ENCOURAGE RISK-TAKING Tuckwell pointed out that management AND INNOVATION” 1.8 ENGAGEMENT IS LACKING as a discipline is primarily about making HOW DO MANAGERS RATE THEIR Too many in the UK workforce are knowledge effective. In practice, this ORGANISATIONS? disengaged, which is damaging productivity. means that managers need to have capabilities in technical, commercial, Julian Birkinshaw, Professor of Strategy human, social and societal knowledge. and Entrepreneurship at London Business These capabilities are not usually acquired School, told the Commission that “we have through working in silos, which is standard a very poorly engaged workforce” – a practice within many organisations. He challenge faced, he said, by businesses added: “Too long spent in silos limits around the world. the brain’s broader development and 35% ability to relate to people with different Research shows that poor employee backgrounds and experiences.” engagement acts as a drag on business growth. According to a 2007 study by Narrowness in management experience human resource consultancy Towers is also in evidence at the top of Britain’s GOOD/VERY GOOD Perrin-ISR, a group of global companies biggest businesses. In 2013, analysis by with highly engaged employees saw recruiter Robert Half found that more than their net income grow by 13.7% over a half (52%) of FTSE 100 chief executives 12-month period, while net income fell by come from a finance background and 3.8% among companies with low levels of 12% had moved from a finance role to employee engagement.20 chief executive at the same company.21
38% In his evidence, Kevin Murray highlighted In his paper, Tuckwell noted: “There the difference made when a manager can be little doubt that this relative succeeds in engaging the workforce. “I narrowness of people’s work experience have seen cases where underperforming and neurological development limits the COULD DO BETTER teams have had a new leader come in capacity of the UK’s economy to evolve who’s been much more about involving competitively, whilst making it more people and having conversations with fragile and slow to adapt.” them on a continuous basis, and who engages them in the process of new It also explains why businesses tend to ideas, taking new products to market, and focus heavily on a cost-cutting agenda inventing new ideas around new product during difficult periods for the economy. opportunities. The performance of the
24% teams changes overnight.” 15 blogs.hbr.org/2012/12/why-do-we-wait-so-long-to-trai/ 16 Van Velsor, Ellen and Wright, Joel, Expanding the leadership equation: developing next-generation leaders, Centre for Managers trying to engage employees Creative Leadership, 2012: www.ccl.org/leadership/pdf/ need to relate to up to four different research/expandingleadershipequation.pdf 17 Training and Skills Report, Forum of Private NOT ALL/POOR generations, all with different expectations Business, January 2014 of the workplace. Giving oral evidence 18 www.gov.uk/government/uploads/system/uploads/ attachment_data/file/80247/bpe-2012-stats-release-4.pdf to the Commission, Chief Executive of 19 The Power of Role Models, CMI, 2014 Engine Group Debbie Klein highlighted that 20 dop.bps.org.uk/organisations/insights-research/the- business-benefits-of-employee-engagement$.cfm Generation Y (those born in the 1980s and 21 Source: Management 2020 Survey, www.roberthalf.co.uk/id/PR-03593/FTSE-100- CMI, 2014 early 1990s) expect high levels of feedback Companies-UK-Press-Release
18 19
14-19_CMI management2020.indd 19 10/07/2014 12:49 2. THE WORLD OF GENERATION Y
“Space and autonomy instils a high level of KEY POINTS
responsibility, trust and By 2025, Generation Y will comprise 75% of the global workforce. authenticity. That’s how Generation Y looks for ethical employers, opportunities for progression, a good work-life I would have liked to have balance and interesting work. been managed and I think that’s how I More than half (57%) of UK members of Generation Y intend to leave their jobs within one to two years of joining. manage others.” Millennials tend to be extremely independent and resistant to micromanagement. , Co-founder and Ry Morgan However, they have a strong appetite for feedback and coaching. Chief Executive, PleaseCycle, oral evidence to the Commission, Generation Y is very comfortable with technology and social networks. It is also 14 January 2014 creative and open-minded, multiculturally aware, confident, able to collaborate, and ethical. Generation Y, also known as ‘Millennials’, But it can display a strong sense of entitlement, an inability to communicate face-to-face, is the generation of people born in a lack of decision-making skills, a poor sense of awareness, a low work ethic and a the 1980s and 1990s. By 2025, these tendency towards overconfidence. individuals will comprise 75% of the global 22 workforce, according to Deloitte. They Generation Y lacks a global mindset – just one UK student studies abroad for every 15 will inevitably play a pivotal role in shaping international students in the UK. the future development of management, both in the UK and globally. In order More than three-quarters (77%) of Generation Y view formal management qualifications to understand how management is to be the most effective method of learning and development. likely to evolve in the future, it is crucial to understand their views on, and Entrepreneurialism is very attractive to Generation Y. More than a quarter (27%) of 16- expectations of, the workplace. to 30-year-olds in the UK claimed that they were increasingly thinking of setting up a business, according to 2012 research by The Prince’s Trust. 2.1 WHAT MILLENNIALS WANT Generation Y looks for an ethical employer, opportunities for progression, a good work- life balance and interesting work. different roles. I’d hate to have a job where was that many managers working today I go in every day and do the same thing are unwilling to change. A job is more than just that to Generation nine to half-five.” Y. The managers who belong to this In written evidence to the Commission, generation want to work somewhere where Bromley highlighted the value that he Dr Mark Pegg, Chief Executive of the there is a positive, values-driven culture, places on getting prompt feedback by Leadership Foundation for Higher job security, the chance to learn new skills, sharing his experience of working for a Education, said of Generation Y: “There a good work-life balance, regular/instant door-to-door sales company, saying: is a clear shift in this generation towards feedback and interesting work. These “The managers there did a great job action learning, to collaboration, to were the findings of a study by not-for- of motivating people, making sure sharing thinking on difficult problems, profit organisation Net Impact in 2012.23 everyone was happy at the end of the to embracing the power of the team in day and talking through how your distributive learning, with leadership The oral evidence of University of performance went.” starting earlier in their career and the West of England (UWE) student functioning at every level. They have a and entrepreneur Tom Bromley, who Robert Wilson, another UWE student stronger desire to learn transferable skills addressed the Commission on 14 January and entrepreneur, emphasised in his and best practice from other sectors.” 2014, supports this view. He said: “I’d like oral evidence to the Commission on 14 to work for an organisation where I have January that he wanted “the ability to have Furthermore, values matter greatly to the opportunity to progress and take on influence over change”. His observation Generation Y. Deloitte’s Millennial Survey,
20 21
20-23_CMI management2020.indd 20 10/07/2014 12:50 published in 2014, found that half of coaching abilities, and being prepared Indeed, management does not appear Millennials surveyed wanted to work for to sponsor them for formal development to be a particularly appealing concept a business with ethical practices, while programmes, according to the Harvard to Generation Y in some respects. In his separate research by CMI revealed that Business Review.25 oral evidence, Ry Morgan described 90% of young managers would prefer to management as being about control, join an organisation that does something Furthermore, members of Generation whereas leadership is about inspiring they can believe in. Y are not likely to work for any one individuals to do things for themselves, employer for a signifi cant length of “which is much more about freedom”. He Giving oral evidence to the Commission, time. Research by Ashridge Business added: “I would consider myself more Dylan Valentine, an apprentice at School found that more than half of a leader than a manager and I would technology company Fujitsu, said: (57%) of UK members of Generation defi nitely be drawn towards people who “The thing I immediately noticed when Y intend to leave their jobs within one are more leaders than managers.” I joined Fujitsu is that it’s very people- to two years of joining.26 Meanwhile, focused. I also thought it was very the Harvard Business Review found 2.2 STRENGTHS innovative and aspirational. It’s set that top young managers are often on AND WEAKNESSES out long-term and challenging goals a non-stop job hunt, with three-quarters Generation Y is creative and open-minded, in an IT industry that has essentially (75%) admitting that they had sent out multiculturally aware, technologically- stagnated.” applications and interviewed for jobs savvy, confi dent, able to collaborate, at least once a year during their fi rst and ethical. But it can also have a strong Flexibility is important to Generation Y – employment stint.27 sense of entitlement and lack decision- nearly half (45%) will choose workplace making skills. fl exibility over pay, according to CMI Millennials tend to be extremely research.24 Hence, being comfortable independent and resistant to Millennials are the least experienced with fl exible schedules is among the micromanagement. Research by London cohort of managers working in the UK top fi ve qualities that members of Business School found that, instead, at present due to their youth. Research Generation Y look for in a boss, along members of Generation Y prefer to be by EY in 2013 found that 87% of the with a willingness to help them navigate self-managed and receive feedback and Generation Y managers that they had their career path, an inclination to coaching, rather than subject themselves surveyed had moved into a management give straight feedback, mentoring and to more traditional “management”.28 role during the last fi ve years, compared with 38% of Generation X managers and 19% of Baby Boomers.29 FLEXIBILITY MATTERS TO GENERATION Y – NEARLY HALF (45%) WILL CHOOSE WORKPLACE FLEXIBILITY OVER PAY Having come of age in the technological era, Generation Y is very comfortable with technology and social networks – qualities that make its members very attractive to today’s leaders, according to the Center for Creative Leadership (CCL).30 Furthermore, leaders are excited by Generation Y’s creativity
22 www2.deloitte.com/content/dam/Deloitte/global/Documents/ About-Deloitte/gx-dttl-2014-millennial-survey-report.pdf 23 What Workers Want in 2012, Net Impact, 2012 24 Generation Y: Unlocking the Talent of Young Managers, CMI, 2008 25 hbr.org/2010/05/mentoring-millennials/ar/1 26 www.ashridge.org.uk/Website/Content.nsf/wCOR/ Research+reveals+the+reality+of+the+workplace+ for+graduates?opendocument 27 hbr.org/2012/07/why-top-young-managers-are- in-a-nonstop-job-hunt 28 Kelan, E, The Refl exive Generation: Young Professionals’ Perspectives on Work, Career and Gender, London Business School, 2009 29 Generations Survey, EY, 2013 30 www.ccl.org/leadership/pdf/capabilities/GenerationY.pdf
20 21
20-23_CMI management2020.indd 21 10/07/2014 12:50 THE WORLD OF GENERATION Y
and open-mindedness, multicultural why nearly half (47%) of employers are awareness, confidence, ability to dissatisfied with graduates’ international collaborate, and strong sense of ethics. awareness and more than half (55%) are disappointed with their foreign language But CCL also found that today’s skills, according to research from the leaders had some significant concerns Confederation of British Industry.34 about Generation Y. They worry that members of that generation have a It seems that both Generation Y and strong sense of entitlement, an inability the Baby Boomers can learn from their to communicate face-to-face, a lack counterparts in Generation X (those born of decision-making skills, poor self- in the 1960s and 1970s). Research by awareness, a low work ethic and a EY found that Generation X managers tendency towards overconfidence. were perceived more favourably on nearly every management characteristic A 2013 study by Young Enterprise found compared with the other two generations. that British employers believe the top These characteristics included the two skills young people lack most when ability to manage change, as well as entering the workforce are the very basic communication, decision-making, skills of self-management (50%) and flexibility, leadership, motivational, communication and literacy (44%).31 strategic and talent-development skills. Meanwhile, a poll of employers conducted by training provider BPP in March 2013 Nevertheless, as members of Generation revealed that more than half (59%) were Y increasingly come to dominate the having difficulty filling vacancies due to workplace, it seems probable that the rest the lack of available talent.32 of the workforce will need to adapt to be like them, rather than the other way round. A big disappointment for many As chief executive of the Engine Group employers is that Generation Y in Britain Debbie Klein told the Commission: “We 59% appears to lack the global mindset are not going to wean them off the need for instant gratification. You cannot change MORE THAN HALF that will be necessary for success in OF EMPLOYERS an increasingly interconnected world. the generation; you cannot change the IN BPP’S POLL WERE Just one UK student studies abroad for world that they have grown up in. Actually, HAVING DIFFICULTY FILLING I don’t get obsessed with them anymore; VACANCIES DUE every 15 international students in the TO THE LACK OF UK, according to the Higher Education I just accept that they are different.” AVAILABLE TALENT Funding Council for England (HEFCE). Figures from HEFCE and Spiegel Given the significance of Generation Y, it show that just 1.6% of UK students is concerning that employers are not living study abroad, compared with 6.4% of up to its members’ expectations at present. German students.33 This may explain According to research from CMI, more
22 23
20-23_CMI management2020.indd 22 10/07/2014 12:50 than three-quarters (77%) of Generation Y term exits from their businesses rather view formal management qualifications to than long-term satisfaction. Giving oral 2.4 NEXT COMES be the most effective method of learning evidence, entrepreneur Ry Morgan said: GENERATION Z and development. Yet just 27% of male “The one thing that an exit gives you, if Generation Z sees learning power as managers and 17% of female managers you exit for any sort of reasonable amount more important than factual memory. had experienced any form of coaching of value, is it gives you choice – choice to and mentoring, CMI found.35 do what you want with your lifestyle.” Of course, the future of management is not all about Generation Y. 2.3 AGE OF THE WOULD-BE At present, however, the UK is not Generation Z (those born after 2000) ENTREPRENEUR as entrepreneurial as it could be. will have different expectations again Entrepreneurialism appeals to young It was ranked ninth on the Global of the working landscape. In his people, but they do not see owning a Entrepreneurship & Development Index written evidence, Mark Pegg noted business as a long-term strategy. 2014, which identifies the strengths that today’s 11- to 18-year-olds still and weaknesses of the economies want university places but only if they The idea of entrepreneurship is very of 120 countries and compares their get their money’s worth – “quality appealing to young people. More than a entrepreneurial characteristics. This contact time, learning facilities and quarter (27%) of 16- to 30-year-olds in the put us behind the US and other nations, a social life”. He pointed out that: UK claimed that they were increasingly including Australia, Taiwan, Finland “Leading schools are moving en thinking of setting up a business, and the Netherlands.37 The researchers masse to iPads, installing wi-fi, fibre according to 2012 research by The who compiled the index said: “While optics and intranets, and backing up to Prince’s Trust in association with RBS.36 entrepreneurial activity is innovative in the cloud. Leaders in this generation Yet just 5% of 16- to 30-year-olds are the UK, Britons were less likely to choose see learning power as more important actually self-employed. The main barriers entrepreneurship as a career path than factual memory.” to Generation Y entrepreneurs starting because they had a wealth of employment their own businesses are not having options available to them. This made them
enough money (cited by 59%) and fear of reluctant to leave secure, well-paid jobs for 31 Employability Report, Young Enterprise, 2013 32 failure (a concern for 43%), The Prince’s the uncertainty of starting up a business.” www.bpp.com/about-bpp/aboutBPP/press- releases#Employability-is-key Trust found. 33 www.hefce.ac.uk/news/newsarchive/2013/news82822.html The Prince’s Trust research found that and ml.spiegel.de/article.do?id=910810 34 www.cbi.org.uk/media-centre/press-releases/2012/06/further- When the Commission asked witnesses almost half (48%) of self-employed young progress-on-school-and-college-leaver-attainment-requires- about the appeal of entrepreneurship at people say starting their own business is radical-new-vision-cbi-pearson 35 Generation Y: Unlocking the Talent of Young 38 an oral evidence session, UWE student the best decision they have ever made. Managers, CMI, 2008 36 and entrepreneur Robert Wilson said But the aura of glamour that surrounds The Start-up Generation, The Prince’s Trust and RBS, 2012 37 www3.imperial.ac.uk/newsandeventspggrp/imperialcollege/ he had always enjoyed making his own entrepreneurialism could be negatively newssummary/news_9-4-2014-14-50-27 38 money from an early age. “It was the affecting more “traditional” industries by The Start-up Generation, The Prince’s Trust and RBS, 2012 independence I had from making my own reducing the pool of talented people who money and not relying on others or my are available to them. Giving oral evidence parents,” he said. to the Commission on 14 January 2014, Clare Reinhold, Engineering Associate Shivam Kagadada, Assistant Tutor with Building Design Partners, said with Explore Learning and owner of that the UK engineering profession is Original Karma, described the allure of struggling to recruit people with good entrepreneurship as follows: “That drive technical skills. “I don’t think there’s to push the boundaries has always been much enthusiasm for engineering,” she there and I’ve always wanted to prove to observed. “It’s not seen as an exciting other people and prove to myself that I can career. Being an entrepreneur and having actually do these things.” your freedom is seen as more exciting.”
But, just as Generation Y employees will move jobs quickly in order to progress, its entrepreneurs often look for short-
22 23
20-23_CMI management2020.indd 23 10/07/2014 12:50 3. THE WORKING WORLD IN 2020
“The future is not an accident; it doesn’t just KEY POINTS happen. The future is built Technology is transforming how organisations function. By 2020, each person will have every day by the actions six different devices that will be connected to the internet.
of people.” As a result, people skills will become even more vital to managers. Brian David Johnson, Futurist, Intel Managers will need to be able to lead teams consisting of workers who work flexibly, independently and in a broad range of geographical locations.
Workplace structures will become wider, flatter and less hierarchical. It may be just six years into the future, but one thing we can be sure about is that the Managers will have tools for analysing staff emails and social media accounts in order to working world in 2020 will be very different gauge staff engagement and manage performance. from the world that we know today. While we can’t predict exactly what that working Diversity will become even more of a business imperative. Nearly one billion women are world will look like, there are a number of likely to enter the global workforce over the next decade. By 2020, women are expected important trends that are likely to shape to take up 56% of the net increase in jobs in the UK. how the future will evolve. The proportion of black, Asian and other ethnic minorities in the UK population will rise to 20% by 2051. 3.1 TECHNOLOGY Technology will be integral to the way Many of the young people joining companies today will live to 100 years old and they will that managers manage and lead. be working until they are about 85.
Since the turn of the century, the Managers need to develop a business culture that makes ethics, corporate social technological revolution has transformed responsibility and sustainability an integral part of the company’s business model. our existence, and the pace of change will only get faster. By 2020, Gartner Future leaders need to be agile, authentic, sustainable and talented. predicts that the world will be a hive of interconnectivity.39 On average each person will have six different devices FIGURE 3: THE WORLD POPULATION’S that will be connected to the internet. In CONNECTIVITY OVER THE YEARS an interview with the Commission, Brian David Johnson, Futurist at chip-maker WORLD Intel, predicted that, by 2020, “we will POPULATION 6.3 billion 6.8 billion 7.2 billion 7.6 billion have smart buildings and smart cars and CONNECTED smart cities”. DEVICES 500 million 12.5 billion 25 billion 50 billion
Not only will technology be even more integral to the way that we work than 2003 2010 2015 2020 it is today, it will be central to the way that managers manage and lead. The most obvious manifestation of this is that managers will need to be able to lead teams consisting of workers who work More connected devices than people flexibly, independently and in a broad CONNECTIVE ➤ range of geographical locations. The DEVICES 0.08 1.84 3.47 6.58 future office will comprise “core teams” PER PERSON whose members work around the globe
24 25
24-29_CMI management2020.indd 24 10/07/2014 12:51 and connect with each other online. Workplace structures will become wider, TABLE 1: EMPLOYMENT LEVELS BY INDUSTRY SECTOR (000s) flatter and less hierarchical as a result, Brian David Johnson told the Commission. 1990 2000 2010 2015 2020 According to PwC,40 the average number of host locations for a global organisation Managers, directors and senior officials 2,284 2,540 3,016 3,279 3,560 will have grown to 33 by 2020, up from 13 in 1998. In 2011, Mercer forecast that Professional occupations 4,181 4,820 5,843 6,189 6,712 by 2020, 70% of workers would deal with their manager online rather than face- Associate professional and technical 3,050 3,561 3,926 4,138 4,476 to-face. Meanwhile, in 2012, the BBC Administrative and secretarial 4,437 4,078 3,698 3,466 3,312 predicted that by 2025 “technology will allow us to conjure workspaces out of Skilled trades occupations 4,736 3,767 3,526 3,389 3,295 thin air by using interactive services”; that holographic teleconferencing and virtual Caring, leisure and other service 1,446 2,142 2,719 2,801 3,032 “dry runs” of projects will “consign old office templates to the dustbin”; and that Sales and customer service 2,309 2,479 2,608 2,555 2,610 workforces will become more dispersed, with workers having diverse careers in Process, plant and machine operatives 2,819 2,349 1,950 1,829 1,737 different locations and working for shorter periods on projects. Elementary occupations 3,504 3,454 3,173 3,209 3,274
Total 28,768 29,192 30,458 30,855 32,008 As technology evolves, it will make some of the lower-skilled roles that exist Source: Working Futures 2010-2020, UKCES, December 2013 today redundant. Hence there will be less demand for sales and customer service operators, and plant and enable them to analyse staff emails machine operators. A report by the UK and social media accounts in order to Commission for Employment and Skills gauge staff engagement and manage (UKCES) reveals that the groups that performance. They will also be able to are expected to experience the greatest analyse social media profiles to assess growth in employment over the period the intelligence and emotional stability 2010-2020 are higher-level occupations.41 of potential recruits. Behavioural and These include managers, directors and sentiment analysis will allow managers senior officials (up 18%), professional to predict the likelihood of staff turnover occupations (up 15%), and associate among high-potential employees, so that professional and technical occupations they can identify employees who are (up 14%). considering leaving long before notice is handed in, resulting in a lower Managers will also need to get to grips staff turnover. with the potential of big data, since it is a powerful tool that can help them to lead people more effectively. Research by training company Cegos Asia Pacific in 2013 suggests that, by 2020, big 39 www.gartner.com/newsroom/id/2603215 data will have transformed many of the 40 Talent Mobility: 2020 and Beyond, PwC, 2010 core tasks undertaken by managers.42 41 Working Futures 2010-2020, UKCES, December 2013 42 www.slideshare.net/JeremyBlain/leading-and-managing-in- In particular, they will have tools that the-2020-workplace-challenges-for-gen-x-leaders-in-waiting
24 25
24-29_CMI management2020.indd 25 10/07/2014 12:51 THE WORKING WORLD IN 2020
In 2013, Gartner predicted that, by “An essential factor for leaders quotas for female non-executive directors 2020, the career paths of the majority on the boards of listed companies, of “knowledge workers” (workers and managers who will be this could drive further opportunities whose main capital is knowledge – for successful in recruiting, for women, since companies will need example, software engineers, doctors retaining, developing and to invest in developing their female and architects) will be disrupted by talent pipelines. “smart machines” in both positive and enabling the best talent is their negative ways. Smart machines that ability to create cultures that It’s clear that managers will need to learn from results will be able to enhance are positively focused towards draw out and develop their female talent process- and decision-making but could over the coming years. The evidence also “remove the need for humans in the diversity and inclusion” shows that better gender balance is process and decision effort”, Gartner The British Psychological Society good for performance. Research by said.43 Meanwhile Cisco has predicted Credit Suisse showed that companies that a $1,000 computer will have the travel and work become more flexible with women on their boards outperformed processing power of the human brain by across national boundaries, diversity in those with men-only boards during 2020,44 and, in 2012, NBC News forecast organisations is increasing,” stated the the downturn, notching up 14% net that, by 2020, we will control devices British Psychological Society, in written income growth on average, compared via microchips implanted in our brains.45 evidence to the Commission. with 10% for those with no female According to Gartner, we will suffer from director on the board.51 Submitting an information overload of sorts, since Women are the world’s great, untapped written evidence to the Commission, we will have more information concerning economic resource. As of today, their the British Psychological Society observed ourselves and our surroundings than we potential is scarcely realised. But, over that an “essential factor for leaders can actually act upon. Meanwhile, the the next decade, nearly one billion and managers who will be successful way in which digitalisation will drive labour women are likely to enter the global in recruiting, retaining, developing and reduction could lead to social unrest in workforce, according to a report by enabling the best talent is their ability to mature economies, Gartner warns, and consultancy Booz & Company.47 And, if create cultures that are positively focused this is something to which managers will female employment rates matched those towards diversity and inclusion”. In an need to be sensitive.46 of men, GDP would increase by 5% in interview with the Commission for this Britain and America and 9% in Japan study, Paul Polman, Chief Executive of Intel Futurist Brian David Johnson argues by 2020, according to the European fast-moving consumer goods company that people skills will become even more Commission.48 By 2020, women are Unilever, explained why enhancing gender vital to managers in the technological expected to take up 56% of the net diversity is a major part of his company’s age. In his interview with the Commission, increase in jobs in the UK, according to strategy. “To solve today’s challenges he said: “The wonderful thing about UKCES.49 The impact of women joining you need more partnerships, you need managers is that we’re going to need them. the workforce will be even greater in high- a longer-term view and you need to be Technology is always about people. Human growth countries, such as India, where driven by a greater sense of purpose,” beings are really good at communicating they are under-represented today. he said. “It has been shown that women with other human beings and computers tend to possess these qualities to a higher are really bad at it. One of the things When it comes to management roles, degree than men.” managers excel at is emotional intelligence there will be more jobs for both men – being able to empathise and sympathise, and women at the manager, director A study by the University of Leeds in and being able to guide careers.” and senior official levels, but the UKCES 2010 predicted that the proportion of highlights that men are expected to black, Asian and other ethnic minorities 3.2 DIVERSITY get the “lion’s share” of these kinds of will rise from 8% of the UK population, “As populations shift and the world jobs.50 However, if the EU presses ahead as recorded in the 2001 census, to becomes more interconnected, and with its proposed legislation to impose 20% by 2051.52 Meanwhile, the UK
26 27
24-29_CMI management2020.indd 26 10/07/2014 12:51 Government has set a target of doubling exports to £1tn by 2020. Hence cross- FIGURE 4: THE ECONOMIC CONTRIBUTION OF WOMEN BY COUNTRY cultural awareness and sensitivity will be important skills for managers to possess in 2020, both in terms of how they interact Forecast increase in GDP by 2020, if female employment rates match male rates, % with employees in their organisation’s UK workforce and with those based 0 5 10 15 20 25 30 35 overseas. In its written submission to the Egypt 108 Commission, the Association of Business India 115 Schools stated: “UK firms operate in increasingly globalised markets, and Argentina 35 therefore managers will need to cultivate a Italy 33 shared understanding of company values Brazil 46 and goals across employees, even if Japan 43 they live in different countries and speak various languages.” Spain 15 China 58 Rising retirement ages and longer life Britain 13 expectancy mean that, by 2020, there will United States 30 be five generations working alongside each other in the UK workforce. These five France 10 generations are the Traditionalists (those Germany Index* rank out 8 of 128 countries born between 1927 and 1945), the Baby Sweden 3 Boomers, Generation X, Generation Y and Generation Z. So managers will need Source: Booz & Company, 2012 *Economic empowerment of women (“Third Billion Index”) to become comfortable with managing both those who are significantly older, and those who are significantly younger, than they are, which will require them to Globalisation is the process of integrating 43 www.gartner.com/newsroom/id/2603215 44 www.cisco.com/web/about/ac79/docs/Top_25_ further hone their people-management economies, industries, markets, cultures Predictions_121409rev.pdf skills. Furthermore, managing an ageing and processes around the world. It 45 www.nbcnews.com/id/55092370/ns/technology_and_ science-science/t/human-brain-microchip-times-faster-pc/ workforce will continue to be a pressing has gathered pace over the past three 46 www.gartner.com/newsroom/id/2603215 concern, Lynda Gratton, Professor at decades and it will accelerate faster in the 47 Empowering the Third Billion: Women and the World of Work, Booz & Company, 2012 London Business School, observed in future, thanks to ongoing technological 48 ec.europa.eu/europe2020/pdf/themes/31_labour_ oral evidence to the Commission. She developments, which are making the market_participation_of_women.pdf 49 Working Futures 2010-2020, UKCES, December 2013 noted: “Many of the young people joining world a smaller place. The world is also 50 Working Futures 2010-2020, UKCES, December 2013 companies right now will live to 100 years becoming increasingly urban. Research by 51 Gender Diversity and Corporate Performance, Credit Suisse Research Institute, 2012 old, which means they’ll be working until the UN Department of Economic and Social 52 www.leeds.ac.uk/news/article/3354/more_ethnically_ they’re about 85. I don’t think there’s any Affairs found that, by 2050, the world’s diverse_populations_for_uk_local_areas 53 understanding of that.” urban population is expected to increase esa.un.org/unup/pdf/WUP2011_Highlights.pdf by 72%, from 3.6 billion to 6.3 billion.53 3.3 GLOBALISATION In its written evidence to the Commission, AND DEMOGRAPHICS the Association of Business Schools Managers need to harness the power emphasised that managers need to of globalisation in order to help their harness the power of globalisation in businesses succeed. order to help their organisations succeed.
26 27
24-29_CMI management2020.indd 27 10/07/2014 12:51 THE WORKING WORLD IN 2020
Supporting this view, Professor Lynda fertility rates and increasing life expectancy. Living Plan. The company has three big Gratton told the Commission that today’s By 2050, there will be 48 million fewer goals that it wants to achieve by 2020 multinational businesses set a good 15- to 64-year-olds and 58 million more and it is involving its entire workforce example that locally based businesses people over 65 in the EU, according to in order to achieve them. Its goals are: should follow. She said: “Any UK company 2009 figures from research institute Ismeri to help more than one billion people that wants to be high-performing in the Europa.57 Ismeri Europa also predicted that to improve their health and well-being; long term needs to globalise.” from 2017 a shrinking workforce will reduce to halve the environmental footprint of overall employment and act as a brake on its products; and to source 100% of its Research by the EU in 2008 found that potential growth in the EU. agricultural raw materials sustainably, countries with high levels of educational while enhancing the livelihood of people attainment, employment and productivity, 3.4 SUSTAINABILITY across its value chain. along with a high share of employment Ethics, corporate social responsibility and in advanced sectors, are set to benefit sustainability should be an integral part of In an interview with the Commission, most from globalisation. This is good news an organisation’s business model. Unilever Chief Executive Paul Polman for countries such as the UK, Denmark, said: “If we believe in the long-term Finland, Ireland and Sweden. It is less As the world’s resources grow sustainability of this company, then we welcome news for countries such as scarcer and more expensive to extract, also have to have a supplier base that is Greece, Italy, Hungary, Latvia and Spain. organisations will have to become more sustainable in the long term.” There will be huge changes in the world focused on operating sustainably. They economy over the coming years as the will also need to combat the threat of Sustainability will inevitably become more BRIC and MINT economies continue to climate change, which is leading to integral to management practice over the develop. By 2030, China is expected to extreme weather, putting stress on food- coming years. In its written submission overtake the US as the world’s largest producing systems and increasing the to the Commission, the Association of economy. Meanwhile, the UK is likely to risk of pandemic diseases. Business Schools said that managers leapfrog Germany to become the largest and leaders need to “develop a business economy in Western Europe, according Sustainability is at the heart of the culture that makes ethics, corporate social to the Centre for Economics and Business integrated reporting initiative,58 which responsibility and sustainability an integral Research World Economic League Table, encourages organisations around the part of the company’s business model”. published in December 2013.54 The UK world to produce integrated reports has got the fastest-growing population that communicate their strategy and Fortunately, however, sustainability has a in Europe and it will have the largest performance in the context of the external clear appeal to the leaders of both today population in Western Europe by 2050.55 Its environment in which they operate. This and tomorrow, since it fits with their desire population will increase to 77 million in 2050 means that, besides reporting on their to make a difference. Giving oral evidence from 62.2 million today, a rise of almost financial results, they will also be reporting to the Commission on 14 January 2014, 24%.56 Having such a large population will on factors such as their environmental and Clare Reinhold, Engineering Associate mean that it will be well placed to benefit social impact. with Building Design Partners, said: “My from globalisation, providing it can use its passion and the reason why I went into demographics to its advantage. Fast-moving consumer goods company the construction industry is foremost as an Unilever is one of the participants on the engineer, rather than as a manager. When On the other hand, the population of the EU integrated reporting pilot programme I do get made director, I would like to be is projected to become both smaller and and it has a strong commitment to involved in taking the company forward older, mainly as a consequence of declining sustainability through its Sustainable in sustainability.”
28 29
24-29_CMI management2020.indd 28 10/07/2014 12:51 “Managers and ability to collaborate virtually, among 62 leaders need to develop a other qualities.
business culture that makes Research firm Bersin & Associates ethics, corporate social believes that the four critical functions responsibility and sustainability of future leaders are to develop a vision, share goals, gain support, and deliver an integral part of the support.63 Significantly, however, Professor company’s business model” Linda Hill from Harvard Business School argues that the next generation will need The Association of to act like shepherds and “lead from Business Schools behind”. This will require them to decide who is in and who is not in the group and to articulate the values that will inform the group. It will also require them to develop 3.5 THE FUTURE OF SKILLS the talents of members so that they can Over three million people are working as flourish in their roles, set boundaries for managers in the UK today, according the group’s activities and manage the to UKCES.59 But UKCES predicts that tensions that are inherent in group life. this figure will leap by more than 18% to 3.6 million by 2020. Taking replacement demand into account, UKCES believes that a total of 1.3 million managers, directors and senior officials will be needed by 2020.
So what skills will the managers of 2020 need to possess in order to meet the challenges posed by technology, diversity, globalisation and sustainability? PwC sums up the characteristics of our future leaders in four words: agile, authentic, sustainable 60 and talented. Meanwhile, the American 54 www.cebr.com/reports/cebr-world-economic-league-table Management Association has identified 55 www.telegraph.co.uk/news/politics/10230468/UK-has- fastest-growing-population-in-Europe.html the “four Cs”as the most important skills 56 www.independent.co.uk/news/uk/home-news/uk-population- for managers in the future.61 These are largest-in-western-europe-by-2050-2039395.html 57 ec.europa.eu/regional_policy/sources/docgener/ critical thinking and problem solving; studies/pdf/challenges2020/regional_challenges_ communication skills; collaboration skills; demographic_challenge.pdf 58 www.theiirc.org and creativity and innovation skills. The 59 Working Futures 2010-2020, UKCES, December 2013 University of Phoenix Research Institute 60 Talent Mobility: 2020 and Beyond, PwC, 2010 61 www.amanet.org/news/AMA-2010-critical-skills-survey.aspx also points out that managers will need 62 www.phoenix.edu/forward/careers/2012/06/5-strengths- to have social intelligence, new-media workers-need-for-the-future.html 63 Employee Development Planning: The Four Critical literacy, computational thinking and an Elements, Bersin and Associates, December 2012
28 29
24-29_CMI management2020.indd 29 10/07/2014 12:52 4. HIGH-PERFORMING INDIVIDUALS – TOP TEN TRAITS
“If the UK wants more inspiring leadership in the next 10 years, it must prepare leaders for many new challenges – the ones that stand out are globalisation, diversity, sustainability and digital technology.” Dr Mark Pegg, Chief Executive, Leadership Foundation for Higher a diverse workforce, work collaboratively single-handedly guides an organisation to Education, written evidence to and flexibly, understand the importance glory. Instead, the Commission heard that the Commission of self-reflection, demonstrate grit and leadership qualities are commonly found perseverance, and deliver excellent throughout the workforce. Moreover, and results time after time. especially in today’s complex, high-tech world, leadership is about developing and From the evidence gathered, the working with teams, rather than “leading” Commission distilled 10 characteristics in the more traditional sense. As a result, of a highly effective 21st century leader strong leaders need to combine what and manager (see table below). appear to be opposite qualities. They need to be confident, but modest. They need to 4.1 HIGH-PERFORMING be adaptable, but decisive. They also need INDIVIDUALS to be good listeners who are able to nurture The Commission heard a lot of evidence the people they work with to help them countering the popular notions of leadership reach their full potential. being an innate gift given to a select few or Our evidence found that anyone can a trait that can be measured according to a The 10 key characteristics of highly be a manager and anyone can be a set of clearly defined attributes. Similarly, the effective leaders and managers in the good manager. But what does “good” evidence contradicted the myth of a leader 21st century identified by the Commission look like in the context of both the being a “heroic”, charismatic individual who are as follows: organisation and the individual? These questions were at the heart of the Commission’s investigation TOP TEN CHARACTERISTICS THAT MANAGERS NEED into the future of management and it 1 Clear sense of purpose. considered a wide range of written and 2 Strong values and personal integrity. oral evidence in order to address them. 3 Commitment to developing others through coaching and mentoring. This chapter focuses on the attributes 4 Champion of diversity. sought at an individual level. The 5 Ability to engage and communicate across all levels. Commission’s evidence revealed that 6 Self-awareness and taking time to reflect. the characteristics of high-performing leaders are reflected in how they lead 7 Collaborative, networked and non-hierarchical. their organisations. They have a clear 8 Agile and innovative, technologically curious and savvy. sense of purpose, strong values and 9 Personal resilience and grit. a commitment to developing others. 10 Excellent track record of delivery. Furthermore, they can communicate with
30 31
30-33_CMI management2020.indd 30 10/07/2014 12:52 1. Clear sense of purpose need to develop a coaching style that is either. It also occurs through actions, so Employees need to understand what collaborative, open and fair, and support a leader communicates by being a role their leaders are trying to do, why they the career development of their team. At model. Giving evidence to the Commission, are trying to do it, and what it will achieve the same time, they need to know how Head of EMEIA and Corporate Senior Vice not only for the organisation itself but also to have difficult conversations about President of Fujitsu Duncan Tait said: “You for the organisation’s wider stakeholders, performance. It is not good management have to communicate like crazy, much including society in general. Only then will to give false reassurance to someone who more than you ever thought you’d have to they truly buy into the leader’s vision. Giving is not performing well, since this will affect do. And you have to say the same thing oral evidence to the Commission, Dylan the morale of other team members. Sir again and again and again and again, Valentine, a young manager at Fujitsu, Charlie Mayfield, Chairman of the John often to the same people, by different ways. said of his manager: “She has been very Lewis Partnership, told the Commission: So, I tweet every day to our internal people. good; a very good people person. Her “A good leader, if they are doing their job They know exactly what I’m up to.” best trait [is] she can take people on that properly, is supporting and encouraging journey. You feel like you’re searching for their people, and should instil confidence 6. Self-awareness and the one common goal or purpose. She sets in their people.” taking time to reflect extremely challenging targets; you know Attributes such as self-awareness and you have a key part to play.” 4. Champion of diversity having the ability to reflect may not sound Demographic, social and technological like leadership qualities in the conventional 2. Strong values and personal integrity changes mean that the workforce is sense, but the Commission found they Over the past few years, a series of becoming more diverse all the time. are crucial attributes of the leaders that scandals have rocked both the profit Moreover, it is becoming ever more organisations need today. At evidence and not-for-profit sector, exposing the geographically dispersed. So good sessions, the Commissioners heard failings of leaders within those sectors. managers must feel comfortable that organisations could be weakened if For example, banks were fined heavily for with leading groups of people from they come under the undue influence of mis-selling payment protection insurance different age groups, ethnic origins, flamboyant personalities with big egos. and manipulating the Libor, the benchmark genders, nationalities and professional Instead, the most effective leaders tend interest rate. Some well-known companies backgrounds. To achieve this, they need to be those who have quiet confidence, and media personalities have come under to be sensitive to cultural and language emotional intelligence, listening skills and scrutiny for the way they manage their tax differences and open to new ways of strong values, as well as being people who affairs. Within the health service, the Mid working. Rather than trying to bring team do not allow themselves to be dominated by Staffordshire NHS Foundation Trust was members round to their way of thinking, the ideas of the person they last spoke with. criticised by a public inquiry for causing they will embrace the fresh perspectives the “suffering of hundreds of people” that they bring. As Sean Taggart, Chief Self-awareness doesn’t mean being between 2005 and 2008. Executive of the Albatross Group, told indecisive, the Commission heard. the Commission: “[When we hire] people It means taking decisions in a more These well-publicised episodes have from outside, we make sure we keep thoughtful and grounded way so that you served to make employees increasingly their external view. It’s good to welcome bring people with you. Thomas Lawson, sceptical of their leaders’ motivations different views; otherwise you don’t get Chief Executive of Leap Confronting and inclined to demand higher levels of better. We have no bias: we hire people Conflict, observed: “You can’t be a great integrity than ever before. So leaders and when they’re good and manage them leader unless you can lead yourself, so managers, even at a junior level, need to when not.” unless you’ve got emotional intelligence demonstrate strong values and conduct and an ability to understand yourself, you themselves well. Unilever Chief Executive 5. Ability to engage and won’t be able to communicate effectively.” Paul Polman told the Commission that communicate across all levels the company places a heavy emphasis Having the ability to communicate with a 7. Collaborative, networked on integrity. For him, integrity includes: wide range of people is crucial to good and non-hierarchical “Putting the interests of others ahead of leadership, our evidence found. Managers Management is no longer about issuing your own, and wanting to make an impact don’t just set a strategy and give guidance commands; it is about collaboration. in the world.” and instructions. They need to continually A study by Robert Hamlin and Alf engage with everyone who has to make Hatton that was submitted as written 3. Commitment to developing others: the strategy happen. This involves evidence to the Commission identified coaching and mentoring communication running both ways. It also collaborative working as having a Even at a junior level, management is involves communicating why something number of key elements. These include: a leadership role. Therefore, individual needs to be done – for example, what effective planning and organising; managers must take responsibility for difference will the proposed action make proactive execution and control; the morale and sense of purpose of to the end customer? Communication supportive management; delegation and each person reporting to them. They does not just take place through words, empowerment; care and concern for staff
30 31
30-33_CMI management2020.indd 31 10/07/2014 12:52 TOP TEN TRAITS
and other people; a willingness to Our evidence shows that leaders must in the turnaround when a business has work in the interests of team members; be hungry for knowledge and continually suffered a setback. Alex Cheatle, Chief support for career development; and questioning whether their teams have Executive of concierge provider Ten Group, open communication. the right skills and experience to take told the Commission: “Two of the times advantage of emerging technologies, when we’ve had the best motivation in our Duncan Cheatle emphasised the legislative change and other external business and the best leadership were importance of learning from one’s peer events. In written evidence to the when we’d become bust and then managed group – for example, through professional Commission, Chris Rodgers of the Centre to save the business – or bits of it.” body networks, trade association for Progressive Leadership argued that groups or more informal groups like the leaders should lead by asking questions, 10. Excellent track record of delivery Supper Club, a leading UK network for rather than by thinking that they need to A good manager is expected to deliver and entrepreneurs. “Regularly coming along provide all the answers. they are expected to deliver consistently and meeting a trusted peer group, free strong results time and time again. By from sales pitches, and sharing and 9. Personal resilience and grit doing this, they set the strongest possible learning with each other” can lead Failure, error and unwelcome external example to the people who follow them. Our to innovative new approaches to shocks, such as political violence, evidence found the most senior managers problem solving. earthquakes and ash clouds, are an should set the standards of delivery that inevitable part of life. No organisation, are expected and then convey these to the Collaborative working is supported even the best managed, can ever be rest of the workforce. Head of EMEIA and by advances in technology that allow perfect, and a lot of damage can be done Corporate Senior Vice President of Fujitsu managers and leaders to draw on far by just a small number of individuals. Duncan Tait said: “We expect our people to wider networks – and a wider range of be great for their customers… We’ve got to skill sets – than have been available to “You can’t be a great be the best employer in our industry, and them in the past. The Commission also we have to deliver a set of results that are heard from Brian David Johnson of Intel leader unless you can lead better and better. So we set the framework that technology has played a pivotal yourself, so unless you’ve for what we expect, and our style is to then role in enabling these wide networks, got emotional intelligence tell people what we want, and they decide which in turn are causing traditional the ‘how’.” hierarchies to be replaced by flatter and an ability to understand organisational structures. Organisations yourself, you won’t be able with flat structures tend to be flexible and to communicate effectively” nimble, which gives them an advantage in a complex world that presents complex Thomas Lawson, Chief Executive challenges. As Unilever Chief Executive of Leap Confronting Conflict Paul Polman told the Commission: “You need partnerships; the problems are so Nevertheless, evidence from our expert big you can’t solve them by yourself.” witnesses, along with research, clearly shows that better-run companies, which 8. Agility and continual innovation – are run by the best-prepared leaders, are technologically curious and savvy less affected by the external shocks that The days of five-year plans, if they ever they encounter, and they recover from truly existed, are over. Today, markets them more quickly when they do occur. change within months and developments in areas such as mobile working At the individual level, this means managers and big data are radically reshaping within organisations must develop reserves business models. As economies develop of personal resilience. They must take rapidly, and new competitors emerge, a long-term view and recognise that no business leaders need to be tuned in to crisis lasts forever. They should also do the technological advances and responsive right thing even if those around them are to changing events. Harriet Green, Chief impatient for a quick fix. A leader often has Executive of Thomas Cook, told the to project a confident future, even if they Commission: “Strategic agility, for me, struggle to feel it inside, as it is their job defines great leadership.” to encourage others to become engaged
32 33
30-33_CMI management2020.indd 32 10/07/2014 12:53 CASE STUDY: TRANSFORMATIONAL CHANGE
HARRIET GREEN CHIEF EXECUTIVE THOMAS COOK
Harriet Green told the “Organisations are organisation – meet the key together the values and the Commission about her personal players in every area, know their ways of working. Create a strong “transformation toolkit”, which like living organisms direct reports, and meet with code of conduct and involve the she has used to overhaul a and, when looking up and coming talent. Identify whole organisation. Everyone number of organisations on to transform them, quickly those who are not “on needs to clearly know what the different continents, including the bus” – make decisions organisation believes in, how it Thomas Cook. you need to consider quickly. When transforming an works and “how we do things all elements, whilst organisation, moving at pace is round here”. Together, these “Driving transformation is a 24/7 addressing the most essential – don’t waste time trying will create a culture and build job,” she said. “Organisations to convert those managers and trust. Every employee needs are like living organisms and, urgent priorities.” leaders who don’t want to change to see themselves and their when looking to transform and who make it clear that they beliefs reflected in the culture them, you need to consider all Harriet described some of the will never support the new ways. to succeed – like a flamingo elements, whilst addressing key “tools” in her personal Give everyone a fair chance to looking into a pool. Develop the most urgent priorities.” The leadership toolkit that are change but then take the tough clear leadership competencies critical three elements are: helping her to drive the ongoing decisions. Middle-management to measure the performance turnaround at Thomas Cook. is often a big part of the problem of your leaders and enforce The psychology: how people – and also the solution. By the code of conduct fairly and think, feel and act – in other INVESTIGATE THE PROBLEM engaging and fostering belief clearly for everyone without words, the organisation’s On her first day as CEO, Harriet at the top and the bottom of the exception. Lead with integrity culture, values, ways of working sent a survey to everyone in organisation, those in the middle and by example every day. Be and “the way we get things done the business asking what was who might be slower to change a role model. round here”. wrong with it. In under a month, begin to feel the squeeze and over 8,000 people had replied. move forward positively. BREAK DOWN BARRIERS The physiology: the systems Those at the frontline usually Silos and organisational and processes that underpin know what’s not working and BUILD A WINNING TEAM politics have no place in and connect the business, have a passion for fixing it. Bringing in fresh talent, different transformations – build new like nerve endings and industry experience and a teams, share best practice and blood flows. BE VISIBLE different perspective is vitally encourage openness. Communicate often, update important, as is identifying And, finally, its anatomy: the organisation regularly, and the skills and knowledge gaps CELEBRATE SUCCESS the organisational structure. use different media, like video. early on. At Thomas Cook, Remember to take time to Businesses need to create a Be available and reply quickly. Harriet personally recruited celebrate success – it’s an lean, agile structure as befits Be visible, share honestly and close to 80 people, believing important part of rebuilding a digitally enabled business, celebrate success. that, when transforming the belief, particularly in an supporting fast decision- leadership of an organisation, organisation that’s been making, and reducing the layers BE OPEN the principle of “a third, a third through a tough time. Pride in of management between the Ensure you are open to and a third” is usually the right the company, its performance, CEO and customers. feedback from employees. At balance: keep one-third of its products and its services is Thomas Cook, Harriet developed the original leadership team, important for everyone. Harriet believes a CEO must an “Ask Harriet” email address, promote one-third from within lead change in all three areas to so employees could email in and bring in one-third to give LISTEN TO STAKEHOLDERS truly transform the organisation. confidence on any issue. At fresh perspective and learnings Never stop listening to your An effective CEO today needs its peak, Harriet received 200 from other industries, and then customers. Never be so remote to operate at the centre of the emails a day and prides herself involve and engage them to or so arrogant to think you can vortex – not from the top of on replying to everyone. work together as one stop listening to any of the pyramid in a historical, aligned team. your key stakeholders. hierarchical construct – and has IDENTIFY TALENT to gather information from all Leaders need to identify their DEVELOP THE CULTURE the organisation’s communities, talented performers quickly. From the very start, focus on both internal and external. Engage with people across the the culture. Develop and agree
32 33
30-33_CMI management2020.indd 33 10/07/2014 13:34 5. PATHWAYS TO PROGRESS – PURPOSE, PEOPLE AND POTENTIAL
Now we know what “good” looks like at What this means in practice is that we need an individual level, how do we ensure that boards to refocus on their organisation’s organisational cultures and structures longer-term purpose, which extends beyond enable leaders to flourish at all levels? making money and meeting targets. Our best way to provide a route map to They should set measurable commitments 2020 is to study today’s highly performing to customers, suppliers, employees, organisations, and to distil the features that communities, and the environment, will provide a pathway to progress for others. as well as to investors.
It is the Commission’s view that a high- We also need managers who inspire performing organisation is characterised and support their teams to succeed. by its focus on long-term growth, sense These managers should be recruited not of purpose and values. It will be an only for the technical skills they possess organisation with a comparatively flat but also because they have the right organisational structure that prepares attitudes, values and ethics. They should people at every level for leadership, and be managers who are assessed and paid rewards according to behaviours, not just not only on their results, but on how they results. It celebrates failure, champions achieved them. diversity, and is committed to investing in the next generation. Finally, we need to focus on the longer term rather than continually succumbing The next question is: how do we get to short-term pressures. That means there? In order to identify the pathways building for the future – by supporting to progress, the Commission interviewed our education system through providing 60- some of the leaders of major British students with access to the world of work, companies that are charting a radically by training new managers and mentoring new approach to business governance. them, and by encouraging larger These organisations are not only organisations to share management improving their profits, but are also expertise through their supply chain 65%OF THE TOTAL WORTH improving outcomes for employees, and across different sectors. OF LISTED COMPANIES the environment and society at large. The Commission also reviewed written By doing this, we can create a ALL OVER THE evidence on this subject from a wide better managed Britain, with WORLD CONSISTS OF range of sources, including business long-term, sustainable growth for the schools and leadership organisations. benefit of all. INTANGIBLE ASSETS SUCH AS THE SKILLS Our evidence shows that boards need to AND RELATIONSHIPS focus on three critical areas: how they define their purpose, how they lead their people, OF THEIR PEOPLE and how they manage their potential.
34 35
34-45_CMI management2020.indd 34 10/07/2014 12:54 “Great leaders are people who are able to lead those organisations where, actually, people at the very bottom of the organisation can be just as influential as the people at the top.”
Commissioner Dame Mary Marsh
34 35
34-45_CMI management2020.indd 35 10/07/2014 12:54 PURPOSE
Our evidence shows that companies that are committed to long-term growth, serve their customers effectively and treat their staff well typically generate excellent returns for shareholders
Define long-term goals has the vision to guide the organisation businesses and politicians. “There has The evidence presented to the effectively over the longer term to be far more emphasis on purpose, on Commission was clear: businesses that and that is committed to building ways of running a business, on education do well in the long term plan consciously strong and enduring relationships and on transparency,” he said. He noted it for the long term. Hence they need to with stakeholders. is the responsibility of leaders, rather than set out long-term goals, as Unilever boards, to drive change and build trust, has done with its Sustainable Living Unilever is very focused on talent but added: “We are short of courageous Plan, and these goals should cover the development over the long-term, Polman leaders who are willing, at personal risk, to company’s measurable commitments told the Commission, and spends a lot drive change.” and relationships to its customers, of time reviewing the leadership skills that employees, investors and suppliers, will be needed in 2020. “We also have hard Track annual progress towards the as well as to the environment and local measures and very tangible programmes overall stated purpose at the AGM community. These align with the Blueprint to deliver the type of leaders we want,” At its annual general meeting (AGM), for Better Business initiative, which he added. the board of an organisation will typically was unveiled by business leaders at present its annual report, containing the Davos summit of world leaders in Emphasising that every organisation relies information about its performance and January 2014. on the continued well-being of others to strategy, to investors. Going forward, some extent, Charlie Mayfield, Chairman organisations should also use AGMs to “You need to fight short-termism,” of the John Lewis Partnership said: convey important messages to investors said Unilever CEO Paul Polman. “We’re a business, not a philanthropic about their purpose and their performance “In the financial world; in the business organisation. There is no disguise about against non-financial targets, as well as world; in the political world.” Talking that: we have robust conversations with financial targets. about the Unilever Sustainable Living suppliers – but we recognise that our Plan, he added that the company’s future depends on them remaining in Ultimately, all value is created by the purpose with the plan “is very much business, so it’s in our interest and theirs flair, innovation, organisational ability and shared with everybody”. to have an equitable relationship.” technical skills of the people working within an organisation. “Value” can mean Elaborating on Unilever’s sense of purpose, Our evidence shows companies that are the social value of a product or service Polman said: “It’s about being authentic committed to long-term growth, serve provided by either the profit or not-for- and acting with integrity. It’s putting the their customers effectively and treat their profit sector – not just financial returns interests of others ahead of your own and staff well typically generate excellent within the private sector. Financial wanting to make an impact in the world, returns for shareholders. results are essential for accountability, increasingly by working in partnership.” He but they can only show part of the picture added that the company has a passion for Duncan Tait, Head of EMEIA and Corporate when it comes to performance. Kevin the “world’s citizens”, saying: “You need to Senior Vice President of Fujitsu, told the Murray, Chief Executive of PR company have that passion, a passion for people, a Commission: “Being a successful leader the Good Relations Group, told the passion for winning and a bias for action.” in the private sector is not just about Commission that around 60-65% of making money. It’s about being a great the total worth of listed companies all Having a long-term strategy means employer, being great for your customers over the world consists of intangible companies must shy away from “quick [and] bringing value to the society that you assets such as the skills and fixes” such as brutal cost-cutting happen to invest and employ people in.” relationships of their people. strategies and large-scale redundancy programmes, unless they are absolutely Polman told the Commission that taking a Witnesses to the Commission argued that necessary. It also requires them to longer-term approach requires a significant businesses with non-financial objectives, put a management team in place that change in thinking among individuals, such as improving quality of life for
36 37
34-45_CMI management2020.indd 36 10/07/2014 12:54 customers and society, tend to have capability when reporting, as well as A parallel initiative, called “Valuing stronger financial returns than companies being educative for the report producers Your Talent”, which is led by CIPD and whose main objective is maximising and readers, including staff, service supported by the UK Commission for profits, especially when measured over providers, regulators, customers and Employment and Skills, CIMA and the longer time frames. other stakeholders.” RSA, is currently exploring ways in which the value that employees represent can Unilever Chief Executive Paul Polman But, in a written submission, John W be expressed in reporting terms. The said: “Our model is built on a total value Stephens observed how remarkable it All-Party Parliamentary Group strongly chain approach, on growing our business, is that basic indicators on staff are not supports this initiative. More information reducing our environmental impact, routinely measured even though they can be found at: www.cipd.co.uk/hr- reaching a billion people with health and have an obvious impact on performance. resources/valuing-your-talent.aspx well-being programmes and moving our He said: “I’ve seen few companies whole business to sustainable sourcing. measuring ‘staff retention’ – this is Reward the chief executive and top We do this on the basis of a common possibly the cheapest and most honest team on the basis of the value that purpose”. Unilever recorded a 9% rise in measure of employee engagement. I they deliver to all stakeholders pre-tax profits for the 2013 financial year.64 remember joining one company where While revenue generation and profitability the staff turnover was measured and are important criteria of success within Giving evidence to the Commission, stood at over 25% per annum… [it] the private sector, they are far from being Duncan Tait, Head of EMEIA and became a key focus area, and, after the only criteria. Therefore financial Corporate Senior Vice President of much effort and investment, it fell to zero, targets should not be the only results Fujitsu, said: “We tend to measure the and did so for my last three years there. by which achievement is measured and outcome a lot more than we measure the As a by-product, the revenue/margin/ input, so we are going to have to improve customer retention/profits all grew.” 64 www.bbc.co.uk/news/business-25823492 on our engagement and enablement. Engagement is: how do I feel about being here? Enablement is: how easy is PHARMACEUTICALS: THE TROUBLE WITH TARGETS it to get my job done around here? If you can measure those two, you’ll grow faster than you can imagine.” Sales targets and with all their bonuses, – that somehow the In written evidence, Colin R Tuckwell financial incentives quotas and incentives inherently cynical wrote: “There may well be a strong case are not necessarily in place. With the nature of a target or to legally facilitate a healthier, more the best way of other half, the sales a bonus says: ‘You’re rounded business focus within the annual motivating a workforce, director took all the naturally idle and you report. Requiring historic performance Commissioner Dr incentive programmes need some incentive information (against previous plans) and future (range) projections relating Jules Goddard of off their shoulders, to go to work and do a to both quantitative and qualitative London Business and simply said to good job’ – rather than matters – for example, share price, School explained them: ‘Do the best you assuming that human corporate data, the relevant business during one evidence can.’ At the last count, nature prefers to do a environments, the company’s position session. He recounted the ‘do the best you good job.” within them, its value chain, strategic the story of a well- can’ group were 23% development, adaptive capability, risk management and profit and market known pharmaceutical ahead of those still on capitalisation (for publics), valuation company that incentives.” including method for privates – conducted an Goddard continued: would ‘raise the bar’ significantly interesting experiment “That shook us; it for all involved.” with its sales force. also shook the board. “We divided their But it absolutely goes He explained the benefits of this approach as follows: “It would require German sales force into with the psychology the board, senior managers and auditors two. One half were left of financial incentives to consider bringing in wider business
36 37
34-45_CMI management2020.indd 37 10/07/2014 12:54 PURPOSE
recognised. Chief executives and the top The ability to give regular, fair and leadership teams should be rewarded honest feedback is an important part according to additional criteria, such of leadership. As Debbie Klein, Chief as job creation, employee engagement Executive of The Engine Group, noted: scores, customer satisfaction scores, “This is something leaders are generally diversity and the percentage of terrible at; they don’t give feedback in young people hired each year, as bite-sized chunks. Great leaders do that well as financial targets. This means well – they are great communicators.” paying attention to the way in which management is done, as well as to the Creating a code of conduct is a products and services delivered. good way to establish a framework of behavioural expectations that underpins In his evidence, John W Stephens wrote: the values of a company. These are “We need to preach that performance- timeless principles by which managers related pay should concentrate on the and others throughout an organisation long-term prospects of the business, not are expected to abide, irrespective of just last year’s profit and loss account.” the market conditions. Harriet Green has introduced a code of conduct at Senior leaders champion the Thomas Cook that defines the standards organisation’s values and act expected of managers, and encourages as role models all staff to become more engaged with There is rarely a better way to lead than the business. by example. Therefore business leaders need to ensure that they do actually live Creating a decent culture is about more and breathe the values that they espouse than being a good corporate citizen. and act as good role models. As Stavros Abiding by strong values also helps Baroutas put it in his written evidence: prevent ethical failures and corporate “A leader must be able to operate like scandals. Professor Mick Yates, of the a justice scale and, thus, communicate University of Leeds, told the Commission: such high ideals to the rest of the “There’s a code of ethics for doctors, one executives within the organisation.” He for lawyers; there isn’t one for bankers added: “Everyone pays attention to the and there isn’t one for CEOs. One leader’s actions and often tries to imitate wonders about that. You wouldn’t them. In this sense, justice ensures that want to stifle entrepreneurship, but 13OF DECLINING % the leader’s message is transferred within there has to be a set of ethics inside ORGANISATIONS SAY the workforce in a proper fashion.” management education.”
THEIR TRAINING OF STAFF Being a good role model is key to Recruit senior leaders for their values IMMEDIATELY AFTER A gaining the respect of others and and track record of delivering leaders need to be respected in long-term performance PROMOTION IS VERY order to manage effectively. In her oral When recruiting leaders, organisations GOOD, COMPARED WITH evidence, Kim Winser said: “For me, must ensure that they are not swayed by larger-than-life personalities who have ALMOST 30% OF GROWING a leader is respected and they respect others equally. Key is listening as well moved from role to role quickly and have ORGANISATIONS as talking.” an apparently strong history of delivering
38 39
34-45_CMI management2020.indd 38 10/07/2014 12:55 “ALL STAFF ARE TRAINED IN MANAGEMENT AND LEADERSHIP BEFORE, OR WITHIN THREE MONTHS OF, BEING PROMOTED INTO A MANAGEMENT ROLE”
HOW DO MANAGERS RATE THEIR ORGANISATIONS?
23% 34% 37%
GOOD/ COULD DO VERY GOOD NOT AT ALL/ BETTER POOR
Source: Management 2020 Survey, CMI, 2014
“results”. Instead, they should look for there’s no one better to ask than the their mistakes. Head of EMEIA and candidates who have high levels of employees themselves. Thomas Cook Corporate Senior Vice President of Fujitsu emotional intelligence and who have Chief Executive Harriet Green summed Duncan Tait said: “If you mess up, you a history of bringing people with them up the crucial role that employees play should confess as quickly as you possibly when they implement change. in giving feedback when she told the can, for all the ways you possibly can Commission: “People in the company in the size of the organisation, that you According to written evidence supplied can tell you what is wrong. They may messed up.” by David Shaw and Kyle Ingram, of the not be able to fix it, but they can tell University of Greenwich, businesses you what’s wrong.” As a result, Green Ruth Ambrose, Director Legal at need senior management teams that prides herself on exchanging emails with AMEC, revealed that the company have the “emotional intelligence and people from all over the business, and does 360-degree reviews of senior resilience to manage the ambiguities commented: “I don’t consider my role at personnel, anonymous “pulse” surveys and unpredictability of enterprise-wide the top of anything, hierarchically. Great and a wider annual survey. organisational change, while at the same CEOs have to consider themselves in the time communicating to their employees a centre of the vortex and they have to be consistent logic that should underlie able to gather quality information from all the apparent contradictions and communities, both inside and outside unpredictability of their actions”. the business.”
The pair added that organisations should Alex Cheatle, Chief Executive of Ten “seek to create a team of senior managers Group, described employee surveys as whose prior experience equips them very helpful. “It is not anonymous,” he with a wide repertoire of capabilities in explained. “I get to see who’s said what. If managing change”. someone’s really unhappy, and if they’re a top performer, I’m going to do something Put in place feedback mechanisms to about that. People are incredibly honest. If escalate both good and bad news they say they’re not going to be with us in When it comes to understanding the two years’ time, that’s often the case.” internal dynamics of an organisation, no news is bad news for leaders. Leaders must be willing to own up to Therefore, it is absolutely crucial that their mistakes if they are to encourage they understand what is happening members of their workforce to be honest – both the good and the bad. And about their own failings and learn from
38 39
34-45_CMI management2020.indd 39 10/07/2014 12:55 PEOPLE
One of the most striking, consistent, and “We always believe management is Train all staff before, or within three well-articulated observations from nearly our biggest differentiator, a source of months of, being promoted into a all of our interviewees concerned the competitive advantage.” management role importance of developing leadership No one would let a doctor perform surgery abilities throughout the organisation. A focus on people development tends to without training. Yet every year British “Recognise that anyone can be a leader be a particularly noticeable characteristic businesses let thousands of managers in their own role, and celebrate that,” of family-owned businesses, which have a loose on their workforces, without Thomas Lawson, Chief Executive of Leap clear commitment to passing equipping them with the skills that they Confronting Conflict told the Commission. an enterprise on from generation to need to be effective in their roles. The generation. Giving evidence to the CMI’s Management 2020 Survey of over But management and leadership abilities Commission, Charlie Mayfield, Chairman 2,000 managers working in the UK today in all individuals need to be encouraged of the John Lewis Partnership, said: found that less than a quarter (23%) rated and nurtured – something that is not “Family-owned businesses can be an their employers as being “very good” or always done adequately today. excellent way of running a business: “good” at providing leadership training to Those companies that do invest in there is a big advantage, as they start managers before or within three months developing their people, however, from a sense of custodianship – it’s not of being promoted into a management tend to outperform their peers that about selling it, but making sure it can role. A third (34%) rated their employer don’t. Addressing the Commission, be passed on. There is a lot of research as “could be better” in this respect, while Sean Taggart, Chief Executive at travel indicating that family-owned businesses well over a third (37%) revealed that their company the Albatross Group, said: tend to outperform over the long run.” employer was “poor” at providing training
40 41
34-45_CMI management2020.indd 40 10/07/2014 13:29 or did not do so at all. Giving evidence to CEO Paul Polman puts it: “The more you that nurtures, helps and supports aspiring the Commission, Thomas Lawson, Chief invest in them, the more people are going leaders, provides more opportunities to Executive of Leap Confronting Conflict, to deliver.” learn by doing, offers projects to take on, said: “I was promoted to a manager encourages mutual support and provides without any management training. I Use mentoring and coaching programmes access to wise role models as mentors”. managed but I struggled. But I managed to support all newly promoted managers He argued that: “It is a complete myth that because I had fantastic managers and Our evidence found that mentoring and we only learn leadership by doing it; we coaches around me, who I was using very, coaching programmes are invaluable to can develop as leaders in the classroom very heavily.” supporting newly promoted managers. too and this need not cost the earth.” In written evidence, the Involvement Worryingly, but not unsurprisingly, and Participation Association noted: “At There’s an art to having difficult there is a strong correlation between a line-manager level, the development conversations with direct reports and it’s lack of investment in training and poor of coaching and mentoring skills can one that most line managers have to work company performance, although it is help to foster an environment in which hard to master. Being able to manage not clear which factor is the cause and innovation is encouraged and new ideas poor performance effectively while which is the effect. According to CMI sought out and rewarded.” maintaining discipline and encouraging research, those organisations described people in order to get the best out of their by their employees as “declining” are Meanwhile, in written evidence, abilities are among the soft skills that good particularly behind on training staff in Christopher Bond and Megan Seneque managers must develop. So ambitious management and leadership. Almost described coaching as a “means companies of all sizes need to help 60% of organisations in decline do not of integrating individual, team and managers at every level to develop core train their staff, compared with about a organisational learning and change”. interpersonal and people-management quarter of growing organisations. Equally, skills if they want a workforce that only about 13% of managers in declining Professor Vlatka Hlupic, of the University performs at the highest level. organisations say their training of staff of Westminster, argued that coaching immediately after a promotion is very is particularly important for highly Alex Cheatle, Chief Executive of Ten good, compared with almost 30% of those skilled knowledge workers because Group, told the Commission: “For the in growing organisations. they resist being ordered about in first five to 10 years [as a manager] I hierarchical organisations. She wrote: found it difficult to tell people they were The AMEC Academy is a good example “Research shows that knowledge underperforming. I sugared the pill so of how employers can support their workers cannot and do not want to be much that they probably went home and managers’ development. Describing led using traditional vertical leadership thought that their boss thought that they it to the Commission, Ruth Ambrose, approaches, they tend to ignore were wonderful. You have to be more Director Legal, said: “We have the AMEC corporate hierarchy, and they need ‘Dutch’ – more direct. But not unpleasant.” Academy, which includes management interactions and autonomy to be more training. Amongst other things, employees innovative and engaged.” Unfortunately, Debbie Klein, Chief Executive of of all levels have access to an online tool CMI’s 2020 Management Survey found communications group Engine, told the and can map their career path. They can that just a quarter of employers (24%) Commission that leadership is a triangle work out what they have to do to achieve are very good at using mentoring and consisting of logos, pathos and ethos. the next goal. If they want to be a leader, coaching programmes. Furthermore, Logos is about logic and developing a they can look at what they need to do, the those that do are likely to be large strategy, pathos is about bringing the experience needed, and so on, to look to organisations. best out of people, and ethos is about the next role.” doing the right thing. She said: “The best Support off-the-job leaders are those that are able to do all Ultimately it is short-sighted for any development opportunities of those. Not everyone is brilliant at them, organisation to under-invest in its new In written evidence, Mark Pegg observed but, if you aren’t brilliant at all three, you managers and this particularly applies that good leadership development should surround yourself with people to struggling organisations. As Unilever “identifies potential, creates a career path who are.”
40 41
34-45_CMI management2020.indd 41 10/07/2014 13:31 PEOPLE
Assess people on their new ideas. Many witnesses to the behaviours, not just their results Commission expressed the view that WINSER LONDON: Performance is inextricably linked to Britain is still too “risk-averse” and FOCUS ON purpose and values so the organisations argued that an honest, open culture THE FUTURE that do best are those that recruit and gives people permission to “own up” retain individuals who share their purpose to their mistakes, which then become Kim Winser OBE, founder of fashion and values and behave in a way that points of learning. Entrepreneur Cary company Winser London, insists supports them. Our evidence shows that Marsh, founder of the web acceleration it is not just the results that are delivered site Mydeo, said that the British business every division of her company but the way in which those results are culture is still too frightened of failure to employs a young person who has delivered that matters. be genuinely entrepreneurial: “In the US, just left school or university. These if you fail, you have got your stripes – got individuals get to work closely – Sir Charlie Mayfield, Chairman of your failure under your belt. You’re more sometimes one-on-one – with her the John Lewis Partnership, told the likely to get finance next time. Here, senior personnel. The experience Commission: “We put much more an entrepreneurial failure is seen as emphasis on how, as well as what, they something to be feared and avoided.” has been beneficial for both the [managers and leaders] achieve. We students and their mentors, Winser bring it into appraisals, throughout An organisation that never lets its said. “The youngsters absolutely the organisation.” people take risks will never achieve love it because they’re in a proper its full potential. So it is essential that job and they are getting training Focusing on managers’ behaviours, rather organisations permit their managers to get that they’ve never had. Equally, the than the results they produce, represents a things wrong sometimes. Sean Taggart, substantial volte-face for many businesses Chief Executive of the Albatross Group, experienced people have absolutely in terms of the way they appraise their said: “You have to trust people. Command loved it because it really has given employees today. According to CMI’s 2020 and dictate won’t work. Let your people them a very, very fresh look at ideas, Management Survey, half of employers make mistakes but ultimately they particularly in the whole social do not evaluate their people on their will succeed.” media world.” behaviours at all, are poor at it, or could do better. Professor Cary Cooper told the Commission about a young company in Learn from mistakes and encourage the US that has a “cock-up of the month” risk-taking and innovation competition. “It’s really fascinating. They By its very nature, innovation spurns all laugh about it. They say who’s cocked plenty of ideas that do not yield up the most in this organisation and then revenues. But, unless companies give they all learn about it from that and allow their managers permission to explore, failure to take place.” make errors and learn from them, they are limiting their chances of growth and Alastair Lukies, founder and Chief renewal. Releasing people to explore Executive of Monitise, said: “There are and experiment, and to be curious about those who take risks, and those who the outside world, helps an organisation want unequivocal data before every to innovate. The Commission heard that decision. We need to be more towards 24%JUST A QUARTER internet giant Google encourages its the risk end of that spectrum. You, at OF EMPLOYERS ARE employees to spend up to 20% of their the head of the business, have to be time innovating, so that it’s constantly making decisions on a regular basis: we “VERY GOOD” AT USING reinventing itself and generating are averse to being successful or being COACHING PROGRAMMES
42 43
34-45_CMI management2020.indd 42 10/07/2014 12:57 risk-takers [in the UK] – we shoot them No business can expect to outperform down. In [Silicon] Valley, it’s not perfect, its competitors either within the UK or but everyone shoots for the sun.” overseas unless is effective at drawing the best out of a diverse workforce. Champion diversity In its written evidence, the Centre for Witnesses to the Commission argued Enterprise at Manchester Metropolitan strongly that diversity is not just about University School of Business and fairness; there is a strong business Law said that talent recognition and case for it. The workforce and the management “need to be inclusive to customer base within both the profit maximise the benefits from a multicultural and not-for-profit sectors are diverse, workplace where different genders so management teams themselves provide equal measures of significant need to be diverse in order to relate to talent and ability”. them effectively. Furthermore, a lack of diversity within a leadership team It is important that organisations realise increases the risk of leaders thinking that diversity is not just a policy, but in the same way and failing to spot a way of thinking, because those that potential risks. don’t get into the true mindset of diversity will never be able to tap into the many In an interview with the Commission, advantages that it has to offer. Brian Harriet Green, Chief Executive of Thomas David Johnson, a Futurist at Intel, Cook, shared her views on the travel said: “The thing about humans is that company’s lack of diversity when she we are incredibly complicated. We joined: “Thomas Cook had phenomenal have different beliefs, religions, political diversity issues – everyone who worked affiliations, socio-economic backgrounds; for me was a German or British man, yet we like different things. Some people 70% of our customers and employees are introverts, extroverts, nerds, are female.” She added: “When there some people like sports… But to isn’t enough diversity at the top, you get me that complexity is not a bad thing. unbelievable and totally unacceptable So [complexity and diversity are] groupthink. We have changed incredibly important, especially when this and my direct team now spans doing business and putting together seven nationalities and is nearly ecosystems. The more diversity that 50% female.” we have, the better.”
42 43
34-45_CMI management2020.indd 43 10/07/2014 12:58 POTENTIAL
Since the most successful organisations Kim Winser, founder of Winser London, for them. The answer is to grasp the plan to be around for the long term – not said that businesses themselves can opportunity on our own doorstep, to just for the next quarter’s results – they develop by drawing on the talent of invest in them and make them a bigger also plan for the long-term development young people. But she was clear that it part of our plans, to build thinking and of business leaders. Duncan Tait, is important from an ethical perspective learning about leadership into everything Head of EMEIA and Corporate Senior to reward interns. “I strongly believe that we do.” Vice President of Fujitsu, said that his we have a duty to develop and reward company is committed to developing interns,” she said. “The intern/employee Other witnesses agreed that UK managers and leaders at every level relationship should be reciprocal.” businesses are not taking full advantage in the organisation and preparing them of our excellent educational system. Tom for the future. Report on how the organisation is Bromley, a student and entrepreneur at working with schools, colleges the University of the West of England, Offer opportunities for young people and higher education told the Commission: “There should be to gain practical skills and experience British businesses are extremely more focus on presentations [at school], Offer an opportunity to a young person fortunate in that they have a wealth of and team-based activities. You have to and it’s amazing what will happen when educational expertise on their doorsteps learn to work with people. What prepared they take it. Just take the example of – yet they fail to take advantage of it. In me most for management was a young Shivam Kagadada, a young fashion his written evidence, Mark Pegg wrote entrepreneurs’ [club] at school.” designer and owner of Original Karma. that the UK has some of the world’s best He related a positive experience from universities and business schools for In written evidence, John Board said: his work at an educational institute: teaching and research into management “More partnerships between businesses “I was working for a company as an and leadership, and some of the best and business schools need to be admin assistant, and I noticed the lack virtual training providers. Too few developed.” This latter finding is also of marketing. I told the CEO: ‘How would British managers realise the rest of the supported by CMI’s 21st Century Leaders you expect students to know about your world comes to the UK to learn about report, which was published in June 2014. company, and see results? If you allow managing and leading. me two months to redesign the website Set targets to focus recruitment on and PR, I can help.’ He gave me the But, he noted: “We have the leadership school leavers and young people opportunity to be in charge of marketing thinkers; we have the schools. What we Around 13% of people in the UK aged for eight months.” lack is the commitment and support between 16 and 24 are unemployed.65
44 45
34-45_CMI management2020.indd 44 10/07/2014 13:31 That is a large potential pool of Some leading companies already Management 2020 Survey, just 21% have technologically savvy so-called “digital play an active role in supporting the a “very good” or “good” programme to natives” that British businesses could wider community. In an interview encourage parents and carers to return to draw on to give them a competitive with the Commission, Mike Wright, work after career breaks. advantage. But it seems that they Executive Director of Jaguar Land are ignoring them instead. CMI’s Rover, said: “[Tata – Land Rover’s Collaborate with different Management 2020 Survey found that owner] are great believers that one sectors and other organisations more than half of organisations (57%) are of the roles of business is about to exchange ideas and people poor or could do better at offering young giving back to the community, and “Collaboration” may be the buzzword of the people the chance to gain practical skills sustaining communities, in the broadest future, but it seems that UK organisations and experience within the workplace. sense of the word. We don’t see that as have yet to get the hang of it. According a burden. Actually it’s quite liberating, to CMI’s Management 2020 Survey, UWE student Tom Bromley emphasised but it’s something that is maybe slightly less than a third (28%) of organisations the value of practical work experience to different as an element of our leadership collaborate with different sectors and other the Commission: He said: “There’s only so model, compared with, say, other organisations to exchange ideas and much you can learn from the books and manufacturers in the UK.” people. By neglecting to do so, they are lectures. Actually doing it yourself is the missing out on opportunities to learn from only true way to do it.” Run programmes that actively each other, to innovate and to grow. encourage parents, carers and others Support others in the supply to return to work after career breaks Kevin Murray, Chairman of the chain and local community The UK has generous maternity laws Good Relations Group, told the Since no organisation can survive in to help women return to the workplace. Commission: “There is a kind of isolation, they need to be able to see Nevertheless, women still routinely suffer symbiotic relationship between big the bigger picture and where they can discrimination in the workplace after having companies and SMEs, because they provide support and guidance to other children and often drop off the career work together a huge amount, and the organisations, particularly those that ladder as a result. This is a significant loss one wouldn’t survive without the other. are struggling. In written evidence, for their employers. Sean Taggart, Chief This isn’t ‘either/or’; it’s ‘together’. There’s Manchester Metropolitan University Executive of the Albatross Group, told the a lot of thinking that we need to do suggested that more established Commission: “One of our board members around how we encourage more of businesses could help startups to went on maternity leave; we noticed the that collaborative working across the big survive in the long term by offering board had lost something when it was all companies and the middle companies them management support. blokes. We do value that… developing to get them to think about how it’s in female leaders; more women do take time everybody’s interest to try and improve off, but often come back richer people.” quality of leadership.”
Professor Cary Cooper, a member of the Commission, reported that the number of women applying for flexible working is currently three times the number of men. He also explained that, when men apply for flexible working, they are three times more likely to be rejected. But, 21%HAVE A “VERY GOOD” with Generation Y entering the workforce OR “GOOD” PROGRAMME in large numbers, employers will have to reconsider their approach to flexible TO ENCOURAGE PARENTS working. Neither the women nor the men AND CARERS TO RETURN of this generation are prepared to sacrifice their work-life balance for their employers. TO WORK AFTER And it seems that employers have some 65 www.telegraph.co.uk/finance/jobs/10679801/Is-youth- CAREER BREAKS way to go, since, according to CMI’s unemployment-as-bad-as-the-figures-suggest.html
44 45
34-45_CMI management2020.indd 45 10/07/2014 12:58 6. BRIDGING THE GAP – CURRENT UK PERFORMANCE ON PURPOSE, PEOPLE AND POTENTIAL
Having identifi ed purpose, people and 6.1 PURPOSE potential as key best practice areas from With an average score of 6.8 out of 10, the evidence we heard, we wanted to purpose was the strongest of the three better understand precisely where UK sections, with 46% of responses across organisations currently stand against the category falling into the “good or very these measures. good” category. The two highest scores on the whole tool – indeed, the only ones We surveyed a total of 2,113 managers where over half of respondents scored and leaders via a third-party research their organisations as “good or very good” house, with a near-even split between CMI – are in this section. They were asked members and non-members. They were whether progress is tracked annually (a asked to score their organisation out of 10 fundamental of management, where we on each of 18 indicators, where 1 meant might expect good scores) and whether “our organisation doesn’t do this” and 10 senior leaders champion the organisation’s meant “our organisation does this really values – an encouraging result. well”. A “not applicable” option was also offered for each question. Other scores are notably lower and help highlight priority areas for action. More Overall, UK organisations were rated organisations need feedback mechanisms by managers and leaders at an average to escalate bad news and keep senior of 5.9 out of 10 across the Management leaders informed, as 51% were scored as 2020 Framework – the equivalent “not at all/poor” or “could be better” on of “could do better”. This shows this question. Across the different sectors, signifi cant potential for making the public sector scored worst: 25% said management better. such feedback mechanisms are poor or
PURPOSE: CURRENT PRACTICE
Average score out of 10 N/A Not at all/poor Could do better Good/very good
Q1. We defi ne and publish the long-term purpose of our 6.5 organisation, ensuring it covers measurable commitments 10% 21% 27% 42% to all stakeholders.
Q2. We track the annual progress towards our overall 7.5 stated purpose at our AGM/annual review and discuss 10% 12% 22% 58% during at least one board meeting.
Q3. Our CEO/top team is rewarded on the basis of 6.2 delivering value to all stakeholders and not just on 17% 21% 25% 37% meeting fi nancial targets.
Q4. Our senior leaders champion the organisation’s values 7.0 and act as role models. 4% 16% 30% 51%
Q5. Senior leaders are recruited for their values and track 6.7 record of delivering long-term performance. 9% 17% 31% 44%
Q6. Feedback mechanisms exist to escalate both good and 6.7 bad news, and ensure the senior management team hears 5% 19% 32% 44% directly from employees at all levels.
46 47
46-49_CMI management2020.indd 46 10/07/2014 12:59 non-existent, compared to 18% in the national level. This included measures offender for not having any reporting private and 16% in the charity sectors. like reporting to investors, where 50% mechanisms in place when it comes to the of large organisations (more than 1,000 environment (30%, compared to 28% in There is also a need to recruit leaders employees) were rated as “good” or “very charities and 20% in the public sector). more for their values and track record good”, compared to only 18% of small Private-sector organisations emerge as of long-term success, as opposed to ones (one to 50 employees). considerably better at rewarding top successful short-term turnarounds, and teams on the basis of delivering value organisations also need to do far more However, international organisations risk to all stakeholders, not just on meeting to defi ne and publish their long-term falling down in how they work with local fi nancial targets: 42% were said to be purpose, with measurable commitments communities. Those operating only in “good” or “very good”, compared to 29% for a range of stakeholders. a local area are better at defi ning and in the charity sector and only 26% in the publishing commitments to the local public sector. Looking at the detail, it appears that community and society than international the bigger the organisation, the better fi rms (46% compared to 33% indicated Organisations in the charity sector scored it is at reporting on its commitments to that their organisations are “good” or higher on tracking and discussing annual stakeholders. For example, respondents “very good” at it). progress towards their stated purpose: indicated that only 36% of small 69% scoring as “good/very good”, organisations (one to 50 employees) defi ne There are substantial differences between compared to 58% of the public sector and publish their commitments to their the private, public and civil society sectors. and 55% of the private sector. They also employees, compared to 58% of large Perhaps not surprisingly, the charity and scored highest in terms of their senior organisations (over 1,000 employees). public sectors are considerably better at leaders championing the organisation’s Larger organisations also scored higher defi ning and publishing the purpose of the values and acting as role models, which on indicators like tracking annual progress, organisation with commitments to the local is to be expected, given the values-driven rewarding the top team on the basis of community and society: 54% of the charity nature of the sector. Sixty-one per cent of delivering value and not just on meeting and 50% of the public sector scored “good/ the charity sector respondents scored their fi nancial targets, evaluating people on their very good” on this measure, compared to organisation as “good” or “very good”, behaviours and not just their results, and only 28% of the private sector. compared to 52% of the private sector and encouraging people to return to work after only 45% of the public sector. The same career breaks. The public sector is ahead of the other two picture applies when it comes to recruiting when it comes to the environment: 43% leaders for their values. Organisations that operate internationally scored “good/very good”, compared to score higher on most reporting measures 34% in the charity and 32% in the private than those that only operate at a local or sector. The private sector is the worst
PURPOSE: DETAILED BREAKDOWN OF FIVE KEY STAKEHOLDER STATEMENTS We defi ne and publish the long-term purpose of our organisation, ensuring it covers measurable commitments to the following:
Average score out of 10 N/A Not at all/poor Could do better Good/very good
1A. CUSTOMERS AND SUPPLIERS 6.3 4 14 26 56
1B. EMPLOYEES 5.0 5 19 29 48
1C. LOCAL COMMUNITY/SOCIETY 4.4 6 27 30 37
1D. ENVIRONMENT 4.9 7 28 31 36
1E. INVESTORS 4.9 27 19 18 36
46 47
46-49_CMI management2020.indd 47 10/07/2014 12:59 BRIDGING THE GAP
6.2 PEOPLE The best score in this section was on the by only 24%, despite persuasive testimony extent to which people are assessed for about its effectiveness in helping improve their behaviours, not just their results – practical skills and encouraging innovation. something that was identifi ed as important Thirty-fi ve per cent of all organisations by several witnesses interviewed by the were rated as “good” or “very good” Commission. Nonetheless, fewer than half when it comes to learning from mistakes, scored “good” or “very good”. with smaller organisations (one to 50 employees) taking the lead: 43% rated The average score was a whole point lower themselves highly, compared to only than for purpose, at 5.8. Scores for certain 29% of large organisations (more than indicators were much lower. Echoing the 1,000 employees). Looking at the three submissions made to the Commission, it sectors, the public sector is lagging appears management training is usually behind when it comes to learning from too little, too late: only 23% of organisations its mistakes: only 22% of organisations rank as “good” or “very good” in training scored “good” or “very good”, compared 60%OF ORGANISATIONS IN staff in management and leadership before, with 38% in the charity and 39% in the or within three months of them, taking on private sector. DECLINE REPORT THAT a management role for the fi rst time, with THEY DO NOT TRAIN THEIR 37% saying their organisation doesn’t do STAFF OR DO SO POORLY, this or does it poorly. COMPARED TO ONLY The use of mentoring and coaching to AROUND A QUARTER OF support new managers also seems limited. GROWING ORGANISATIONS This was rated as “good” or “very good”
PEOPLE: CURRENT PRACTICE
Average score out of 10 N/A Not at all/poor Could do better Good/very good
Q7. All staff are trained in management and leadership 5.2 before, or within three months of, being promoted into a 7% 37% 34% 23% management role.
Q8. Our organisation uses mentoring and coaching 5.3 programmes to support all newly promoted managers. 7% 36% 33% 24%
Q9. We use performance assessment and appraisal 6.6 tools that evaluate people on their behaviours and not 6% 20% 30% 43% just their results.
Q10. “Off-the-job” development opportunities focusing on core 5.7 interpersonal and people-management skills are offered to 7% 31% 34% 29% managers and leaders at all levels.
Q11. We learn from our mistakes and encourage risk-taking 6.2 and innovation. 3% 24% 38% 35%
Q12. We champion the diversity of our talent pipeline at all 5.9 levels and set targets to benchmark our achievements in terms 7% 28% 34% 32% of equal pay and promotion.
48 49
46-49_CMI management2020.indd 48 10/07/2014 12:59 POTENTIAL: CURRENT PRACTICE
Average score out of 10 N/A Not at all/poor Could do better Good/very good
Q13. We offer opportunities for young people to 6.3 gain practical experience and skills within our 7% 22% 35% 38% work environment.
Q14. We report on how our organisation is working 5.0 with schools, colleges and universities. 14% 38% 26% 23%
Q15. Our organisation sets targets to focus recruitment 4.4 on school leavers and young people. 14% 45% 24% 17%
Q16. Our organisation supports others in our supply 4.9 chain or local community with development 11% 39% 31% 19% opportunities and mentoring.
Q17. We have a programme that actively encourages 4.9 parents, carers or others to return to work after 13% 39% 29% 21% career breaks.
Q18. We collaborate with different sectors and other 5.6 organisations to exchange ideas and people. 8% 32% 32% 28%
6.3 POTENTIAL The third area of the framework, potential, Not only is this the weakest area of current organisations in decline were reported as is the area where employers are currently practice among employers, but it’s also not training their staff or doing so poorly weakest, scoring just 5.2 on average overall. the area where Government action may – compared to only around a quarter of be most effective – for example, through growing organisations. Similarly, only Fewer people rated their organisation education and skills policy. This is about 13% of respondents in declining as “good” or “very good” in this area – refl ected in our recommendations. organisations said that their training of staff and more rated them as “poor”. There new to management roles is “good” or were low scores on the recruitment of 6.4 LINKS TO PERFORMANCE “very good”, compared to almost 30% school leavers and young people, and In order to compare organisations of growing organisations. Organisations for employers reporting on how they work that are performing well and those that are struggling also use mentoring with educational institutions, with that aren’t, we asked managers whether and coaching programmes far less. only 24% saying they are good at their organisation is growing or declining. reporting on their cooperation with Overall, 49% of organisations are While the results cannot prove a schools. The private sector is lagging growing or rapidly growing; 14% are cause and effect relationship, it is behind when it comes to reporting on declining or rapidly declining; and nevertheless striking that those fi rms how organisations are working with 32% are stable. that are performing strongly are also schools, colleges and universities: doing better against our measures for 41% of organisations were rated as bad The results were arresting. Across all purpose, people and potential. at doing this, or weren’t doing it at all, 18 measures in the framework, those compared to 35% in the public sector organisations that are growing or growing and 21% in the charity sector. rapidly scored higher than declining ones. The use of measures to encourage people back to work after career breaks, which There were especially strong links between could include parental leave, also the people scores and organisational appears weak. growth. For example, almost 60% of
48 49
46-49_CMI management2020.indd 49 10/07/2014 12:59 FULL RECOMMENDATIONS
FOR EMPLOYERS To ensure successful long-term leadership, we recommend that organisations should review and focus on three critical areas: how they defi ne their purpose, how they lead and develop their people, and how they invest in their potential.
PURPOSE devolve responsibility, and to create Defi ne and publish the social purpose channels for challenge at all levels. of your company, ensuring it covers more than just shareholder return. We Reward chief executives for their ability to recommend using the principles within the deliver value to all stakeholders – not just Blueprint for Better Business. shareholders. For example, link bonuses to revenue growth, job creation, employee Look at contributions to employees, engagement scores, diversity and the customers, communities and the percentage of young people hired each environment, as well as just the fi nancials. year, and not just fi nancial results and total Make sure that metrics are attached shareholder return, which can be achieved to all these areas, and that they are through cost-cutting and asset-stripping. measured and published each year. Track annual progress towards your Insist on transparency and ensure that overall stated purpose. these metrics are published in annual reports. Encourage companies to Recruit chief executives who are willing to adopt the Valuing Your Talent reporting focus on long-term sustainable growth, not framework. Have a mechanism for just short-term metrics, and have a track measuring and potentially limiting chief record of doing so. executive pay, and give shareholders veto rights. Support executives and chief executives in championing the corporate values, code of conduct and being role models. Look for a willingness to de-layer and
50 51
50-52_CMI management2020.indd 50 10/07/2014 13:03 PEOPLE Recruit people on the basis of their for failure/learning of the month, as well as BENCHMARK YOUR personal attitudes and capabilities, and for success/new ideas of the month. ORGANISATION: not just their technical competencies (see MANAGEMENT 2020 page 30 for the key characteristics of Champion the diversity of your talent BENCHMARKING TOOL successful leaders). pipeline at all levels and set targets to We have developed the Management benchmark your achievements in terms 2020 Benchmarking Tool, which is Prepare all new managers for first line- of equal pay and promotion. freely available, for managers at any management roles, with a focus on core level to undertake a self-assessment interpersonal and people-management POTENTIAL of their organisation against the best skills, such as how to have a difficult Offer opportunities for young people to practice in the areas listed above, conversation. gain practical experience and skills within which we distilled from all the evidence a work environment. to this inquiry. Employees in their first line-management The overall result from our Management role should receive training within 12 Supply-chain support: consider how you 2020 Survey, with organisations being could support SMEs in your supply chain months of promotion through a national rated at only 5.9 on a 10 point scale, or the local community with management management and leadership qualification. highlights huge scope for a better development opportunities or mentoring. managed Britain. Establish mentoring programmes within your company or through national Report on how your organisation is To start that journey, we encourage organisations, such as CMI or Chambers working with schools, colleges and boards, business leaders, of Commerce, and ensure that all higher education. entrepreneurs and anyone responsible newly promoted managers and for leading an organisation, to sign new employees have a mentor. Actively encourage parents, carers up to our new Management 2020 and others to return to work after Benchmarking Tool. This diagnostic tool will give you a benchmarked Use performance assessment and career breaks. result to reflect on key areas for self- appraisal tools that evaluate people on improvement. their behaviours and not just their results. Collaborate with different sectors and other organisations to exchange ideas One year on, participants will Learn from mistakes and encourage risk- and people. automatically be invited to review taking and innovation. Reward employees and track their progress. for sharing bad news. Establish schemes
MANAGEMENT 2020 BENCHMARKING TOOL Looking at your own organisation, to what extent (on a scale of 1-10) do you agree that you meet the following statements? (1 = do not agree at all; 5 = meet some aspects of the statement; 10 = agree completely) PURPOSE PEOPLE POTENTIAL
1. We define and publish the long-term purpose 1. All staff are trained before, or within 1. We offer opportunities for young people to of our organisation, ensuring it covers measurable three months of, being promoted into gain practical experience and skills within commitments to the following: a management role. our work environment. a. Customers and suppliers Our organisation uses mentoring and We report on how our organisation is working b. Employees 2. 2. coaching programmes to support all with schools, colleges and higher education. c. Local community/society newly promoted managers. d. Environment 3. Our organisation sets targets to focus recruitment e. Investors 3. We use performance assessment and on school leavers and young people. (See five principles of a Blueprint for Better Business) appraisal tools that evaluate people on their behaviours and not just their results. 4. Our organisation supports others in our supply 2. We track the annual progress towards our overall chain or local community with development stated purpose at our AGM and review during at 4. “Off-the-job” development opportunities opportunities or mentoring. least one board meeting. focusing on core interpersonal and people- management skills (such as how to have 5. We have a programme that actively encourages 3. Our CEO/top team is rewarded on the basis a difficult conversation) are offered to parents, carers or others to return to work after of delivering value to all stakeholders (for career breaks. example, revenue growth, job creation, employee managers and leaders at all levels. engagement scores, diversity and the percentage We collaborate with different sectors and other 5. We learn from our mistakes, and encourage 6. of young people hired each year) and not just on risk-taking and innovation. organisations to exchange ideas and people. meeting financial targets. 6. We champion the diversity of our talent 4. Our senior leaders champion the organisation’s pipeline at all levels and set targets to values and act as role models. benchmark our achievements in terms of equal pay and promotion. 5. Senior leaders are recruited for their values and track record of delivering long-term performance.
6. Feedback mechanisms exist to escalate both good and bad news, and ensure the senior management team hears directly from employees at all levels.
50 51
50-52_CMI management2020.indd 51 10/07/2014 13:03 FULL RECOMMENDATIONS
FOR GOVERNMENT Build employability into education Encourage business schools to include The Valuing your Talent framework, Measure schools on employability a significant period of experience within which will be published by the CIPD, outcomes. Employability measures the workplace in the curriculum, and CIMA, CMI, RSA and the UKCES in July for higher education are helping to encourage the use of SME placements to 2014, provides new insights into how refocus curriculum development, better reflect the employment landscape. organisations can better report on the and employability outcomes need Ensure that interpersonal skills, such value of their workforce. to be a priority much earlier in the as communication, having a difficult education system. conversation and coaching, are taught Publish league tables or introduce a and practised during these placements. national awards scheme, potentially in The new trailblazer programme is partnership with CMI, for organisations being extended in September to include Exchanges – new national networks that score highly on purpose, people and management. It will be important to Work with partners to develop a potential, and hold them up as examples. ensure that new management and national exchange network to promote leadership apprenticeships are fully secondments and much greater FOR INDIVIDUALS supported by employers and lead exchanges of ideas and people between: Coach and champion your team: as a through to higher-level qualifications • business and education; manager, be a role model, be authentic and professional recognition such as • civil service and business; and and start mentoring others. Support Chartered status. • SMEs and multinationals. new managers and review and reward behaviours, not just performance. Encourage schools at primary and Encourage reporting secondary level to provide practical and promote excellence Embrace change: challenge the status team-leading opportunities and Encourage employers to expand annual quo – embrace and lead change. experience of enterprise programmes, reports to include both social purpose such as Young Enterprise. We strongly and broader people metrics, covering Collaborate and connect: keep learning, support the Enterprise Advisers scheme employee engagement, diversity extend your networks across generations, recommended by Lord Young. measures at all levels, job creation, different sectors and cultures, and stay and educational activities. The connected. Allocate time in teachers’ and pupils’ Blueprint for Better Business and schedules and find ways of aligning the Integrated Reporting Framework enterprise and business education to the are good starting points for many national curriculum, rather than putting organisations. it in competition with those subjects that feature in performance tables. The The Think, Act, Report initiative standing of business studies courses that tackles gender diversity is an should be reviewed to ensure they are excellent example of how Government relevant, attractive to young people and has encouraged organisations to respected by employers and measure and report on diversity and high education. inclusion. Employers could similarly be encouraged to report on a voluntary Promote the inclusion of MEL basis on how they are engaging with (management, entrepreneurship education, providing work experience and leadership) modules in all degree and placements, and the targets subjects. These should include they are setting for recruiting young intercultural awareness, ethics, diversity, people and those returning from people-management and coaching skills. career breaks.
52 52
50-52_CMI management2020.indd 52 10/07/2014 13:03 CONCLUSION
“By using our Management The economic climate has they can survive and thrive in what may changed significantly since the still be difficult times ahead. 2020 Benchmarking Commission first embarked on this Tool and focusing research in October 2013. At that To get the most from their managers, specifically on the areas point, what appeared to be a fledgling however, organisations need to realise their recovery finally seemed under way people are the most valuable capital they of purpose, people and after five difficult years. Now, the UK have. They need to develop, invest in, potential, UK organisations economy is positively booming by learn from, share with and trust them. can help their managers recent standards and the country’s They also need to consider whether domestic product will rise by over 3% their purpose and values live up to become outstanding in 2014, according to the Centre for their employees’ expectations of them leaders of the future” Economics and Business Research.66 and, if not, do something about it.
Nevertheless, the recovery is fragile and By using our Management 2020 concerns remain over asset bubbles, Benchmarking Tool and focusing soaring energy prices, the rising cost of specifically on the areas ofpurpose , living, the heavy indebtedness of many people and potential, UK organisations governments and heightened political can help their managers become tensions in volatile parts of the world. In outstanding leaders of the future. this era of opportunity and uncertainty, organisations need their managers more than ever. They need them to drive growth in a technological age and to draw out the diverse talents of the UK workforce so that
66 www.cebr.com/reports/uk-gdp-to-grow-by-over-3-in-2014
53
53-58_CMI management2020.indd 53 10/07/2014 13:05 APPENDICES
“The Commission wanted to show how management could be rebooted to create jobs, growth and individual and collective well- being in a sustainable way, while still driving growth in profits”
APPENDIX A: About the Commission Pathways to progress Solutions (Suffolk County Council); Essex The All-Party Parliamentary Group on The key enablers that can raise the University; Forum of Private Business; Management’s (APPGM’s) Commission on game of aspiring managers and leaders Henley Business School; Institute the Future of Management and Leadership to help them achieve success in this for Systemic Leadership; Institute of was launched in October 2013 to examine future context. Leadership and Management; Involvement how UK management could better support and Participation Association; JC economic growth. Over a period of nine months, the Partners; Lancaster University; Leadership Commission heard from esteemed Foundation for Higher Education; The Commission is a joint Parliamentary academics, vibrant entrepreneurs, London School of Business and Finance; and business initiative led by Barry up-and-coming young managers and Manchester Metropolitan University Sheerman MP (Chair of the APPGM) world-renowned business leaders. School of Business and Law – Centre for and Peter Ayliffe (President of CMI). Following hours of interviews and Enterprise; Myline Ltd; Osca; Partners discussion, we have developed a in Management Ltd; PCM Consulting; Its goal was to demonstrate that modern series of recommendations aimed at Process Management International management can (and often does) provide improving the quality of management Ltd; Roehampton University Business the leadership needed to address issues and leadership in the UK. School; SDA; Specifar Pharmaceuticals; such as underinvestment in innovation and University of Bradford; University of major ethical failings. It wanted to show Witnesses offered their views at five Greenwich Business School; University of how management could be rebooted to oral evidence sessions that took place Westminster Business School; University of create jobs, growth and individual and between January and April 2014 and by Wolverhampton Business School; John W collective well-being in a sustainable way, participating in individual interviews carried Stephens; Colin R Tuckwell; Dave Mettam; while still driving the growth in profits that is out with members of the Commission. Vin Mole; and Chris Rodgers. required to ensure the long-term success and sustainability of the business. The witnesses interviewed by the As part of the Commission’s evidence- Commission are listed on page 13. gathering process, CMI ran an essay In particular, the research focused on the competition to engage students and young following key areas: Written evidence from the following people in the workplace. We asked them to business schools, professional bodies, submit essays responding to the question: Understanding the current situation employers and other interested parties “How will managers and leaders need to How good are management and was submitted by 31 March: adapt to thrive in 2020?” The winning essay leadership in the UK (including was written by James Pickering. international comparative data)? Agileering; Assentire Ltd; Association of Business Schools (ABS); British Academy To complement the qualitative findings Future skills needs of Management; British Psychological of the Commission, the CMI also Understanding the potential impact of Society; Cass Business School, City undertook a quantitative survey of global markets, technology, workplace University London; Chartered Quality CMI members and external managers and societal trends on management and Institute; Durham University Business in May and June 2014. A total of leadership skills and behaviours. School; Eastern Facilities Management 2,113 managers responded.
54 55
53-58_CMI management2020.indd 54 10/07/2014 13:05 APPENDIX B: The Student View – Essays on essay “What does the fox say?”. The two the Future of Management runners up were Luke Hamilton, 20, and As part of the Commission’s evidence- Robert Mateer, 22. Edited extracts from gathering process, CMI ran an essay the three top essays are featured below. competition to engage students and young people in the workplace. We asked Winning essay: What them to submit essays responding to the does the fox say? question: “How will managers and leaders In a 2010 research paper written in need to adapt to thrive in 2020?” conjunction with the BBC, Professor David Nicholas posited that prior generations Review process are “hedgehogs” – linear thinkers who In total, 29 young people, ranging in age depend on their own specialist, in-depth from 19 to 29 years old, submitted essays knowledge to achieve their goals and to the competition. One CMI staff member rarely rely on wider social networks or and one CMI subject matter expert connected sources. In contrast, the digital reviewed each essay and rated them generation are “foxes” – associative according to the following criteria: thinkers who multitask and use social networks to find information quickly, • essay is thought-provoking and offers rather than relying on their own specialist an original perspective; knowledge.67 Why is this important for the • essay provides realistic and credible managers of 2020? responses to the question: how will managers and leaders need to adapt to Well, by 2020, this generation of foxes thrive in 2020?; will begin to outnumber the hedgehogs, 29 • essay has a clear argument, supported and start to comprise the majority of by relevant facts and figures; and the workforce. • essay is well written, the layout and structure are clear, and references are Up until recently, organisational resource 29 YOUNG PEOPLE, used appropriately. management has worked on the basis that RANGING IN AGE FROM 19 individual employees are hedgehogs – TO 29, SUBMITTED ESSAYS The three best essays were selected specialists with experience and expertise TO THE COMPETITION
based on the combination of points each to achieve specific objectives. Managers 67 Concepts of “foxes” and “hedgehogs” from David Nicholas, essay received, as well as the rankings of therefore had to manage the allocation Ian Rowlands, David Clark and Peter Williams, “Google the reviewers. Twenty-five-year-old James of skills within their resource pool, hiring Generation II: web behaviour experiments with the BBC”, in Aslib Proceedings: New Information Perspectives, Vol 63, Pickering won the competition with his those with the right skills for the job, No 1, 2011-2014
54 55
53-58_CMI management2020.indd 55 10/07/2014 13:35 APPENDICES
then putting in place enough incentives sit in their offices and rely on data to identify and support to make sure that they stay issues and low-level managers to be their loyal and that their skills are used as eyes and ears among the workforce. Now, productively as possible. these managers need to have first-hand involvement within their organisations. The new, digital generation is different, however. They are not specialists. They An issue that managers will need to rely on their social networks and rich regard with increasing importance is availability of ready-indexed knowledge corporate social responsibility (CSR) and to allow them to constantly learn new the wider term “ethics”. Managers will skills. Though they are not “experts” in need to move on from the more traditional the hedgehog sense, these foxes are Friedman attitude on ethics, whereby a highly adaptable, and will probably “business as a whole cannot be said to stay that way well into their middle and have responsibilities” (Friedman, 1970), later careers. This makes them highly and take up the Aristotelian approach demanding but also highly resourceful. to ethics, whereby “it has now become They are ready to adapt at any stage almost compulsory, at least for larger in their career to learn new skills and to corporations” (Roberts, 2005). enhance their performance. Business and globalisation have Managers and their organisations need become increasingly intertwined over to adapt in order to strike a balance recent decades. Managerial success between hedgehogs and foxes, between will be dependent on this, so not only specialists and generalists. The digital will managers need to adapt their generation will undoubtedly be the business strategies, they will also need to driving force behind the organisations possess additional skills, such as being of tomorrow, but they need to learn to multilingual, if they are to manage and become experts, just as much as the communicate around the globe. current generation of managers needs to learn to support the digital generation’s Some managers have a tendency to “Managers and their individuality. From 2020, managers won’t panic during tough times. They focus their organisations need to be seeking out people who are foxes or resources and money on keeping going hedgehogs; managers will need people and make the least number of changes adapt in order to strike who are both. possible. This is not good business a balance between Author: James Pickering acumen. Managers need to aspire to be hedgehogs and foxes, thriving in 2020 and to do this they must Runner-up essay: embrace change, promote growth, invest between specialists Thrive, don’t just survive in innovation to gain unique selling points and generalists” Gone are the days when managers could and create an environment where their
56 57
53-58_CMI management2020.indd 56 10/07/2014 13:04 ACKNOWLEDGEMENTS
The Commission would like to thank everyone who submitted evidence, who shared their expertise through the witness evidence sessions employees not only feel secure but also to innovate and the leader must accept and interviews, the students who entered the essay competition and want to play a vital part in an organisation productive failure in order to encourage all the managers who completed that is thriving. new ideas that can give the organisation the Management 2020 Survey. We Author: Luke Hamilton a competitive advantage. are grateful to everyone for their time, their ideas and their passion Runner-up essay: The The workplace will be an entirely different for improving management end of management place by 2020. Management is the least and leadership. Twenty-first century management and efficient activity in an organisation. As our leadership face various challenges. workforce improves their overall skills by The work of the CMI team in Presently, the key drivers of change 2020, we will probably see self-managed supporting the Commission in all its affecting organisations are technology, employees who only require leaders work, from the call to evidence to the innovation and people. to provide direction (Hamal, 2011; Pitt, witness sessions to the survey and the final report production, is also 2012). In addition, we will begin to see gratefully acknowledged. Overall, technology helps management a trend in outsourcing and independent by lowering operating costs, increasing workers, which further ratifies the belief CMI TEAM productivity, improving customer relations, that management will become an and helping to attract new clients by unnecessary business function Petra Wilton creating better products and services at (Kim, 2011). Director of Strategy lower prices (McCormick, 2013; Morris, and External Affairs 2013). Technology also brings surprises To conclude, 2020 will see the end of Piers Cain that can “shake up” entire industries very management. The role of leaders will be Head of Knowledge and quickly, (Schacter, 1999). It is essential that essential to set overall strategy, motivate, Stakeholder Relations managers can act fast and make decisions encourage creativity and lead the Patrick Woodman quickly because the future promises to organisation to success, however. Head of External Affairs consume organisations that fall behind Author: Robert Mateer technologically. Leaders in 2020 will be Philip Wood expected to fulfil the roles of visionaries, Policy Manager collaborators, salespeople and negotiators. Lysbeth Plas Innovation has become a priority for Senior Researcher organisations and more emphasis is William Bushby placed upon creating an environment Policy Officer that encourages it. A culture of collaboration and co-operation will be Undine Rubeze fundamental for the leaders of 2020 External Affairs Officer because organisations will progress as Thanks are also due to Philip a team. Employees will work in groups, Whiteley, Sally Percy and the demanding feedback from their leader. production team at Think Publishing The culture must challenge employees to for their sterling efforts in helping to write and produce this report. break the norm and collaborate in order
56 57
53-58_CMI management2020.indd 57 10/07/2014 13:04 Evidence papers, transcripts from the witness sessions, videos and the Management 2020 Benchmarking Tool can be found at www.managers.org.uk/management2020
Follow us on Twitter @CMI_managers
Use #management2020 to join the discussion.
58
53-58_CMI management2020.indd 58 10/07/2014 13:06 CMI management2020_COVER SPREADS.indd 5 10/07/2014 13:06 The Commission on the Future About CMI of Management and Leadership CMI is the only chartered professional The Commission on the Future of Management and body in the UK dedicated to promoting Leadership was created in 2013 to investigate how the highest standards of management management and leadership in the UK will need to and leadership excellence. change by 2020 to deliver sustainable economic growth. CMI has been providing forward-thinking Established by the All-Party Parliamentary Group on advice and support to individuals and Management and the Chartered Management Institute employers for more than 60 years. We (CMI), the Commission brings together members of both continue to give managers and leaders – Houses of Parliament from across the main parties, with and the organisations they work in – the leaders from a wide range of sectors. tools they need to improve their performance and make an impact. As well as equipping Evidence papers, transcripts from the witness individuals with the skills, knowledge and sessions, videos and the Management expertise that they need to excel, our 2020 Benchmarking Tool can be found at products and services support management www.managers.org.uk/management2020 and leadership excellence across both private- and public-sector employers.
About the All-Party Parliamentary Find out more at Group on Management (APPGM) www.managers.org.uk The APPGM exists to promote debate and foster Follow us on Twitter a closer understanding between parliamentarians @CMI_managers and UK managers from across all sectors. It has been running for over 30 years and currently has Use #management2020 100 members. to join the discussion
Copyright Chartered Management Institute © First published July 2014
All rights reserved. Except for the quotation of short passages for the purposes of criticism and review, no part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of the publisher. Chartered Management Institute 2 Savoy Court, Strand British Library Cataloguing in Publication Data London WC2R 0EZ A CIP catalogue record for this report is available Registered charity number 1091035 from the British Library Incorporated by Royal Charter 0-85946-449-X
CMI management2020_COVER SPREADS.indd 2 10/07/2014 13:07