Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

University of Birmingham

FINAL REPORT

P W Daniels and J R Bryson

Services and Enterprise Research Unit School of Geography, Earth and Environmental Sciences

March 2006

Copies available online at: http://www.gees.bham.ac.uk/research/seru/BPSskillsneeds/index.htm Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Acknowledgements

The preparation of this report has benefited from the inputs of numerous individuals, representative organizations, and firms.

In addition to all those who have given up valuable time to participate in a region-wide telephone survey of BPS firms, the depth interviews and the focus groups, the inputs of the following are gratefully acknowledged:

Simon Murphy, Chief Executive, Birmingham Forward Richard Johnson, Executive Director, Birmingham Professional DiverCity Helen Bradley, Birmingham and Solihull LSC Kim Gilman, Telford Business Partnership Sid Stephenson, Head of Adult Strategy, Shropshire LSC Tracey Brown, Workforce Development Coordinator, Coventry and Warwickshire LSC Sue French, Sector Manager, Staffordshire LSC Ian McLauchlin, Project Manager, finest Network North Staffordshire Frances Roberts, Skills and Partnership Manager, Hereford and Worcester LSC Katherine Campbell, Coventry First Simon Tulitt, Partnership Manager, Specialist Business and Professional Services, Birmingham and Solihull Chamber of Commerce

We have also benefited enormously from the guidance, insightful comments, and support provided via the auspices of the regular meetings of the Project Steering Group:

Alan Martin, Marilyn McHugh, Simon Tulitt, Peter Shearer, Claire Holden, Sue French, Helen Bradley (until December 2005), Lyndsey Allen

We would also like to thank Mary Costello and the team of bookers, telephone, and field interviewers at BMG Research who have made it possible to compile the quantitative and qualitative information for this report.

We are indebted to Bob Ford, School of Geography, Earth and Environmental Sciences for assistance with the analysis of the telephone survey data.

The project has also benefited from invaluable administrative and technical assistance provided by Claire Clarke, Lynn Ford, Kevin Burkhill, and Lynne Pearce, all at the School of Geography, Earth and Environmental Sciences, University of Birmingham.

This Report has been co-financed by the European Social Fund and commissioned and managed by the Learning and Skills Council (Contract 042003WM2).

About the Authors

Peter Daniels ([email protected]) and John Bryson ([email protected]) are attached to the Services and Enterprise Research Unit (SERU), School of Geography, Earth and Environmental Sciences, University of Birmingham, Edgbaston, Birmingham B15 2TT.

SERU has an established international reputation for: • Exploring the contribution made by service activities to regional, national and international economic and enterprise development. • Advancing knowledge and understanding of the role played by services industries and enterprise functions in shaping new economic geographies. • Raising awareness of the wider implications for society of the move to service dominated economies.

Full details and contacts at: http://www.gees.bham.ac.uk/research/seru/index.htm

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LIST OF CONTENTS

Acknowledgements 2

List of Contents, Tables, Figures 3

Executive Summary 9

1. Introduction 30

1. Objectives of the study 30 2. Structure of the report 32 3. Business and Professional Services and the West Midlands economy 32

2. The Survey of BPS Firms: Profiles and Attributes 35

1. Business activities of the survey firms 35 2. Legal Status of firms 35 3. Organizational type 35 4. Employment 35 5. Years at present site 38 6. Annual turnover 39 7. Regional variations in business and services 41

3. Skill needs of Business and Professional Services (BPS): The Context 47

1. National setting 47 2. Skills in the West Midlands 48 3. Occupation demand forecasts 50 4. BPS local networks 51

4. Recruitment and hard to fill vacancies in BPS 56

1. Incidence of job vacancies 56 2. Occupations in which firms had vacancies 56 3. Vacancies that are hard to fill 59 4. Occupations where vacancies are hart to fill 59 5. Reasons why vacancies are hard to fill 59 6. Views about skills that applicants lack 61

5. Evidence for a BPS skills gap 63

1. Staff proficiency 63 2. Skill gaps 63 3. Causes of staff lacking full proficiency 63 4. Skills needing improvement 66 5. Skill deficiencies and threats to competitiveness 71 6. Effects on the firm of all staff not being fully skilled 71

6. Workforce training and development by BPS 73

1. Strategic planning 73 2. Training conducted during the past 12 months 73 3. Training provided for different occupations 75 4. Types of training 76 5. Delivery of training 78 6. Preferred mode of training for new recruits and existing workforce 78 7. Formal qualifications achieved 79 8. NVQ training 79 SERU, University of Birmingham Page 3 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

9. Off the job training providers 81 10. Off the job training 84 11. Influence of external providers on type of training provided 84 12. Satisfaction levels with off the job training 84 13. Reasons why firms use particular external providers 84 14. Reasons why training not provided from local FE colleges 87 15. Difficulties experienced with local sources of training 90 16. Barriers in the firm to linking training to nationally recognised qualifications 90 17. Barriers which limit provision of training and development for staff 90

7. Variations in Skill Needs of BPS between LSC Regions? 94

1. Birmingham and Solihull LSC Region 94 In-depth interviews 98 Location 99 Skills shortages 101 Training 102 Further Education Colleges 104 Recruitment 105 Competitive advantage 106 Focus group 108 Policy issues 109 2. Black Country LSC Region 110 In-depth interviews 115 Location 115 Skill shortages 116 Training 117 Recruitment 118 Competitive advantage 119 Focus Group 121 Policy issues 122 3. Coventry and Warwickshire LSC Region 123 In-depth interviews 128 Innovative organizational forms 128 Skills shortages 128 Absence of support staff 128 Training 129 Recruitment 129 Competitive advantage 130 Focus Group 131 Policy issues 132 4. Hereford and Worcestershire LSC Region 133 In-depth interviews 138 Location 138 Organizational forms 138 Skills shortages 139 Training 139 Recruitment 141 Competitive advantage 141 Focus Group 143 Policy issues 144 5. Shropshire LSC Region 145 In-depth interviews 150 Recruitment 150 Generalist firms 150 Absence of support staff 150 Training 150 Location 151 Competitive advantage 151 Focus Group 151

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Policy issues 152 6. Staffordshire LSC Region 154 In-depth interviews 159 Location 159 Organizational forms 159 Skills shortages 159 Training 160 Recruitment 161 Competitive advantage 162 Focus Group 164 7. Overview and Synthesis 166

8. BPS Skill Needs at Sub-Sector Level 172

1. Real estate activities 172 2. Legal accounting business consultancy etc 177 3. Architectural & engineering activities 182 4. Labour recruitment 187

9. Policies for the Skill Needs of BPS Firms 192

1. Overview 192 BPS firms 192 Diversity of the sector 192 Recruitment 193 Training 194 Further Education Colleges 194 Succession and small firms 195 2. Policy Issues For Addressing Skill Needs In The West Midlands Bps 195 Community Generic issues 195 Local and regional issues 196 FE-related issues 197 Other policy issues 198

Appendices (Separate Document) 199

A1. Study methodology implementation and limitations: 202

Survey population 202 Survey sample 202 Target sectors and survey sample 202 Telephone survey 203 Depth interviews 203 Focus groups 204

A2. Telephone survey instrument 211

A3. Depth-interview survey instrument 227 Profile of organizations willing to take part in qualitative aspects of the survey 231 Depth interview booking script 233

A4. Depth Interviews: final transcript distribution: by LSC, firm size, and BPS activity 236

A5. Focus Groups: setup procedure and Facilitator guidance 240 Focus Group booking script 242 Focus Group facilitator guidance 245

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LIST OF TABLES

Table ES.1 Structure of telephone and depth interviews: by main business activity and 11 SIC division Table ES.2 Extent to which firms have ensured strategic support for training programmes 14 Table ES.3 Comparative synthesis of key skill needs and issues: quantitative and 18 qualitative survey sources, by LSC region, West Midlands

Tabl1 1.1 Counties, West Midlands: Employee jobs (%) in service industries, 2003 32 Table 1.2 Counties, West Midlands: employment structure (%) by occupation, 2004 33 Table 1.3 Projected employment growth and regional share, UK regions, 2002-2012 34

Table 2.1 Survey firms, by activity (SIC groups) 36 Table 2.2 Legal status of firms 37 Table 2.3 Organisational type of firms 37 Table 2.4 Numbers employees on site, in the West Midlands and the UK 39 Table 2.5 Years spent at present site 40 Table 2.6 Selected summary measures of size of workforce by LSC region 46

Table 3.1 Recruitment problems: BPS, England, 2003 48 Table 3.2 Indicators of skill deficiencies and recruitment difficulties: LSC regions, 49 West Midlands, 2003 Table 3.3 Density of recruitment problem and skills gaps: West Midlands and London, 49 2003 Table 3.4 Counties, West Midlands: Qualification levels (%) of working age 50 population, 2003-2004 Table 3.5 Incidence of skill gaps: West Midlands, London, England, 2003 50 Table 3.6 Skills gaps: BPS, England, 2003 51 Table 3.7 Skills gaps: BPS, England, 2003 Birmingham and Solihull LSC: Employment 53 change (%), BPS activities by occupation sub-groups, 1981-204 and 2004- 2014

Table 4.1 Significant contrasts in vacancy levels among firms: by selected 57 characteristics Table 4.2 Firms with hard to fill vacancies in major occupation groups: total and as % 60 of all firms with vacancies in the group

Table 5.1 Staff proficiency levels: main occupation groups (SOC2000) 64 Table 5.2 Causes of skill gaps: occupations with the greatest problems 65 Table 5.3 Main causes of why staff not fully skilled: firms with skill gaps 67 Table 5.4 Skills needed to bring staff to full proficiency 68 Table 5.5 Skills deficiencies viewed as biggest threat to a firm’s ability to compete in 71 the marketplace Table 5.6 The effects on the organisation of not having a fully skilled workforce: firms 72 with proficiency problems

Table 6.1 Extent to which firms have ensured strategic support for training programmes 74 Table 6.2 Variation in extent to which firms have ensured strategic support for training 75 programmes: by selected characteristics of firms Table 6.3 Percentages of firms offering (a) different types of training and (b) whether at 77 the desk or workplace Table 6.4 Formal qualifications obtained by staff during the past two years 79 Table 6.5 Reasons why firms were dissatisfied or very dissatisfied with NVQ training: 82 last five years Table 6.6 Off the job training providers: (a) only provider used by firms and (b) number 83 of times provider preferred in comparison pair Table 6.7 Number and % of all firms using their most important external provider for 85 each type of training Table 6.8 Types of training which took place in the last 2 years as a result of tailored or 85 customized advice from an external provider Table 6.9 Reasons given by firms for not obtain training from the local FE college 89 SERU, University of Birmingham Page 6 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 6.10 Barriers limiting the provision of training and development of staff (ranked 91 by frequency mentioned)

Table 7.1.1 Characteristics of firms in the Birmingham and Solihull LSC region 95 Table 7.1.2 Job vacancies of firms in the Birmingham and Solihull LSC region 95 Table 7.1.3 Skill needs of firms in the Birmingham & Solihull LSC region 96 Table 7.1.4 Workforce training by firms in the Birmingham & Solihull LSC region 97 Table 7.2.1 Characteristics of firms in the Black Country LSC region 111 Table 7.2.2 Job vacancies of firms in the Black Country LSC region 111 Table 7.2.3 Skill needs of firms in the Black Country LSC region 112 Table 7.2.4 Workforce training by firms in the Black Country LSC region 113 Table 7.3.1 Characteristics of firms in the Coventry and Warwickshire LSC region 124 Table 7.3.2 Job vacancies of firms in the Coventry and Warwickshire LSC region 124 Table 7.3.3 Skill needs of firms in the Coventry and Warwickshire LSC region 125 Table 7.3.4 Workforce training by firms in the Coventry and Warwickshire LSC region 126 Table 7.4.1 Characteristics of firms in the Hereford and Worcester LSC region 134 Table 7.4.2 Job vacancies of firms in the Hereford and Worcester LSC region 134 Table 7.4.3 Skill needs of firms in the Hereford and Worcester LSC region 135 Table 7.4.4 Workforce training by firms in the Hereford and Worcester LSC region 136 Table 7.5.1 Characteristics of firms in the Shropshire LSC region 146 Table 7.5.2 Job vacancies of firms in the Shropshire LSC region 146 Table 7.5.3 Skill needs of firms in the Shropshire LSC region 147 Table 7.5.4 Workforce training by firms in the Shropshire LSC region 148 Table 7.6.1 Characteristics of firms in the Staffordshire LSC region 155 Table 7.6.2 Job vacancies of firms in the Staffordshire LSC region 155 Table 7.6.3 Skill needs of firms in the Staffordshire LSC region 156 Table 7.6.4 Workforce training by firms in the Staffordshire LSC region 157 Table 7.7 Comparative synthesis of key skill needs and issues: quantitative and 168 qualitative survey sources, by LSC region, West Midlands

Table 8.1.1 Characteristics of Real Estate Activities firms 173 Table 8.1.2 Job vacancies in Real Estate Activities firms 173 Table 8.1.3 Skill needs of Real Estate Activities firms 174 Table 8.1.4 Training arrangements of Real Estate Activities firms 175 Table 8.2.1 Characteristics of Legal, Accounting and Business Consultancy firms 178 Table 8.2.2 Job vacancies in Legal, Accounting and Business Consultancy firms 178 Table 8.2.3 Skill needs of Legal, Accounting and Business Consultancy firms 179 Table 8.2.4 Training arrangements of Legal, Accounting and Business Consultancy firms 180 Table 8.3.1 Characteristics of Architectural and Engineering Activities firms 183 Table 8.3.2 Job vacancies in Architectural and Engineering Activities firms 183 Table 8.3.3 Skill needs of Architectural and Engineering Activities firms 184 Table 8.3.4 Training arrangements of Architectural and Engineering Activities firms 185 Table 8.4.1 Characteristics of Labour Recruitment firms 188 Table 8.4.2 Job vacancies in Labour Recruitment firms 188 Table 8.4.3 Skill needs of Labour Recruitment firms 189 Table 8.4.4 Training arrangements of Labour Recruitment firms 190

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LIST OF FIGURES

Figure ES1 Providers of off job training: by number of firms, business sector and percentages of 29 all firms using each type of provider Figure ES2 Ratings of quality of training and mean scores by mode of delivery 15 Figure ES3 Matrix showing the percentages of firms with proficiency problems in each 16 occupation group who felt particular skills needed improvement

Figure 1.1 Map of Objective 2 Areas: West Midlands 31

Figure 2.1 The organizational type of survey firms by SIC division 38 Figure 2.2 Mean number of on site employees for firms: by legal status and 40 organisational type Figure 2.3 Histogram showing number of years firms have spent at their current site 42 Figure 2.4 The number of years firms have been trading at their present site: various 42 selected categories of firms Figure 2.5 Estimated annual turnover: pre-selected groupings 43 Figure 2.6 Main business activities of firms, by LSC region 43 Figure 2.7 The legal status of firms, by LSC region 44 Figure 2.8 Organisational type of firm, by LSC region 44 Figure 2.9 Number of employees at present site, by LSC region 45

Figure 4.1 Percentages of firms with vacancies and vacancies as a percentage of 58 employment: firms by employment size group

Figure 4.2 Number of firms reporting vacancies and hard to fill vacancies: by occupation 58 (3 digit SOC) Figure 4.3 Reasons why firms had vacancies that proved difficult to fill 61 Figure 4.4 The number of firms citing difficulties of obtaining the following skills from 62 applicants for hard to fill vacancies

Figure 5.1 Whether all staff fully proficient for different size groups of firm: by number 64 of on-site employees Figure 5.2 Leading causes of staff not being fully proficient: by occupational groups 67 (percentage of firms experiencing skill gaps) Figure 5.3 Matrix showing the percentages of firms with proficiency problems in each 70 occupation group who felt particular skill needed improvement

Figure 6.1 Percentage of staff reviewed annually 74 Figure 6.2 Percentages of firms that provide training and whether it is primarily for the 77 existing workforce or new recruits Figure 6.3 Percentage of firms providing training: past two years, by occupational group 78 Figure 6.4 Ratings of quality of training and mean scores by mode of delivery 80 Figure 6.5 Preferred mode of training for delivery (a) new recruits and (b) existing 80 workforce Figure 6.6 Levels of satisfaction with NVQ training: past five years 82 Figure 6.7 Providers of off job training: by number of firms, business sector and 83 percentages of all firms using each type of provider Figure 6.8 Number of times each type of provider preferred when compared with 85 another type of provider: firms that used more than one provider of off the job training Figure 6.9 The types of training for which the most important provider is used: by 86 provider’s sector Figure 6.10 Levels of satisfaction with different types of “off-the-job” training 87 Figure 6.11 The reasons firms use particular providers to deliver “off-the-job” training 89 from the Further Education, the Private and Other sectors Figure 6.12 Skills that firms feel are difficult to source using local training providers 91 recorded by number and percentage of all survey firms Figure 6.13 Barriers identified by firms as limiting development of training to nationally 92 recognised standards

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EXECUTIVE SUMMARY

INTRODUCTION

Competition between nations in an increasingly globalized economy is placing a high and rising premium on labour force skills. Employers and employees need to be more adaptable, flexible and willing to invest and to incorporate training into their individual and corporate development strategies.

Some sector and local area information relevant to BPS can be extracted from NESS 2003. The highest share of skill shortage vacancies (SSVs) in the West Midlands occurred in Other Business Activities (16.5% of all SSVs)1; a level that is higher than expected from its share of all employment (11.5%). Using a measure of density as a surrogate for the intensity of recruitment problems (based on vacancies or recruitment problems measured as a proportion of employment), Miscellaneous Business Activities Not Elsewhere Classified also recorded a high figure of almost 5 per cent.2

The best qualified population in the region are in Shropshire, Herefordshire and Worcestershire, and Coventry and Warwickshire, ranking between 16th and 19th for the number of working age population with a qualification at NVQ Level 4 or above. Herefordshire and Worcestershire also rank in the top 10 for qualification at NVQ Level 3.

This study contributes to an understanding of some of the issues as they relate to the needs of BPS within the West Midlands region.

OBJECTIVES OF THE STUDY

1. To provide a rigorous and academically sound quantitative and qualitative analysis of the skill needs BPS firms located in Objective 2 Wards within the West Midlands.

2. To undertake a demand-led analysis of specific skill needs by LSC region and BPS sub-sector that will also identify practical solutions to identified needs.

3. To identify BPS skill gaps, including any intra- and inter-regional and sector differences.

4. To provide an analysis that will enable local LSCs to benchmark the skill needs and performance of BPS in their area.

5. To publicize the use of ESF funding and the role of LSCs in addressing skills gaps and related issues for PBS in the region.

6. To provide an accessible and user friendly set of outputs that will inform the development and delivery of policy in this area and provide a tool that can be used for lobbying.

The project is positioned in European and national policy debates that identify the quality of people's skills, ideas and education as key sources of competitiveness in the developing knowledge economy.

1 See Appendix A, Table A.1 for a list of the activities included. 2 Photographic activities, Packaging activities, Secretarial and translation activities, Other business activities not elsewhere classified.

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STRUCTURE OF THE REPORT

The main body of the report comprises four main parts.

1. An exploration of aspects of the skill needs of BPS firms across the Objective 2 areas within the West Midlands as a whole.

2. An examination of the skill needs of BPS for Objective 2 area within each of the six LSC regions of the West Midlands.

3. An examination of selected BPS activities, namely: real estate activities; legal, accounting, business consultancy etc.; architectural and engineering activities; and labour recruitment services.

4. An elaboration of the priorities and the policies for addressing the skill needs of BPS firms in the West Midlands.

BPS IN THE WEST MIDLANDS

The West Midlands region, and every county within it, has a smaller share of employment in BPS activities than the national average.

At the level of occupation groups, and especially those that are BPS-related (such as professional occupations or associate professional and technical occupations) the region overall, and individual counties, also compare less favourably with the national picture.

However, the share of BPS activities in the economy of the West Midlands is expected to demonstrate encouraging growth up to 2012. An estimated 101,000 increase (18.4%) between 2002 and 2012 compares with 17.1% for all UK regions.

THE SURVEY FIRMS: A SUMMARY

A representative sample of BPS in Objective 2 areas of the West Midlands has been used for a three-stage survey process. This has involved a telephone survey (1196 responses) and depth interviews (206 responses) (Table ES.1) representing approximately 1 in 5 of the total identifiable population of BPS firms in the Objective 2 areas and a similar ration of depth interviews to telephone respondents. A focus group was also convened at one location in each LSC region, namely Birmingham, Brierley Hill, Coventry, Malvern, Telford, and Stoke-on-Trent.

Firms were selected for the survey with special attention given to size and their distribution across the six LSC regions within the West Midlands (Appendix A).

The firms included in the survey are drawn from two SIC92 (Standard Industrial Classification 1992) divisions (Appendix A, Table A.1). The smallest division is Financial Intermediation and its 218 firms represent just 18.2% of the total sample. The balance of 978 firms is in the Real Estate, Renting and Business Activities division.

Just over one half of the survey firms are single site organisations and a further third are branches or subsidiaries of British companies with a HQ outside the West Midlands

The majority (58%) of firms in business services are single site organisations compared to 32% of the firms in financial services. In contrast multi-site organisations are more typical of firms in financial services especially where the West Midlands site is part of a British company whose headquarters is elsewhere in the country.

The 1,196 firms included in the survey retained 20,666 employees on site. The largest firm had a complement of 2500 workers but more typically the labour force was quite small. Although only 12 firms employed one person, 169 employed just two persons and 154 three persons. As a result just over 80% of firms employed 10 or less people.

The 563 firms which are not restricted to a single site provided a further 30721 jobs in the West Midlands region. This is nearly twice the total on site employment of 15,719 persons of these firms.

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Table ES.1 Structure of telephone and depth interviews: by main business activity and SIC division

Survey No. of % of % of Depth % of % of population: telephone total survey interview firms telephone Objective 2 interviews firms population firms survey areas firms Main business activity J - Financial 1242 218 18.2 17.6 32 15.5 14.7 intermediation K - Real estate, renting 4451 978 81.8 22.0 174 84.5 17.8 and business activities Totals 5693 1196 100 21.0 206 100 17.2

Main business activity by SIC division 65 Financial 690 105 8.8 15.2 10 4.9 9.5 intermediation 66 Insurance & pension 277 62 5.2 22.4 9 4.4 14.5 funding 67 Activities auxiliary to 275 52 4.3 18.9 13 6.3 25.0 financial mediation 70 Real estate, renting & 640 135 11.3 21.1 17 8.3 12.6 business activities 74 Other business 3811 815 68.2 21.4 154 74.8 18.9 activities 71 Renting of machinery * 15 1.3 * * & equipment1 72 Computer & related * 10 0.8 * 3 1.5 * activities1 73 Research & * 2 0.2 * * development1 Totals 5693 1196 100 21.0 206 100 17.2

Note: 1. Re-classified on the basis of information received during telephone interview.

The distributions of firm size are very similar for the Financial and Business services divisions. The average numbers on the payroll of the two divisions are respectively 15.7 persons and 17.6 persons compared to 17.3 for all firms.

Enterprises with relatively low turnover enterprises dominate the study with as many as 14.1% of respondents earning under ₤100k and just over half generating less than ₤1m per annum. There were some big earners; 8.2% of firms had a cash flow of more than ₤25m per year.

The six LSC regions differ in their mix of financial and business services but perhaps not as markedly as might be expected. Financial services are slightly more concentrated in Birmingham and the Black Country. It accounts for 19.1% and 19.4% of the survey firms with lower shares (14.2% – 17.1%) in the other four regions.

Although the regions have the same distinctive profile with smaller companies dominating, they can be roughly divided into two groups.

The first comprises the largely urban regions of Birmingham and Solihull, the Black Country, Coventry and Warwickshire and Staffordshire which are distinctive because they have more larger firms than the region as a whole.

The second group consists of the more rural regions of Hereford and Worcester and Shropshire in which virtually all firms employ 10 or fewer workers.

RECRUITMENT AND HARD TO FILL VACANCIES (HtfV)

Nearly one fifth of firms had vacancies at the time of the survey:

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• The probability of BPS firms in urban areas having vacancies was twice that typical of the more rural areas in the West Midlands.

• The proportion of firms with vacancies increases with the size of the workforce.

• The occupational groups for which the greatest number of firms reported vacancies were middle ranking jobs in administration, especially the general, finance and secretarial fields.

• Relatively few firms report vacancies in occupations at either end of the spectrum whether it be managerial, with the exception of production mangers, or elementary occupations.

• Just over 40% of the 232 firms with vacancies reported that they were finding it difficult to fill some of the positions.

• By far the most cited reason (50% of respondents with vacancies) for these difficulties was a shortage of applicants with the required skills The data suggests that firms in the Birmingham and Solihull LSC region or in the Business Services sector are most likely to face this problem.

In terms of the shortcomings of those applying for jobs:

• Communication skills are mentioned by 37% of the firms with HtfV. It was thought important for 16 of the 21 occupational groups considered in this study.

• Some one third of firms cited customer handling skills as a notable applicant shortcoming; it was mentioned for all but four of the occupational groups. It was most often cited in relation to applicants for post in the professional occupations.

• Technical and practical skills were third most frequently cited as being absent in candidates; notably those in Engineering, Business and Statistical professions, Architects, Town Planners and Surveyors.

• The inadequacy of office administrative skills and IT skills were both mentioned frequently with reference to applicants for administrative and secretarial positions.

• The lack of team working skills came up repeatedly for professionals especially in Engineering and Business but was rarely mentioned for other occupations.

BPS SKILL GAPS

Approximately 4 out of 5 firms felt that all staff were fully proficient at their jobs. This varied little between firms; concerns about proficiency were rarely significantly greater than the overall average of 19%.

The largest organisations had the greatest incidence of problems associated with staff proficiency. Approximately one-half of firms employing 100 or more had problems compared with just over one-third of firms with 25-99 employees.

Most concern was expressed about skill deficiencies amongst the Administrative and Secretarial workforce. However, Sales and Customer Service occupations assume more significance once ‘impact on the business’ becomes the criterion for assessing the impact of skill deficiencies on a firm’s activities (14.4% of employers then cited this factor).

Firms overwhelmingly cited (64.7%) lack of experience or the fact that staff had only been recruited recently (i.e. there had been insufficient time to train them in-house) as the main contributors to low levels of staff proficiency.

There is a general similarity amongst the causes of lower than expected levels of occupational proficiency but there are also some significant differences. The need for the workforce to keep up with change is viewed as a more serious problem for those employed as managers or in associate professional and technical occupations.

Failures in training are regarded as most serious for managers and administrative and secretarial occupations. A lack of experience or recent recruitment is viewed as significant in virtually all cases where proficiency is a problem for sales and customer occupations.

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Large employers (100+) are much less likely to cite recruitment problems as a cause of skill problems. Medium- sized firms (especially those with 25-99 employees) are most likely to find their workforce unable to keep up with change.

There are clear indications of scope for enhanced investment in training; approximately a quarter of the firms recognise that existing inadequacies are directly responsible for the skill limitations of their staff. It is difficult to believe that carefully designed programmes would not help overcome poor staff motivation, assist staff to keep up with change, and speed up the induction process for new staff.

Of the skills in need of improvement, communication skills topped the list (mentioned by 42.8% of firms with skills gaps), along with other skills relating to social interaction which included customer handling (41.0%) personal skills (40.0%). Team working (34.2%) also scored highly.

A matrix has been devised to illustrate the relationship between the skills identified by BPS employers as in need of improvement and occupation group (Figure ES.1, page 22).

It is evident that 60% of the firms with proficiency problems feel that practical/general management skills need improving for managers. This is significantly above the 40% average for all firms with proficiency problems.

Firms concerned about their managers identified a number of different areas in which improvement was felt necessary:

• Managers are thought to be particularly deficient compared to other sectors in the workforce with respect to general management, leadership, human resources, IT, professional, and personal skills.

• In the case of those in professional occupations special emphasis needs to be given to technical and practical skills and, where relevant, foreign language training.

• Associate professionals and technical occupations are disproportionately picked out as requiring improved personal skills and customer handling skills.

• Administrative and secretarial occupations need to especially improve their general IT and office administration skills.

Overall, skills gaps that reflect external drivers such as those relating to interaction with customers and competitors are of most concern to BPS firms in this study. Skill needs that areas linked to the internal operation of the firms are given less weight, perhaps because there is greater scope for intervention and compensatory action by the respondent, even though this may not generate optimal outcomes.

WORKFORCE TRAINING AND DEVELOPMENT BY BPS FIRMS

This part of the survey examines the extent to which respondent firms undertake training, the form it takes, and the role of external providers, especially the Further Education (FE) sector.

It is worth noting at the outset that there was some evidence of scepticism about the value of training. Although all three of the factors which reflected doubts about the potential value of training received only limited support from respondents, they nevertheless amounted to more than 1 in 6 of all firms. Single site firms and sole proprietorships are disproportionately represented in this group.

Nevertheless, approaching three quarters of the firms in the survey work to some form of business plan in which human resource issues are likely to be prominent (Table ES.2). Nearly 60% of firms had training plans in which the level and type of training given to employees is specified in advance. The importance of appraisal was also acknowledged with 70% of respondents holding annual performance reviews.

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Table ES.2 Extent to which firms have ensured strategic support for training programmes

Number % of all of firms firms Have a business plan 861 72.0

Have a training plan 711 59.4

Have a training budget 549 45.9

Have an annual performance review or 835 69.8 appraisal system

All of the above 413 34.6

None of the above 157 13.1

But only 10% of the workforce was incorporated into some appraisal exercises, although over half the firms did include all their employees.

Overall, there was considerable diversity in business practice with respect to strategic planning. Some 1 in 3 of the firms utilised all of the procedures investigated but 1 in 8 firms who claimed not to have used any, with the remainder (52.3%) implementing one of more but not all of the four methods.

Just over two-thirds of the firms had funded or arranged training for their employees during the previous 12 months. Large, urban-based, and multi-site firms are more likely to have made training available to their staff and for almost every occupational group training levels are generally highest in urban areas.

The training used most often by the survey firms at some time during the previous two years was job specific. It is the most widespread form of training for all categories of firm. Other important types of training are in health and safety, new technology, and induction.

The relative importance of different types of training does not vary significantly between the six LSC regions.

On the job and in–house training was easily the most frequently used mode of training delivery. It was used by 81.1% of the 920 “training” firms. The second-most important mode of training delivery was off the job by external provider (49.4% of firms).

On the job training stands out as the most appreciated of the four modes of delivery considered largely because of the high scores awarded by small firms (Fig. ES.2). The ratings made by the larger BPS firms do not clearly favour either employee or externally provided training.

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Figure ES.2 Ratings of quality of training and mean scores by 800 mode of delivery Mean score = 4.30 5 - very good 4 3 2 600 1 - very poor

Mean score = 4.12

400

Mean score = 4.08 Number of firms of Number

Mean score = 4.14

200

0 on the job - delivered by on the job - delivered by an off the job - delivered by off the job - delivered by an employees external training provider employees external training provider

During the previous two years, a total of 600 firms (marginally over 50% of all respondents) had used external providers for their training and development activities. As a result, staff in some 287 of these firms had achieved a formal qualification, varying from university degrees to first aid certificates.

Firm size is a good indicator of the likelihood of training leading to a formal qualification. For example, staff in 75% of firms with 100 or more employees obtained a qualification as an outcome from training; the equivalent for small firms (1-10 employees) was 41.9%.

Private sector companies were by far the most frequently used for off the job training (Fig. ES.3). Three out of every four firms had used such providers some time in the previous two years. FE was the second most important provider of off the job training (29.8%); equivalent to just 158 firms. The numbers utilising higher education and public sector providers were even lower; 103 and 74 firms respectively.

When comparison pairs confirm that private training companies are the most preferred provider type (rating highest in 134 comparisons), but FE is not far behind as its providers were rated best in 100 comparisons.

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Figure ES.3 Providers of off job training: by number of firms, business sector and percentages of all firms using each type of provider

Further education 29.8% Financial services provider Business services

Higher education provider 19.4%

Public sector training 14.1% provider

Private sector training 73.6% consultancy

Other training company 12.6%

0 100 200 300 400 Number of firms External providers are used in a great variety of ways. They lead the way for job specific training, but management training, new technology, and health and safety training are all areas in which a single external provider plays a key role. Externally-based trainers are used much less frequently for supervisory training and for induction training.

For the majority of firms the training provided was not customised or tailored to their particular requirements. Customised advice was most important for job-specific training, although for virtually all types of training, with the exception of foreign languahes, there was clearly some scope for customisation.

Firms expressed high levels of satisfaction with all types of off-the-job training. At least 80% claimed to be satisfied in all cases with all mean scores (5=very satisfied,…,1=very dissatisfied) well above four (i.e. better than satisfactory). Supervisory training is marginally rated most satisfactory (apart from foreign language training which involves very few firms). Least satisfactory ratings are given to new technology training. Only a very small number of firms (nine) expressed considerable dissatisfaction with the training provided for them during the last two years.

The choice of external providers is in many cases determined by whether they are able to supply the “specialised/job specific training” required (11.6% of firms). The second most popular reason (10.4%) was that the provider was able to offer “relevant training/qualifications”. This overlaps with the first reason and suggests that options may be limited. The third most often cited reason for choosing a provider (9.4%) was that there was “no specific reason”. This is difficult to interpret; it may indicate a lack of concern, justified or otherwise, about the credentials of training providers or the details of the training provided.

The importance of job specific and relevant training are popular reasons for choosing private sector and FE providers but the former “has the best expertise”, the “course tailored to our needs”, and “no one else does the training”. FE only scores more highly for the provision of relatively specific types of training. Private sector provision scores well when flexibility and quality are deemed important by their clients.

In relation to all training provided externally, four reasons were given for not electing to use a local FE college:

• There is a widespread belief that the local FE college does not offer an appropriate training product, either because the level is too low or because the instruction is not specialized enough to meet a firm’s requirements.

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• A second group of reasons reveal ignorance of what the local FE College might have to offer (1 in 4 responses). Some firms claimed not to have considered an FE college at all, or to be unaware of what courses were available at the local college.

• Third, are reasons that amount to a preference for other providers along with the ‘poor quality’ of FE courses

• In some instances, FE colleges could not be considered because a firm was tied to another provider, or the sourcing decision for training was taken elsewhere in their organization (6% of responses).

Yet, only a small number of firms (5.9% actually claimed to be having difficulties with sourcing local training. The regions where local supply was most problematic are Hereford and Worcester and Staffordshire; it wad considered least problematic in Shropshire and Birmingham and Solihull.

Of the 71 firms reporting problems with local sourcing for their employee skill needs, job specific and management skills were cited by approximately 12%,, followed by IT (10%), accountancy (6%), and design skills (5%).

SKILL NEEDS VARIATIONS BETWEEN LSC REGIONS

A major part of the report examines the extent to which there are differences in the skill needs of BPS amongst the six LSC regions in the West Midlands.

Each of the six LSC profiles utilises:

• Selected data series which are reproduced in accompanying sets of tables. These record counts and percentages for each region and equivalent data for all the firms in the survey to facilitate comparison.

• Highlights of the key issues and themes identified by the in-depth interviews.

• A summary of the discussion points at the focus group meeting in each LSC region.

There is a very large quantity of quantitative and qualitative information contained within the above overviews of the skill needs of BPS firms in each of the six LSC regions within the West Midlands.

Briefly annotated comparisons for each LSC region are provided as a table (Table ES.3) which is organised as follows:

• General characteristics of the survey firms (from telephone survey) by: o Key attributes o Job vacancies o Skill needs o Workforce training

• Location

• Skill shortages

• FE provision

• Recruitment

• Competitive advantage

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Table ES.3 Comparative synthesis of key skill needs and issues: quantitative and qualitative survey sources, by LSC region, West Midlands

Birmingham and Black Country LSC Coventry and Hereford and Shropshire LSC Staffordshire LSC Solihull LSC Warwickshire LSC Worcestershire LSC General: Firms Small enterprises Firms typically smaller Business activities, Single site organizations Single site enterprises Majority of firms are single dominate; more large than average; especially labour dominate; engineering and private limited site; number of medium-sized firms than elsewhere; composition of business recruitment prominent; and architectural firms firms; sole firms relatively high; single site firms; types broadly firms with HQs outside over-represented; labour proprietorships above composition of firms by sector business services representative of West WM prominent; fewer recruitment average; only one firm comparable with WM. important. Midlands. single site enterprises. underrepresented; more than10 workers almost all firms employ fewer than 10 on site. Job vacancies HtfV not a serious HtfV a major issue for High incidence of HtfV Small sample makes None of the firms Few firms indicated HtfV; problem; critical areas professional for firms with openings generalization difficult; reported HtfV. vacancies that were available are professional, occupations; ‘lack of in professional notable that firms difficult to fill because of ‘low associate professional, required skills’ main occupations. seeking to fill number of applicants. administrative, issue; ‘not enough professional jobs have secretarial people interested’ higher fewer problems than than elsewhere. elsewhere. Skill needs Administrative and Administrative and Proficiency re associate Staff proficiency Proficiency problems in Proficiency limitations notable secretarial; lack of secretarial occupations; professionals and problems across all professional, for associate professional and experience main cause lack of experience technical occupations occupations but worst in administrative, technical occupations; of skill problems; explains staff lacking (twice level in other sales and customer secretarial occupations; marginally less so professional improved skills needed proficiency; regions); inexperience at services occupations, lack experience or staff and administrative occupations; in office administration, communication, recruitment stage also administrative and only recently recruited most concern about gaps in problem solving, data technical, practical and explains lack of secretarial; office explains proficiency manager, professional and analysis customer handling skills proficiency; Needs are administration, IT, limitations; need to associate professional skills; main requirement. communication, communications skills improve technical, need improvement in team personal, customer are gaps needing practical, general working, leadership, and handling skills attention. management skills. problem solving. Workforce training Higher than average Strategic planning lower Strategic planning most Engagement in strategic Use of strategic planning Strategic planning in line with commitment to strategic than WM average; on- widely used of all planning is well below levels in WM as whole; arrangement of planning; on-the-job the-job training regions; firms with comparatively low; much of WM; training marginally below training favoured mode; favoured; limited use of training plan also worst of all LSC investment in training average; on-the-job training by off-job dominated by other modes, led by highest; strong regions; on-the-job last 12 months also employees main mode; private private sector private training commitment to training; training by employees lower; on-the-job sector consultants dominate consultants consultancies. on-the-job or private preferred mode; private training by employees external provision external training. training consultancies preferred; external by preferred. pre-eminent. private trainers. Location Diversity of BPS Complex BPS Not an attractive BPS community has Similar difficulties to Concerns about attraction and community makes community reflecting location for BPS distinctive other ‘rural’ LSCs; retention of professionals as a generalisations difficult; needs of local clients; professionals characteristics, partly availability of local function of location, size of large firms make this link between economic (Coventry); highly explained by location; training limited; local BPS community relative LSC different; majority history of sub-region innovative firms in this relatively isolated within professionals travel to to Manchester or Birmingham. of firms able to fill and BPS specialisms; LSC; including legal and WM and in relation to Birmingham or London;

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Birmingham and Black Country LSC Coventry and Hereford and Shropshire LSC Staffordshire LSC Solihull LSC Warwickshire LSC Worcestershire LSC professional vacancies; proximity to organisational other BPS difficulties recruiting best prefer to work in Birmingham a problem; structures; flexibility of concentrations; and retaining young London; attraction of but young professionals approach means firms recruiting and retaining professionals; age London not mentioned choosing to live in BC have limited support professional staff profiles of some firms by smaller firms; eventually choose to staff requirements; difficult because of suggests spin-offs into branches of national work there; small professionals often self- ‘remote’ location, new practices or return firms recruit support reverse shift. employed. especially firms migration by Shropshire staff in region, operating from rural professionals after professional staff locations.. period in London etc. recruited by HR team elsewhere; importance of national organisation structure Skills Shortages Difficult to recruit staff Shortage of certain types Emphasis on people Multi-tasking a common Absence of significant Skills shortages caused by able to make immediate of employees related to (soft) skills and feature; limited or no concentrations of BPS in attraction of other areas; contribution to business; the expertise base of personality (partly support staff means that the LSC region makes it especially significant for also commercially aware sub-region; staff function of no of professionals undertake difficult for local BPS professional staff; also support professionals; skills gap ‘poaching’ common recruitment firms); mix of basic and either to recruit or to staff; identifying individuals between ‘self skills’, amongst traditional difficult for small firms advanced tasks; benefits develop staff with with appropriate skill set a management skills, BPS; recruitment rare to attract highly skilled from training specialist expertise problem; pool of skills reflects technical skills; key occurrence for small staff or support staff, the professionals in skills expected by clients; presence of similar firms; shortage of individuals firms but when attraction of that will support their notable absence of departures of similar businesses with intangible skills. necessary have Birmingham, higher business but would be support staff in many can lead to ‘skills isolation’. experienced real salaries elsewhere; reluctant to be trained firms; limits effects of difficulties. reluctance to recruit alongside support staff. skills issues. support staff without fee generating capacity. Training Small firms only Few companies Depth-interviews Availability of training Reflects demands placed Dichotomy between formal and undertake ‘essential’ investing in training for contradict telephone undermined by difficult on professionals proactive approach of larger, CPD training; via support staff; well- survey – training infrastructure, dispersed working in a multi- specialist BPS firms professional bodies or developed staff appraisal provision very limited population; some tasking environment (professional and support staff) private training by larger firms. (apart from CPD for provision is point typical of small firms; and inclination to provide providers; larger firms professional staff); specific; those closest to CPD key driver; support minimal training (other than have well-developed support staff training the provision obtain the staff training tends to be CPD) on part of small firms; staff appraisal systems neglected. greatest benefits, firms ad hoc. latter provide limited training and more formal training in remote locations for support staff.; some firms procedures. denied access to had developed graduate entry available skills training schemes. FE Provision Limited role; location Few use FE colleges; Image problem; not a FR colleges associated FE colleges have captive FE colleges used by some firms and timing of provision accountants use for provider of bespoke with provision of less market; they don’t and for support staff training or for important; key issue is technician training and training solutions; no specialist expertise; do not have to market training paraprofessionals; persuading BPS firms some firms used for training solutions concerns about access their courses; the key generally FE seen as provider that FE colleges are support staff (customer between long course (distance and time). problem is that BPS of inappropriate skills training; suitable training relationships); FE provided by FE/HE and firms are unaware of the absence of training in key SERU, University of Birmingham Page 19 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Birmingham and Black Country LSC Coventry and Hereford and Shropshire LSC Staffordshire LSC Solihull LSC Warwickshire LSC Worcestershire LSC providers; need proper colleges do not provide short courses offered by training that is available; generic skills required by BPS dialogue between FE commercially aware private trainers. needs to be more such as soft skills providers and BPS training opportunities. information about FE professional bodies and provision; access is networks important, should not need to go out of county. Recruitment Role of extant Word of mouth, schools, Generally by word of Difficult to recruit Tend to recruit from Some use of Job centres but for relationships and agencies, local press. mouth or by local specific types of small pool of local less technical BPS employees; personal referrals Specialist firms had advertisement for specialist expertise; people known to firms; word of mouth and existing (networks); small firms great difficulties but smaller firms; more recruitment less reflects size of firms and contacts used by small and use local press and word these tend to operate as formal mechanisms used problematic in main small size of BPS large BPS firms, mainly on of mouth; larger firms ‘close knit communities’ by larger firms or branch population centres; very community; firms tend informal basis; recruitment rely on agencies; many in which informal offices, especially for much a rural BPS firm to know each other, who agencies used by large firms, firms paid recruitment contacts are vital in the support staff problem; so significant is hiring or not hiring some also participating in bonuses to existing staff recruitment process; (recruitment agencies that some firms failing etc. university recruitment fairs; if recommending some companies used) but word of mouth to grow, or even advertising via corporate someone eventually overlook graduates, or friendships important downscaling. websites. recruited by firm. recruit and develop when recruiting school leavers; many professionals. firms noted great difficulty recruiting professional staff; succession issues for small firms. Competitive Similar to other LSC Founded upon In common with other Founded upon price, Speed of response, Founded on quality of services Advantage regions; key difference personalities, LSC regions, related to personalities involved, thorough attention to provided as well as staff is size of local client reputations, contact quality of expertise specialist or niche detail, providing a (professional and support); base, diversity of networks, expertise of offered, client focussed expertise; quality of life personal service; most of difficulty recruiting qualified potential employees fee earners; stress placed approach, cost; some factors, as well as the firms in this region support and professional staff (support and on uniqueness of each clients retreating to distance from are providing expertise acknowledged to be a key issue professional, availability firm’s collection of larger firms as perceived Birmingham has to local clients; not in for maintaining of training; competitive clients which creates to offer more protection stimulated development direct competition with competitiveness. BPS firms are extremely possibility to develop in times of difficulty; of niche firms and BPS larger practices. flexible, act unique market position contributes to specialisms. strategically, are highly which may form around strengthening visible in chosen localised friendship Birmingham’s role. marketplace. network.

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An overview of Table ES.3 points to a number of common issues for BPS firms across the West Midlands, including:

• A segmented approach to exploring and understanding the skill needs of BPS is vital; it reflects the functional, organisational, and size range of businesses in this sector.

• Ways of addressing skills and training needs tend to be dichotomised between micro-scale and small firms on one side, and medium/large firms on the other, especially where the latter are branches or subsidiaries of larger national or international organisations.

• BPS firms that are part of large and diverse (mainly urban) business communities (or complexes) face different skills issues to those located in primarily rural, low density, groupings of BPS.

• The recruitment and retention of professional staff is an issue in all the LSC regions.

• Proficiency problems primarily impact professional and technical occupations, and administrative and technical occupations.

• Enhancement of proficiency in ‘soft skills’ is a more pressing need than enhancement of technical skills (although there is of course an ongoing requirement for the latter).

• Most of HtfV arise from the demand for staff in professional occupations and key paraprofessionals.

• Multi-tasking is unavoidable in small BPS firms; training is on a ‘needs must’ basis with professional staff undertaking required CPD while support staff training is often neglected.

• Skill needs are sometimes ‘hidden’ in the sense that small firms will only hire support staff as a last resort; preference is for recruitment of fee-earning staff.

• Strategic planning of skills and training, as well as a planned commitment of company expenditure, is more likely to occur in medium-sized and large firms. Since these are also more likely to be located in the larger, urban, clusters of BPS they reinforce the ‘skills availability advantage’ of those areas. This process tends to work against the interests of the firms in the rural LSC regions.

• Training is dominated everywhere by on-the-job input by employees.

• Private training providers are the most likely supplier of bought-in training because they offer flexibility and customisation; cost is a consideration when choosing a supplier, but is outweighed by other factors.

• FE and HE are well behind private trainers in the provision of training for BPS firms, both in the volume and types of provision used.

• Prejudices and perceptions about what FE and HE actually provide, especially the former, are widespread. This is compounded, on the BPS side, by a lack of knowledge of what is available and, on the college side, by only limited efforts to understand BPS needs and to deliver accordingly.

• A number of recruitment difficulties exist but it is important to recognise that for most of the (numerous) small BPS firms recruitment of any sort is a comparatively infrequent activity.

• The role of word of mouth and personal networks/contacts as a recruitment device, especially outside the larger BPS clusters, should not be underestimated.

• Agencies and other more formal methods of recruitment are largely the prerogative of medium-sized and especially larger BPS firms. Likelihood of use is increased if firms are branches of multi-site, national or international companies.

• Recruitment of graduates, especially into professional vacancies, is important but some firms are turning to school leavers who are then trained to the level required. This approach is being used to address the graduate recruitment and retention problem encountered in all the LSC regions except Birmingham and Solihull.

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• Many firms are not prepared to acknowledge that there is a link between competitiveness and skills. Most prefer to cite quality of service, professionalism and expertise of staff, careful response to client needs, or competitive pricing as the foundation for their competitiveness. The larger groups of BPS within the region again acquire some advantage because of the size of the client base and the diversity of the potential support and professional staff available to them.

While there may be differences in detail or emphasis, broadly speaking the skills and training needs of BPS across the West Midlands Objective 2 Areas are very similar.

BPS SKILL NEEDS AT SUB-SECTOR LEVEL

There are sufficient responses for four of the BPS activities included in this study to permit more detailed analysis. These are:

70.3 Real estate activities (125 firms) 74.1 Legal, accounting & business consultancy (319 firms) 74.2 Architectural & engineering activities (240 firms) 74.7 Labour recruitment (183 firms)

Real estate activities

Firms involved in real estate activities form one of the largest SIC groups covered in this study.

They are evenly distributed among the six West Midlands LSC regions but there is evidence of slight clustering in the Coventry & Warwickshire and the Birmingham & Solihull regions, and under-representation in the Black Country.

HtfV are not a serious problem for real estate firms judging from the limited data available.

There are only a few reports of proficiency problems and no significant concentration in any one occupational group. Only in the associate professional, administration and secretarial areas was any real concern expressed about skills gaps.

While the practice of working to business plans and regularly reviewing staff is well established in the real estate industry, there is a lower than average commitment to training.

Overall the real estate industry seems to have few general skills problems but there are particular areas of concern. Attitudes to training do not seem as positive as some other sectors. This may be because local offices that are branches of regional or national firms have less responsibility for this activity.

Legal, accounting and business consultancy

This is the largest group of activities (319) included in the study. Generalisations are difficult for enterprises whose circumstances and traditions may vary widely.

Regional disparities are limited with a tendency for these activities to be oriented towards town centre locations. There is a slight over-representation in the multinucleated Black Country.

Legal, accounting and business consultancies are experiencing some problems in filling vacancies that are primarily in professional, administrative, and secretarial occupations. The majority of firms encountering recruitment difficulties were particularly concerned that their problems were exacerbated by the fact that insufficient applicants had the required skills.

Lack of proficiency was a significant problem with administrative and secretarial staff. Skills shortages were also frequently noted for professionals but at much the same level as experienced by BPS generally.

The take-up rates for business plans, training plans and training budgets are unexceptional but the practice of staff review is below the level demonstrated by firms in other sectors.

Overall, the legal, accounting and business consultancy group of services is distinctive in terms of its modal size of firm, type of organisation, and legal status. However, its skill problems and training problems do not appear exceptional.

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Architectural & engineering activities

This is the second largest (240) of BPS activities in the West Midlands.

Architectural and engineering firms are well distributed across the West Midlands but are marginally over- represented in the more rural regions (Hereford & Worcester, Shropshire and Staffordshire).

There is a general problem with filling vacancies in the professional grades. Finding sufficient applicants with the required skills seems to be the single most important reason, compounded by a “low numbers of applicants generally” for vacancies in group of activities.

Problems of staff proficiency are most pronounced in associate professional and technical occupations.

Adoption levels for all four instruments of strategic planning are below the norms for the West Midlands. As a result a relatively high percentage of firms are not using any of these procedures.

Overall, the architectural and engineering group of firms exhibit more variation than other groups, reflecting the presence of a significant number of larger, corporate enterprises. The incidence and concern about skill deficiencies is typical of the BPS sector as a whole but more importance than normal is attached to the availability of technical and practical skills. Generally however, the commitment to training is below average.

Labour recruitment

This group accounts for 183 respondent firms or some 15% of the telephone survey responses.

Labour recruitment firms are uniformly distributed across four of the LSC regions but are notable for their absence in the most rural regions of Hereford & Worcester and Shropshire.

Almost uniquely, single site businesses do not dominate the labour recruitment sector; the majority of establishments are branches or subsidiaries of organisations with headquarters outside the West Midlands.

HtfV are most commonly experienced in the professional and associate professional grades. The main reasons that some positions are difficult to fill are that applicants often lack the required skills or qualifications.

The skills gap giving most concern was in associate professional/ technical occupations, although sales/ customer service and administration/ secretarial occupations were problematic.

Labour recruitment firms are at the forefront of good business practice with high adoption levels for strategic planning. As a result, well over half of the firms used all four measures (see Table ES.1); the highest proportion for the BPS activities covered in this survey.

Labour recruitment firms have distinctive features including a tendency to locate in urban areas and to be part of larger, multi-site organisations. The importance of skills to business success is widely accepted by these firms and the commitment to training is at a comparatively high level relative to other firms in the study.

POLICIES FOR THE SKILL NEEDS OF BPS FIRMS

Scrutiny of the depth interview transcripts, the records of the discussion at the focus group meetings, and the observations made by the stakeholders interviewed during the initial stages of this project provides numerous pointers to the interventions needed to address some of the skills gaps or awareness amongst BPS firms of the value of investing in training. The more quantitative material generated by the telephone survey responses also informs policy directions.

Before specifying the issues that skills and training policy might usefully address, an overview of the survey of BPS firms serves to illustrate the difficult challenges ahead.

BPS firms are established by individuals who are capitalising on their expertise, personality, reputation and network of contacts. Business success is down to three interrelated factors:

1. Individuals and firms must acquire and continue to develop technical expertise.

2. There needs to be an ability to transform technical expertise into something that has commercial value by providing distinctive inputs into the activities of client firms. SERU, University of Birmingham Page 23 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

3. People-focussed skills involving presentation and communication techniques are key requirements; these can be subsumed under the term ‘impression management’ or ‘client relationship building’.

The survey has demonstrated the diversity of BPS activities within the West Midlands. This does not make it easy to arrive at generalisations about the complete population of firms and the policies for skills and training that reflect a collective need.

There is some scope however, for understanding skill needs by adopting a segmentation approach that highlights, for example, different organizational forms such as micro, single person firms with no employees; small single office local firms; small firms with more than one office; branch offices of medium-sized firms; and branch offices of large firms.

BPS firms also operate in a number of different market segments. These range from the very local to the national and sometimes international. Firms delivering services to each of these market segments will experience different skills and training requirements and will possess different dynamics in relation to the organisation of their business activities.

When exploring recruitment by BPS firms it must be recognised that for many it is an activity that is engaged in only rarely, if at all. There are therefore firms that do not recruit, those that recruit infrequently and, those that recruit on an annual basis. If this is mapped on to the types of organizational form typical of BPS i.e. the relatively small number of medium-sized and large firms, it will be clear why formal recruitment processes are the exception.

Training in BPS is not just about achieving the appropriate qualifications as required by professional bodies or in order for employees to be able to perform particular roles or gain promotion. BPS managers also need to be trained in how to identify the training needs of their employees. Many lack professional management skills.

For most of the businesses in this study it does not matter if training is provided by private or public trainers. The key concerns are quality and cost. It was noted that, even though they are used more extensively than public sector trainers, there are some very bad private trainers.

BPS firms in the West Midlands see Further Education Colleges as having a limited but important role to play in fulfilling their training and staff development needs.

POLICIES FOR ADDRESSING SKILL NEEDS IN THE WEST MIDLANDS BPS COMMUNITY

It is easiest to group the issues that skills and training policies might usefully address into three types:

• Generic

• Local/regional

• FE-related

Generic issues

Unsurprisingly, the evidence from this study confirms that the competitiveness of BPS firms is derived from a combination of technical competence, the personality of individual professional and support staff, and a set of soft skills. This implies that academic excellence and world class technical competence do not provide the platform for commercial success; it is also crucially founded upon relationship building, soft skills and personality.

At one level, it is difficult and perhaps impossible to develop advanced soft skills in some personality types but the educational system should be designed to develop minimum levels of competence in a set of essential BPS skills.

These essential BPS skills are:

• Verbal dexterity.

• An ability to relate to people from a wide variety of backgrounds and cultures (gender, ethnicity, age, nationality).

• An ability to listen (to try to understand what the client wants and then to be able to frame an appropriate response). SERU, University of Birmingham Page 24 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

• Appreciation of body language (its interpretation and projection); impression management.

In addition, much of activity engaged in by BPS is about creative writing. Therefore, advanced literacy skills are required, as well as a level of numeracy.

Although there are other types of communication technology that can be used by BPS, the telephone continues to perform an important role at the interface between a BPS firm and its clients. Consequently, training in telephone techniques is essential. Similar arguments can also be made with reference to training in email communication.

There is therefore a need for the development of courses that address issues surrounding client relationship management.

Although not exclusively an issue for support staff in BPS firms, there is evidence pointing to poorly developed soft skills, including managing relationships – internal and external to firms..

This deficiency does not just arise from any inadequacies in the monitoring and training regimes used by employers. It is complicated by a failure on the part of new employees to appreciate some of the survival techniques that are required in the world of employment. This includes an appreciation of the nature of the work environment in BPS, understanding how as individuals they relate to other employees (as well as clients), and the requirements associated with working as part of a team.

Within BPS these are critical skills as the success of a firm is founded upon the projection of a consistent professional image that is constructed around, and from, the activities of all staff members.

But care also needs to be taken that over-training in non-essential skills is not provided. This can raise expectations on the part of the trainee and undermine the employer perception of the training provider.

There is a triple cost to external training:

1. Management time spent identifying skills and training needs.

2. Time and effort invested in identifying suitable courses.

3. Fee earning or support staff time lost as a result of training.

A fourth cost enters the equation if the source of the training is located 20-30 miles away i.e. tired and less motivated staff in the workplace.

On the job training has a double cost which arises from:

1. The pre-occupation of the internal trainer and the trainee with the task in hand.

2. A tendency in many instances for the training not to be concluded because everyday business activities have a tendency to distract the participants.

Local and regional issues

BPS professionals require a stimulating work and residential environment. This means that it is difficult for the LSC region and the communities within them, apart from Birmingham and Solihull, to attract and retain certain types of staff.

In Stafford, Coventry and Warwickshire, and Shropshire we have been informed that the key attraction is some form of family tie to the locality.

Firms claimed that salary levels were comparable (and sometimes enhanced) with those in Birmingham, but they still found it difficult to attract suitable highly skilled staff.

Support staff attraction and retention is a lesser problem but poor soft skills as well as uneven FE provision of key courses, for example the absence of suitable secretarial training in Coventry and Warwickshire LSC, are a source of difficulty.

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The concentration of some support staff training suppliers in Birmingham is also seen as a major problem, especially when account is taken of transportation infrastructure problems (e.g. the reference by a firm in Stoke-on- Trent to mostly junior female staff being unable to afford reliable cars and therefore being reluctance to travel far on wet winter evenings). The impact of such ‘invisible’ barriers to sourcing training by BPS firms should not be underestimated.

It is also the case that there are significant structural differences across the West Midlands region, especially when the qualitative rather than the quantitative survey evidence is examined closely.

A key structural difference is the density of BPS firms within a local or regional economy. This is a key issue that should not be under emphasised as it makes it difficult to attract staff as well as reducing the local provision of training.

Places such as Coventry, Stoke and Trent, Hereford, and Worcester have low representation of the larger practices that tend to be the primary training grounds for some BPS professionals. This means that BPS firms outside Birmingham are relatively disadvantaged as a consequence of the absence of large firms that sometimes operate as a kind of lobbying group for BPS.

Larger firms have the resources to develop, implement and manage employees appraisal and training schemes The employees in small BPS firms encounter constant demands for multi-tasking and do not have the spare capacity of time and people that are needed to develop effective training regimes.

This means that in large-firm economies such as Birmingham FE colleges must fit in with the training schemes of the larger companies while in the regional economies they must be more proactive in engaging with companies and ensuring that they identify and fill local skills deficiencies and gaps.

FE-related issues

The managers of training within BPS firms have an outdated understanding of FE provision. A constant complaint voiced during the depth interviews and the focus groups was failure of FE Colleges to publicise/market their courses. In comparison to private sector trainers, FE Colleges are regarded as largely invisible, apart from the provision of evening class related to personal development.

FE courses should be proactively developed and targeted in ways that will really enhance BPS management skills in the areas of staff appraisal and training needs analysis. This is very important because it is apparent from the evidence gathered for this study that significant numbers of BPS firms suffer from skill deficiencies about which they are largely unaware.

The perception of the FE sector amongst BPS professionals is that:

• It provides training for school-leavers.

• It commands a captive market and does not actively go out to attract business clients.

• The generic training available is of variable quality.

• It is inflexible in relation to timetabling, curriculum content.

• The location of provision is very uneven. Users do not want to travel more than 20-30 miles to receive what they consider to be very standard training packages. Professionals are willing to travel; quality of provision overrides cost or distance.

There is some evidence, cited by respondents, indicating that across the West Midlands the FE sector is changing and becoming more proactive in establishing links with businesses and developing business-targeted training packages. But this continues to be undermined by longstanding perceptions about the sector, some of which are rooted in ideas about its status as a training provider.

One way that the FE sector could begin to address these concerns would be for each college (or consortium of colleges?) to set up a Business Skills Development Unit. This would have a separate brand to the home FE College but would draw upon the resources and skill base of the College staff. This Unit would provide long term traditional training as well as bespoke, targeted training to meet the needs of a collective group of local employers.

SERU, University of Birmingham Page 26 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

The Units would have a steering group of key regional employers and develop strong linkages with local Chambers, Business Links, and key local, regional or national business lobbying groups. Staffordshire first, Birmingham Forward or Telford Business Partnership, for example, could play a pivotal role in supporting and facilitating such an initiative from the BPS side.

This strategy is one that acknowledges that FE colleges operate in a number of distinct markets; but this does evidently result in brand confusion/contamination between the FE sector’s primary concern with 16-19 training and a requirement for the provision of commercially targeted lifelong learning.

The FE sector should not be too ambitious. It should focus on the training of support staff, including paraprofessionals, and this should be its primary market. There should be national dialogue between the LSC and the various professional bodies to identify gaps in national provision that could be filled by FE colleges under the guidance and accreditation provided by the professional bodies.

The key message is that FE colleges should:

• Build upon their key primary advantages of location, regional identity, availability of local infrastructure and resources.

• Develop a local knowledge base to meet the demands of local business.

• Learn from the best private sector training providers (i.e. they should benchmark themselves against private sector providers).

• Provide targeted training to meet a particular business need.

• Be flexible in skills delivery to match client expectations and timeframes.

• Improve, develop and re-badge what they are currently doing.

• Develop a modular framework of very short units so that employers could, for example, identify a slot (say two-day module) that could be selected to fulfil their particular requirements.

• Consider bespoke training provision for a particular company or group of firms as a key requirement.

Another model for FE to consider is the development of intensive short-term modules in which all training is provided during a single week e.g. a specialist team from Birmingham and Solihull could provide such a module in Shropshire. This could be supported by a policy within the region for developing local centres of excellence in particular kinds of training (a hub and spoke system).

Other policy issues

The focus group meetings in particular generated a number of other comments or observations that are policy- related and worth noting. These are listed below (in no particular order):

• Public sector training is primarily driven by government targets rather than by the real skill needs of BPS firms.

• Change the way in which LSC measure success; too much emphasis on completion of a course, employers may only want some of the skills that are provided.

• There should be a local database of available courses that is explicitly designed to meet the needs of businesses.

• Poor training can destroy a business; quality standards for trainers are needed.

• The training system needs to be simplified; there are too many courses available, too many types of training provider, and so many different types of funding.

• The LSC could develop a set of case studies of what training has done for a particular group of firms; they would help to raise local awareness of skills and training needs and might also alter the perception of FE provision. SERU, University of Birmingham Page 27 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

• There is scope for a useful dialogue between the BPS COG and training providers, public and private.

• The public/private training divide is artificial; the fundamental issue is quality and cost.

• It may be worth setting up local training collectives of BPS firms to, for example, support graduate entry into professional employment.

SERU, University of Birmingham Page 28 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Figure ES.1 Matrix showing the percentages of firms with proficiency problems in each occupation group who felt particular skills needed improvement. (Cross hatching indicates values significantly above the average for all firms and stippling represents values significantly below the average for all firms) service Sales & Sales technical customer customer Associate Associate Managers Overall (%) Overall & secretarial Professionals Administrative Administrative professional & professional Practice/ general management 40 60 47 50 26 25 skills

Leadership skills 29 48 36 30 17 18

Human resource management 17 32 21 12 10 14 skills

IT professional 25 38 31 15 30 7 skills

Personal skills 40 51 34 51 32 31

Technical & 43 32 59 35 46 34 practical skills

Foreign language 8 10 16 6 5 3 skills

Customer 41 handling skills 33 40 52 40 45

General IT skills 31 31 31 21 45 24

Office admin 38 29 33 18 58 38 skills

Accounts/ 21 finance 25 30 11 28 7

SERU, University of Birmingham Page 29 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

1 INTRODUCTION

Rapidly changing requirements for new skills, symbolized by the rapid growth and diversification of business and professional services (BPS) in recent years, are posing new challenges for education and training policies.3 Since most BPS involve direct contact with customers, human resources are the key to their present and future performance. Education and skills policies are important to help professional and support staff in BPS firms to adjust to structural change at the local/regional level or as a result of globalization.

OBJECTIVES OF THE STUDY

1) To provide a rigorous and academically sound quantitative and qualitative analysis of the skill needs BPS firms located in Objective 2 Wards4 within the West Midlands (Figure 1.1).

2) To undertake a demand-led analysis of specific skill needs by LSC region and BPS sub-sector that will also identify practical solutions to identified needs.

3) To identify BPS skill gaps, including any intra- and inter-regional and sector differences.

4) To provide an analysis that will enable local LSCs to benchmark the skill needs and performance of BPS in their area.

5) To publicise the use of ESF funding and the role of LSCs in addressing skills gaps and related issues for PBS in the region.

6) To provide an accessible and user friendly set of outputs that will inform the development and delivery of policy in this area and provide a tool that can be used for lobbying.

An analysis of BPS firms in the West Midlands in 2002 highlighted demand led labour force issues that were identified as a threat by more than half of the firms surveyed.5 In order of priority, the most important were: • Shortages of skilled staff, • Shortages of graduate recruits, • The high cost of staff, • Poor educational attainment and qualifications, • An absence of suitable local training institutions.

3 See, OECD (2005) Growth in Services: Fostering Employment, Productivity and Innovation (for Meeting of the OECD Council at Ministerial Level). Paris: OECD, 3. 4 The EU’s Objective 2 programme includes areas with slightly less than 50% (2.4 mill.) of the population of the West Midlands region. Parts of the region’s major population centres, such as Birmingham, Coventry and Wolverhampton, are included in Objective 2. There are three priorities for the designated areas: developing a diverse and dynamic business base, especially the modernisation and diversification of traditional industries, as well as new ones; creating the conditions for employment growth through regeneration of targeted areas; and empowering communities with high scores on a Multiple Deprivation index. The total cost of the programme amounts to EUR 2.360.090 million, of which the EU Structural Funds provide EUR 889.920 million (see Government Office for the West Midlands (GOWM) West Midlands Objective 2 Programme). 5 P W Daniels and J R Bryson (2002) Professional Services in the West Midlands: Strengths, Weaknesses and Opportunities. Birmingham: Birmingham Forward and Advantage West Midlands. SERU, University of Birmingham Page 30 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Figure 1.1 Map of Objective 2 Areas: West Midlands

The qualifications/skills deficit, as measured by the proportion of people resident in the West Midlands aged 16-74 with no qualifications or those with level 1 to level 4/5 qualifications, does not compare favourably with equivalent data for England and Wales.6 Almost 19% of the employable age group in the region, for example, have no qualifications, rising to 20.7% in West Midlands County compared with just over 15% for Great Britain as a whole. Indeed, there are regional level deficits across all the qualifications levels, relative to the national level, of the order of 4%.

6 NOMIS (2005) Labour Market Profile: West Midlands (see www.nomisweb.co.uk, accessed 11 November 2005) SERU, University of Birmingham Page 31 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

STRUCTURE OF THE REPORT

After a short overview of the characteristics of the BPS firms that have participated in the survey that has been central to this assessment of their skill needs, the main body of the report comprises four main parts.

The first part explores aspects of the skill needs of BPS firms across the Objective 2 areas within the West Midlands as a whole. Particular attention is given to recruitment and hard to fill vacancies, the nature of the evidence for a BPS skills gap, and the approaches adopted by these firms to workforce training and development.

From the perspective of identifying appropriate interventions that are properly targeted at enhancing any skills gaps or improving the accessibility to skills training, the second part of the report examines the skill needs of BPS for Objective 2 area within each of the six LSC regions of the West Midlands. In order to facilitate comparison between the regions, each analysis is presented in a consistent format.

While for some of the target sectors for the study the number of respondents is relatively small, it is possible to undertake some meaningful analysis of selected activities. Real estate activities, legal, accounting, business consultancy etc., architectural and engineering activities, and labour recruitment are therefore examined in part three of the report.

Drawing together the empirical evidence assembled from the telephone survey and the qualitative inputs provided by the depth interviews and the focus group meetings, the final part of the report identifies the priorities and the policies for addressing the skill needs of BPS firms in the West Midlands.

BUSINESS AND PROFESSIONAL SERVICES IN THE WEST MIDLANDS ECONOMY

The shift from manufacturing to services that has been a feature of the West Midlands economy during the late 20th century has yet to match the shift experienced at the national level (Table 1.1). Every county within the region has a smaller share of total employment in services than the national average (81.4%). The majority of the 1.7 million employee jobs in services in 2003 were located in West Midlands county (0.9 million) and a significant share of these were concentrated in and around central Birmingham.

The statistics in Table 1.1 cannot be mapped directly on to the BPS activities as defined for this study; using finance, IT, and other business activities as the nearest surrogate, Table 1.1 shows the region as a whole and every county has a smaller share of employment in these activities than the national average. Indeed every county shows a (-) sign although relative to the West Midlands region average, West Midlands County, Worcester, and Warwickshire have positive (+) shares of employ jobs in BPS.

Table 1.1 Counties, West Midlands: Employee jobs (%) in service industries, 2003

West Worcester Hereford Shropshire Staffordshire Warwicks West GB Midlands Midlands County Region Services: employee 914,303 173,001 48,120 84,207 246,185 174,871 1,640,867 jobs Distribution, 26.9 (+ hotels & 21.9 (- -) 25.5 (+ +) 26.4 (+ +) 25.8 (+ +) 27.4 (+ +) 23.8 (-) 24.7 +) restaurants Transport & communicati 5.6 (= -) 3.9 (- -) 3.5 (- -) 5.6 (= -) 6.4 (+ +) 7.6 (+ +) 5.6 (-) 6.0 ons Finance, IT, other 18.3 (+ -) 17.0 (+ -) 11.1 (- -) 9.1 (- -) 14.0 (- -) 18.0 (+ -) 16.5 (-) 19.8 business activities Public admin, 26.6 (+ +) 23.3 (- -) 24.4 (- -) 32.6 (+ +) 25.9 (+ +) 19.0 (- -) 25.6 (-) 25.8 education & health Other 4.6 (- -) 5.6 (+ +) 4.8 (+ -) 4.9 (+ -) 4.5 (- -) 5.4 (+ +) 4.8 (-) 5.2 services Services 77.0 75.2 70.8 78.5 76.5 77.4 76.2 81.4

Note: Signs in brackets (+/-/= above, below, equal to West Midlands %, GB %) Source: Annual Business Inquiry Employee Analysis (2003), extracted from NOMIS, accessed 12 October 2005. SERU, University of Birmingham Page 32 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

At the level of occupation groups by employment in 2004 (Table 1.2) and especially those that are BPS-related (such as professional occupations or associate professional and technical occupations) the region overall and individual counties compare less favourably with the national picture.

Of course some of the occupations classified as managerial and senior official, for example, will be affiliated to manufacturing establishments so that the statistics in Table 1.2 must be interpreted cautiously. The share of professional occupations in Worcester and Shropshire matches or slightly exceeds the national average but every area underperforms relative to the national average with respect to associate professional and technical and to administrative and secretarial occupations.

The projected growth of employment in business and related services nationally between 2002 and 2012 has been estimated at almost 1.3 million (Table 1.3). For comparative purposes this is almost three times the expected growth in the number employed in non-marketed services such as the civil service or the NHS.

This distinction is broadly similar for the West Midlands (Table 1.3); employment in business and related services is expected to grow by just over 0.1 million, equivalent to a change of 18.4% and above the UK average (17.1%). The growth in non-marketed services is also expected to exceed the national level but it is perhaps telling that as a share of national absolute growth the figure for non-marketed services (12.8%) is larger than that for business and related services (7.9%).

Thus, the share of BPS activities in the economy of the West Midlands is expected to demonstrate encouraging growth up to 2012 but still at a lower rate of change than non-marketed services which, it can be suggested, are certainly part off but still a less significant contributor to the medium and long term competitiveness of the region and its businesses.

Table 1.2 Counties, West Midlands: employment structure (%) by occupation, 2004

SOC 2000 West Worcester Hereford Shrop Stafford Warwic West GB Group Midlands shire shire kshire Midlands County Region 1 Managers and senior 12.7 16.2 15.1 12.8 13.8 14.2 13.4 14.9 official 2 Professional 12.3 12.4 10.2 13.2 10.8 11.4 11.6 12.4 occupations 3 Associate professional 11.8 13.5 11.4 13.4 13.3 11.8 12.3 13.9 & technical 4 Admin. and 13.3 10.9 10.9 10.6 12.4 12.5 12.4 12.7 secretarial 5 Skilled trade 11.7 10.7 17.3 11.5 13.6 12.0 12.4 11.3 occupations 6 Personal 7.3 7.9 8.4 8.2 7.0 7.3 7.4 7.7 service 7 Sales and customer 8.1 8.4 6.4 6.7 8.0 7.4 7.9 7.8 service 8 Process plant & 10.1 9.4 8.3 9.5 9.7 8.8 9.8 7.5 machine operatives 9 Elementary 12.3 10.4 11.9 14.3 11.4 14.8 12.6 11.6 occupations Persons in employment 1,066.1 256.6 83.5 131.1 386.6 245.1 2,169.3 (000s)

Source: Annual Population Survey (Jan-Dec 2004), extracted from NOMIS, accessed 12 October 2005

SERU, University of Birmingham Page 33 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 1.3 Projected employment growth and regional share, UK regions, 2002-2012

Region Business and related services Non-marketed services

Change Change Change (% Change Change Change (% (000s) (%) share UK) (000s) (%) share UK)

London 337 18.8 26.3 44 5.1 9.7 South East 176 14.3 13.7 71 8.1 15.7 East of England 133 20.2 10.4 41 7.7 9.1 South West 60 10.6 4.7 47 8 10.4 West Midlands 101 18.4 7.9 58 9.9 12.8 East Midlands 55 14.2 4.3 47 10.2 10.4 Yorkshire and the 92 19.5 7.2 31 5.3 6.8 Humber North West 131 18.7 10.2 47 5.9 10.4 North East 23 11.6 1.8 6 2 1.3 Wales 46 20.0 3.6 22 6.2 4.9 Scotland 105 17.9 8.2 27 4.3 6.0 Northern Ireland 22 17.8 1.7 14 6.1 3.1 United Kingdom 1,282 17.1 453 6.7

Source: Working Futures (2004), extracted from Table 1.6, 18.

SERU, University of Birmingham Page 34 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

2 THE SURVEY OF BPS FIRMS: PROFILES AND ATTRIBUTES

BUSINESS ACTIVITIES OF THE SURVEY FIRMS (A1)

The survey was designed to produce a representative sample of Business and Professional services in Objective 2 areas in the West Midlands. Firms were selected with special attention given to size and regional distribution.

The need to both over sample large firms, because of their comparative rarity, and to compensate for variations in response rates, requires the data be weighted to restore the original proportions. The industrial make-up of the weighted distribution is shown in Table 2.1.

The firms included in the survey are drawn from two SIC (Standard Industrial Classification) divisions.

The smallest division is Financial Intermediation and its 218 firms represent just 18.2% of the total sample. The balance of 978 firms is in the Real Estate, Renting and Business Activities division. This division contains the largest SIC groups (3 digit level) as Legal, Accounting, Business Consultancy etc, Architectural & Engineering Activities, Labour Recruitment and Real Estate Activities all contain from 125 to 319 firms.

These four groupings remain the most important even at the SIC class level (4 digit) as the core activities, of real estate agencies, accountancy, labour recruitment and architecture and engineering all have at least 123 firms.

LEGAL STATUS OF FIRMS (A4)

The legal status of firms found in the professional and business services sector varies widely although private limited companies form a majority if only just (Table 2.2). Otherwise the sector is equally divided between Partnerships, Sole Proprietorships and Public Limited firms.

There is an important difference between the Financial Services and the Business Services divisions in terms of the legal status of constituent firms. As Figure 2.1 makes clear, Public Limited firms are much more common in Financial Services where as many as 30% of all firms are of this type compared to just 10% for the Business Services division as a whole..

ORGANISATIONAL TYPE (A3)

Just over one half of the survey firms are single site organisations and nearly a further third are branches or subsidiaries of British companies with a HQ outside the West Midlands (Table 2.3).

The organisational structures of the Financial Services and the Business Services sectors differ significantly (Figure 2.1). The majority of firms in business services are single site organisations as 58% of all enterprises in this sector are of this type compared to 32% of the firms in financial services. In contrast multi-site organisations are more typical of firms in financial services especially in the case where the West Midlands site is part of a British company whose headquarters is elsewhere in the country.

EMPLOYMENT (A5, A10 & A11)

The 1,196 firms included in the survey employed in aggregate a total of 20,666 employees on site. The largest firm had a complement of 2500 workers but more

SERU, University of Birmingham Page 35 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 2.1 Survey firms, by activity (SIC groups)

Number of % of SIC groups (3 digit) firms firms

J Financial Intermediation

65.1 Monetary intermediation 73 6.1

65.2 Other financial intermediation 32 2.7

66.0 Insurance & pension funding 62 5.2

67.1 Activities auxiliary to financial intermediation 47 3.9 67.2 Activities auxiliary to insurance & pension 5 0.4 funding K Real estate, renting and business activities

70.1 Real estate activities with own property 7 0.6

70.2 Letting of own property 4 0.3

70.3 Real estate activities 125 10.4

71.3 Renting of other machinery & equipment 15 1.3

72.2 Software consultancy & supply 6 0.5

72.5 Maintenance & repair of office machinery 1 0.1

72.6 Other computer related activities 3 0.3 73.1 Research & experimental development science & 2 0.2 eng 74.1 Legal, accounting, business consultancy etc 319 26.7

74.2 Architectural & engineering activities 240 20.0

74.3 Technical testing and analysis 1 0.1

74.4 Advertising 57 4.7

74.5 Labour recruitment 183 15.3

74.8 Miscellaneous business activities 15 1.3

SERU, University of Birmingham Page 36 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 2.2 Legal status of firms

Number of % of Legal status firms firms Partnership 214 17.9 Sole Proprietorship 183 15.3 A Public Limited Firm 167 13.9 A Private Limited Firm 619 51.8 Other 12 1.0 Total 1196 100.0

Table 2.3 Organisational type of firms

Number % of Organisational type of firms firms

Only site of the organisation 633 52.9

HQ, regional or divisional HQ 172 14.4 with branches elsewhere

A branch or subsidiary or division with HQ elsewhere in 366 30.6 the UK A branch or subsidiary or division with HQ outside the 24 2.0 UK

Other 1 0.1

Total 1196 100.0

SERU, University of Birmingham Page 37 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

typically the labour force was quite small. Although only 12 firms employed one person, 169 employed just two persons and 154 three persons. As a result just over 80% of firms employed 10 or less people (Table 2.4). Not surprisingly the mode of 2 and median of 5.3 are not only low but well below the mean of 17.3 persons.

The 563 firms which are not restricted to a single site provided a further 30721 jobs in the West Midlands region. This is nearly twice the total on site employment of 15,719 persons of these firms.

The distributions of firm size are very similar for the Financial and Business services divisions. The average numbers

Figure 2.1 The organizational type of survey firms by SIC division

60% 58%

Financial services 50% Business services

40%

32%

26%

20% 15% 14% Percentage of in industrialPercentage firms sector

3% 2% 0% The only site of your A headquarters, regional or A branch or subsidiary or A branch or subsidiary or organisation divisional headquarters with division with headquarters division with headquarters branches elsewhere elsewhere in the UK outside the UK on the payroll of the two divisions are respectively 15.7 persons and 17.6 persons compared to 17.3 for all firms. However, as Figure 2.2 makes clear there are significant differences in firm size both in terms of legal status and organisational type.

As far as the latter is concerned the main contrast is between the comparatively small size of single site firms (mean of 7.8 workers) and the larger multi site companies (means of 26 and above). If anything the differences according to legal status are more striking as only an average of 4.5 people work for firms that are in sole proprietorship while public limited companies have a workforce that averages 33.7 workers.

YEARS AT PRESENT SITE (A2)

There was considerable variation in the length of time the surveyed firms had been at their current site. Some firms had had continuously occupied the same site for 100 years or more (eight firms) with the longest recorded duration being 200 years.

But it is evident from Table 2.5 and Figure 2.3 that duration of residence is a strongly positively skewed distribution with short occupations the most frequent. Indeed 4% of firms had been at the present site for less than 1 year, virtually 25% for less than 3 years and close to 50% for less than six years. The implied turnover rate is therefore quite high.

When the experience of different types of firm is compared (Figure 2.4), some clear patterns emerge. For example long established firms are most frequent in the financial services sector and among public limited companies (over half of the latter firms had been in residence for more than 10 years). In contrast, establishments that were branches or subsidiaries to non-UK firms rarely limited achieved much longevity and less than 20% had occupied their current site for more than a decade. The patterns tend to be reversed when high turnover is considered but the groups with most recent arrivals are single site firms and partnerships.

SERU, University of Birmingham Page 38 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Non-UK firms have a high initial loss but the number of firms moving into the site during the last three years is comparatively low as it is for all multi site firms. High mobility may be an important factor affecting company attitudes to training and knowledge and commitment to local training agencies.

ANNUAL TURNOVER (E3)

Annual turnover is a further way of representing the scale of a firm’s activities. Unfortunately this was not a question that met with much success. When asked for an estimate the majority of respondents either refused or felt unable to do so. When offered the alternative of selecting a band in which their company’s turnover fell, response rates markedly increased by a factor of 3.5.

Nevertheless, responses were disappointing. 27.8% of respondents refused to answer the closed question, 18.2% did not know their company’s turnover, while a further 1.9% were firms that had been in operation for less than 12 months.

Table 2.4 Numbers employees on site, in the West Midlands and the UK

Number of Number % of employees at the site of firms firms (A5) 1 - 10 966 80.8 11 - 24 116 9.7 25 - 99 83 6.9 100+ 31 2.6 Number of employees in the

West Midlands (A10) Up to 100 1048 87.6 101 - 199 39 3.3 200 - 499 50 4.2 500+ 60 5.0 Total workforce in

the UK (A11) Less than 200 941 78.7 201 - 499 54 4.6 500 - 999 57 4.7 1000+ 114 9.5 Don’t Know 30 2.5

SERU, University of Birmingham Page 39 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Figure 2.2 Mean number of on site employees for firms: by legal status and organisational type

33.7

28.8 27.6 26.1 25.0

Overall mean = 17.3 14.0

7.8

4.5

Only site of your HQ, regional or Branch or Branch or Partnership Sole A Public Limited A Private Limited organisation divisional HQ with subsidiary with subsidiary with Proprietorship Firm Firm branches HQ elsewhere in HQ outside UK elsewhere UK

Table 2.5 Years spent at present site

Number of % of Time at present site firms firms Less than a year 47 4.0 1 - 2 years 238 20.1 3 - 5 years 262 22.1 6 - 10 years 249 21.0 11 - 20 years 191 16.1 More than 20 years 198 16.7

Don't Know/ Refused 10 4.0

Total 1196 100.0

SERU, University of Birmingham Page 40 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

It is apparent from an analysis of companies not providing the required information that they are generally larger than the firms that obliged. Thus the mean number of employees for companies refusing was 21.7 while the mean for the "don’t knows" was 22.4, both exceeding the overall mean of 17.3 workers. This suggests the recorded data understates company turnover to some extent, a limitation that the weighting procedure does not really resolve.

Figure 2.5 records responses to the closed question about company turnover. As it stands, the impression is that relatively low turnover enterprises dominate with as many as 14.1% firms earning under ₤100k and just over half generating less than ₤1m per year. In comparison there were some big earners as 8.2% of firms had a cash flow of more than ₤25m per year and, as indicated, the real figure is probably somewhat greater.

REGIONAL VARIATIONS IN BUSINESS AND PROFESSIONAL SERVICES

There are important differences among the six LSC regions in terms of the business and professional services sector.

Probably the most obvious is a matter of scale since the Birmingham and Solihull region dominates. It alone accounts for just over 45% of the survey firms and together with the Black Country jointly accounts for 70% of the total. The other four regions have relatively similar if small shares, although Shropshire is distinctively the smallest.

The regions also differ in their mix of financial and business services (Figure 2.6) but perhaps not as markedly as might be expected. There is though a slight tendency for financial services to be more concentrated in Birmingham and the Black Country. Thus this sector accounts for 19.1% and 19.4% of the survey firms whereas lower percentages (14.2% – 17.1%) pertain for the other four regions.

Disaggregation of the sector does not reveal more contrasts; the main business activities are well represented in all regions However, it is possible to generalise that in the more rural regions (Shropshire, and Hereford and Worcester) insurance, accountancy, legal, architectural and engineering firms are relatively more numerous but labour recruitment agencies are comparatively rare. In the case of the main urban regions of Birmingham and the Black Country, there is a greater range and diversity of activities. Thus, firms offering auxiliary and miscellaneous services are especially concentrated in these areas.

The considerable similarity of the regions is confirmed by examination of both legal status (Figure 2.7) and organisational type (Figure 2.8). The only consistent differences that emerge concern the two most rural regions. In both Shropshire and Hereford and Worcester sole proprietorship and single site firms are strongly over represented.

The size of firms reflected in the numbers employed on site varies considerably among the regions. Figure 2.9 shows that although all the regions have the same distinctive profile with smaller companies dominating, they can be roughly divided into two groupings.

The first comprises the largely urban regions of Birmingham and Solihull, the Black Country, Coventry and Warwickshire and Staffordshire which are distinctive because they do have significant numbers of larger firms.

The second grouping consists of the more rural regions of Hereford and Worcester and Shropshire in which virtually all firms employ 10 or fewer workers.

SERU, University of Birmingham Page 41 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

This division is largely borne out by the summary statistics recorded in Table 2.6. The median value effectively produces the same partition of the regions although the actual difference in values is quite small. The mean is less reliable as it can be strongly influenced by large values. This is certainly the case for Hereford and Worcester where a single firm employing 2,500 people on site produces the biggest regional mean of 34 employees. If this one firm is excluded the Hereford and Worcester mean falls back to 5.6 which is a better reflection of the general situation in the region.

Figure 2.3 Histogram showing number 100 of years firms have spent at their current site

s 75

b 50

u N

0 0 50 100 150 Years spent at current site

Figure 2.4 The number of years firms have been trading at their present site: various selected categories of firms

A Private Limited Firm

A Public Limited Firm

Sole Proprietorship

Partnership

HQ outside UK

HQ elsewhere in UK

HQ, regional or divisional headquarters

Only site

Business services

Financial services

0% 20% 40% 60% 80% 100%

SERU, University of Birmingham Page 42 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Figure 2.5 Estimated annual turnover: pre-selected groupings

More than £50m

£25 - £50m

£5m - £24.9m

£2m - £4.9m

£1m - £1.9m

£500,000 - £999,999

£250,000 - £499,999

Annual Turnover £100,000 - £249,999

Less than £100,000

In operation less than 12 months

Don't Know Refused

0 100 200 300

Number of firms Figure 2.6 Main business activities of firms,by LSC region

What does the business do

Staffordshire at this site ? J - Financial intermediation K - Real estate, renting and business activities Shropshire

Hereford & Worcester

Coventry & Warwickshire

Black Country

Regions Council Skills and Learning

Birmi ngham and Solihull

0 100 200 300 400 500 600 Number of Firms

SERU, University of Birmingham Page 43 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Figure 2.7 The legal status of firms, by LSC region

Birmingham and Solihull Black Country Coventry & Warwickshire Hereford & Worcester Shropshire Staffordshire

Legal status of firms Partnership Sole Proprietorship A Public Limited Firm A Private Limited Firm Other

Figure 2.8 Organisational type of firm, by LSC region

Shropshire

Hereford & Worcester

Staffordshire

Coventry & Warwickshire

Black Country

Birmingham and Solihull

0% 25% 50% 75% 100% Percentage of firms

SERU, University of Birmingham Page 44 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Figure 2.9 Number of employees at present site, by LSC region

Birmingham and Solihull Black Country Coventry & Warwickshire

400 s

m 300

e 200

u N 100

Hereford & Worcester Shropshire Staffordshire

400 s

m 300

e 200

u N 100

1-10 11-24 25-99 100+ 1-10 11-24 25-99 100+ 1-10 11-24 25-99 100+

Number of employees at the site

SERU, University of Birmingham Page 45 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 2.6 Selected summary measures of size of workforce by LSC region

Coventry Hereford Shropshire Staffordshire Total Number employed Birmingham Black and & on site and Solihull Country Warwicks Worcester

% of firms with 1- 77.0 82.3 80.3 93.5 97.9 76.1 80.8 10 employees % of firms with 25 12.1 7.1 8.5 2.6 0/0 14.5 9.5 or more employees Median 6 6 6 4 3 5 5.3 Mean 20.3 10.5 17.3 34.0 4.1 12.9 17.3

SERU, University of Birmingham Page 46 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

3 SKILLS NEEDS OF BUSINESS AND PROFESSIONAL SERVICES (BPS): THE CONTEXT

NATIONAL SETTING

Competition between nations in an increasingly globalised economy is placing a high and rising premium on labour force skills. Employers and employers need to be more adaptable, flexible and willing to invest and to incorporate training into their individual and corporate development strategies.

The UK Treasury noted in 2004 that not only are the competitive challenges increasing, they are doing so in the context of the country’s persistent and relatively poor existing position in intermediate level skills.7 Such is the ongoing concern about maximizing the benefits from harnessing the correlation between skills and productivity that the Treasury has recently commissioned an independent review to examine the future skill needs of the UK economy (led by Lord Leitch).

The comparative advantage of the advanced economies lies in activities (goods and services) that are knowledge-based. Business and professional services (BPS) firms are key players on the supply side, providing much of the specialist expertise, information and other advanced inputs used by other parts of the economy to, for example, improve productivity, enhance efficiency, improve design, or to extend market reach. BPS firms are also themselves a source of demand for knowledge-intensive services and goods. By definition knowledge is a highly dynamic, ever changing factor of production that is embodied in people (human resources). Success is very dependent on the workforce being adequately skilled and able to acquire new expertise and competencies that ensure that BPS firms can properly function as agents of economic restructuring and facilitators of competitiveness.

The National Employers Skills Surveys are commissioned by the Learning and Skills Council (LSC), the Department for Education and Skills (DfES) and the Sector Skills Development Agency (SSDA). These surveys (more than 27,000 employer interviews) provide definitive and contemporary information about the skills and workforce development issues encountered by employers (in England only).

Since they are part of time series (1999, 2001, 2003, and 2004)8 utilizing broadly similar methodologies, the NESS provide a sound foundation for the development of policies for developing and enhancing employee skills as well for assessing how skills are changing over time in response to skills initiatives. The NESS reports also help to raise awareness amongst employers of the benefits of working in with training agencies such as the Learning and Skills Councils or the employer supported Sector Skills Councils.9

The concerns that the skills of the labour force at national level are not fit for purpose are borne out by NESS 2003 for England.10 It finds, for example, that over 10 per cent of the workforce (2.4 million) lack the skills needed to do their job; one third of employers have no training plan to address workforce skill gaps; one fifth of job vacancies remain unfilled because of a lack of skilled applicants, and employers in London are the least likely to offer training to their employees.

It is not amongst the so-called higher level occupations (managers and professionals – where skill levels are relatively high) where recruitment problems are significant. Rather, they tend to be disproportionately high where the expected employee skills are quite modest.

7 HM Treasury (2004) Skills in the Global Economy. Norwich: HMSO. See also Confederation of British Industry (2005) Raising Skills, Delivering Prosperity: Benchmarking Skills for Business. London: CBI. 8 Department for Education and Skills (1999) Employers Skills Survey 1999. London: DES; DES (2001) Employers Skills Survey 2001. London: DES; Learning and Skills Council (2004) National Employers Skills Survey 2003. Coventry: LSC: LSC (2005) National Employers Skills Survey 2004. Coventry: LSC. 9 The Financial Services Skills Council, which provides strategic leadership for education, training and skills development for the financial services industry is the only SSC within the ambit of the BPS sector. 10 Learning and Skills Council (2004) National Employers Skills Survey 2003: Key Findings Coventry: LSC. SERU, University of Birmingham Page 47 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

A shortage of skills is a major component of HtFVs amongst BPS firms in England (Table 3.1). More employers ascribed their HtFVs as owing to a lack of the required skills than to any other reason (42 per cent of HtFVs). Other common reasons were a lack of interest in the job (40 per cent) and, related to this, a low number of applicants (37 per cent of HtFVs).

SKILLS IN THE WEST MIDLANDS

The workforce of the West Midlands is engaged a wide variety of economic activities. Key sectors include: food and drink; electronics and telecommunications; automotive; plastics and rubber; software; and business services. Some 1 in 7 of the region’s manufacturing employment is engaged in the motor vehicles and other transport equipment sector but this ratio is unstable and falling following the recent difficulties of MG/Rover at Longbridge and Peugot at Ryton.

Outside London, the West Midlands is the largest financial and business services complex. This is driving service output growth in the region with financial and business services comprising 18 per cent of total regional GVA.

There have been wide variations in the performance of the different local LSC areas in terms of employment growth. The overall picture is one of poor employment growth performance with The Black Country, and Birmingham and Solihull, showing the worst employment growth over the period between 1993 and 2003, but the best during the second half of the decade (from 1998). The reverse is the case for the other LSC regions where employment growth was lower in the second half of the decade from 1993 to 2003 than in the first half.

The disappointing performance of individual local LSC areas is linked to the fact that the majority are near the top of the list for the share of manufacturing in total employment; the Black Country leads the rankings using this measure. In addition employers based in the West Midlands generally specialize in economic activities that are included in the 10 worst performing industries in England. Again, the Black Country and Birmingham/Solihull are notable for a higher than average proportion of employment in such economic activities, this effect further compounded by the fact that both also have the worst unemployment in the West Midlands. Unemployment in the other local LSC areas is around the UK average.

Some sector and local area information relevant to BPS can be extracted from the NESS 2003 (although it needs to be utilized with caution). The largest share of skill shortage vacancies (SSVs) in the West Midlands occurred in Other Business Services (16.5% of all SSVs); a level higher than expected from their share of all employment (11.5%). Using a measure of density as a surrogate for the intensity of recruitment problems (based on vacancies or recruitment problems measured as a proportion of employment), Miscellaneous Services recorded a high figure of almost 5 per cent (Table 3.2).

The West Midlands has a higher percentage of establishments reporting HtFVs and SSVs than the national average (Table 3.3). Generally employers in the West Midlands report a relatively higher percentage of HtFVs

Table 3.1 Recruitment problems: BPS, England, 2003

Industry* % share of total % share of Vacancies HtFVs as a % SSVs as a % employment all as a % of of of vacancies employment vacancies vacancies

Other Business Services 11.5 12.5 3.4 39.7 26.4

Miscellaneous Services 5.2 7.9 4.7 43.4 20.5 Computing and Related 2.2 2.7 3.9 26.1 18.4 ProfessionalServices Services 2.5 2.6 3.2 32.9 17.2 Financial Intermediation 4.2 3.7 2.7 20.7 11.4 Total 100.0 100.0 3.1 40.0 19.9

Source: LSC National Employers Skills Survey 2003 (IFF/IER). Base: Employment weighted.

Notes: * Ranked by SSVs as a % share of all vacancies (column 5). Numbers in bold italic font highlight industries that are well above or below average.

SERU, University of Birmingham Page 48 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 3.2 Indicators of skill deficiencies and recruitment difficulties: LSC regions, West Midlands, 2003

Region Rank % of Rank % of Rank % of establishments establishments establishments with vacancies with HtFVs with any SSVs (c) (g) (q) West Midlands 20.8 10.5 7.4 Shropshire 24 19.0 41 10.2 4 8.4 Staffordshire 27 19.1 43 10.6 40 7.1 Black Country 30 19.5 13 7.3 25 5.6 Birmingham 46 23.6 30 8.8 28 6.1 and Solihull Herefordshire and 34 20.3 46 12.0 43 7.9 Worcestershire Coventry and 42 21.9 42 9.6 37 6.8 Warwickshire

Sources: After NESS 2003, in LSC (2005) Table A.3, 82-83 Notes: Rank 1 is highest concentration of qualification and 47 lowest.

Table 3.3 Density of recruitment problem and skills gaps: West Midlands and London, 2003

Region* % share of % share of all Vacancies HtFVs as a SSVs as a all vacancies as a % of % of % of employment employment vacancies vacancies

West Midlands 10.5 10.4 3.1 43.1 24.0 London 18.3 15.5 2.6 28.6 20.5

Total 100.0 100.0 3.1 40.0 19.9

Source: LSC National Employers Skills Survey 2003 (IFF/IER). Ba se: Employment weighted. Notes: * Ranked by SSVs as a % share of all vacancies (column 5). Numbers in bold italic font highlight regions that are well above or below average. and SSVs compared with the rest of England. That is especially the case in Shropshire, and Herefordshire and Worcestershire.

With around 22 per cent of working age population without qualifications, the Black Country and Birmingham and Solihull rank second and third respectively for this measure, indicating that there is a high percentage of working age population in the West Midlands with no qualification levels.11 The Black Country also has the smallest percentage of the working age population with qualifications at NVQ Level 4 or above, ranking last in England. Birmingham and Solihull and Staffordshire also rank poorly on this measure at 36th and 37th respectively (Table 3.4). The best qualified populations in the region are in Shropshire, Herefordshire and Worcestershire, and Coventry and Warwickshire, ranking between 16th and 19th for the number of working age population with a qualification at NVQ Level 4 or above. Herefordshire and Worcestershire also ranks in the top 10 for qualification at NVQ Level 3 (see Table 3.4).

At the national level the number of skills gaps12 as a percentage of employment varied little by region from the overall figure of 11 per cent. The exception to this rule was the West Midlands where a higher proportion (15 per cent of employees) were described as having

11LSC (2005) Skills in England 2004 Volume 4: Regional and Local Evidence Report. Coventry: LSC 12 Skills gaps are defined as occurring when employers regard some of their staff as not being fully proficient to do their job, and the incidence of skills gaps thus gives an indication of the extent to which the supply of skills meets employer demand (LSC, 2005, 9). SERU, University of Birmingham Page 49 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

skills gaps (Table 3.5). Data on the density of skill gaps for each of the 47 local LSC areas reveal little variation between areas on this density measure.

At the sector level in England in 2003 the number of BPS skills gaps as a % of employment is highest for financial intermediation and for other business services (Table 3.6). Computing and related services, the smallest BPS sector in terms of share of employment, also had the smallest proportion of employers reporting skills (significantly below the average) as well as the number of all skills gaps as a proportion of employment.

OCCUPATION DEMAND FORECASTS

The demand for skills training by BPS firms will also be shaped by the structure of occupational demand. Detailed forecasts for selected occupations (SOC2000) that are related to the BPS sector for the period up to 2014 are shown in Table 3.7 for the Birmingham and Solihull LSC.13 Total employment in Birmingham and Solihull has more or less maintained a steady state since 1981 with an expected expansion of 3.3% for the decade 2004-2014.

While occupations on banking and finance, insurance and financial support services are expected to perform less well or only marginally better than the average for the LSC, it is notable that occupational demand in real estate, renting, computing and related services, research and development, professional services nes, and other business services is expected to increase at rates significantly above the LSC average.

In some cases the absolute number of jobs involved is relatively small even though the forecast increase is as much as 80% (research and development). On the other hand rather smaller, but nonetheless significant, growth in professional services (31%) or computing and related services (33%) represents significant increases in absolute demand. This is also the case for other business services (14.7%) which is the largest single group of BPS activities in 2004 and in 2014 (see Table 3.7).

Table 3.4 Counties, West Midlands: Qualification levels (%) of working age population, 2003-2004

Qualification West Worcester Hereford Shropsh Stafford Warwicks West GB level Midlands ire shire Midlands County Region NVQ4 and 20.1 24.5 23.9 26.1 21.6 23.3 21.1 25.2 above NVQ3 and 37.0 42.6 41.1 43.1 40.0 43.7 38.8 43.1 above NVQ2 and 54.5 59.7 61.1 64.4 59.2 61.7 57.0 61.5 above NVQ1 and 69.8 76.9 78.2 76.9 75.5 77.0 72.7 76.0 above Other 9.4 6.2 7.2 9.1 8.8 7.0 8.6 8.8 qualifications No 20.7 16.8 14.6 14.0 15.8 16.0 18.7 15.1 qualifications

Source: Local Area Labour Force Survey (March 2003-February 2004), extracted from NOMIS, accessed 12 October 2005.

Table 3.5 Incidence of skill gaps: West Midlands, London, England, 2003

Region % share of all % share of all skill % of employers No. of skill gaps as employment gaps reporting skill gaps a % of employment West Midlands 18.3 16.9 16 10 London 10.5 14.5 24 15 Total 100 100 22 11

Source: LSC National Employers Skills Survey 2003 (IFF/IER). Base: Employment weighted (all skill gaps). Notes: *Ranked by % share of all skill gaps (column 2).

13 Data provided by Alan Martin, Birmingham and Solihull LSC, November 2005. SERU, University of Birmingham Page 50 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 3.6 Skills gaps: BPS, England, 2003

Sector* % share of all % share of all % of Number of all employment employers skills gaps as % of employment Skill gaps Reporting skills gaps# Financial intermediation 4.2 n.d. 27 12 Other business services 11.5 n.d. 18 11 Miscellaneous services 5.2 4.6 18 10 Professional services 2.5 2.0 17 9 Computing and related services 2.2 1.6 13 8 Total 100 100 22 11

Source: LSC National Employers Skills Survey 2003 (IFF/IER). Ba se: Employment weighted (all skill gaps), # establishment weighted. Notes: *Ranked by % share of number o f skill gaps as a % o f employment (column 5).

As might be expected, almost every occupation group experienced positive change between 1981 and 2004 and usually at rates significantly higher than that for all occupations in Birmingham and Solihull LSC. The only exception to this are occupations in insurance which, apart from customer service occupations, all recorded negative change.

The forecasts for 2004-2014 reveal considerable variation in expected changes in occupational growth within each of the BPS sectors (see Table 3.7). While there are more positive than negative values, the former are both larger and anticipated to occur amongst almost all of the occupations listed in Table 3.7 in real estate, computing and related services, research and development and professional services nes.

Occupational demand within insurance reveals some recovery compared with the 1981-2004 but apart from a small increase in demand for customer service occupations, financial support services are expected to experience declining occupational demand. Most of the growth in occupational demand within computing and related services, research and development, and professional services nes is forecast to grow at rates at least equal to or significantly higher than occurred during the preceding 25 years.

These forecasts suggest not only that the demand for skills and training from the BPS sector as a whole will comprise a major share of overall demand during the next decade, it will be generated by specific sub-groups of activity.

This conclusion is only based on evidence for the Birmingham and Solihull LSC. While the detailed circumstances will vary elsewhere in the West Midlands, especially for those LSCs with significant rural or semi-urban areas, it seems reasonable to infer that BPS-driven needs for skill needs and training will also be major consideration there for the foreseeable future.

BPS LOCAL NETWORKS

Partly as a response to the barriers to growth of the BPS sector associated with recruitment or skills and training gaps, recent years have witnessed the emergence of a number of networks of professional and/or business service firms. All of these are locally embedded but also seek to raise the profile of the sector and the services and expertise that it has to offer more widely.

The longest established is Birmingham Forward14 which places skills at the top of the agenda for the city:

‘Skills, education and inclusion – with skilled people drawn from across Birmingham’s many communities - equipped to work in knowledge-based businesses’

Networks of BPS firms that have been more recently established, such as finest15 (North Staffordshire), Coventry first16 and Telford Business Partnership17, also include the need to address skills and training amongst their key objectives.

14 http://www.birminghamforward.co.uk 15 http://www.finest.org.uk 16 http://www.invest-in-coventry.co.uk/pages/news/news_covfirst.htm SERU, University of Birmingham Page 51 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

These, and other similar networks of BPS firms that are likely to be established in other areas of the West Midlands in the near future, will be important for informing the development of actions that will address the skills/training deficit. This is achieved on the one hand by sharing information and examples of best practice for resolving human resource needs amongst members of the network, and on the other by creating the potential for a co-ordinated dialogue with training providers.

While both of these approaches will be geared towards the interests and priorities of the networks, the net effect will be hopefully to raise levels of awareness of skill needs more widely amongst local BPS providers.

17 http://www.telford.gov.uk/Business/Information/InwardInvestmentPartnership.htm SERU, University of Birmingham Page 52 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 3.7 Birmingham and Solihull LSC: Employment change (%), BPS activities by Occupation sub-groups, 1981-204 and 2004-2014

SOC2000 Sub-Major Groups 1981 2004 1981- 2014 2004- 2004 2014 All occupations 647,782 660,802 2.0 682,754 3.3

Banking and finance All occupations 13,857 21,785 57.2 22,934 5.3 11 Corporate Managers 996 1,822 83.0 1,930 6.0 12 Managers & Proprietors 713 391 -45.2 260 -33.6 23 Teaching/Research Prof. 67 52 -23.1 33 -35.4 24 Business/Public service Prof. 302 552 82.8 583 5.6 31 Science/Tech Associate Prof. 147 284 92.8 305 7.1 35 Bus/Public Serv. Assoc Prof. 536 1,028 91.9 994 -3.2 41 Administrative Occupations 6,905 11,342 64.3 12,237 7.9 42 Secretarial & Related Occs 1,495 1,386 -7.3 1,142 -17.6 71 Sales Occupations 549 1,063 93.5 1,346 26.6 72 Customer Service Occupations 230 947 310.9 1,388 46.6 92 Elementary: Admin/Service 818 1,161 41.9 1,135 -2.2

Insurance All occupations 8,911 6,065 -31.9 6,060 -0.1 11 Corporate Managers 879 761 -13.4 777 2.1 12 Managers & Proprietors 259 95 -63.1 70 -26.8 21 Science/Tech Professionals 199 172 -13.7 175 2.3 24 Business/Public service Prof. 197 158 -20.0 174 10.6 31 Science/Tech Associate Prof. 63 60 -3.9 63 3.5 35 Bus/Public Serv. Assoc Prof. 1,641 1,135 -30.9 962 -15.2 41 Administrative Occupations 2,608 1,707 -34.5 1,819 6.6 42 Secretarial & Related Occs 940 350 -62.7 263 -24.9 71 Sales Occupations 788 631 -19.9 671 6.4 72 Customer Service Occupations 193 361 87.2 506 40.3 92 Elementary: Admin/Service 314 154 -50.9 145 -6.2

Financial support services All occupations 3,007 5,357 78.1 4,169 -22.2 11 Corporate Managers 260 758 191.2 696 -8.2 12 Managers & Proprietors 124 112 -10.1 79 -29.1 21 Science/Tech Professionals 113 367 223.8 307 -16.2 24 Business/Public service Prof. 131 264 101.9 216 -18.1 31 Science/Tech Associate Prof. 77 221 187.4 180 -18.6 35 Bus/Public Serv. Assoc Prof. 199 541 171.3 462 -14.6 41 Administrative Occupations 577 952 65.2 752 -21.1 42 Secretarial & Related Occs 571 501 -12.4 260 -48.1 71 Sales Occupations 72 166 129.8 134 -19.6 72 Customer Service Occupations 30 141 374.0 149 5.7 92 Elementary: Admin/Service 195 346 77.9 253 -27.1

Real estate All occupations 4,332 10,576 144.1 12,360 16.9 11 Corporate Managers 403 1,457 261.2 1,689 15.9 12 Managers & Proprietors 245 418 70.4 319 -23.7 21 Science/Tech Professionals 220 845 284.6 1,148 35.8 24 Business/Public service Prof. 160 458 186.2 508 11.0 31 Science/Tech Associate Prof. 125 373 199.7 452 21.1 35 Bus/Public Serv. Assoc Prof. 200 717 258.3 829 15.6 41 Administrative Occupations 694 1,318 89.9 1,409 6.9 SERU, University of Birmingham Page 53 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

SOC2000 Sub-Major Groups 1981 2004 1981- 2014 2004- 2004 2014 42 Secretarial & Related Occs 574 596 3.8 373 -37.4 71 Sales Occupations 95 265 180.1 347 31.1 72 Customer Service Occupations 37 204 457.9 287 40.3 92 Elementary: Admin/Service 401 557 38.8 1,047 88.0

Renting of goods All occupations 4,078 4,943 21.2 5,071 2.6 11 Corporate Managers 542 750 38.5 776 3.4 12 Managers & Proprietors 239 189 -20.9 146 -22.7 21 Science/Tech Professionals 378 490 29.5 534 9.1 24 Business/Public service Prof. 240 243 1.4 224 -8.0 31 Science/Tech Associate Prof. 182 206 13.1 205 -0.5 35 Bus/Public Serv. Assoc Prof. 278 357 28.0 357 0.1 41 Administrative Occupations 437 538 23.3 525 -2.6 42 Secretarial & Related Occs 176 203 15.3 138 -32.3 71 Sales Occupations 79 110 37.8 114 3.7 72 Customer Service Occupations 22 82 273.3 108 31.1 92 Elementary: Admin/Service 212 243 14.3 335 38.1

Computing & related services All occupations 3,044 12,446 308.9 16,548 33.0 11 Corporate Managers 410 1,901 364.0 2,568 35.1 12 Managers & Proprietors 129 223 72.9 201 -9.9 21 Science/Tech Professionals 398 1,561 292.3 1,853 18.7 24 Business/Public service Prof. 140 559 299.1 640 14.6 31 Science/Tech Associate Prof. 97 461 375.7 675 46.2 35 Bus/Public Serv. Assoc Prof. 271 1,296 378.2 1,552 19.8 41 Administrative Occupations 365 1,776 387.2 3,106 74.8 42 Secretarial & Related Occs 332 937 181.9 1,175 25.4 71 Sales Occupations 63 340 439.7 596 75.2 72 Customer Service Occupations 26 338 1182.3 766 126.9 92 Elementary: Admin/Service 95 457 381.0 629 37.8

Research and development All occupations 2,105 2,242 6.5 4,054 80.8 11 Corporate Managers 267 367 37.6 729 98.7 12 Managers & Proprietors 89 56 -36.5 54 -4.4 21 Science/Tech Professionals 144 208 44.2 508 143.7 24 Business/Public service Prof. 126 141 12.1 258 82.7 31 Science/Tech Associate Prof. 86 120 39.0 267 122.7 35 Bus/Public Serv. Assoc Prof. 187 261 39.5 476 82.3 41 Administrative Occupations 268 273 1.8 468 71.3 42 Secretarial & Related Occs 141 98 -31.0 68 -29.8 71 Sales Occupations 42 51 22.2 80 55.9 72 Customer Service Occupations 14 41 188.5 93 125.3 92 Elementary: Admin/Service 101 126 24.9 200 58.3

Professional services nes All occupations 25,653 31,476 22.7 41,232 31.0 11 Corporate Managers 2,631 4,372 66.2 6,352 45.3 12 Managers & Proprietors 1,089 756 -30.5 685 -9.5 21 Science/Tech Professionals 1,289 2,118 64.3 3,197 51.0 24 Business/Public service Prof. 1,281 1,643 28.3 2,202 34.1 31 Science/Tech Associate Prof. 810 1,259 55.3 1,818 44.4 35 Bus/Public Serv. Assoc Prof. 1,931 3,400 76.0 4,745 39.6

SERU, University of Birmingham Page 54 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

SOC2000 Sub-Major Groups 1981 2004 1981- 2014 2004- 2004 2014 41 Administrative Occupations 4,196 5,314 26.7 6,993 31.6 42 Secretarial & Related Occs 3,790 2,685 -29.2 2,106 -21.6 71 Sales Occupations 593 1,051 77.1 1,750 66.6 72 Customer Service Occupations 221 815 269.5 1,519 86.3 92 Elementary: Admin/Service 1,635 2,003 22.5 2,382 18.9

Other business services All occupations 20,171 51,877 157.2 59,480 14.7 11 Corporate Managers 1,504 6,504 332.5 6,252 -3.9 12 Managers & Proprietors 985 1,854 88.3 1,173 -36.8 21 Science/Tech Professionals 766 3,869 404.8 3,975 2.8 24 Business/Public service Prof. 618 2,179 252.5 1,960 -10.1 31 Science/Tech Associate Prof. 447 1,730 287.1 1,712 -1.0 35 Bus/Public Serv. Assoc Prof. 775 3,383 336.3 3,341 -1.3 41 Administrative Occupations 3,285 6,970 112.2 9,748 39.8 42 Secretarial & Related Occs 3,013 3,044 1.0 3,095 1.7 71 Sales Occupations 506 1,574 211.1 2,590 64.6 72 Customer Service Occupations 178 1,068 499.5 1,919 79.7 92 Elementary: Admin/Service 2,999 2,974 -0.8 2,921 -1.8

SERU, University of Birmingham Page 55 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

4 RECRUITMENT AND HARD TO FILL VACANCIES

This section of the survey investigates the extent to which firms have vacancies and whether this is a source of difficulty because some are difficult to fill.

INCIDENCE OF JOB VACANCIES (B1)

Nearly one fifth of firms had vacancies at the time of the survey. As is evident in Table 4.1 there were significant contrasts for different groups of firm. For example, the probability of firms located in the cities of Birmingham and Coventry having vacancies was twice that typical of firms located in the more rural areas of the West Midlands. Vacancy rates are also relatively high in multi-site firms and, to a lesser extent, firms in the financial sector. Many of these contrasts are influenced by differences in the average size of businesses in the different groups.

The strong relationship between the likelihood of vacancies and size of enterprises is clearly illustrated in Figure 4.1. This shows that the percentage of firms with vacancies increases with size of the workforce. This is, however, somewhat misleading since the vacancy rate, here measured by the number of vacancies as a percentage of total employment of firms in each size group, falls sharply with size of the workforce.

Indeed some 44% (230 out of 523) of all vacancies at the time of the survey were registered by firms with 10 or less employees, despite the fact that these firms only accounted for 25% of all on site employment. In contrast, firms with 100 or more employees accounted for 27% of all vacancies but 47% of employment.

OCCUPATIONS IN WHICH FIRMS HAD VACANCIES (B2)

232 firms reported having on site vacancies at the time of the survey in 34 occupations (3 digit SOC). The occupational group with the greatest number of firms reporting vacancies involved middle ranking jobs in administration, namely in the general, finance and secretarial fields (Figure 4.2). Comparatively large numbers of firms had vacancies in the professions with openings in the business and statistical professions (largely accountants) being particularly numerous. Among the associate professions the public sector seems especially prominent but jobs in finance and sales are also quite widely available.

Employment in sales, such as sales assistants in the retail sector, appears especially important when more junior jobs are considered. Relatively few firms report vacancies in occupations at either end of the spectrum whether it be managerial, with the exception of production mangers, or elementary occupations. The latter is perhaps not surprising since relatively few survey firms offered any employment at all at this level.

There were few clear links between vacancy reporting and the characteristics of firms except where the nature of their business involved special labour requirements. For example, a high proportion of firms (15%) in the financial services sector had vacancies for business and finance associate professionals. The financial sector accounted for all but one of the firms with such vacancies.

Similar patterns can be discerned when firms which are partnerships are considered. Partnerships account for high proportions of firms with vacancies for legal professionals, architects, town planners and surveyors and arguably less obviously, secretarial and related occupations.

SERU, University of Birmingham Page 56 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 4.1 Significant contrasts in vacancy levels among firms: by selected characteristics

Characteristics of firms % of firms with vacancies

City (Birmingham, Coventry) 23.7 Rural (Hereford & Worcester, Shropshire) 11.3

Financial services 22.2 Business services 18.8

Private limited firms 21.5 Sole proprietorship (owner-managers only) 15.5

Multi site firms 24.0 Single site firm 15.3 All firms 19.4

SERU, University of Birmingham Page 57 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Figure 4.1 Percentages of firms with vacancies and vacancies as a percentage of employment: firms by employment size group

75 % of firms with vacancies 5 vacancies as % of workforce

60 4 % of jobs vacant jobs of %

45 3

30 2

% of firms with vacancies with firms % of 15 1

0 0 1 - 10 11 - 24 25 - 99 100+ Number of employees

Figure 4.2 Number of firms reporting vacancies and hard to fill vacancies: by occupation (3 digit SOC)

111 Corporate Managers 112 Production Managers 113 Functional Managers 116 Managers in Distribution, Storage & Retailing firms with hard to fill vacancies 118 Health & Social Service Managers 211 Science Professionals firms with no hard to fill vacancies 212 Engineering Professionals 213 Information & Communication Technology Professionals 232 Research Professionals 241 Legal Professionals 242 Business & Statistical Professionals 243 Architects, Town Planners & Surveyors 311 Science & Engineering Technicians 312 Draughts persons & Building Inspectors 342 Design Associate Professionals 351 Transport Associate Professionals 353 Business & Finance Associate Professionals 354 Sales & Related Associate Professionals 356 Public Service & Other Associate Professionals 412 Administrative Occupations: Finance 415 Administrative Occupations: General 421 Secretarial & Related Occupations 521 Metal Forming, Welding & Related Trades 523 Vehicle Trades 531 Construction Trades 611 Healthcare & Related Personal Services 711 Sales Assistants & Retail Cashiers 721 Customer Services Occupations 811 Process Operatives 821 Transport Drivers & Operatives 914 Elementary Goods Storage Occupations 921 Elementary Administrative Occupations 922 Elementary Personal Services Occupations 923 Elementary Cleaning Occupations 0 102030 Number of firms

SERU, University of Birmingham Page 58 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

VACANCIES THAT ARE HARD TO FILL (B3)

Firms with job vacancies at the time of the survey were asked whether any were proving hard to fill. For the purpose of the survey, respondents were told to treat “hard to fill” as any job which it had proved necessary to readvertise. Just over 40% of the 232 firms with vacancies reported that they were finding it difficult to fill some of the positions.

This proportion does not vary much by region, although Staffordshire firms seem to have more difficulty than most. There is also a tendency for a slightly smaller share of the large companies in the study to experience recruitment problems.

OCCUPATIONS WHERE VACANCIES ARE HARD TO FILL (B4)

Figure 4.2 distinguishes firms with vacancies that are hard to fill for different occupational groups. Generally there is a positive relationship between the numbers of firms with hard to fill vacancies and the total with vacancies which may or may not be hard to fill. Thus, the high numbers reported for Administrative and Associate Professional occupations overall are matched by apparently high counts when attention is confined to firms with recruitment problems.

Aside from a general similarity in distributions, it is also evident that there are differences in detail as the proportion of firms with hard to fill vacancies varies considerably. Table 4.2 offers an insight into recruitment difficulties at the SOC major group level. The table records an overall figure of 41% for the firms that have vacancies, of which some at least are hard to fill.

Compared to this the professional group looks problematic as more than half of the firms have difficulty filling vacancies. (A similar percentage for skilled trades is unreliable because of the small number of firms with vacancies for such jobs).

The incidence of “hard to fill” vacancies is also comparatively high for the Associate Professional and Manager groups. By comparison the Administrative (group 4) and Sales (group 7) groups, which earlier were shown to include occupations with relatively high reported vacancies, seem to experience modest recruitment problems.

Numbers in the remaining groups, which are mainly lower skill occupations, are small and vacancies are not difficult to fill.

REASONS WHY VACANCIES HARD TO FILL (B5)

The 94 firms indicating they had hard to fill vacancies were asked why they thought they firm were experiencing difficulties. The survey question was open-ended but responses were precoded. Respondents could mention as many reasons as they wished and as a result 168 were recorded. These are shown graphically in Figure 4.3.

Easily the most popular explanation was that there had been insufficient applicants with the required skills. Marginally fewer than 50% of respondents had opted for this explanation. It is difficult to explore possible correlates because of the small numbers involved but the data suggests that firms in the Birmingham and Solihull LSC region or in the Business Services sector are most likely to opt for this factor. Additionally, there is a modest, albeit consistent, increase in the share of respondents citing this explanation with the size of firm.

On the other hand, there is no clear association with particular occupations and it appears that skill deficiencies are relevant at all work levels. The only occupational group for which the lack of required skills is disproportionately mentioned is Architects, Town Planners & Surveyors; it seems rather less of a concern for Administrative or Sales Assistants posts.

Beyond the primacy of a lack of skills when attempting to fill vacancies, there is a secondary cluster of reasons that are mentioned by approximately 20% of the respondents. These collectively emphasise the importance of small numbers of applicants, their inadequate work

SERU, University of Birmingham Page 59 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 4.2 Firms with hard to fill vacancies in major occupation groups: total and as % of all firms with vacancies in the group.

Occupation No. of % of firms (SOC major group) firms with with hard to hard to fill fill vacancies vacancies 1 Managers & senior 8 41 officials 2 Professional occupations 34 53 3 Associate professional & 21 37 technical occupations 4 Administrative & 26 32 secretarial occupations 5 Skilled trades occupations 3 51 6 Personal service 0 0 occupations 7 Sales & customer service 6 22 occupations 8 Process, plant & machine 1 26 operatives 9 Elementary occupations 1 17

All firms with vacancies 94 41

SERU, University of Birmingham Page 60 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Figure 4.3 Reasons why firms had vacancies that proved difficult to fill

Low number of applicants with the required skills

Low number of applicants generally

Low number of applicants with the required attitude, motivatation

Lack of work experience the company demands

Lack of qualifications the company demands

Not enough people interested in doing this type of job

Too much competition from other employers

Remote location/poor public transport

Poor career progression / lack of prospects

Other

Poor terms and conditions (e.g. pay) offered for post

Job entails shift work/unsociable hours

No particular reason

Don't know

0 1020304050 Number of firms with hard to fill vacancies

experience, or absence of appropriate qualifications for the job concerned.

It is noticeable that reasons which might be categorized as rather negative aspects of the jobs on offer, all appear well down the list when ordered by frequency of mention. Thus, “poor terms”, “unsociable hours”, “poor career prospects” and “remote location” are rarely cited as important, at least from the employers’ perspective. The assessment might be different if actual or potential job applicants for these vacancies had been consulted.

VIEWS ABOUT SKILLS THAT APPLICANTS LACK (B6)

The firms with hard to fill vacancies were further asked which of an extensive list of skills they felt that applicants lacked. This was done with respect to each of the occupational vacancies respondents for which respondents had indicated they had recruitment problems.

Although the responses have generated much detailed information, the small number of cases involved makes it difficult to draw general conclusions. However, it is possible to compile a league table based on the number of companies mentioning a skill at least once that a particular skill was absent. This helps identify skills which are generally thought essential but are inadequately present in applicants (Figure 4.4).

Communication skills are the most widely reported shortcoming; it is mentioned by 37% of the firms with hard to fill vacancies. It was thought important for 16 of the 21 occupational groups considered in this study. Perhaps reassuringly, one of the few occupations for which communication skills was not mentioned as a problem was legal professionals.

Customer handling skills was cited by someone-third of firms. Its general value can be gauged by the fact it was mentioned in relation to all but four of the occupational groups. Although distributed fairly uniformly, it came up more than average in relation to Professional occupations.

Technical and practical skills were third most frequently cited as being absent in candidates. Although cited with respect to most occupations, its omission was of particular regret in the case of applicants for Engineering, Business and Statistical professions, Architects, Town Planners and Surveyors.

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Although the absence of most skills was mentioned in connection with the majority of occupations, some did relate quite strongly to specific areas of work. Thus, inadequate office administrative skills and IT skills were both mentioned frequently with reference to applicants for administrative and secretarial positions. The lack of team working skills came up repeatedly for professionals especially in Engineering and Business but rarely merited a mention for other occupations.

Figure 4.4 The number of firms citing difficulties of obtaining the following skills from applicants for hard to fill vacancies

Communication skills

Customer handling skills

Technical and practical skills

Problem solving skills

Management skills

Office admin skills

Any other skills

Team working skills

Leadership skills

Literacy skills

Numeracy skills

General IT user skills

Human Resource Skills

IT professional skills

Foreign language skills

Don't know

No particular skills difficulties

0 5 10 15 20 25 30 35 Number of firms with hard to fill vacancies

SERU, University of Birmingham Page 62 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

5 EVIDENCE FOR BPS SKILL GAPS

STAFF PROFICIENCY (C1)

Approximately 4 out of 5 firms felt that all staff were fully proficient at their jobs.18 This figure varied little between firms; concerns about proficiency were rarely significantly greater than the overall average of 19%. The exceptions include the Coventry and Warwickshire sub region (25.2%) and multi-site firms with headquarters in the region (23.9%) or elsewhere in the UK (21.9%).

Single site firms and firms with non-UK headquarters had respectively on average only 16.1% and 15.7% of the respondents claiming staff were not fully proficient. However, more striking is the strong correlation between size of firms and concerns about proficiency (Figure 5.1). The largest organisations had the greatest incidence of problems associated with staff proficiency; the proportions claiming staff not fully proficient rises to just over one-third of firms with 25-99 employees and approximately one-half of firms employing 100 or more on site.

Notwithstanding this impressive trend it is still the case that the smallest firms dominate in that they account for 69.6% of all firms with staff proficiency problems.

It might be expected that differing job requirements mean that proficiency levels will be strongly related to occupation. But this is only partially true in this study. Table 5.1 shows that, when expressed as percentages of firms with jobs in each of the occupation categories, the results are broadly consistent for all groupings, with the exception of Managerial and Elementary occupations.

For both groups, arguably the most and least skilled, relatively low percentages of employers recorded dissatisfaction with staff competence, although in the case of elementary occupations the actual number of firms involved is low. In absolute terms, Administrative and Secretarial occupations were most frequently cited as problem areas and may warrant special attention. For all occupational groups the largest firms tend to have the lowest levels of staff proficiency apart from Sales and Customer Services occupations where there is no clear association with firm size

SKILL GAPS (C2)

Respondent firms were asked to nominate the two occupational groups, previously identified as having proficiency problems, which had the most significant impact on the business. This produced very similar results because it was rare for a firm to cite more than two occupational groupings in which staff lacked full competence.

Again, most concern was expressed about skill deficiencies in the Administrative and Secretarial workforce than for any other occupational group. However, Sales and Customer Service occupations assume more significance once impact on the business becomes the criterion for assessing the impact of skill deficiencies on a firm’s activities (14.4% of employers cited this sector).

CAUSES OF STAFF LACKING FULL PROFICIENCY (C3 & C6)

Firms were questioned about what they thought were the main causes of staff not being fully proficient for their job (in the up to two occupations in which skill gaps had been identified). Respondents overwhelmingly cited (64.7%) lack of experience or recent recruitment as the main contributors to low levels of staff proficiency (Table 5.2). This suggests that proficiency problems are largely

18 Where a proficient employee is defined as someone able to do a job at the required level. SERU, University of Birmingham Page 63 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 5.1 Staff proficiency levels: main occupation groups (SOC2000)

Occupation Number of Firms lacking firms with full proficiency staff not as a % of all fully offering the proficient occupation Managers 58 5.4

Professional 56 11.2

Associate Professional & 62 14.2 Technical Administrative & 89 13.2 Secretarial

Sales & Customer Service 33 14.3

Personal Service 3 14.3

Elementary 8 8.0

Figure 5.1 Whether all staff fully proficient for different size groups of firm: by number of on- site employees

1000

750 All staff fully proficient Some staff not fully proficient

500

Number of firms Number 250

0 1 - 10 11 - 24 25 - 99 100+ Number of Employees

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Table 5.2 Causes of skill gaps: occupations with the greatest problems

Main causes of skills gap Number of % of all occupations occupations with skill with skill gaps gaps Failure to train/develop staff 53 18.8

Recruitment problems 18 6.5

High staff turnover 6 2.1 Inability of workforce to 48 17.2 keep up with change Educational system - 13 4.6 secondary school Educational system - 12 4.2 Further Education Educational system - Higher 13 4.5 Education Lack of experience/recently 182 64.7 recruited Staff lack motivation 35 12.6

Any other causes 10 3.6

No particular reason 5 1.7

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transitional but this conclusion needs to be tempered with the recognition that inadequacies in training are an important secondary factor.

Culpability of employees seems to be another strand contributing to proficiency levels; the third and fourth often-cited causes are the inability of the workforce to keep up with change and its lack of motivation. Shortcomings in the educational system represent another important factor although there is no clear agreement about which level(s) within the educational system are most responsible.

The main causes given for staff not being fully proficient vary between the main skills gap occupations as shown in Figure 5.2. There is a general similarity evident but there are also some significant differences. For example, the need for the workforce to keep up with change is viewed as a more serious problem for those employed as managers or in associate professional and technical occupations.

The main causes of under-skilling were explored further by asking the same firms to select from identical categories as used in question C3 (apart from the education categories which were excluded) but this time in relation to staff in general who were not fully skilled in their job. The results appear in Table 5.3 and are strikingly similar to the figures recorded earlier in Table 5.2, both in absolute and relative terms.

Again lack of experience and/or recent recruitment is easily the single most important cause of skills shortages. Although the rank ordering has hardly changed it is important to note that some secondary causes, notably recruitment problems and motivation among the staff, are clearly more important when the whole company is considered.

The relative importance of these causes does not vary greatly from one type of firm to another. Where differences do exist, the sample sizes are generally too small to establish statistical significance. The exceptions are that large employers (100+) are much less likely to cite recruitment problems as a cause of skill problems while medium-sized firms (especially those with 25-99 employees) are most likely to find their workforce unable to keep up with change.

What both sets of results indicate is that there is plenty of scope for enhanced training. Approximately a quarter of the firms recognise that training inadequacies are directly responsible for the skill limitations of their staff. It is difficult to believe that carefully designed programmes would not help overcome poor staff motivation, assist staff to keep up with change, and speed up the induction process for new staff.

SKILLS NEEDING IMPROVEMENT (C4)

Respondents were asked to indicate which of a number of skills they thought needed improvement to bring occupations previously identified as not fully proficient to the required level of expertise. As Table 5.4 reveals a great variety of skills elicited substantial support and twelve out of the eighteen identified in the survey instrument were selected by at a least a quarter of the firms. It should be noted, however, that as many as half of the firms did indicate a lack of proficiency in any of the skills that were listed.

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Figure 5.2 Leading causes of staff not being fully proficient: by occupational groups (percentage of firms experiencing skill gaps)

80 Managers 70 Professional Occupations Associate Professionals/ Technical Occupations Administrative and Secretarial Occupations 60 Sales/ Customer Service Occupations

50 periencing skills gaps (%)

Firms with occupations ex 0 Educational system Recruitment Lack of Failure to train & Staff lack motivation Inability of workforce High staff turnover problems experience/recently develop staff to keep up with recruited change

Leading causes of staff not being fully proficient

Communication skills topped the list (mentioned by 42.8% of firms with skill gaps), along with other skills relating to social interaction which included customer handling (41.0%) Personal skills (40.0%) and team working (34.2%) also scored highly. Another common theme could be described as managerial, as reflected in the high

Table 5.3 Main causes of why staff not fully skilled: firms with skill gaps

Main causes of why some staff Number of % of all not fully skilled firms with firms with skill gaps skill gaps

Failure to train and develop staff 55 24.2

Recruitment problems 40 17.8

High staff turnover 20 8.9

Inability of workforce to keep up 43 18.9 with change Lack of experience/recently 155 68.4 recruited Staff lack motivation 49 21.6

Other 2 0.7

No particular causes 38 16.6

SERU, University of Birmingham Page 67 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 5.4 Skills needed to bring staff to full proficiency

Skills that need improving Number % of all of firms occupations with skill gaps Communication skills 120 42.8 Technical and practical skills 120 42.6

Customer handling skills 115 41.0 Practice/general management skills 114 40.5

Personal skills 112 40.0

Problem solving skills 112 39.7 Office admin. skills 106 37.7

Team working skills 96 34.2

General IT skills 88 31.5 Leadership skills 80 28.6

Data analysis 73 26.1 IT professional skills 71 25.3 Accounts/ finance 60 21.3

Technical skills related to the occupation 58 20.5 Human resource management skills 47 16.7 Literacy 39 14.0

Numeracy skills 31 11.0 Foreign language skills 22 8.0 No particular skills 20 7.1

Other skills 12 4.4

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percentages given to general management (40.5%), problem solving (39.7%), office administration (37.7%) and leadership (28.6%).

Perhaps unsurprisingly, technical and occupation specific skills generally were not cited frequently as exemplified by accounts/finance (21.3%), technical skills related to occupation (20.5%) and foreign language (8.0%).

General office-related skills received more mentions, but perhaps less than expected. For example, general IT skills were only cited by 31.5% of firms, while literacy and numeracy were selected by just 14% and 11% of firms respectively. This is at odds with the emphasis often given by business leaders to such factors but it may be that these problems are only acute among younger employees.

While Table 5.4 gives a good indication of general training needs it is also certainly the cadse programmes will need to be tailored to meet the special requirements of different occupational groups. A matrix (Figure 5.3) has been devised to illustrate the relationships between the skills identified by BPS employers as in need of improvement and occupational group.

The matrix identifies the five principal occupational groupings and those skills for which significant differences between occupations were discovered. The skills omitted are those relating to communication, team working, problem solving, numeracy, literacy, data analysis and technical skills related to the occupation. In general, these are generic skills with general application across the business community; hence occupational differences are generally small.

The numbers in the matrix refer to the percentages of firms with proficiency problems in an occupation group who felt particular skills needed improvement. Cross hatched shading is used to identify cells containing percentages significantly (at 95% level) above the skills average for all firms. Stippling is used to indicate the cells where the percentages are significantly below the average.

Thus, in the top left hand cell of the matrix it is evident that 60% of the firms with proficiency problems feel practical/general management skills need improving for managers and this is significantly (95% level) above the 40% average for all firms with proficiency problems.

The results suggest that managerial shortcomings, where they exist, embrace several skill sets. Firms concerned about their managers identified a number of different areas in which improvement was felt necessary. The skills in which managers are thought to particularly deficient compared to other sectors in the workforce are general management, leadership, human resources, IT, professional, and personal skills.

Other occupational groups also have a distinctive profile of skills needing improvement. In the case of Professionals special emphasis needs to be given to technical and practical skills and, where relevant, foreign language training.

Associate professionals and technical occupations are disproportionately picked out as requiring improved personal skills and customer handling skills, while administrative and secretarial occupations need to especially improve their general IT and office administration skills.

The sales and customer services group of occupations are exceptional in that no skills stand out as requiring special attention compared to other groups. It may be that the skill categories presented to respondents were not particularly appropriate to this group of occupations, a conclusion supported by the fact that respondents were significantly more likely to opt for the residual “other skills” category for this group.

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Figure 5.3 Matrix showing the percentages of firms with proficiency problems in each occupation group who felt particular skill needed improvement. (Cross hatching indicates values significantly above the average for all firms and stippling represents values significantly below the average for all firms) service Sales & Sales technical customer customer Associate Associate Managers Overall (%) Overall & secretarial Professionals Administrative Administrative professional & professional Practice/ general management 40 60 47 50 26 25 skills

Leadership skills 29 48 36 30 17 18

Human resource management 17 32 21 12 10 14 skills

IT professional 25 38 31 15 30 7 skills

Personal skills 40 51 34 51 32 31

Technical & 43 32 59 35 46 34 practical skills

Foreign language 8 10 16 6 5 3 skills

Customer 41 handling skills 33 40 52 40 45

General IT skills 31 31 31 21 45 24

Office admin 38 29 33 18 58 38 skills

Accounts/ 21 finance 25 30 11 28 7

SERU, University of Birmingham Page 70 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

SKILL DEFICIENCIES AS THREATS TO COMPETIVENESS (C5)

Firms reporting staff as not fully proficient were invited to identify the skill deficiencies that most threatened the ability of their business to compete in the market place. Respondents were allowed to nominate up to three skills in order of importance. In practice, very few firms identified more than one skill set. Only approximately one quarter of firms suggested a second set of skills and less than one tenth added a third set of skills.

As a result analysis has to concentrate on the skills identified as most important although, even here, returns were far from complete. Just over a third of respondents did not offer a skill set either because they did not have an opinion or because they did not feel any particular skill deficiency threatened the business.

Table 5.5 lists the skills deficiencies most frequently cited as critical to market competitiveness. The table lists the ten skills most frequently mentioned as particularly critical, together with the total number of citations irrespective of order of importance. The ranked order produced is similar to that found in Table 5.4 in that communication, technical, personal and customer relation skills occupy the top places although there are minor differences in the detailed order.

The most notable difference in Table 5.5 is that respondents have highlighted the importance of sales ability, which was not an option in question C4 when respondents had to select from a closed list of categories. Another interesting feature is that personal skills alone, of all those considered, received more mentions as second and third most important skills. This suggests that individual ability and motivation is always a key if not the critical factor affecting business success.

It is difficult to explore these responses further as the numbers involved are small and categorisation of responses to open ended questions is inevitably subjective. But the similarity of the leading skill sets does help underpin the earlier findings as to which skills need to be enhanced to bring a BPS workforce up to full competence.

EFFECTS ON THE FIRM OF ALL STAFF NOT BEING FULLY SKILLED (C7)

The final question in this section of the survey asked firms to indicate the effect on the firm of not having all staff fully qualified. Respondents were presented with six possible impacts although, as before, respondents could indicate that none were appropriate.

About one quarter of the firms indicated that skill deficiencies did not have a negative impact, or indeed that none of the six factors applied. But for the remaining firms all the suggested impacts (six) of not having fully qualified staff attracted considerable support (Table 5.6). The most notable feature of the results is that the detrimental consequences of the under-skilling of employees are widely experienced.

The results indicate that external effects, those relating to interaction with customers and competitors, are of most concern to BPS firms in this study. Effects derived from the internal operation of the firms are given less weight, perhaps because here there is greater scope for intervention and compensatory action.

Table 5.5 Skills deficiencies viewed as biggest threat to a firm’s ability to compete in the marketplace

Skill deficiencies viewed Most All as a threat to a firm’s important deficiencies ability to compete. deficiency mentioned (No. of (No. of

firms) firms) Sales ability 17 22

Communication 15 22

Technical skills 13 13

Personal skills 13 33

Customer handling skills 13 23

IT/computer skills 11 15

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Accounting/ finance 7 7 Office administration 6 9 skills General business skills 5 5 General lack of 4 7 experience

Table 5.6 The effects on the organisation of not having a fully skilled workforce: firms with proficiency problems

Number of firms % of all firms with Effects of staff not being fully qualified skilled with skill gaps skill gaps

Increased operating costs 101 44.5 Difficulties meeting customer service objectives 77 34.0 Loss of business or orders to competition 62 27.2 Delays developing new products or services 61 27.0 Difficulties meeting required quality standards 50 21.9 Difficulties introducing new working practices 35 15.3 No particular problems/ none of the above 60 26.3

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6 WORKFORCE TRAINING AND DEVELOPMENT BY BPS FIRMS

This section of the survey is concerned with the extent to which respondent firms undertake training, the form it takes, and the role of external providers and especially the Further Education (FE) sector.

STRATEGIC PLANNING (D1)

The first question in this section investigates the extent to which there are formal structures which impact on and support the training and development of a company’s workforce.

The results reveal (Table 6.1) that approaching three quarters of the firms in the survey work to some form of business plan in which human resource issues are likely to be prominent in view of their importance in the production process in the BPS sector. The significance of training in the strategic thinking of firms becomes clearer when firms are asked whether they have a training plan in which the level and type of training given to employees is specified in advance.

Nearly 60% of firms were able to answer this question in the affirmative, although it is noteworthy that a third of these respondents do not have a specific budget line for training expenditure. Indeed, less than 50% of all firms indicated that training was a budget item. It is to be hoped that this signifies an open-ended commitment to expenditure on training but it is always possible that it will in fact be restricted if the expenditure is not protected as an explicit component of the company budget.

Appraisal of employees is essential to ensure that appropriate and sustained training needs are identified and provided. Almost 70% of the survey firms acknowledge the importance of this activity in that they held annual performance reviews. These were conducted by line managers. But as Figure 6.1 reveals, not all employees are included in these reviews; as few as 10% of the workforce were covered in some appraisal exercises, although most firms (51.2% of the total) did include all their employees.

These results reveal considerable diversity in business practice with respect to strategic planning. Approximately one third of firms utilised all of the procedures investigated but this has to be set against the 1 in 8 firms who claimed not to have used any. The remaining 52.3% firms employed one of more but not all of the four methods.

The identity of the best practice businesses can be revealed by cross-referencing with selected characteristics of the firms. Table 6.2 highlights some salient contrasts where the percentage of adopters is significantly different from the overall average.

As can be seen, adopters are more likely to be located in urbanised regions of the West Midlands, to be part of a multi site company with headquarters outside the West Midlands, be publicly limited, and to be in the financial services sector. By way of contrast, low adoption rates are more typically associated with firms based in more rural parts of the region or those that are small enterprises in which sole proprietorship is common.

TRAINING CONDUCTED DURING THE PAST 12 MONTHS (D2 & D3)

Just over two-thirds of the firms had funded or arranged training for their employees during the previous 12 months. Respondents were asked not to distinguish between on the job or off the job training. The likelihood of training taking place is strongly related to whether the organisation has formal procedures in place.

For example, 86.5% of firms with a specific budget for this purpose did undertake some

SERU, University of Birmingham Page 73 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Table 6.1 Extent to which firms have ensured strategic support for training programmes

Number % of all of firms firms Have a business plan 861 72.0

Have a training plan 711 59.4

Have a training budget 549 45.9

Have an annual performance review or 835 69.8 appraisal system

All of the above 413 34.6

None of the above 157 13.1

51.2 50 Figure 6.1 Percentage of staff reviewed annually s 40

30.2 30

20 11.9 ercentage of firm

P 10 2.1 1.0 0.3 0.3 1.3 0.3 1.0 0.3 0.1 0 0 1-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-99 100 Percentage of staff reviewed annually

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Table 6.2 Variation in extent to which firms have ensured strategic support for training programmes: by selected characteristics of firms

Characteristics of firms have a have a have have annual business training training review plan plan budget % of firms with given characteristic

Urban (Birmingham, Coventry, Black Country, & 74.7 61.9 48.5 73.2 Staffordshire) Rural (Hereford & Worcester, Shropshire) 53.2 42.0 28.1 46.5

Large (over 10 employees) 87.9 85.4 73.7 91.6 Small (1-10 employees) 68.2 53.3 39.3 64.6

Financial services 82.9 73.8 52.7 82.4 Business services 69.5 56.2 44.4 67.0

A public limited firm 83.1 79.5 61.9 92.8 Sole proprietorship (owner-managers only) 50.3 40.5 24.9 42.4

Branch/subsidiary/division with headquarters 85.9 78.6 64.9 90.2 elsewhere in the UK Single site firm 61.6 44.9 31.6 53.9 training in the previous year. The percentages for firms with a training plan and annual appraisals were also high at 83.3% and 79.0% respectively. Although considerable training takes place among other firms the participation rate is much lower. Thus only 30.4% of firms that did not have a training plan, a training budget, or annual appraisal actually provided any training for their employees.

The characteristics of the BPS firms most actively involved in training are not to dissimilar to those identified in the previous section. Large, urban-based, and multi-site firms are more likely to have made training available to their staff. However, although the patterns are broadly similar, the differences are not pronounced. This is partly a function of high proportions of firms involved. In none of the categories examined did less than 50% of the firms participate in training.

Firms were asked whether the training they funded or arranged was mainly designed for new recruits or the existing workforce. Perhaps not surprisingly most offered instruction for both groups but a substantial number had concentrated exclusively on their existing workforce (Figure 6.2). This latter group tends to be the smaller firms in which sole proprietorship is a marked feature, presumably because for this group recruitment was not a significant factor. Very few firms offered training solely for new recruits.

TRAINING PROVIDED FOR DIFFERENT OCCUPATIONS (D4)

To evaluate the extent to which training is provided for different occupations, firms were asked which occupation groups, if any, they had funded or arranged training and development for during the previous two years (Figure 6.3).

The longer time period sees the percentage of firms providing no training falling to 23.1% compared to the one-year figure of 32.7%. The occupational groups that benefit most are Managers, Professionals and Administrative and Secretarial staff. Nearly 60% of firms were engaged in some form of managerial training although this high proportion partly reflects the ubiquity of this occupational group amongst all BPS activities.

More interesting is that 40.3% of firms feel that it necessary to invest in training for professional staff; this accounts for nearly all the firms employing such staff. A similar picture emerges for Sales and Customer Service occupations although the percentage participation is lower because a smaller proportion of firms offer employment in these occupations. In striking contrast are the Administrative and Secretarial occupations; only 36.8% of firms offered training for this group, well short of the 56.4% of firms employing administrative and secretarial staff. SERU, University of Birmingham Page 75 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

For almost every occupational group, training levels are generally higher in the urban areas and lowest in the more rural regions. However, the only statistically significant difference is the comparatively high percentage of firms in Birmingham and Solihull that train their administrative and secretarial staff. More striking differences appear when the size of the firm is considered; training rates consistently increase as progressively higher size bands are examined. This is the case for all of the occupational groups in the survey.

TYPES OF TRAINING (D5 & D11)

The most popular type of training used by the survey firms at some time during the previous two years was job specific (Table 6.3). Overall 82.5% of firms had engaged in this activity and it is the most widespread form of training for all categories of firm.

Other important types of training are health and safety, new technology, and induction. These were provided by approximately 60-70% of firms. Notably few firms sought help from Further Education and Higher Education institutions but those who did were most likely to be larger organisations. The relative importance of different types of training does not vary significantly between the six LSC regions.

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Figure 6.2 Percentages of firms that provide training and whether it is primarily for the existing workforce or new recruits

No training 33% Existing workforce 25%

Both Training 40% 67%

New recruits 2%

Table 6.3 Percentages of firms offering (a) different types of training and (b) whether at the desk or workplace.

Types of training (a) % of (b) % firms firms with some offering training at each type desk or of training workplace Job specific training 82.5 89.4 Health and safety training 70.5 92.0 Training in new technology 65.7 93.5 Induction 61.7 95.3 Management training 51.5 93.2 Supervisory training 42.7 96.7 Part-time FE/HE education 20.0 na Graduate training places - 15.7 na Further Education colleges Graduate training places - 13.6 na Universities Training in foreign language 3.3 94.4 Other training 8.4 na Don't know 2.0 na

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Figure 6.3 Percentage of firms providing training: past two years, by occupational group

DELIVERY OF TRAINING (D6 & D7)

Firms were asked whether they utilized any of four different methods of training. These were defined by distinguishing between on the job and off the job training and for each of these categories making the further distinction between in house delivery by employees and delivery by an external provider.

On the job, in–house training was easily the most frequently used mode of delivery. Of the 920 “training” firms, 746 (81.1%) used this mode of delivery. The second-most important mode of delivery was off the job delivery by external provider (49.4% of firms).

Firms were also asked to grade the quality of training provided by each of the four delivery methods on a five point scale (5=very good, …, 1=very poor). The highest mean score was 4.3 for on the job training conducted in-house (Figure 6.4). The other scores fell in the range 4.08-4.14 and collectively indicate high levels of satisfaction with all modes of delivery, although in-house training generally seems to gain most approval.

Satisfaction levels do not vary widely and it is difficult to identify any trends. However, the data do reveal that it is mainly because of the high scores awarded by small firms that in-house, on the job training stands out as the most appreciated of the four modes of delivery considered. The ratings made by the larger BPS firms do not clearly favour either employee or externally provided training.

PREFERRED MODE OF TRAINING FOR NEW RECRUITS AND EXISTING WORKFORCE (D11 & D12)

All firms were asked about their preference for different methods of training in relation to both the needs of new recruits and those of the existing workforce.

This section of the survey was put to all firms, not just those who had offered training during the previous two years. Another difference compared to Question D6 is that the off the job external training provider category has been sub- divided in order to distinguish training consultancies from FE colleges.

The results (Figure 6.5) reveal a similar overall pattern to that found among the “training” firms; on the job in house provision is easily the most favoured delivery mode for both new recruits and the existing workforce. One curious feature is that larger, multi-site BPS companies rate this method of training most highly; in the previous question based on experience, if anything it was smaller firms that seemed the more satisfied.

Off the job training delivered by external providers again proved the second most popular form of provision when designed for the existing workforce. Training consultancies are the preferred external provider but the difference is not great in relation the training of new recruits..

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FORMAL QUALIFICATIONS ACHIEVED (D8)

A total of 600 firms (just marginally greater than 50% of all respondents) had used external providers for their training and development activities during the previous two years. Staff in some 287 of these firms had achieved a formal qualification varying from university degrees to first aid certificates (Table 6.4).

The likelihood of training leading to a formal qualification strongly correlates with firm size. For example, staff in 75% of firms with 100 or more employees obtained a qualification as an outcome from training, whereas the equivalent values for firms with 1-10, 11-24 and 25-99 employees are 41.9%, 59.9% and 68.1% respectively.

NVQ TRAINING (D13 & D14)

The importance of NVQs was investigated further. In the survey 238 (19.9%) firms affirmed that they had provided some training linked to NVQs in the last five years. Although all types of the firms had offered at least some NVQ training, the participation rates were highest for multi-site companies (25.4% averaged over both categories), public limited companies (28.6%) and those in the financial services sector (30.2%).

Table 6.4 Formal qualifications obtained by staff during the past two years

Number Number Qualifications Qualifications of firms of firms

MA/MSc 9 First aid certificate 2 BA/BSc Hons 12 Health and safety certificate 6 Professionally accredited 143 ILEX diploma 2 qualification NVQ level 1 20 Fork lift truck driving certificate 2 NVQ level 2 36 CEMAP certificate 10 NVQ level 3 40 IT qualification (unspecified) 2 Postgraduate qualification City and Guilds (level unspecified) 9 3 (unspecified) HNC 4 Any other qualification 48 HND 1 Don't know 21

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Figure 6.4 Ratings of quality of training and mean 800 scores by mode of delivery Mean score = 4.30 5 - very good 4 3 2 600 1 - very poor

Mean score = 4.12

400

Mean score = 4.08 Number of firms of Number

Mean score = 4.14

200

0 on the job - delivered by on the job - delivered by an off the job - delivered by off the job - delivered by an employees external training provider employees external training provider

Figure 6.5 Preferred mode of training for delivery (a) new 75 recruits and (b) existing workforce

New recruits

Existing workforce

Percentage of all firms all of Percentage 25

0 On the job - On the job - Off the job - Off the job - Off the job - Other methods No preference delivered by delivered by delivered by delivered by delivered by an employees external provider employees training FE college consultancy

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Size of firm in terms of the number of employees was a particularly significant factor as all size-groups above 10 employees were considerably more likely to have invested in NVQ courses.

Firms that had asked staff to participate in NVQ courses were asked to rate them on a five point scale from 1 = very dissatisfied to 5 = very satisfied. The levels of satisfaction expressed (Figure 6.6) are generally high but overall rather low (mean satisfaction = 3.82) when compared with the mean levels recorded in D7 where respondents had to rate the quality of different methods of training.

Although overall quality and satisfaction levels are positive it is difficult not to conclude there is scope for improvement in NVQ training.

To investigate this further, the twenty-four firms who were either very dissatisfied or dissatisfied with the NVQ training provided were asked to state their reasons (Table 6.5). The main complaints are centred on the standard of the provision itself but issues associated with the relevance and value of the training relative to the needs of individual firms/employees also emerged.

OFF THE JOB TRAINING PROVIDERS (D16 & D17)

The nature of “off the job” training was investigated further by asking the 529 firms that had employed such methods which of four different types of provider they had used (Figure 6.7).

Private sector training companies were by far the most frequently used. Nearly three quarters of firms had drawn on such providers some time in the previous two years. Further Education was the second most important provider, accounting for 29.8% of the firms using “off the job” training. However this only amounted to 158 firms in total. The numbers drawing on higher education and public sector providers were even lower; 103 and 74 firms respectively. The “Other Training Company” category was nominated 74 times and a diverse set of providers was recorded. These included much in-house provision but banks, insurance companies and professional institutes were often cited.

There was little clear evidence that particular types of firm favoured particular types of provider. However, it was evident that business services made significantly greater use of Higher Education providers than was the case for firms more generally. Professional services, on the other hand, were over-represented in the “Other” providers group.

It is interesting to note that above-average use was made of Further Education by firms organised as partnerships (42.3%), firms with HQs outside UK (45.6%), and firms with 25 and over employees (43.8%).

In question D18, firms were asked to rank the different training providers in order of expenditure where rank 1 signifies the greatest expenditure. It is difficult to interpret such rankings since the number of providers varies from one to five. However, some progress can be made by forming comparison pairs using the declared rank orders. In this way one, three, six etc pairs can be formed in the cases respectively of two, three and four providers appearing in the rank order (Table 6.6).

Some 46.1% of all firms using external providers for “off the job training” only employed private sector training consultancies. In contrast, firms using other providers such as Further Education and especially Higher Education typically did so as part of a mix of different providers.

When comparison pairs are examined it is interesting to note that although Private Training Companies are the most preferred provider type (rating highest in 134 comparisons), Further Education is not far behind as its providers were rated best in 100 comparisons (see Table 6.6).

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Figure 6.6 Levels of satisfaction with NVQ training: past five years

80 77 70

60 54

40 Number of firms of Number 20 15 12 9

0 1 - Very 2 3 4 5 - Very Don't know Dissatisfied Satisfied

Table 6.5 Reasons why firms were dissatisfied or very dissatisfied with NVQ training: last five years

Firms dissatisfied or very dissatisfied Number of with NVQ training firms Generally poor standard/ didn't meet 11 requirements Not focussed enough on required 3 subject area Learning unnecessary/ useless skills 3 Too time consuming 2 Other 4

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Figure 6.7 Providers of off job training: by number of firms, business sector and percentages of all firms using each type of provider

Further education 29.8% Financial services provider Business services

Higher education provider 19.4%

Public sector training 14.1% provider

Private sector training 73.6% consultancy

Other training company 12.6%

0 100 200 300 400 Number of firms

Table 6.6 Off the job training providers: (a) only provider used by firms and (b) number of times provider preferred in comparison pair

Off the job training (a) firms for (b) number of providers which only times preferred provider in comparison used pair

Further education provider 31 100 Higher education provider 9 77 Private sector training 244 134 consultancy Public sector training 17 37 provider Other training company 52 14

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A more complicated picture emerges when individual comparison pairs are examined (Figure 6.8) although even here the supremacy of the private sector is clear since it is rated above the other providers in all of the pairs in which it appears. Further Education providers do well against Higher Education, the Public Sector and Other Providers. Even in comparisons with the Private Sector, approaching one half (43.%) of the 99 firms that use both types of provider rated FE the higher of the two.

OFF THE JOB TRAINING (D18)

Table 6.7 reveals the types of training supplied by a firm’s most important external provider. It is evident that external providers are used in a great variety of ways. Job specific training is the most important application, but management training, new technology, and health and safety training are all areas in which a single external provider plays a key role. Externally-based trainers are used much less frequently supervisory training and for induction training.

The way in which different types of provider are utilized does not vary much. This becomes evident when the different sectors are compared in terms of their distribution of training activity (Figure 6.9). For example, the principal external providers are heavily involved in job specific training no matter from which sector they originate.

However, some differences can be discerned. The private sector and Higher Education are over represented in the management training field, whereas “other” providers perform a significant role in supervisory training, an area in which HE is rarely a significant provider.

Approximately one half of “other” providers are involved in induction training but since many of these are affiliated companies, if not “in-house, this is perhaps not surprising. It can be noted that the public sector is disproportionately involved in the provision of health and safety training.

INFLUENCE OF EXTERNAL PROVIDERS ON TYPE OF TRAINING PROVIDED (D19)

Firms were asked about the extent to which the type of training conducted in last two years by external providers was a result of tailored or customised advice received from these providers.

Firms reported (Table 6.8) that in the majority of cases training was not customised. Perhaps unsurprisingly, customised advice was most important for job-specific training but for virtually all types of training there was clearly some scope for customisation. Training in foreign languages is the only real exception.

SATISFACTION LEVELS WITH OFF-THE-JOB TRAINING (D20)

Firms expressed high levels of satisfaction with all types of off-the-job training (Figure 6.10). At least 80 % claimed to be satisfied in all cases and all mean scores (5=very satisfied,…,1=very dissatisfied) are well above four (i.e. better than satisfactory). Supervisory training is marginally rated most satisfactory (apart from foreign language training which involves very few firms) and new technology training is marginally rated least satisfactory. Only a very small number of firms (nine) expressed considerable dissatisfaction with the training provided.

REASONS WHY FIRMS USE PARTICULAR EXTERNAL PROVIDERS (D21) Firms were asked why they used a particular organisation as the main external provider of their company’s off-the-job training needs. The question was open-ended and generated a wide range of responses that were not easy to classify.

The most frequently offered explanation was that a provider was able to supply the “specialised/job specific training” required (11.6% of firms). The second most popular response (10.4%) was that the provider was able to offer “relevant training/qualifications”; this reinforces the first choice in that it suggests that options may be limited. The third most often cited category to emerge (9.4%) was that

SERU, University of Birmingham Page 84 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands Figure 6.8 Number of times each type of provider preferred when compared with another type of provider: firms that used more than one provider of off the job training HE - Other

Other - Private Preferences for 1st lsted provider

Public - Other Preferences for 2nd lsted provider

FE - Other

FE - Public

HE - Public

FE - HE

Private - HE

Private - FE

Private - Public

0204060 Number of comparison pairs

Table 6.7 Number and % of all firms using their most important external provider for each type of training

Types of training Firms using external provider for this training (most important trainer only) Number % Induction training 124 23.5 Health and safety training 201 37.9 Supervisory training 146 27.6 Management training 225 42.5 Training in new technology 235 44.3 Training in foreign languages 11 2.1 Job specific training 356 67.3 None of the above 26 4.8

Table 6.8 Types of training which took place in the last 2 years as a result of tailored or customized advice from an external provider

Types of training External providers whose advice used to customise training Number % Induction training 57 10.7 Health and safety training 83 15.7 Supervisory training 53 10.1 Management training 92 17.4 Training in new technology 101 19.1

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Training in foreign languages 2 0.4 Job specific training 157 29.6 None of the above 281 53.1

Figure 6.9 The types of training for which the most important provider is used: by provider’s sector.

100%

75%

50%

25%

% of firms using main provider 0% Private sector Further Higher Public sector Other Education Education Induction training Health and safety training Supervisory training Management training Training in new technology Training in foreign languages Job specific training None of the above

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Figure 6.10 Levels of satisfaction with different types of “off-the-job” training

100%

75%

50%

25%

0% Induction Health and Supervisory Management Training in Training in Job specific training safety training training new foreign training training technology languages

1 - Very Dissatisfied 2 - Fairly Dissatisfied 3 - Neither Satisfied nor Dissatisfied 4 - Fairly Satisfied 5 - Very Satisfied

there was “no specific reason”. This is difficult to interpret as it may indicate a lack of concern, justified or otherwise, about the trainer or the training provided.

The next two reasons represent a contradiction, as these were (a) the chosen provider is believed to have the “best expertise in this subject/best trainer” (6.8%) but (b) that “no one else does training/lack of alternative options” (6.4%). It is conceivable that this contradiction reflects variations in the pattern of supply but an investigation of possible links with urban and rural settings, for example, proved negative. Indeed it was Birmingham and Solihull based firms that were more likely than average to nominate “no one else does it”, “due to regulations etc” and “no specific reason” when asked about their choice of private sector trainers.

Figure 6.11 provides details of reasons firms use particular providers for off-the-job training, by type of provider. The reasons are ordered by the frequency with which each is nominated as the basis for choosing a Further Education provider. “No specific reason” heads the Further Education list followed by “offer relevant training/qualification”. This latter reason is not unrelated to other popular reasons such as “specialized/job specific training” and “due to regulations etc”. This suggests that the Further Education sector scores highly for the provision of relatively specific types of training.

Cheapness and access also emerge as important additional considerations. It is interesting to compare the Further Education and private sectors. The importance of job specific and relevant training are popular reasons for choosing providers in both sectors but in the private sector “has the best expertise”, “course tailored to our needs” and “no one else does the training” are the third to fifth most cited reasons. It is possible to conclude that private sector provision scores well when flexibility and quality are important considerations for their clients.

REASONS WHY TRAINING NOT OBTAINED FROM LOCAL FE COLLEGE (D22)

For all training provided externally, firms were asked why it had not been obtained from the local FE college (Table 6.9). Setting aside “other reasons” (5% of the reasons given), responses can be broadly grouped into four categories.

The largest group of responses, about one-half of the total, reflect a belief that the local FE college does not offer an appropriate training product, either because the level is too low or because the instruction is not specialized enough to meet a firm’s requirements.

The second general category (approximately one quarter of the total) incorporates reasons that reveal ignorance of what the local FE college might have to offer. Thus, some firms claimed not to have considered an FE college at all or to be unaware of what courses were available at the local college. SERU, University of Birmingham Page 87 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

The third category (some 13% of responses) in various ways represents a negative assessment the courses provided by FE colleges. Thus, 7.2% of the reasons cited amounted to a preference for other providers while the ‘poor quality’ of FE courses accounted for another 3.8% of mentions.

A final 6% of responses revealed that the local FE college could not be considered because a firm was tied to another provider or the sourcing decision for training was taken elsewhere in their organization.

The reasons given for not choosing FE colleges are unrelated to the type of firm. The size of firm, for example, doe not emerge not emerge as a crucial factor. However, there were some significant links with legal status; partnerships and private limited companies were significantly more likely to choose non-FE providers because they needed more specialist training than they believed the FE colleges could provide.

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Figure 6.11 The reasons firms use particular providers to deliver “off-the-job” training from the Further Education, the Private and Other sectors

It's up to individual staff members They are a professional body/ trade association Offers a wide range of courses at one place Trainers have access to better resources Further Education Keep staff up-to-date Private Sector Head office decision/ company policy/ not our decision Company has good reputation/ it was recommended to us Others Time requirements Supplied/ provided the equipment/ software Course is tailored to our needs To better staff/ reach required standards Business arrangement/ agreement with them All training done in-house Has the best expertise in this subject/ best trainer Used them before/ previous good results No-one else does training/ lack of alternative options Easily accessible/ convenient Other No in-house training available Due to regulations/ professional requirement/ legal requirements Require specialised/ job specific training Low cost/ free/ value for money They offer the relevant training/ qualifications No specific reason

0255075 Number of external providers

Table 6.9 Reasons given by firms for not obtain training from the local FE college

Reasons firms did not use their local FE college Number of % of mentions mentions College doesn't provide required course 91 23.3 No specific reason 57 14.6 Need highly specific/specialised subject training 51 13.0 College courses are not relevant to/don't meet our requirements 38 9.9 Prefer to have training done in-house/by other providers 28 7.2 Lack of information on the range of courses available 26 6.5 Other reasons 20 5.1 Haven't considered it 16 4.2 Needed higher level of qualifications/skills 16 4.1 Poor standard of college courses 15 3.8 Decision is made by head office/ other people 11 2.9 Too expensive/not cost effective 8 2.0 Business contract with present training provider 8 2.0 Not allowed to do course in college due to trade regulations 4 0.9 It depends on the staff members choice 2 0.6

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In addition, public limited companies were significantly more likely to claim they preferred in-house training and that the choice of provider was in a any event a head office decision.

DIFFICULTIES EXPERIENCED WITH LOCAL SOURCING OF TRAINING (D23 & D24)

All firms in the survey were asked whether they were experiencing any difficulty in sourcing local training provision, whether publicly or privately funded. The responses are summarised in Figure 6.12. As is evident, only a small number of firms (5.9% of all those surveyed) claimed to be having difficulties. The regions where local supply was most problematic were Hereford and Worcester (10.8% of the firms in this region had difficulties) and Staffordshire (10.3%). The regions best off were Shropshire (2.4%) and Birmingham and Solihull (4.4%).

The 71 firms reporting problems with local sourcing were asked to indicate what skill areas these involved. The most frequently mentioned were job specific and management skills (each cited by approximately 12% of these firms) followed by IT skills (10%), accountancy (6%) and design skills (5%).

Beyond these skill areas there are a large number of other skills that merit mention only by 3 or less firms. As the actual numbers are so small (see Figure 6.12) their appearance may reflect the particular circumstances of individual firms and it is very difficult to discern any general pattern.

BARRIERS IN THE FIRM TO LINKING TRAINING TO NATIONALLY RECOGNISED QUALIFICATIONS (E1)

All respondents were asked what barriers, if any, existed in their firms to providing training leading to nationally recognized qualifications (Figure 6.13). This was an open-ended question and respondents were free to identify as many factors as they thought relevant.

Some 863 firms (72.2% of the total) indicated that they could not identify any barriers. There is only very limited variation in this percentage for different types of firm. The only significant departure was the comparatively low figure of 65.3% recorded for firms in sole proprietorship.

As far as the barriers themselves are concerned, where they were felt to exist it was financial constraints that were the most frequently mentioned: 29.4% of the firms reporting barriers identified this as a problem.

Most of the other leading factors were similarly related to need and to the costs of training. Prominent here is the perceived administrative costs of reorganising training to fit within national qualifications. This may account for the high ranking of time considerations (21.2%) and fears that extra administration would be necessary (3.1%).

There is some uncertainty apparent about the need for any training for national qualifications. Firms pointed out that all staff were fully qualified (7.5%), that there is no need or point in obtaining national qualifications (4.5%), and that the type of work involved does not require qualifications (2.5%).

Another theme concerns the adequacy of supply as some firms claim it is difficult to find an appropriate course (12.0%) and other criticisms focus on distance and travelling problems (2.9%).

BARRIERS WHICH LIMIT PROVISION OF TRAINING AND DEVELIOPMENT FOR STAFF (E2)

Respondents were also asked what barriers they believed to exist which limited the provision of training and development of staff. Unlike the previous question, respondents were asked to select from a number of precoded answers and they were allowed to select more than barrier.

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The results indicate substantial support for most of the barriers identified in the list of possible responses (Table 6.10). However, as might be anticipated, the financial considerations

Figure 6.12 Skills that firms feel are difficult to source using local training providers recorded by number and percentage of all survey firms

Loss of productivity 0.7% Too few tutors/course places available 0.9% High staff turnover/lack of long term staff 1.0% Poor standard of qualifications/courses 1.3% Training depends on the staff 1.4% Specialised training requirement 2.0% Prefer to train staff using own methods 2.1% Lack of information 2.2% Type of work doesn't require qualifications 2.5% Distance/ location/travelling problems 2.9% Lack of staff interest 3.0% Increase in bureaucracy/extra administration 3.1% No need/ no point (unspecified) 4.5% Covering staff when training 6.8% All staff employed fully qualified/trained 7.5% Other 12.0% Finding course/qualification relevant to job 12.0% Time factor/time available 21.2% Lack of funding/budget/high cost of training 29.4%

0255075100 Number of firms

Table 6.10 Barriers limiting the provision of training and development of staff (ranked by frequency mentioned)

Barriers Number of firms % of all firms

The cost of training 435 36.4 Being able to access training at suitable times 419 35.0 The relevance of training offered by providers in the local area 388 32.5 Unable to release staff for training due to the negative impact on 343 28.7 production Do not have the time to train staff 319 26.7 No barriers 315 26.4 Lack of information on the training available 305 25.5 The quality of training offered by providers in the local area 278 23.3 Cannot find training needed in the local area 263 22.0 Concerns over trained employees taking jobs in other firms 189 15.8 Unable to quantify the business benefits from training 138 11.5 Employees are not interested in training or developing their skills 134 11.2 No budget for training 122 10.2

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Barriers Number of firms % of all firms

No benefits identified from training 91 7.6 No-one in the firm is skilled at identifying employee's training 85 7.1 No-one in the firm is skilled at buying training 77 6.4 Other barriers 7 0.6

Figure 6.13 Barriers identified by firms as limiting development of training to nationally recognised standards

Detailed courses/ job specific 8 Management skills 8 IT skills 7 None 6 Accounting/ finance 5 Design skills 4 Communication skills 3 Customer service skills 3 Insurance 3 HGV driving 2 General administration 2 Electrical skills 2 Legal training 2 Sales skills 2 Construction skills 2 Personal skills 2 Health and safety 2 Surveying skills 2

04812 Percentage of firms

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attached to training were frequently mentioned. Top of the list was the actual cost of training which just over a third of firms identified as a major obstacle although relatively few thought that a lack of a training budget was a particular problem (10.2%). Opportunity costs are also involved in that 28.7% of respondents considered that they were unable to release staff due to the negative impact on production. Just over a quarter of firms took the view that they did not have time to train staff.

One remedy is to engage external providers in training programmes but based on this survey, there must be serious concerns about what is available locally. 32.5% of respondents were worried about the relevance of local provision, 23.3% about the quality of training programmes, and 22% by the absence of appropriate training in the local area. It also seems reasonable to assume that the 35% who found it difficult to access training at suitable times were also dissatisfied with local provision.

It may be that perceived inadequacies of training provision at the local level are a function of incomplete information por imperfect knowledge. This conclusion is supported by the comparatively high ranking attached to “lack of information on training” as a barrier to staff development and training.

There was also some evidence in the survey of scepticism about the value of training. Although all three of the factors which reflected doubts about the potential value of training received only limited support from respondents, they nevertheless amounted to more than 1 in 6 of all firms. It is difficult to provide a detailed profile of these companies but single site firms and sole proprietorships are disproportionately represented.

On a more positive note, 26.4% of firms felt there were no barriers limiting provision of training for staff. The larger firms including those with 25 and more employees, which are public limited companies and subsidiaries or branches of UK organisations, seem to face fewer obstacles than BPS firms in general.

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7 VARIATIONS IN SKILL NEEDS OF BPS BETWEEN LSC REGIONS?

This chapter examines each of the six LSC regions individually as a means of identifying the extent to which they face common or distinctive problems. Each utilises:

• Selected data series which are reproduced in the accompanying sets of tables. These record counts and percentages for each region in turn and equivalent data for all other firms in the survey to facilitate comparison. • Highlights of the key issues and themes identified by the in-depth interviews. • A summary of the discussion points at the focus group meeting in each LSC region.

An overview table that provides a comparative synthesis of the key skill needs and issues that emerge from the quantitative information, the depth interview transcripts, and the discussions at the focus group meetings at the end of this chapter.

BIRMINGHAM & SOLIHULL LSC REGION

Birmingham and Solihull is easily the most important region in the West Midlands for business and professional services. The sample of 547 firms accounts for nearly a half (45.7%) of all firms included in this study. However, as Table 7.1.1 illustrates, the region does not differ markedly from the rest of the West Midlands in terms of the character of its firms.

The key shared features are:

• Small enterprises (77% have 1-10 workers) • Private limited firms dominate (52.7%) • Single site firms are in the majority (50.9%) • Business services are important, notably legal, accounting, architectural, engineering and labour recruitment services

Although of lesser importance, the main distinctive features are the relatively high incidence of:

• Larger firms (25+ employees) • Public and private limited firms • Enterprises with a HQ outside the West Midlands • Firms that have not been at their current premises for long

The latter is most significant for firms who have been resident for less than three years. It is not possible to determine whether the high incidence of short stay firms reflects greater local mobility or high firm creation rates or is simply a temporal blip.

It does not appear that this region has a serious problem with hard to fill vacancies (Table 7.1.2). As throughout the West Midlands, the critical areas are in the professional, associate professional, administrative and secretarial sectors although the latter seems less significant in Birmingham.

In terms of the competence of the labour force, Birmingham compares favourably as proficiency levels are higher for every occupation apart from elementary for which there are few openings in the service sector (Table 7.1.3). However, when measured in terms of concern, administrative & secretarial occupations stand out as being especially worrying in Birmingham.

Easily the most important cause of skill problems among staff was widely regarded as lack of experience or recent recruitment with “failure to train and develop staff” in a distant second place. Both causes were given fractionally more support by Birmingham firms.

A wide range of skills were felt to need improvement but the ratings given by Birmingham firms were unexceptional apart from the relatively high support for improved skills in the areas of office administration, problem solving and data analysis.

In regard to the impact of skill deficiencies on competitiveness, Birmingham firms appeared generally less concerned although, uniquely, accounting/finance was thought a significant liability. The overall effects of staff not being fully SERU, University of Birmingham Page 94 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

skilled were widely conceded to be detrimental, with increased operating costs the main worry in Birmingham and the West Midlands generally.

Table 7.1.4 reveals a strong commitment to strategic planning in Birmingham as 39.2% of firms operate business and training plans, have a training budget and conduct annual staff reviews. This compares to 30.6% elsewhere in the West Midlands. Birmingham shows a higher than average appreciation of the value of training; nearly 70% of firms have arranged it in the past year for their workforce.

In common with other regions, on-the-job training by other employees is by far the most favoured mode. Private sector consultants are especially important for off-the-job training, but otherwise the mix of external providers is similar to that found in the rest of the West Midlands. Job specific training is the main activity of a firm’s main provider while management and new technology training are given more prominence than elsewhere.

Table 7.1.1 Characteristics of firms in the Birmingham and Solihull LSC region

Birmingham firms All other firms Number % Number % Business Activity (SIC divisions and selected groups) Base: all firms 65 Financial intermediation 51 9.4 54 8.3 66 Insurance & pension funding 23 4.1 39 6.0 67 Activities auxiliary to financial mediation 31 5.6 21 3.2 70 Real estate, renting & business activities 66 12.1 69 10.6 71-73 Computing & Research 10 1.8 17 2.6 74 Other business activities 366 66.9 450 69.3 of which 74.1 Legal, accounting, business consultancy 142 25.9 178 27.4 74.2 Architectural & engineering activities 108 19.7 132 20.3 74.5 Labour recruitment 85 15.5 99 15.2 Years at current premises Base: all firms Less than a year 21 3.8 26 4.0 1 - 2 years 136 24.9 102 15.7 3 - 5 years 121 22.2 141 21.8 6 - 10 years 103 18.9 145 22.4 11 - 20 years 81 14.8 110 17.0 More than 20 years 79 14.4 119 18.4 Don't Know/ Refused 5 0.9 5 0.7 Organisational type Base: all firms Only site 278 50.9 355 54.6 HQ, regional or divisional HQ 75 13.7 98 15.0 HQ elsewhere in UK 178 32.6 188 28.9 HQ outside UK 15 2.8 9 1.4 Legal status Base: all firms Partnership 96 17.6 118 18.2 Sole Proprietorship 75 13.8 108 16.6 A Public Limited Firm 82 14.9 85 13.1 A Private Limited Firm 288 52.7 331 51.0 Number of on-site workers Base: all firms 1 – 10 421 77.0 545 84.0 11 – 24 59 10.9 57 8.7 25 – 99 44 8.1 38 5.9 100+ 22 4.0 9 1.4

Table 7.1.2 Job vacancies of firms in the Birmingham and Solihull LSC region

Birmingham firms All other firms Number % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 4 34.9 4 42.3 Professional occupations 20 50.4 15 61.5

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Associate professionals & technical occupations 10 35.7 10 31.6 Administrative and secretarial occupations 12 27.3 14 36.8 Skilled trades occupations 2 50.8 1 29.2 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 4 25.6 1 14.1 Process, plant & machine operatives 1 24.2 1 28.7 Elementary occupations 1 25.0 0 0.0 Base: firms with difficult to fill Reasons why vacancies difficult to fill vacancies Too much competition from other employers 6 11.9 3 7.9 Not enough people interested in this type of job 5 10.0 7 18.2 Poor terms and conditions offered for post 1 2.2 3 6.9 Low number of applicants with the required skills 30 54.8 17 42.6 Low number of applicants with required attitude 11 19.9 9 22.4 Low number of applicants generally 14 26.5 7 16.5 Lack of work experience the company demands 12 21.7 8 19.7 Lack of qualifications the company demands 9 17.5 8 19.6 Poor career progression / lack of prospects 1 1.1 4 10.9 Job entails shift work/unsociable hours 1 2.3 2 4.2 Remote location/poor public transport 1 2.6 4 8.9

Table 7.1.3 Skill needs of firms in the Birmingham & Solihull LSC region

Birmingham firms All other firms Number % Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 20 4.1 38 6.5 Professional Occupations 25 10.2 32 12.4 Associate Professionals/ Technical Occupations 25 11.9 36 16.2 Administrative and Secretarial Occupations 40 12.0 49 14.3 Sales/ Customer Service Occupations 12 11.0 21 17.4 Personal Service Occupations 1 10.9 1 14.8 Elementary Occupations 6 16.1 2 3.4 Base: firms with at least one occupation not fully Occupations with skills gap of most concern proficient Managers 19 19.9 32 23.8 Professional Occupations 22 24.0 30 22.3 Associate Professionals/ Technical Occupations 24 25.4 30 22.8 Administrative and Secretarial Occupations 39 41.6 45 33.7 Sales/ Customer Service Occupations 12 12.9 21 15.8 Personal Service Occupations 1 1.3 1 1.0 Elementary Occupations 4 3.8 1 1.1 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 26 27.7 29 21.9 Recruitment problems 16 17.6 24 17.9 High staff turnover 9 10.0 11 8.1 Inability of workforce to keep up with change 19 19.9 24 18.2 Lack of experience or their being recently recruited 66 70.9 89 66.6 Staff lack motivation 20 21.2 29 21.9 Other 0 0.0 2 1.1 No particular causes 18 19.2 20 14.7 Skills needing improvement Base: occupations experiencing skills Communication skills 48 39.3 73 45.3gaps Technical and practical skills 51 42.6 68 42.5 Customer handling skills 48 40.1 67 41.6 Practice/ general management skills 45 37.5 68 42.5 Personal skills (motivation, ability to fit in) 47 39.1 65 40.5 Problem solving skills 51 42.3 60 37.6 Office admin. Skills 50 41.3 56 34.9 Team working skills 42 34.4 55 34.0 General IT skills (word processing, email, internet) 39 32.0 50 30.9 SERU, University of Birmingham Page 96 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Leadership skills 35 28.9 45 28.2 Data analysis 36 30.0 37 23.1 IT professional skills 26 21.5 45 28.1 Accounts/ finance 28 22.9 32 20.1 Technical skills related to the occupation 24 19.7 34 21.1 Human resource management skills 20 16.2 27 17.0 Literacy 16 13.4 23 14.4 Numeracy skills 13 10.5 18 11.3 Foreign language skills 9 7.7 13 8.1 No particular skills 9 7.1 11 7.0 Other skills 1 1.0 11 6.9 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 11 11.4 23 17.1 Customer handling skills 7 7.7 15 11.6 Sales ability 9 9.6 13 10.1 Communication 7 7.9 15 11.1 IT / computer skills 3 3.4 12 8.8 Technical skills 6 6.7 7 5.4 Office administration skills 4 4.7 5 3.8 General lack of experience 2 2.6 5 3.6 Accounting/ finance 6 6.6 1 0.7 Numeracy 1 1.3 5 4.0 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps Loss of business or orders to competition 25 27.0 36 27.3 Delays developing new products or services 22 23.0 40 29.9 Difficulties meeting customer service objectives 33 35.3 44 33.0 Difficulties meeting required quality standards 21 22.3 29 21.6 Increased operating costs 41 43.8 60 45.0 Difficulties introducing new working practices 13 13.4 22 16.6 No particular problems/ none of the above 24 25.8 36 26.7

Table 7.1.4 Workforce training by firms in the Birmingham & Solihull LSC region

Birmingham firms All other firms Number % Number % Incidence of strategic planning Base: all firms Has a business plan 416 76.2 445 68.5 Has a training plan 336 61.5 375 57.7 Has a training budget 279 51.0 270 41.6 Has annual performance review or appraisal system 404 73.8 431 66.4 All of the above 214 39.2 199 30.6 None of the above 54 9.9 103 15.9 Training conducted during past 12 months Base: all firms Arranged training 380 69.6 425 65.4 mainly for Existing workforce 116 21.3 184 28.3 New recruits 17 3.2 9 1.4 Both 247 45.1 232 35.7 Have not arranged training 166 30.4 225 34.6 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 453 82.9 502 77.3 On the job - delivered by external provider 165 30.2 144 22.2 Off the job - delivered by employees 182 33.3 156 24.0 Off the job - delivered by a training consultancy 164 30.1 194 29.9 Off the job - delivered by a FE college 113 20.6 134 20.6 Other method 11 2.0 4 0.7 No preference 44 8.0 89 13.8 For existing workforce On the job - delivered by employees 427 78.0 490 75.4 On the job - delivered by an external provider 183 33.5 185 28.5 SERU, University of Birmingham Page 97 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Off the job - delivered by employees 165 30.1 152 23.5 Off the job - delivered by a training consultancy 217 39.7 240 36.9 Off the job - delivered by a FE college 128 23.5 128 19.8 Other method 9 1.6 8 1.2 No preference 48 8.7 73 11.3 Off job training providers Base: all firms using external training Further education provider 73 30.4 84 providers29.3 Higher education provider 48 19.7 55 19.1 Private sector training consultancy 183 75.7 206 71.7 Public sector training provider 30 12.3 45 15.6 Other training company 33 13.7 34 11.7 Training by most important provider Base: all firms using external training Health and safety training 92 38.3 108 providers37.6 Induction training 56 23.3 68 23.6 Supervisory training 70 29.2 76 26.3 Management training 112 46.3 113 39.3 Training in new technology 111 46.0 123 42.9 Training in foreign languages 4 1.6 7 2.5 Job specific training 151 62.6 205 71.2 None of the above 11 4.4 15 5.2 Base: all firms using external training Top ten reasons firms use particular external providers providers Require specialised/ job specific training 22 9.0 44 15.2 They offer the relevant training/ qualifications 28 11.6 30 10.6 Has the best expertise in this subject/ best trainer 16 6.5 23 7.9 No-one else does training/ lack of alternative options 16 6.6 20 6.9 Course is tailored to our needs 12 5.2 21 7.4 Easily accessible/ convenient 16 6.5 16 5.4 Head office decision/company policy/not our 17 6.9 10 3.3 decision Due to regulations/ professional or legal requirement 11 4.6 15 5.2 No in-house training available 10 3.9 13 4.5 Low cost/ free/ value for money 11 4.6 11 3.9

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IN-DEPTH INTERVIEWS: BIRMINGHAM AND SOLIHULL LSC

Ninety-three in-depth interviews were held in Birmingham and Solihull with 64 firms employing less then 10 people, 12 between 11 and 24, 12 between 25 and 99 and 5 over 100.

LOCATION

The Birmingham and Solihull LSC area is the home to the largest concentration of BPS firms and employment in the West Midlands. This subregion is complex as it consists of a diverse BPS community of firms that have developed to support the local as well as regional economy, but also, in some instances, to develop expertise that is exported to other regions and countries.

The diversity of the BPS community is illustrated by its population structure. This consists of a large number of small and medium-sized firms as well as a much smaller number of much larger firms. The larger firms have either grown to support the needs of larger local client firms or are the branch offices of national and international service suppliers. Many of the latter appear to have entered the West Midlands market place over the last 10 years and have experienced high growth rates.

The diversity of this subregion’s BPS community makes it difficult to arrive at generalisations about the complete population of firms. It is necessary to apply a segmentation approach that highlights differences between the micro, small and medium to larger firms. It is perhaps worth noting that many of the issues identified in the other LSC areas were also found in this subregion. The key difference is perhaps the important role performed by larger firms in Birmingham and Solihull.

A small number of firms highlighted retention and attraction difficulties with the best professionals preferring to work in London. This, however, appeared to be a relatively minor difficulty with the majority of firms being able to fill vacancies.

One large property consultancy firms that employed 45 people in the region noted that this was not just a Birmingham issue as:

‘I think it is related to the attractions of the regional economies, not just Birmingham, compared to London. I think when the economy is in an upswing and the property market is going well then the brighter, younger people are attracted to London. We have a huge number of graduate applications . . . the commercial business probably had seven hundred applicants last year for something like fourteen or fifteen places in London. We’re taking two or three graduates this year into Birmingham we’ve recruited one so far and I didn’t count them up but I suppose number of graduate applicants to the Birmingham office would probably be between seventy five and a hundred but the brighter ones are attracted to go to London and it is quite difficult to attract the really good people to come and work in the regional markets. They may do so later on in their career when they have had a spell in London . . . those who are brighter and have initiative and are really prepared to get stuck in as it were are not prepared to settle for second best will be attracted by the bright lights and the more active market in London’ (BS33/Real/25-99).

This suggests that an interesting relationship exists between the London BPS market and that of the regional economies. Professionals may be trained in London, work there for some years and then relocate to work in other cities. It may also be that the best locally trained BPS professionals migrate to London in order to advance their careers. However, there is only limit evidence to support this and further research into the career biographies of BPS professionals would be useful. It is also worth noting that many of the larger firms highlighted the fact that professionals moved between firms in the area and that the market could be very competitive; sometimes larger firms engaged in a sort of ‘Dutch auction’ to attract professionals (BS46/Leg/100+).

It is also the case that micro-, and many of the smaller, firms did not mention the attraction of London as an issue. For many of these firms recruitment was an unusual and special event in the life of the practice. A small accountancy firm (employs 4) noted that:

‘the last person I took on was seven years ago. The first one before that was fifteen years ago’ (BS81/Acc/1- 10).

Another accountant was quite emphatic in stressing that he had no inclination to employ anyone. He was:

‘a one man band. My object in life is not to get involved with employment. As soon as you get an employee, they’re a pain in the neck. Not necessarily, but, you’ve got to think about them, you’ve got to plan for them,

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and make sure they’ve got a sufficient work load. Most of them, if you give an inch, they take a mile. Some of them are good, I’m not being unkind to all of them, but . . . (BS26/ACC/1-10).

He did experience client workloads that he was unable to deal with by himself. He could either shrink the size of his client portfolio or develop flexibility on the edges of his business or in other words utilise the services of other self- employed accountants on a needs basis. Thus, he had:

‘a couple of assistants. I can call on the services of staff from another accountant, who’s also in the same building here. We sort of share people, and when I need them I hire them and that’s it’ (BS26/ACC/1-10).

For this type of company and for small practices either recruitment is not an issue or the main concern is the replacement of support staff and issues surrounding succession planning.

Larger firms are much more complex. Some are branch offices of national firms. These can be budget or cost centres in their own right and have near independence or be completely controlled from outside the region. There are many different combinations of legal structure. Most, however, are responsible for the recruitment of support staff, in some cases the recruitment of professional staff is dealt with by a national HR team often located outside the West Midlands.

Some of these companies are operating in extremely specialist areas whilst others are just providing relatively standardized but client customised or focussed expertise. This means that some professionals are recruited nationally and even internationally. One accountancy firm noted that:

‘Well let me say in our office we are about 30 people strong or something like that, we’ve got a guy from St Lucia, someone from Malaysia, a lady who started this week from Germany, a lady next door from China, and in the past we have had people from South Africa, Australia, I’ve got no problem about recruiting overseas’ (BS54/Acc/25-99).

National and international BPS firms operate through a linked network of local offices. In some practices this means that clients can access expertise that is located anywhere within a firm’s office network. Generic expertise will be available in all offices, but specialist expertise might be concentrated in key centres of excellence.

The West Midlands needs to acquire as many national centres of excellence as possible. This ensures that a branch office makes an important contribution to the overall competitiveness of the firm. This means that a Birmingham client might access London expertise via the local branch of a BPS firm or that a London client might require expertise that has been developed in the West Midlands.

Thus, large BPS firms must be considered within the context of their national organisational structure. Some will be just branch offices that are not involved with innovation, but are only concerned with providing generic expertise to local clients and acting as a front for specialist expertise that is located elsewhere. Others may be important national and international providers of expertise. This is a complex issue and its complexity is best illustrated by a quotation from a large property consultancy. This firm’s organisation:

‘. . . is a bit of a matrix but effectively financially the office is a self contained unit so therefore we have our own profit and loss account and within that we have separate profit and loss accounts for each team. However, nine different business lines which we have in the office . . . are replicated throughout every other office in the company and because we are replicating business lines many of us around all sorts of offices will act for the same client organisations. So, for example, what I mainly do is property investment work which is buying and selling income producing property for pension funds and property companies and life assurance companies and I will, for example, be trying to buy or sell properties for somebody like the Prudential in the Midlands and I will have colleagues in London and in Manchester and around the country that are trying to do the same thing for the same people. We also have some distinctly local clients that would only use the Birmingham Office. We have some clients that act everywhere but in the Southeast there are some clients that only do London. So it’s a bit of a mix, but in terms of the skill sets that the various individuals need that’s common across the company and we have quite a big, what we call CRM [customer relationship management] programme going on in the UK company at the moment and, therefore, I sit and various other people in the office sit on various CRM teams directed at specific clients. So yes there is an awful lot of networking and cross working with colleagues from other offices . . . From Birmingham there are only two things which we do not do. One of which is what we call pack petroleum and automotive consultancy which is anything to do with roadside uses. But we have a specialist team in London who do that and they do anything in the Midlands that needs that work. And we also in London have a specialist Hotels Team and any Hotels we refer to them. We are looking at people who do that into our offices, but it’s rather more specialised. But that’s a good example of how we teamwork with teams in other offices’ (BS82/Real/25-99).

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The same company highlights one of the important differences between small and larger firms. Small firms do not have spare capacity and this means that it is difficult and in many cases impossible for them to have well developed extensive training programmes. Such firms will undertake the minimum requirement for CPD, but argue that time spent training is unproductive time as it is not fee earning time. Some of the larger firms encourage training and training packages are used to attract and retain staff.

Unlike the smaller companies, in large companies training budgets exist that must be utilised. Thus the property consultancy noted that:

‘because the UK business wishes to encourage people to enter into training courses all the training costs are taken centrally and whilst our local business pays towards the overall central costs, actually it’s well worthwhile getting as much training as you can because it doesn’t really cost you anything. The only training which costs something is if somebody comes to me and says they want to book themselves onto an external conference in which case that team will pay for that. But the vast majority, I would say 95% of all training is paid for centrally and whilst we do pay a contribution to it we pay that contribution whether we actually take advantage of the training or not, so I do try and encourage people to do that’ (BS82/Real/25-99).

In this case the training budget is perceived to be a tax on the branch office and utilising the central training budget is one way of recovering the tax.

SKILLS SHORTAGES

Like the other LSC areas, Birmingham and Solihull firms had difficulties in recruiting experienced people who would be able to make an immediate contribution to the business.

They also found it difficult to recruit commercially aware professionals as well as customer focussed and, in some cases, work focussed individuals. Commitment to client needs was seen as an important factor especially in terms of working after 5pm. Many of the firms identified a skills gap between ‘self skills’, management skills and technical skills. The technical skills are not an issue, but the development of management skills and self or softer skills lags behind the acquisition and refinement of technical expertise (BS46/Leg/100+).

One law firm had experienced difficulties with a secretary who was not performing at the required level. She was still a probationer and her line managers wanted to get rid of her. However, a performance review was undertaken, benchmarks set and the skills gaps identified and a training programme, including mentoring, developed. The skills gap was IT related and in general administrative skills. The probationary period was extended and eventually she became a permanent employee (BS46/Leg/100+).

This illustrates that the recruitment process can fail and people can be recruited who do not have the required skill set, and that the skill deficiencies can be in relatively simple areas. It also shows that appraisal and training programmes can be successful mechanisms for creating useful employees.

The key skill shortage is in the area of more intangible skills many of which are related to personality types. One property consultancy noted that hard to fill vacancies:

‘are the biggest problem that we have. To the point whereby it does have an influence on how much work we take on. So you could say that it’s a limitation to growth. And it’s as fundamental as that. If you have to put it in a strategic context, it is preventing growth and it’s not just my office, not just this office it’s right through the business and when I meet colleagues in other businesses they’ve got exactly the same problem. It’s not a question of there not being enough people out there who would like to work for us, but there’s not enough people of the right quality out there and available. There’s a shortage of supply’ (BS54/Acc/25-99).

The key issue concerns people who have wider expertise which enable them to appreciate the wider commercial implications of a range of decisions. A key skill for this company was problem solving and the ability to sort data and manage complex projects.

Another company identified a similar skills issue by highlighting the difference between technical and commercial skills:

‘. . . technical skills, that is first awareness of the market - so it is personality, being able to communicate, ideas, lateral thinking, business acumen. So the ability to see opportunity go and find it, go and acquire it and at the end of the day we’re a business, we’re about making money for our shareholders as well as providing a cracking service to our clients and we need those skills in our surveyors. They’re not there just to do a technical job, you can only do a technical job once you’ve got the clients and the jobs to do it on and it is our SERU, University of Birmingham Page 101 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

job to get in high quality work, process it, give the best advice, look for opportunities and maximise our position in the market and make money. That requires people with a skill set which is above just being able to do the technical work that is where we run into problems’ (BS33/Real/25-99).

A representative from a branch office of a worldwide property consultancy made a similar point when they argued that:

‘I would say generally that not enough people have a sufficient degree of self confidence to enable them to what I call cold call face-to-face. Just go and introduce yourself to somebody that you don’t know. We have a client cocktail party every year and I would say to people please don’t let me see you standing in a group of more than two of you without anybody else talking to you because if we have invited a load of people here and we are buying a few drinks and we are having a chat with them, all of which could be clients or good contacts of ours, why are you talking amongst yourselves. You can do that all day, so tonight go and talk to people and if you see somebody on their own whether you know them or not go and say hello. And a lot of it is we are quite a confident business but that’s mainly the people that are market facing all the time. Some other people aren’t quite like that’ (BS82/Real/25-99).

Success in the BPS world is attributable to three interrelated factors. First, individuals and firms must acquire and continue to develop technical expertise. Second, the ability to transform technical expertise into something that has commercial value by providing distinctive inputs into the activities of client firms. Third, people-focussed skills involving presentation and communication techniques; these can be subsumed under the term impression management or client relationship building. The first factor is relatively easily acquired whilst the second might come with experience, but the third factor is difficult to develop in someone that does not have the right personality.

TRAINING

Many of the smaller firms only engage in training that is part of the requirement to undertake CPD. These firms argue that they have no time or resources for training or that the training is on-the-job as this provides commercially relevant training.

Most CPD training is obtained via the professional bodies or from private training providers. Some use distance learning that is delivered through CDs that are sent to the firm.

Much of the investment in staff development appears to be provided by medium- and larger-sized firms; these firms are the training grounds for BPS professionals and, in some case, support staff. The majority of firms do not focus on the skill needs of their support staff (secretarial). It is assumed that they will be up-to-date with key office-based business software. One firm noted that:

‘I mean generally speaking we find a lot of secretarial staff now are – tend to be fairly experienced at using that sort of package, Word, Excel and presentation packages and things like that. Where we have new accounting packages and staff need to use those to print off accounts we again have in house training for them, or sometimes the software provider might you know come in and spend a morning or afternoon with people depending on what’s required’ (Bs11/Acc/11-24).

However, important skill deficiencies may still exist that hold a business back. The partners in one firm were surprised that the majority of employees were unable to take full advantage of the firm’s phone system. This meant that staff were not as effective as they could be. To overcome this problem a telephone training company was employed to provide intensive telephone training sessions (BS13/Leg/100+).

Many of the larger firms have well-developed and evolving staff appraisal systems that are designed to identify training requirements. A branch office of a factoring firm that was part of one of the banks was:

‘. . . in the process of trying to implement training plans for each member of the team and we’ve got a team of about twelve so we tend to look at things like internal training programs and we’re members of what is called the FDA which is the Factors Discount Association so we try to link in with some of the courses that they might run but we do look at other courses. We are keen for people to develop their own skills and invest in them so if people turn round and say I want to go and learn more of that using spreadsheets, databases, word and all the rest of it or using computers and we have had people going round the corner to Learn Direct and places like that’ (Bs96/Acc/11-24).

This firm was in the process of developing quite a sophisticated training identification and monitoring system.

A smaller accountancy firm noted that:

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‘we have a sort of continuous training programme, we use outside training organisations, the accountancy training tutors who sort of provide training for professional staff and keeping up with the latest legislation etc. You know we’re required by the institutes to make sure all our staff are up to date and sort of by talking to the staff, identifying what areas they feel they need extra help in, you know, I mean we’re a small firm so we tend to know what peoples strengths and weaknesses are and try to cover those areas where ever possible. . . the senior staff here, we also help by making our experience available, and also by saying, this is the way we have to do these things and explain things. We have in house reference books etc which people can use (Bs11/Acc/11-24).

This reflects a much more informal approach to training than is common in many smaller BPS firms.

Larger firms have to develop increasingly more formal procedures. It is worth comparing the slightly informal with the formal systems that exist. In an accountancy firm that employs between 25 and 99 people:

‘the skill needs of individuals [are identified] in two 2 ways - when we have our appraisals we would ask the interview candidate if they felt they wanted training anywhere and if they would like to have some training so that would give us clue number one and the line manager would then be expected to support it or advise them to try something different, not to block training. And, secondly, if as a result of the appraisal it was apparent that there was a need for further training in something then that would be sought to be put into the objectives of the candidate and the HR people or the training people would be advised that they should be offered the chance’ (BS54/Acc/25-99).

Some large firms organise and supply training from outside the region. This is the case for the branch office of a large property consultancy. According to the interviewee:

‘I would say the majority of training is done in London and the reason for that is we are an office of 82 and the London Office is about 1200 people so if you are putting a course of eight people together there might be one or two from here, but the chances are at least half the course will be London based and people from the other regional offices will go. We are just looking at the moment at something what we call lunchtime learning where we will get either speakers in for one hour at lunchtime or we’ll have a series of videos prepared by professional trainers which people will watch at lunchtime. If there is a bit of skill specific training which everybody in the office needs to know, or at least a decent sized group of say six or more then that training would be held here because it’s actually cheaper to get the trainer to travel here than six people travel to London, but a lot of the training is in London’ (BS82/Real/25-99).

Some BPS firms had established relationships with Universities. This was relatively unusual. An accountancy company has a relationship with the University of Loughborough as:

‘. . . we do use Loughborough for graduates in whatever discipline if we want to enhance their project management skills we’ll buy modules of the Masters courses . . . you look to see what modules are on the courses and ask the tutors if they would be willing to have an extra student for those modules’ (BS54/Acc/25- 99).

A property consultancy firm had recently discovered that they could recruit graduates from non-cognate disciplines and develop them to fit the requirements of the firm. This training was provided by the University of Central England. The company realised that:

‘initially those non cognate graduates will be less productive because they haven’t done the course and they will go off for a day a week for a two year course - the local course is run at UCE, it would be nice if Birmingham University ran one I should say . . . I think it would be a very interesting thing for the university to do. UCE are one of our clients, they are great, but Birmingham University is one of the key red bricks in the U.K. and having the high quality property real estate course there either as degree or post grad course would be I think a very useful adjunct. Interestingly, we have got a couple of work experience girls at the moment, ladies with us at the moment, one is a geography graduate from Birmingham University and I get quite a few applicants who are coming out of the university with geography degrees which is a very good basic degree from which to get into property, it would be a natural add on I think to run a course but there you are, that’s another matter it is something for the university to think about perhaps’ (BS33/Real/25-99).

The same firm was evidently inundated with leaflets from universities advertising postgraduate courses. Such courses are not part of their training strategy as the company requires courses that are:

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‘short and sharp or they are refreshers so they are half day sessions or evening sessions or maybe one day sessions but unless somebody is doing a particular further qualification say in investment or doing an MBA we’re not really getting involved in the universities or the college. . .’ (BS33/Real/25-99).

Most of this firm’s training is:

‘on the job to be honest because whatever theoretical training is done it is how it is implemented that is the issue. How best to progress? I think we should be looking at more managed training programmes but there are only so many hours in the day I suppose . . . many of these courses which are put on really only skim the surface and then the people attend and they get three hours CPD but actually what has it done? It hasn’t actually taken their skill set much further and I think the big issue here is to look at training needs in a bit more detail and dig into those areas in more detail so the courses are not just skimming the surface and refreshing but actually looking at a particular part of the subject in far more detail ‘(BS33/Real/25-99).

FURTHER EDUCATION COLLEGES

Further Education Colleges have a limited but important role to play in the development of the West Midlands BPS economy.

First, they must provide extremely well-trained support staff; individuals who are able to provide world-class administrative support to BPS professionals and who have the potential to become fee earners. The latter is essential as over time BPS firms will require reduced numbers of support staff. This training should meet the requirements of BPS firms in general and should be commercially focussed around core BPS skills: creative writing, attention to detail, time management, relationship management, impression management as well as general administrative skills.

Second, some support staff have the ability, inclination and dedication to acquire skills that will enable them to become fee earners or to directly support a fee earner. The FE Colleges provide an essential and effective means of upskilling support staff to the level of a paraprofessional (accountancy technician/legal secretary) and sometimes to full professional status. All LSC areas in the West Midlands must ensure that benchmarked nationally excellent courses are locally available.

The key issue is persuading BPS firms that the local FE college is a suitable training provider. For example, an accountancy firm stated that:

‘I know Bournville College do AAT training so I mean it’s something that it's always a possibility if you get a student who doesn’t want to go to the city centre and would prefer to be local then the possibilities are there, you know. But we haven't had – the students that we've had have been quite happy to go to Financial Training Centre [a national private training organisation]. Yes, we cannot always release people during the day, if we use FTC which is who we've tended to use in the past, it means block release for students, we tend to lose the students for a period of time, 3 or 4 weeks on the trot, which is inconvenient to smaller firms, the larger firms are able to cope, but for small firms it does tend to be inconvenient’ (Bs11/Acc/11-24).

FE colleges must be perceived by the professional bodies as suitable providers and they must deliver training that meets the requirements of BPS firms in terms of timing and location of provision.

The location and timing of provision is important. One HR manager of a large law firm had direct experience of FE:

‘I mean I went back to college and did an A level in law and I found it very difficult going to work all day doing an intense job and then dashing home, quickly get changed, dash in the car and go to college sit in the rush hour traffic. I went to Sutton Coldfield, so Sutton is quite a long way from Birmingham and you dash home, dash in the car, get over to Sutton and then you haven’t had no tea, you haven’t had any food since lunchtime and so you are there from 6 o’clock until 9 o’clock, your tummy is rumbling, you are thinking what is going on in Eastenders, this is actually quite a dry topic and there is the sunshine shining and I am sitting in here so it can be quite difficult to have the commitment to do that sometimes when particularly in the summer when there is lots of other things going on outside (BS13/Legal/100+).

This description mirrors the findings of some of the focus groups in which difficulties related to geographic access to FE provision were highlighted. It must be possible for FE colleges to enter into a dialogue with the Advantage West Midlands BPS Cluster Opportunity Group (COG) in order to agree on the provision of a range of training and also to explore issues related to delivery.

One relatively small accountancy firm noted that they did not use FE and:

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‘probably it is maybe the time, for example the ACCA they provide Saturday courses or evening courses, between 6 and 9 a seminar, so it does not interfere so much with our work. . . [FE colleges] are more general on an educational basis, academic if you see what I mean. With private companies the courses they provide are more practical’ (BS103/Acc/1-10).

There are two issues here. First, the timing of FE provision is related to the ability of training providers to fit around the requirements of the client’s business. Second, the perception that FE provides academic rather than commercially aware training. This is an important point and it highlights the distinction between the acquisition and application of expertise and knowledge. One property consultancy argued that:

‘the best way of enhancing people’s skills levels is by a combination of practical on the job training allied to the appropriate training courses and the reason why is say that is because a lot of our courses tend to be quite practical with lots of workshops and examples, but what we tend to find is if you cannot relate what you are being taught on a training course to a real life situation then it’s probably going to go in one ear and out the other, so generally it is a combination of you have been in a situation, you’ve seen what’s happened, you have said to somebody, how did you know how to handle yourself like that? Well because a bit of experience, but also been on a training course about keeping your temper or how to influence people or how to talk to people and I think once people can see why a course is a benefit they will take much more of it on’ (BS82/Real/25- 99).

RECRUITMENT

The recruitment experiences of BPS firms can be divided into three types: first, firms that do not recruit, second, those that recruit infrequently and, third, those that recruit on an annual basis.

Extant relationships and referrals are at the centre of the BPS recruitment process. This is the case for small and medium-sized enterprises and is also important in larger companies. For example, a small accountancy firm noted that:

‘we haven’t needed to [recruit] for quite a while now but the last recruitment was for an accountant – he’s a client of mine’s son, and he just finished his degree so it was an opportunity for him to join . . . There’s no shortage of staff. We never need to advertise. Most of the time their sons and daughters are graduating and so on and they always ask if we have any. It’s just the type of business that we run’ (BS83/Acc/1-10).

Another accountancy firm also relied on word of mouth. They argued that:

‘I’m not quite sure how I recruit staff. I get a lot of people who write in saying ‘give us a job’. I could go to an agency, or I could advertise. In the past I’ve advertised, but usually it’s word of mouth. Somebody who knows somebody who knows somebody who fits the bill’ (BS26/ACC/1-10).

It is perhaps important to distinguish between branch offices of firms with headquarters outside the region and local firms. In the majority of cases support staff are recruited locally via advertisements in the local press or word of mouth. However, in some cases the recruitment of professionals is dealt with outside the region, for example, the recruitment of professionals is handled by the London office for the branch office of a large financial adviser (BS43/Acc/1-10).

Larger BPS firms tend to rely on agencies as this prevents them from being swamped with applications. Agencies are used for both support and professional staff, but the importance of soft relationship networks in the recruitment process of all BPS firms should not be underestimated. One property consultancy noted that for:

‘support staff we do use agencies, we have found that when we have tried to advertise we get swamped with too many CV’s of the wrong sort and we rely on certain agencies and a limited number we now work with who will properly sift out good quality staff who would be appropriate to our business . . . Fee earners far more difficult I suppose we are at the top end of the market . . . There are lots of surveyors available in the market but very few who match the standards we require I have to say and yes we do occasionally advertise, we use our own website so all vacancies go on the website because that is the right thing to do because we are legally obliged to do it so any positions that become available are made available to both internal and external candidates but then it is very much being in the market and spotting good people because we’re in a business where there is a lot of contact between like businesses and we try to spot the good people and it is then by direct approach. We haven’t used head hunters particularly in Birmingham but we do elsewhere particularly in London but we tend to use them for particular positions . . . sometimes it is lower down because at very senior positions you tend to know exactly who the market leaders are . . . and it is the next band down sometimes where you need the head hunters to really sort out the people who are coming through’ (BS33/Real/25-99). SERU, University of Birmingham Page 105 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

This last point is significant as it highlights important and subtle differences in the recruitment process. Senior BPS professionals are very visible and known within the local economy, but up-and-coming younger professionals will be less visible but potentially incredibly valuable recruitment targets.

Many firms paid existing staff an internal recruitment bonus if they were able to recommend someone who was eventually recruited by the firm. One large property consultancy firm had a very formal, clearly structured recruitment process that involved an internal bonus system. Recruitment in this company takes place in one of three ways.

First, graduate recruitment. The company has a ‘youth policy’ that specifies that it wants its teams to be young. To achieve this they recruit two to three graduates per year.

Second:

‘we will take people if either somebody leaves or a team which is to expand but they need somebody whose experienced, then we will look to recruit. Now we normally prefer to recruit by asking other people in their office their opinion on other surveyors at other firms and we will try and target those people ourselves, but we will pay and we do pay an internal recruitment bonus. So if we use a recruitment agency we have to pay them a fee so the view is that if we get somebody which somebody has recommended internally the chances are there’s less of a risk with those people because we’ll have some reference on them, but we therefore do reward the people internally that have made that recommendation once the person has been here for six months (BS82/Real/25-99).

Third, recruitment agencies are employed when the firm is unable to find the right person. They prefer not to use agencies

COMPETITIVE ADVANTAGE

The competitive advantage of Birmingham and Solihull’s BPS community is similar to that of the other LSC area. The key difference is the size of the local client base, the availability of potential employees (support and professional) and the availability of local training facilities.

Fundamental to BPS competitiveness is the ability of firms and professionals to lock client companies into a firm on the basis of an established personal relationship that is founded on friendship and trust that has developed over a period of time. This is both an advantage and disadvantage; advantageous as a firm can develop a client bank, but disadvantageous as movement of professional employees may be associated with the loss of clients.

One, accountancy firm that provided project management expertise noted that:

‘I suppose as much as anything else we’ve got a lot of repeat business clients and some of them are major household names, you know you’ve got people like Intel, BP, Marks and Spencer, Tesco, we’re talking about major players in their own markets who come back to us year after year and I’m not talking just about 4 here, I could go on, I could get you the company brochure that’s got a list of them, it’s a lot. And that gives you stability, it allows you to invest in the future and in fact the meeting that’s going on the room next door to us just now is with a research engineer student form Loughborough university who we employ in this office, she’s doing her PHD at the moment in some fundamental research into what makes a lean office. And that is going to be put to the test before much longer because we’ve given her this building as a pilot study’ (BS54/Acc/25- 99).

A firm of financial advisors highlighted advantages and disadvantages of a locked in client in that:

‘We’re financial advisors . . . and basically we have a client bank, get most of our business by referral and advise 400-500 clients and their families and their businesses . . . The history would be whether any recruitment would result in divisional profitability. We’re not interested in growth for the sake of growth and therefore I think the only circumstance in which we would consider recruitment, other than administrative, is if we felt somebody could contribute something additional to the business. Because, at the end of the day, there’s a client bank there, if we create any additional expense by taking somebody on we would just be reducing our main profit which doesn’t make any sense, so we’ve never actively looked to recruit and if we did want to, as you say, clearly they would have to be somebody who could bring something else’ (BS19/Acc/1- 10).

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This firm has sufficient client activity to support its current professionals, but is not interested in expansion as its ‘client bank’ locks the client to the BPS provider, but in this case has also locked the provider into a business model that does not include significant growth as one of its core objectives.

Competitive BPS firms are extremely flexible. Flexibility can involve the use of self employed associates that are responsible for their own training and development issues. It can involve stretching the working day to meet the needs of clients and it can also involve manipulating salary levels. One small recruitment firms (8 employees) argued that they were:

‘Quite competitive . . . We regularly review our charges. One of my consultants said, one of the clients he has been working with for years, has recently got another agency working with them and when he asked why they were using another agency, they said they’re charging less. They are a new agency, they are small and don’t have massive overheads, so they can charge less. My consultant said ok, what if we can match that? I said if you match that how do you pay your staff? He said we can employ new people who are happy to take a lower salary for that job. Our existing staff can still work elsewhere because they are used to the higher salary. Let’s say they are used to getting eight pounds an hour, she thinks she can recruit people who will still be happy to take six pounds an hour, and still keep the business. I said go ahead. We are able to compete in that respect, we’re not rigid. We’re flexible’ (BS16/REC/1-10).

Fundamentally, the competitive advantage of all BPS firms rests upon a combination of reputation, expertise, client relationship management and image projection.

Successful BPS firms must act strategically to ensure that the firm is highly visible in its chosen marketplace (local, regional, national); the same is also the case for BPS professionals. Visibility based on the projection of personalities and a professional image for the delivery of commercially relevant expertise is a key characteristic of successful BPS firms. According to one large property consultant:

‘Our competitive edge is good communication skills and people that have actually got quite a good outgoing personality. So it’s communication skills and personality. It is facility with the written word. So it’s being able to put together a good report. It’s people that are proactive that will go and suggest ideas to people. We don’t get that much business which walks through the door. A lot of our business as consultants is because we will go to somebody with an idea saying, have you thought about buying this, you have got this and we think it’s a good idea. Oh, we didn’t know about that yes can you advise us. So we are basically looking for good communicators, ideas people, proactive people and what also gives us hopefully an edge is that we have a range of different skill sets and personalities within the office. So we have some people for example that are perhaps slightly introverted, but they just get their head down and they grind through things and we have some people that are terribly, ‘hi’,’ how are you?’, ’great’ - maybe not that good at grinding, but the combination of the two together works very well’ (BS82/Real/25-99).

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FOCUS GROUP: BIRMINGHAM AND SOLIHULL LSC (12/10/2005)

The following is a summary of the topics and issues discussed.

1. Accountancy – difference between chartered and certified. Different types of training with chartered being the gold standard. Accountancy firms are training more certified accountants as this is a less expensive option for most, but the training is not nearly as extensive.

2. Mobility of trained accountants should not be underestimated. Tendency to move to London as career development may be better there compared with Birmingham.

3. Local versus global pressures on training.

4. Support staff perform an important role in BPS firms, but have poor soft skills. Even professionals have poor soft skills:

‘Even when we are recruiting for an administrative role we still go for a degree. Graduates have the skills you require. School leavers do not have the right skills. Graduates are kicking doors in to become lawyers. May fail and become paralegals and if they fail they then move on. In the law firms people are hitting a brick wall – they cannot obtain promotion and decide to leave.’

5. Problems with recruiting para-professionals.

6. Power of the brand of larger BPS firms, helps in attracting high quality people and in retaining them. The power of the brand is also important for clients who are prepared to pay firms for their name and the power associated with a particular name.

7. Ethnic BPS is a problem as many ethnic BPS professionals decide to break away from the mainstream firms to provide services to their own community. There is limited ethnic representation within the BPS community:

‘Many young black minority ethnics (BME) do not see their careers in large BPS firms. They need to be persuaded that BPS is an option. Many BMEs might make very good paralegals. It is difficult to attract BMEs into the legal profession. The law firms recruit in a select number of Universities and most of the students are white. Paralegals are in short supply – we steal them from all over the place. The difference between a good and bad paralegal is found in soft skills’.

8. Accountants do not have to be graduates. The degree is seen as important but it is not essential.

9. Private trainers are more flexible than public trainers. They are able to meet the needs of the business – time and location.

10. Senior BPS professionals want training that is private. They do not want publicity and want confidentiality.

11. Perception of NVQ amongst BPS professionals – seen as a poor qualification taken by blue collar workers and not by BPS professionals. One company is providing NVQ training to some of its staff but the company brands the training under a different label:

‘Birmingham Future was offered an NVQ in management that included softer skills. Busy professional were unable to train two nights a week for two years. The course had to be developed flexibly and it could not be called an NVQ as this is associated with ‘not very qualified’ – there is snobbery in the BPS world over the perceived value of some qualifications. NVQs are not for professionals’.

12. The professional bodies provide gold standard qualifications. They are qualifications whose standards have been protected and on some cases enhanced.

13. ‘FE is evaluated on pass rate. There is no time to teach people how to answer the phone’. ‘FE does not provide softer skills – it is awarding body led, government led, qualification led.

14. Technical training provided or regulated by the professional bodies neglects to develop soft skills. FE colleges are more interested in examination and pass rates rather than in the provisions of more intangible soft skills. FE courses are only subsidized if a full course is provided and for which a certificate is provided. Other forms of

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bespoke or short course are not subsidized. Employers are only interested in the skills that are required for their business and not in employees obtaining certificates.

15. BPS firms do not understand the FE training offer. FE colleges need to market their services; they don’t appear to engage in targeted marketing.

16. Private sector trainers are much more flexible than FE colleges – they try to address the needs of the client. But the quality of provision within the private sector is very much of a ‘lucky dip’.

17. Employers tend to be more interested in short-term as against long-term benefits:

‘The FE offer is a cost effective training solution for small firms, but the title of the NVQ needs to be altered’.

18. ‘The BPS sector in the West Midlands will continue to grow, but a dialogue needs to occur between FE and the BPS community otherwise FE will continue as is’.

19. This focus group produced an interesting dialogue between two participants. One worked in FE and had worked together with a representative of one of the professional bodies. It became apparent that the representative from the professional body had some awareness problems regarding FE:

‘The focus group has been a real eye opener. I have worked with XXX and I am surprised that his knowledge of the FE sector is so limited. Employers do not appreciate what is available. FE have to get the word out and we need to go back and raise perceptions – it has been a real shock’.

20. Searching for training providers is a problem:

‘time is valuable – firms do not have the time to spend to go searching. They will go with the easiest provider. Cost is an issue depending on the size of the firm’.

21. Pinching of good staff is a major issue in the sector. Do not want to train for others?

‘We are willing to fund someone through an MBA but they must then work for us for two years’.

22. Need to improve BPS management systems especially in the area of appraisal and in the assessment of training needs of employees – Training Needs Analysis.

POLICY ISSUES

23. Improve profile of FE. BPS firms should be encouraged to use local FE and other types of providers.

24. Full cost recovery versus subsidized training should be reconsidered with FE colleges.

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THE BLACK COUNTRY LSC REGION

The survey includes 289 firms located in the Black Country LSC and these represent just under a quarter of all firms studied. Collectively these firms employ a total of 3,039 workers which accounts for only 14.7% of the regional total suggesting that firms in this region are typically smaller than average.

This conclusion is lent modest support as Table 7.2.1 reveals that the percentage of firms with ten or less people on the company payroll is slightly above the regional average.

In terms of legal status and organisational type, the Black Country is quite typical and the composition of business types is also unexceptional. Duration of residence does however indicate relatively high proportions of long- established businesses. Thus for example, nearly one-third of firms had occupied their present site for at least 11 years.

Hard to fill job vacancies are most strongly experienced in professional occupations (Table 7.2.2). This is particularly so in the Black Country where 70.1% of firms with vacancies for professionals, reported them as hard to fill.

Respondents felt the main reason was “lack of required skills” but this factor was even more strongly supported by firms elsewhere in the West Midlands. Otherwise a wide variety of reasons were indicated. “Not enough people interested in this type of job” can be mentioned as the Black Country had the largest percentage (28.6%) amongst the six regions citing this reason.

Table 7.2.3 sets out the key information about skills gaps in the Black Country region:

• The percentage of firms with proficiency problems was similar for all occupations. • The percentage of Black Country firms (37.2%) reporting skill gaps of concern in administrative and secretarial occupations was virtually identical to the figure for the other regions. Otherwise concern levels tended to be lower in the Black Country. • Lack of experience/recent recruitment is most frequently cited (70.6%) as a cause of staff lacking proficiency. This is a little above the West Midlands average whereas acceptance of training failure as a cause got more modest support than elsewhere. • There was little that is distinctive about the views of Black Country firms regarding skills needing improvement. In common with firms elsewhere, communication, technical, practical and customer handling skills topped the list. • Black Country enterprises were generally more pessimistic than other firms about threats to competitiveness arising from skills deficiencies. Personal skills were of particular concern. • The effects on firms of staff not being fully skilled were varied. The Black Country anticipated the main risks as being increased operating costs, difficulties meeting customer service objectives, and loss of business due to competition.

There is a fair degree of commitment to training among the Black Country respondents (Table 7.2.4):

• A large number of firms employ a variety of strategic tools but overall the percentages employing all four (32.2%) or none (14.7%) are a little worse than those of firms in other LSC regions. • The percentage of firms training staff during the past 12 months (68.1%) is not significantly different from the figure for the rest of the West Midlands. • In line with other regions, Black Country firms strongly favour on-the-job training delivered by employees whether for new recruits or the existing workforce. There is only limited support for other modes, led by private training consultancies. • Private training consultancies are the most frequently used external provider (69.8% of firms). There is also relatively high use made of FE colleges (32.9%). • The main external provider is used most often for job specific training (70.9% of firms) • The need for job specific training is an important factor when choosing an external provider but, as elsewhere, this is clearly a multi-factor decision in which many considerations play a part.

Overall, the results for Black Country firms are very similar to the norms for the West Midlands. Firms tend to be a little smaller and longer established but as far as skill requirements and training practices are concerned the region is fairly typical of the region as a whole.

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Table 7.2.1 Characteristics of firms in the Black Country LSC region

Black Country firms All other firms Number % Number % Business Activity (SIC divisions and selected groups) Base: all firms 65 Financial intermediation 34 11.7 71 7.8 66 Insurance & pension funding 16 5.4 46 5.1 67 Activities auxiliary to financial mediation 7 2.3 45 5.0 70 Real estate, renting & business activities 29 10.0 106 11.7 71-73 Computing & Research 7 2.5 20 2.2 74 Other business activities 197 68.0 619 68.3 of which 74.1 Legal, accounting, business consultancy 84 29.0 236 26.0 74.2 Architectural & engineering activities 52 17.9 188 20.7 74.5 Labour recruitment 46 15.8 137 15.2

Years at current premises Base: all firms Less than a year 15 5.2 32 3.5 1 - 2 years 43 15.0 195 21.5 3 - 5 years 57 19.6 206 22.7 6 - 10 years 69 23.9 180 19.8 11 - 20 years 49 17.1 142 15.7 More than 20 years 53 18.3 145 16.0 Don't Know/ Refused 3 1.0 7 0.8

Organisational type Base: all firms Only site 148 51.1 485 53.5 HQ, regional or divisional HQ 48 16.6 124 13.7 HQ elsewhere in UK 88 30.6 277 30.6 HQ outside UK 4 1.5 20 2.2

Legal status Base: all firms Partnership 51 17.6 163 18.0 Sole Proprietorship 45 15.5 138 15.3 A Public Limited Firm 37 12.8 130 14.3 A Private Limited Firm 152 52.7 467 51.5

Number of on-site workers Base: all firms 1 - 10 238 82.3 728 80.3 11 - 24 31 10.5 85 9.4 25 - 99 17 5.8 66 7.3 100+ 4 1.3 27 3.0

Table 7.2.2 Job vacancies of firms in the Black Country LSC region

Black Country firms All other firms Number % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 0 0.0 8 41.9 Professional occupations 7 70.1 27 51.4 Associate professionals & technical occupations 5 35.6 15 32.9 Administrative and secretarial occupations 9 39.7 17 29.0 Skilled trades occupations 0 0.0 3 44.3 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 1 21.7 5 21.5 Process, plant & machine operatives 1 100.0 1 16.1 Elementary occupations 0 0.0 1 20.5

Reasons why vacancies difficult to fill Base: firms with difficult to fill vacancies Too much competition from other employers 1 4.0 9 11.8 Not enough people interested in this type of job 6 28.6 7 9.6 Poor terms and conditions offered for post 2 11.4 2 2.3 Low number of applicants with the required skills 8 41.4 39 51.7 Low number of applicants with required attitude 6 29.6 14 18.7 Low number of applicants generally 3 14.6 18 24.2 Lack of work experience the company demands 4 21.0 16 20.8 Lack of qualifications the company demands 5 26.4 12 16.4 Poor career progression / lack of prospects 2 11.4 3 3.7 SERU, University of Birmingham Page 111 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Job entails shift work/unsociable hours 0 0.0 3 3.9 Remote location/poor public transport 0 0.0 5 6.7

Table 7.2.3 Skill needs of firms in the Black Country LSC region

Black Country firms All other firms Number % Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 14 5.4 44 5.4 Professional Occupations 13 10.8 43 11.4 Associate Professionals/ Technical Occupations 14 12.9 48 14.5 Administrative and Secretarial Occupations 26 15.7 63 12.4 Sales/ Customer Service Occupations 11 19.6 22 12.7 Personal Service Occupations 1 38.5 1 7.2 Elementary Occupations 1 5.1 7 8.8 Occupations with skills gap of most concern Base: firms with at least one occupation not fully proficient Managers 11 17.4 39 24.1 Professional Occupations 12 19.4 40 24.4 Associate Professionals/ Technical Occupations 12 18.8 42 25.8 Administrative and Secretarial Occupations 24 37.2 60 36.9 Sales/ Customer Service Occupations 11 17.4 22 13.5 Personal Service Occupations 1 2.2 1 0.8 Elementary Occupations 1 0.9 4 2.7 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 12 19.6 43 26.1 Recruitment problems 12 19.3 28 17.2 High staff turnover 6 10.0 14 8.4 Inability of workforce to keep up with change 14 21.3 29 18.0 Lack of experience or their being recently recruited 45 70.6 110 67.5 Staff lack motivation 13 19.8 36 22.3 Other 0 0.0 2 0.9 No particular causes 8 12.5 30 18.2 Skills needing improvement Base: occupations experiencing skills gaps Communication skills 29 40.0 91 43.7 Technical and practical skills 31 42.3 89 42.6 Customer handling skills 30 41.2 86 40.9 Practice/ general management skills 28 38.2 86 41.1 Personal skills (motivation, ability to fit in) 31 42.5 82 39.0 Problem solving skills 25 34.9 86 41.3 Office admin. Skills 28 38.5 78 37.4 Team working skills 26 35.6 70 33.6 General IT skills (word processing, email, internet) 23 32.1 65 31.2 Leadership skills 19 27.0 61 29.0 Data analysis 18 24.8 56 26.5 IT professional skills 20 27.3 51 24.6 Accounts/ finance 13 17.4 47 22.6 Technical skills related to the occupation 16 21.8 42 20.1 Human resource management skills 10 13.6 37 17.7 Literacy 9 12.3 30 14.5 Numeracy skills 8 10.9 23 11.0 Foreign language skills 6 7.9 17 8.0 No particular skills 8 11.1 12 5.6 Other skills 7 9.2 6 2.8 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 13 19.8 21 12.8 Customer handling skills 9 14.1 14 8.4 Sales ability 7 10.4 16 9.7 Communication 8 12.2 14 8.8 IT / computer skills 4 6.2 11 6.7 Technical skills 3 5.4 10 6.1 Office administration skills 2 3.5 7 4.5 General lack of experience 1 1.7 6 3.8 Accounting/ finance 0 0.0 7 4.3 Numeracy 4 6.2 3 1.6 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps SERU, University of Birmingham Page 112 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Loss of business or orders to competition 17 27.1 44 27.2 Delays developing new products or services 17 26.3 45 27.3 Difficulties meeting customer service objectives 21 33.4 56 34.2 Difficulties meeting required quality standards 17 26.3 33 20.2 Increased operating costs 24 38.1 77 47.1 Difficulties introducing new working practices 8 12.2 27 16.5 No particular problems/ none of the above 21 33.1 39 23.7

Table 7.2.4 Workforce training by firms in the Black Country LSC region

Black Country firms All other firms Number % Number % Incidence of strategic planning Base: all firms Has a business plan 204 70.5 657 72.5 Has a training plan 184 63.7 526 58.1 Has a training budget 128 44.1 422 46.5 Has annual performance review or appraisal system 204 70.6 631 69.6 All of the above 93 32.2 320 35.3 None of the above 43 14.7 114 12.6 Training conducted during past 12 months Base: all firms Arranged training 197 68.1 608 67.1 mainly for Existing workforce 75 26.0 225 24.8 New recruits 7 2.3 20 2.2 Both 115 39.8 363 40.1 Have not arranged training 92 31.9 298 32.9 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 228 78.7 728 80.3 On the job - delivered by external provider 61 21.0 248 27.4 Off the job - delivered by employees 73 25.2 265 29.2 Off the job - delivered by a training consultancy 87 30.0 272 30.0 Off the job - delivered by a FE college 69 24.0 177 19.5 Other method 1 0.4 14 1.6 No preference 38 13.2 95 10.5 For existing workforce On the job - delivered by employees 226 78.1 690 76.1 On the job - delivered by an external provider 86 29.7 282 31.1 Off the job - delivered by employees 68 23.5 249 27.5 Off the job - delivered by a training consultancy 116 40.0 341 37.6 Off the job - delivered by a FE college 57 19.7 200 22.0 Other method 4 1.3 13 1.4 No preference 28 9.8 93 10.3 Off job training providers Base: all firms using external training providers Further education provider 45 32.9 112 28.7 Higher education provider 29 21.2 73 18.7 Private sector training consultancy 96 69.8 293 74.8 Public sector training provider 22 16.0 52 13.4 Other training company 19 14.0 47 12.1 Training by most important provider Base: all firms using external training providers Health and safety training 49 35.9 151 38.6 Induction training 41 29.7 83 21.3 Supervisory training 39 28.1 107 27.4 Management training 56 40.9 169 43.1 Training in new technology 57 41.3 178 45.4 Training in foreign languages 4 3.2 7 1.7 Job specific training 97 70.9 258 66.0 None of the above 7 5.0 19 4.8 Top ten reasons firms use particular external providers Base: all firms using external training providers Require specialised/ job specific training 16 11.3 50 12.7 They offer the relevant training/ qualifications 14 10.1 45 11.4 Has the best expertise in this subject/ best trainer 14 10.3 24 6.2 No-one else does training/ lack of alternative options 7 5.0 29 7.4 Course is tailored to our needs 11 7.8 23 5.9 Easily accessible/ convenient 9 6.2 23 5.8

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Head office decision/company policy/not our decision 6 4.0 21 5.3 Due to regulations/ professional or legal requirement 7 5.4 19 4.8 No in-house training available 3 2.4 19 4.9 Low cost/ free/ value for money 4 3.2 18 4.6

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IN-DEPTH INTERVIEWS: BLACK COUNTRY LSC

Fifth-four in-depth interviews were held in the Black Country with 39 firms employing less then 10 people, 6 between 11 and 24, 8 between 25 and 99 and 1 employed more than 100 persons.

LOCATION

Advantages

BPS firms operate in a number of different market segments. These range from the very local to the national and sometimes international. Firms delivering services to each of these market segments will experience different skills and training requirements and will possess different dynamics in relation to the organisation of their business activities.

The application of a segmentation approach to BPS, on the one hand, draws attention to the local production and consumption of BPS and, on the other hand, to firms that have managed to break away from local service delivery by exporting their expertise beyond their local region. In this respect, the Black Country, in common with all the other LSC regions in the West Midlands, has developed a complex community of BPS firms that have evolved to support the requirements of local businesses. Much of the expertise they provide might be considered as purely local, but it must be remembered that in many cases it is actually supporting the regional export activities of client firms.

Research undertaken into BPS firms during the early 1990s highlighted the fact that there is an important relationship between the structure of a regional economy and the type of BPS firms that form in an area. This is unsurprising since BPS firms evolve and grow around the reputation and expertise of their founder(s). The Black Country has a long established tradition of metal working that has left a legacy of engineering and metal related expertise that has been capitalised upon by a small number of BPS firms. There are a number of good examples of such firms that are providing intermediate specialist expertise for metal- based production systems. For example, a family-run company that employs 16 people has specialised in the building of test rigs for the aerospace industry (BC21/Arch.AA-24). This type of activity might be considered to be on the fringe of the BPS activity but it draws attention to the sheer diversity of BPS activities that are sustainable in a region that is as economically diverse as the West Midlands.

Another company specialises in the design, problem investigation and testing of building façades (BC22/Arch/11- 24). It employs 10 consultants, 15 draughtspeople, and five administrators. The skill requirements for this company are quite complex. Draughtspeople are easily recruited but it is impossible to recruit consultants; these are trained and recruited from within the business.

Another company employing four people produces the design and detailing for structural steelwork (BC71/Arch/1- 10). It receives layouts from Structural Engineers that they convert into fabrication drawings that are used to manufacture the steelwork.

It is important that each region of the West Midlands capitalises on the advantages of its existing expertise and reputation. This is especially important in areas like the Black Country. It would be a lost opportunity if BPS policy in this area just focused on the traditional BPS sectors, for example accountancy, law and management consultancy. The Black Country still retains substantial strength in specialised technical expertise that is being harnessed as intermediate external inputs into the wider production system.

Disadvantages

The Black Country’s location relative to Birmingham might be considered to be a disadvantage. Black Country BPS professionals might reasonably be attracted to Birmingham firms. In practice, the relationship between these two BPS communities is complex and requires further research.

Black Country professionals are undoubtedly attracted to work for Birmingham BPS firms; but it is also the case that some young non-local Birmingham professionals choose to live in the Black Country and work in Birmingham. This strategy reflects house price differentials. The Black Country is able to capitalise on this and ultimately it leads to a small shift of professionals from Birmingham to Black Country firms.

A good example is a solicitor (BC92/Leg/11-24) who recently experienced stepped migration – Birmingham – Telford – Black Country. He was:

‘working for a large firm of solicitors in Birmingham. I was made redundant and had a month without work, then started working for a firm in Telford, and then one of the fee earners here, who used to work SERU, University of Birmingham Page 115 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

with my wife, said that there was a temporary vacancy coming up. I applied for it, and when I came for the interview, my predecessor had actually handed in his notice. So it wasn’t temporary anymore it was permanent’ (BC92/Leg/11-24).

Nevertheless, proximity to Birmingham is a problem as it is difficult to attract and retain the very best BPS professionals in the Black Country.

The other LSC areas, apart from Birmingham and Solihull, have a similar difficulty and that Birmingham has a similar attraction and retention issue in relation to London.

There are ways of overcoming this problem:

• First, by developing local professionals that have come through a slightly more unusual career path, for example, late entry into the profession etc. • Second, by attracting slightly older professionals from Birmingham who have reached their own glass ceiling and will not progress any further in the Birmingham marketplace. • Third, BPS firms have to be increasingly flexible in the design of employment packages. A Black Country architectural practice noted that:

‘It is down to salaries, we have to be competitive and sometimes being in Wolverhampton rather than Birmingham means that we are not so competitive. Everybody wants to work in Birmingham because that is the hub of where, the design industry, that is where it is seen, but we are finding that people are starting to move further out. Well, we can basically offer the people really; they are having to become more flexible with what we offer. Obviously salaries have to be competitive with other architectural firms. We are finding that we are having to be more flexible on hours and offer more basically to keep the staff on, to get them’ (BC14/Arch/1-10).

SKILL SHORTAGES

Skill shortages in the Black Country mirror the other LSC regions. BPS firms make frequent reference to the availability of certain types of employee, in most cases those related to the expertise base of the regional economy. However, the traditional BPS sectors poach each others’ staff. A solicitor noted that the notion of ‘hard to fill vacancies’ in relation to professional staff does not normally apply as:

‘[we] usually pinch them off of other solicitors . . . they move around within the industry, from one firm to another’ (BC92/Leg/11-24).

Nevertheless, this firm was experiencing considerable difficulty in recruiting a legal secretary. They had been trying for six weeks and the problem was that there has been:

‘a lack of response. There aren’t too many out there, and we find that the ones that we’ve seen don’t quite fit the bill’ (BC92/Leg/11-24).

Another legal firm experienced a similar problem in recruiting a legal secretary. They advertised and obtained no applications. Eventually they went to a recruitment agency in Birmingham and paid £3000 (BC91/Leg/1-10). The same small firm noted that the real problem was in obtaining experienced staff who would be able to make an immediate contribution to the firm.

It is worth remembering that the majority of BPS firms are quite small and that very few have much experience of recruiting employees; recruitment is an unusual and infrequent occurrence. This means that many of the firms were unable to comment in detail on recruitment difficulties. It is apparent, however, that some firms have experienced real difficulties that have forced them either to downsize or to alter their business model.

One small accountancy firms (6 professionals and one administrator) had experienced significant difficulties. They had taken school leavers and put them through the professional exams, but once trained they tended to leave for larger remuneration packages with company cars. These recruitment difficulties have been a constraint on the performance and conduct of the business. To overcome this problem the firm now sends some of its work offshore to India. The accountant noted that:

‘it means that we have to try and look at various other ways to get work done, such as outsourcing to another country. There are obviously an excess of qualified members of the profession in India, and there are Outsourcing companies based in the UK that export the work to be done in India and then it comes back. We outsource work to the Indian sub continent. They cover excess demand periods. We don’t have to SERU, University of Birmingham Page 116 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

pay for their training because they’re already trained. We don’t give them study leave, we don’t pay for their fees. Just use them as and when they’re needed. It's not ideal for this country though. I don’t think it's the right way for this country, but having spent 3 or 4 years training and recruiting people and seeing them leave to go into management positions in the UK, and not want to stay in the profession, then you have no choice really (BC96/Acc/1-10).

TRAINING

There are many different entry routes into BPS professional employment. Conventionally, it is assumed that graduate entry is the most important route. This is not necessarily the case. Small firms are unable to support graduate entry schemes, but perhaps local regional training collectives of BPS firms could be established that would support such schemes.

The alternative entry route, for example, into accountancy is to train school leavers initially as accountancy technicians and latterly, if they have the ability and inclination, as fully trained accountants. Thus, one accountant noted that:

‘It might shock you to know but we do not regard graduates as very good, simply because at our level and this is something that is not us particularly, it’s throughout the industry …the Institute will tell you, we like graduates but now increasingly small firms are finding that it’s better to get the school leavers on an apprenticeship, take them through to the technical grade and then take them onto the higher grade after that. So in other words, in the 3 years, and I mean for example the, you know, the Chartered Accountant is passed degree standard …what you’re doing is basically training on the job. It’s far more important than sitting in a classroom’ (BC75/Acc/1-10).

Much of the training that supports BPS in the Black Country is on-the-job. This reflects the predominance of small BPS firms in the area that do not have the time or resources to engage in much training. One accountancy firm noted that:

‘I believe that on the job training with regard to my business, suits my business. At the end of the day, I’m training people to work in my business. The best way to do that is in my business . . . how else do people know if they suit my business, unless they actually do it within my business’ (BC27/Acc1-10).

The same company held very decided opinions about staff training, noting that:

‘It’s not that we don’t do [training]. We do it to suit us, which any business would. We are not here, this is just me saying what I believe. I am not here as an educational establishment. I am not paid by the government to educate my staff. I am here to run a business at a profit. If by educating my staff I can see that helps my business, that’s what I’ll do. But where I can’t see it, I won’t do it’ (BC27/Acc1-10).

Either training is neglected within BPS firms or taken extremely seriously. In many cases, professional staff are treated differently to support staff with very few companies investing in their support staff. One financial advisor had a six monthly review at which the company identified:

‘how many seminars are actually on, and which staff need training on that side. Then we send individual staff to those training sessions, and then they have to report back. They’re all provided by banks, building societies and institutions. They are kind of training institutions - there’s the institution of financial services, who provide a lot of the seminars . . . training on their product changes. that’s the biggest thing, and trying to steer us towards their way (BC10/Auxfin/1-10).

This cascade approach to training was apparent in a number of firms.

The distinction between support and professional staff was highlighted by an architectural practice when it was noted that:

‘because I am a personnel manager so I have time to keep up my CPD, but for the receptionists and for the others, other than updating on packages that we bring in there isn’t really a necessity from a professional point of view for them to do it. We do ensure that they are obviously kept up to date with the packages that we bring in. We use in-house training. Nine times out of ten we have got people who have been trained on it and then we train our staff, it is cheaper (BC14/Arch/25-99).

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The firm is using a cascade training method, but it is perhaps worth speculating on the improvements to business performance that might come with some strategic support staff training.

Larger firms have established staff development and appraisal systems. A project management company that has a head office in Shropshire and employed four people at the Black Country office:

‘did have quite a detailed staff training and development programme which is now under constant review and has become really quite vague. It is based around an induction through a three-month expectation and a six-month expectation summary but it tends to get very loosely done. We had a consultant who was lacking in confidence identified through appraisal. Although he was very nice and knowledgeable he just could not go out there and sell. So we sent him out on more networking events and helped him develop his selling skills. It is often that type of training. Things where you can’t physically train for but only experience to help develop confidence (BC15/BMCA/11-24).

This latter point is especially important for BPS – in many cases training needs to be supported with experience and on-the-job training.

Very few companies used FE colleges. The accountants used them for training accountancy technicians and some firms had sent support staff on customer relationship courses. However, most of the training was provided in-house, via the professional bodies, or via other external providers. One accountant noted in relation to FE that:

‘Simply that this is the experience we’re getting is that, you know, sort of 10-15 years ago there were very good chaps who had done a stint in industry or somewhere like that and then decided they wanted to go into college and were really switched on as to what was required’ (BC75/Acc/1-10).

The implication is that things have altered or that the perception exists that FE does not provide commercially aware training opportunities.

RECRUITMENT

There are four mechanisms utilised to recruit staff: word of mouth, schools, agencies and the local press.

First, word of mouth and employing people that are already known by people working in the firm. Some very specialist BPS firms noted that they experienced considerable difficulty in recruiting specialist staff, but they argued that their sectors are very close knit communities. A steel designer even went as far as to state that we know which companies are failing and we target their staff (BC71/Arch/1-10). However, this does not always work as there is:

‘quite a high demand. I mean recently there are a couple of companies who have sort of ceased trading and when we’ve tried to recruit people from those places they’ve always been taken on elsewhere . . . it’s a close-knit community so if anyone gets wind that a company is going down, straightaway there are enquiries going’ (BC71/Arch/1-10).

Second, some companies have decided to overlook graduates and develop school leavers. The recruitment of staff is thus centred on schools. This is especially the case for small accountancy firms that are training accountancy technicians and also providing opportunities for some of their technicians to become accountants. One small accountancy firm goes:

‘straight to the schools. We train them up ourselves. It’s better for us to have a plain sheet of paper to work on than somebody who is already moulded to a set route. We don’t tend to get people moving into this firm, they tend to, they might move out and when they do move out they tend to do quite well because of the grounding they’ve had. We take training very seriously . . . we will take five GCSE’s at Grade C’s and above but very often they are ‘A’ Levels. I mean the girl that has just qualified, for example, she came to us because she didn’t like ‘A’ Levels. She tried the ‘A’ Level course and she didn’t like it so she threw it all out and came to work, so she went from GCSE’s …and qualified in the same amount of time that had she stayed at school and done these ‘A’ Levels and gone to University . . . ’ (BC75/Acc/1-10).

Third, many of the firms noted that it was difficult to recruit professional staff. Most had experienced considerable difficulties and, as a last resort, had utilised recruitment agencies. Experienced and commercially aware technical and professional staff were difficult to find, and support staff were easier. An architectural practice noted that:

‘Because of the nature of our business we usually have to use agencies, simply because there aren’t enough architects being trained out there now and so we have a very hard time recruiting. Advertising in the papers and publications doesn’t work. The professionals that we use prefer agencies. In the architectural SERU, University of Birmingham Page 118 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

business it is due to the technical side and due to the fact that not many people want to go into this kind of business anymore. So, recruitment wise we are on a very small market. We are using the same people, generally the same CV’s keep running round all the architectural firms, then you get the same thing running up and down’ (BC14/Arch/25-99)

Fourth, BPS firms advertise locally for standard support jobs on the understanding that these will be taken by people already living, and perhaps working, in the area. An accountancy company described their recruitment procedures in the following manner: ‘Bookkeepers we would perhaps use local services such as job centres and newspapers. Support staff we’d do that, but with accountants we use professional recruitment consultancies in Birmingham’ (BC27/Acc/1- 10).

It is perhaps worth making reference to the succession issue which is a common feature of small firms. It is especially important amongst BPS firms some of which are, for example, established around the expertise of a key professional; an individual with an established reputation for a particular type of expertise as well as set of established client relationships. In many cases, the established relationships might be more important than the expertise. Two companies identified a succession issue.

First, the company designing and making test rigs noted that ‘the problem we’ve got is that the MD is 55 and he is the technical expertise behind these test rigs and we can’t replace him really. You can’t get somebody with his knowledge’ (BC21/Arch/11-24).

Second, a solicitor aged 66 was planning to merge his practice with another larger firm. This appears to be standard practice. The retiring professional will join the new practice as a consultant and arrange the transfer of the clients to the new firm. Over a few years the older professional will retire completely, but still have been able to capitalise on the goodwill that has been established with clients. This solicitor noted that:

‘I will hopefully join a firm with 6-8 solicitors. I will become a consultant and then cut down from a five day week and working nearly every evening, which I do at present, down to a four and a half day week and, you know, and therefore other people will do the accounts, administration and things like that which I have to do at present’ (BC91/Leg/1-10).

The implication is that some small BPS firms whither away following the retirement or death of their key professional. There is thus constant churn within the BPS SME community. It also means that firms change as mergers occur that are part of succession planning strategies. Some of these mergers are visible, resulting in an alteration to the name of a firm, whilst others or invisible with a retiring professional being subsumed into the receiving firm as a temporary short-term measure that will assist their retirement while also ensuring the transfer of clients to the receiving firms.

COMPETITIVE ADVANTAGE

Like the other LSC areas, the competitive advantage of Black Country BPS is founded upon the personalities, reputations, contact networks and expertise of fee earners. One small firm of solicitors had been established by the owner just over fifty years ago. The senior partner was still practicing and the firm employed four (principal, assistant, trainee and secretary). Its competitiveness was based on price and service but also:

‘we’re fortunate that the [principal]has been going for fifty years, so he’s got a lot of well established clients. I’m seeing the grandchildren of some of his first clients. It’s amazing. He’s got a lot of goodwill because he’s offered them a good service, very technically knowledgeable. Goodwill stands for a lot in this particular firm. We do charge more that other firms, but because we offer a service where we answer the call, we’re there for them, they can get hold of somebody. They do come back to us. People would rather pay a little bit more to get the service. We are a service industry’ (BC84/Leg/1-10).

An accountant made a similar point regarding competitiveness and the client relationship, noting that: ‘It is the trust that is in the relationship and don’t get me wrong we’re nowhere near London prices or Birmingham prices but the personal services we offer, you can always once you come down to price and price alone you have lost whether you’re selling a product or a service because if you’re product, the only way you can go then is down and going down you make no money okay the consumer or the customer or the client you will benefit for a time but he will suffer eventually because you won’t be able to have the expertise that he needs or making investments that are needed to keep you up to date to be able to service it’ (BC68/Acc/1-10).

Another accountant stressed the relationship between competitiveness, time and customization, stating that: SERU, University of Birmingham Page 119 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

‘My business is successful because we offer a service that’s, I won’t say it’s unique, but we offer a quality of service which is different. We’re prepared to go the extra mile to help our client out. We don’t just stick to office hours. We don’t just look at a problem in that’s the way you want us to tackle it, we look at the problem and say the solution is this way. It’s more sitting down and giving the customer what he wants’ (BC27/ACC/1-10).

None of this identifies a Black Country BPS unique selling point. But, the point is that for every successful BPS firm the relationship between the firm and its collection of clients is unique – unique to that firm. Also the diversity of firm forms, personality types, histories and expertise means that every BPS firm has the possibility of developing a unique position within a particular market segment. The market segment may only be formed around a localised friendship network through which the reputation of the firm is created as well as distributed, but it still provides the firm with a distinctive competitive advantage.

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FOCUS GROUP: BLACK COUNTRY LSC, BRIERLEY HILL (11/10/2005)

The following is a summary of the topics and issues discussed.

1. Access to finance for private sector training is an issue

2. Access to finance to fund the training of trainers. Private trainer highlighted that his role was to provide training, but no funding was available to support the development of his trainers. There is no formal mechanism for accessing external funding for this and companies have to rely on their own resources.

3. No courses available that relate directly to the skill needs of BPS.

4. Law firms:

‘legal professional and para-professional don’t want to be forced to have to do an NVQ. They don’t want the NVQ in customer service as they consider that it does not teach them anything they don’t have’.

5. Barriers to entry have developed in the FE sector that makes it difficult to recruit trainers. Trainers need to be certified while private trainers do not require this qualification.

6. Public Relations industry has recently obtained professional status, but training provision to support the sector has been poorly developed. Barriers exist in this BPS sector for those not wanting to take the HE entry route – barriers for 17-19 who want an alternative entry into PR.

7. Employers do not understand training, in terms of assessment, appraisal and evaluation. They do not understand the qualification framework in terms of NVQ levels 3 or 4. They do not understand what these qualifications mean.

8. There appears to be a lack of strategic planning in terms of what is available. BPS firms have a good idea of the skills they require, but the skills can only be obtained when they are ‘bundled up with other skills’ that are not required.

9. Private sector training is flexible. The cost of training provision really rests with the provider. FE colleges run it in a traditional way. Private sector trainers facilitate learning to take place. This cuts down on cost. It is structured training but not as structured as going to an FE provider. E-learning and self study can be deployed as this has less of an impact than releasing someone for a day.

10. Young people have poorly developed basic skills. Basic refers to skills as well as basic literacy and numeric skills.

11. Some BPS sectors have no local provision for training. The example of the PR industry was given, but note PR representative attended this focus group.

12. An FE representative noted that:

‘dialogue exists between the college and professional bodies. Sometimes we are approached by professional bodies and sometimes we approach them, but we need to look at the volume of training that is required. Is it viable? This needs to be addressed before we move into new areas. We need to develop it on a regional basis to make it cost effective’.

13. ‘The traditional view of FE is that we provide a single service, but we are now trying to be more flexible and find out what employers really want’.

14. Double standards between private and FE trainer – private want to meet the immediate needs of a client whilst FE wants to:

‘turn out the best people they can produce and this takes 2-3 years rather than 6 months’.

15. Training provision comes as a double cost to the employer. The costs directly related to the training and indirect costs. ‘Indirect’ refers to the time spent away from the work place.

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16. ‘Employers need to develop the skills of their employees, but individuals are coming into the industry (Public Relations) without the level of skills required – without the level of writing skills that we require’.

17. The type of training provided depends on the need and level of skill acquisition that must be obtained. The needs of the individual and the firms are paramount. On-the-job may be excellent quality but it is often pushed to one side due to the demands of the job. Going outside means the training may be completed.

18. In high pressure work environments it often means that the training is not completed.

19. Private sector training providers are more cut throat in terms of what they will deliver. FE and HE have more time. Private sector may take ten days to provide training while FE will widen the scope of the skills that are acquired.

20. External trainers provide training on the client’s premises – designed to meet the time and locational requirements of clients.

21. BPS firms are only as good as the soft skills of their staff.

22. FE problem is one of a stereotype – the same old course taught for the last 10 years.

23. FE is changing. The old view is that we provided a single service. It is now much more flexible. FE is trying to find out what employers want.

24. Access to training provision is uneven. Professional training tends to be available in London or in the larger cities.

25. Training is selected on the basis of cost, need and time. Provision on site is perhaps the best option as staff time is saved.

26. Employers need to engage with FE to ensure that the required training is provided.

27. ‘We can fill vacancies in the West Midlands, but the level of skills that are required varies depending on what an individual will be doing at any one time – literacy, on-the-job skills – ‘client facing’ or ‘internal facing’ – basic courtesy skills are an issue as these are important for keeping and retaining clients’.

POLICY ISSUES

28. Public sector training is driven by government targets rather than by the real skill needs of firms.

29. Skill needs must be identified and a flexible training package developed and provided.

30. Requirement for advanced literacy to be built into

31. Close the LSC and put the money into the delivery of front line training.

32. Alter the way in which the LSC measures success – currently on the basis of successful completion of a course, but employers may only want part of the skills that are being provided.

33. BPS is about soliciting – selling the mind and body for money. Thus soft skills are essential in this sector.

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COVENTRY & WARWICKSHURE LSC REGION

The Coventry and Warwickshire LSC region is home to 99 survey firms which provide employment for 1,713 people. The share of firms and workforce is 8.3% of the West Midlands totals for both.

In relation to the characteristics of firms (Table 7.3.1), business activities are well represented in this region mainly because of the high incidence of labour recruitment activities (27.7% of all firms).

Limited companies are also slightly more common in the area but single site enterprises are under represented. Firms with HQs in the UK outside the West Midlands are also prominent. The size distribution of firms and the duration of residence distribution are close to West Midlands norms.

It is difficult to generalise about the job vacancy data (Table 7.3.2) because of the small numbers of firms in the sample. What does stand out, however, is the especially high incidence of hard to fill vacancies among firms with openings in professional occupations.

Data on the skill needs of the Coventry & Warwickshire region are set out in Table 7.3.3.:

• Associate professionals and technical occupations is the only occupational grouping where proficiency is a problem. The percentage of firms highlighting this is nearly twice the figure for other regions. • Not surprisingly, it is again the associate professional occupational group in which skill gaps are causing employers to express most concern. However, there is almost equal unease voiced about managers (above the West Midlands average) and administrative and secretarial occupations (below the West Midlands average). • As elsewhere, the respondents in this region identify inexperience/recent recruitment as the single most important factor explaining lack of proficiency but at 50.9% this is the lowest figure for any region. Unusually recruitment problems are also often raised. • Employers in the Coventry & Warwickshire region strongly identify social skills as those most needing improvement. The list of priorities is headed by communication (61%), personal (54.6%) and customer handling skills (48.9%) which are all comfortably ahead of West Midlands comparators. On the other hand, technical, practical and office skills are down on their West Midlands equivalents. • No strong agreement is evident about which skill deficiencies are important threats to a firm’s competitiveness. • There is clear acceptance among local firms that an insufficiently skilled staff complement may detrimentally affect a business. Percentages for most reasons are generally high although the rank order is not very different from the West Midlands as a whole.

Table 7.3.4 offers some insights into the training arrangements of local firms:

• Strategic planning is most widely utilized by firms in this region. For example, the percentage of firms with a training plan (64.5%) is the highest of any region, as is the percentage (42.9%) using all 4 of the measures listed. • There is a strong commitment to training (especially for the existing workforce); 71.3% of firms in the Coventry and Warwickshire region arranged training for their staff in the previous 12 months. • On-the-job training in-house is clearly the most popular mode, as it is elsewhere. Other modes receive rather low levels of support, most notably the FE colleges • Private sector training consultancies are the most used external provider (66.2% of firms) although the level of usage is somewhat below that found elsewhere. • The most important provider covers a wider range of training than is the case in other regions. Thus high involvement figures are recorded for job specific, management, new technology and health and safety training. • The reasons for using particular external providers show the usual diversity. Slightly more weight than usual is given to relevant training/qualifications, courses tailored to needs, and the lack of in-house alternatives.

Overall, the Coventry and Warwickshire region impresses as more strongly committed to modern business practice and the need for training. The strong emphasis on social skills may partly reflect the high incidence of labour recruitment firms in this region.

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Table 7.3.1 Characteristics of firms in the Coventry & Warwicks LSC region

Coventry & Wark firms All other firms Number % Number % Business Activity (SIC divisions and selected groups) Base: all firms 65 Financial intermediation 7 7.3 98 8.9 66 Insurance & pension funding 6 5.8 56 5.1 67 Activities auxiliary to financial mediation 1 1.1 51 4.6 70 Real estate, renting & business activities 11 11.0 124 11.3 71-73 Computing & Research 3 3.5 23 2.1 74 Other business activities 71 71.2 745 67.9 of which 74.1 Legal, accounting, business consultancy 23 22.8 297 27.1 74.2 Architectural & engineering activities 13 12.9 227 20.7 74.5 Labour recruitment 28 27.7 156 14.2 Years at current premises Base: all firms Less than a year 7 6.6 41 3.7 1 - 2 years 16 16.0 222 20.3 3 - 5 years 23 23.5 239 21.8 6 - 10 years 23 23.4 225 20.6 11 - 20 years 15 15.6 176 16.0 More than 20 years 14 13.8 184 16.8 Don't Know/ Refused 1 1.1 9 0.8 Organisational type Base: all firms Only site 42 42.7 590 53.8 HQ, regional or divisional HQ 16 16.5 156 14.2 HQ elsewhere in UK 39 39.0 327 29.8 HQ outside UK 2 1.7 23 2.1 Legal status Base: all firms Partnership 19 19.0 196 17.8 Sole Proprietorship 8 7.7 176 16.0 A Public Limited Firm 23 23.1 144 13.1 A Private Limited Firm 48 48.5 571 52.1 Number of on-site workers Base: all firms 1 - 10 80 80.3 887 80.8 11 - 24 11 11.1 105 9.6 25 - 99 6 6.2 76 7.0 100+ 2 2.3 29 2.6

Table 7.3.2 Job vacancies of firms in the Coventry & Warwicks LSC region

Coventry & Wark firms All other firms Number % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 0 0.0 8 44.5 Professional occupations 6 84.5 29 50.8 Associate professionals & technical occupations 1 22.6 19 34.5 Administrative and secretarial occupations 2 33.9 24 31.6 Skilled trades occupations 0 0.0 3 49.9 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 1 24.4 5 21.3 Process, plant & machine operatives 0 0.0 1 37.0 Elementary occupations 0 0.0 1 22.5 Base: firms with difficult to fill Reasons why vacancies difficult to fill vacancies Too much competition from other employers 1 11.1 9 10.1 Not enough people interested in this type of job 0 0.0 13 15.1 Poor terms and conditions offered for post 1 5.6 3 4.0 Low number of applicants with the required skills 3 27.9 44 52.1 SERU, University of Birmingham Page 124 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Low number of applicants with required attitude 3 33.4 16 19.5 Low number of applicants generally 1 11.1 20 23.5 Lack of work experience the company demands 4 38.9 16 18.7 Lack of qualifications the company demands 2 22.2 15 18.0 Poor career progression / lack of prospects 2 22.2 3 3.3 Job entails shift work/unsociable hours 1 11.1 2 2.2 Remote location/poor public transport 2 16.7 3 4.0

Table 7.3.3 Skill needs of firms in the Coventry & Warwicks LSC region

Coventry & Warks All other firms NumberCountry firms% Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 9 10.2 49 5.0 Professional Occupations 3 12.3 53 11.2 Associate Professionals/ Technical Occupations 11 24.5 51 12.9 Administrative and Secretarial Occupations 8 17.1 81 12.9 Sales/ Customer Service Occupations 4 19.6 29 13.9 Personal Service Occupations 0 0.0 3 13.8 Elementary Occupations 0 0.0 8 8.6 Base: firms with at least one occupation not fully Occupations with skills gap of most concern proficient Managers 8 33.1 42 20.9 Professional Occupations 3 14.0 49 24.1 Associate Professionals/ Technical Occupations 9 35.0 45 22.5 Administrative and Secretarial Occupations 7 28.6 77 38.0 Sales/ Customer Service Occupations 4 15.6 29 14.5 Personal Service Occupations 0 0.0 3 1.3 Elementary Occupations 0 0.0 5 2.5 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 5 21.9 50 24.5 Recruitment problems 8 30.9 33 16.1 High staff turnover 0 0.0 20 10.0 Inability of workforce to keep up with change 3 10.9 40 19.9 Lack of experience or their being recently recruited 13 50.9 142 70.5 Staff lack motivation 6 22.7 43 21.4 Other 0 0.0 2 0.7 No particular causes 6 24.3 32 15.6 Skills needing improvement Base: occupations experiencing skills Communication skills 19 61.0 101 40.4gaps Technical and practical skills 11 35.3 109 43.5 Customer handling skills 15 48.9 100 40.0 Practice/ general management skills 15 47.2 99 39.5 Personal skills (motivation, ability to fit in) 17 54.6 95 38.0 Problem solving skills 14 45.2 97 38.9 Office admin. Skills 9 29.6 97 38.7 Team working skills 11 34.8 85 34.1 General IT skills (word processing, email, internet) 11 34.8 77 31.0 Leadership skills 9 29.6 71 28.4 Data analysis 8 26.2 65 26.1 IT professional skills 10 31.6 61 24.5 Accounts/ finance 8 24.7 52 20.8 Technical skills related to the occupation 4 13.8 53 21.3 Human resource management skills 7 22.7 40 15.9 Literacy 5 17.3 34 13.5 Numeracy skills 5 17.3 25 10.2 Foreign language skills 2 6.9 20 8.1 No particular skills 0 0.0 20 7.9 Other skills 2 6.9 10 4.1 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 4 15.3 30 14.7 SERU, University of Birmingham Page 125 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Customer handling skills 3 10.9 20 9.9 Sales ability 3 10.9 20 9.8 Communication 2 6.6 21 10.2 IT / computer skills 3 13.1 12 5.8 Technical skills 0 0.0 13 6.7 Office administration skills 1 2.2 9 4.4 General lack of experience 2 6.6 6 2.8 Accounting/ finance 0 0.0 7 3.5 Numeracy 0 0.0 7 3.2 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps Loss of business or orders to competition 9 35.5 53 26.1 Delays developing new products or services 9 37.4 52 25.7 Difficulties meeting customer service objectives 11 42.0 67 33.0 Difficulties meeting required quality standards 4 15.6 46 22.7 Increased operating costs 12 46.5 89 44.3 Difficulties introducing new working practices 4 16.1 31 15.2 No particular problems/ none of the above 7 26.2 53 26.3

Table 7.3.4 Workforce training by firms in the Coventry & Warwicks LSC region

Coventry & Wark firms All other firms Number % Number % Incidence of strategic planning Base: all firms Has a business plan 83 83.4 778 70.9 Has a training plan 64 64.5 647 59.0 Has a training budget 54 54.7 495 45.1 Has annual performance review or appraisal system 76 76.9 759 69.2 All of the above 43 42.9 371 33.8 None of the above 4 4.4 153 13.9 Training conducted during past 12 months Base: all firms Arranged training 71 71.3 734 67.0 mainly for Existing workforce 28 27.9 273 24.9 New recruits 0 0.0 26 2.4 Both 43 43.4 435 39.7 Have not arranged training 28 28.7 362 33.0 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 79 79.4 877 79.9 On the job - delivered by external provider 18 17.8 291 26.6 Off the job - delivered by employees 23 23.5 314 28.7 Off the job - delivered by a training consultancy 25 25.1 334 30.4 Off the job - delivered by a FE college 13 13.5 233 21.2 Other method 0 0.0 15 1.4 No preference 12 11.7 122 11.1 For existing workforce On the job - delivered by employees 77 77.8 839 76.5 On the job - delivered by an external provider 31 31.1 337 30.7 Off the job - delivered by employees 26 26.1 291 26.5 Off the job - delivered by a training consultancy 32 32.1 425 38.8 Off the job - delivered by a FE college 14 13.9 243 22.1 Other method 0 0.0 17 1.5 No preference 12 11.7 110 10.0 Off job training providers Base: all firms using external training Further education provider 11 25.0 146 providers30.2 Higher education provider 9 19.0 94 19.4 Private sector training consultancy 30 66.2 359 74.2 Public sector training provider 8 17.1 67 13.8 Other training company 6 14.0 60 12.4 Training by most important provider Base: all firms using external training Health and safety training 22 49.8 178 providers36.8 SERU, University of Birmingham Page 126 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Induction training 10 21.4 115 23.7 Supervisory training 14 30.2 133 27.4 Management training 23 51.2 202 41.7 Training in new technology 22 50.0 212 43.8 Training in foreign languages 3 6.1 8 1.7 Job specific training 25 56.1 331 68.3 None of the above 5 11.4 20 4.2 Base: all firms using external training Top ten reasons firms use particular external providers providers Require specialised/ job specific training 7 15.3 59 12.1 They offer the relevant training/ qualifications 7 15.7 51 10.6 Has the best expertise in this subject/ best trainer 3 6.2 36 7.4 No-one else does training/ lack of alternative options 3 7.3 32 6.7 Course is tailored to our needs 6 12.3 28 5.8 Easily accessible/ convenient 2 5.4 29 5.9 Head office decision/company policy/not our 0 0.0 26 5.4 decision Due to regulations/ professional or legal requirement 1 2.4 25 5.2 No in-house training available 5 11.6 17 3.6 Low cost/ free/ value for money 2 3.7 21 4.3

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IN-DEPTH INTERVIEWS: COVENTRY AND WARWICKSHIRE LSC

Thirteen in-depth interviews were held in Coventry and Warwickshire with the majority of firms employing less than ten (11 firms) and two firms employing between 11 and 24 persons.

INNOVATIVE ORGANIZATIONAL FORMS

A number of highly innovative BPS firms are located in Coventry and Warwickshire. This innovation takes a number of forms including the legal and organisational structure of firms.

Thus, the region is home to a marketing company that operates as a collective in which professional ‘employees’ are:

‘all actually self-employed creatives, video producing, web design, animation and an illustrator. But basically what we do is we work together as a collective so all of our client are kind of pulled into one website, so it makes us look bigger than we actually are’ (CWO1/Adv/1-10).

A virtual human resources company was also interviewed that provides outsourced HR functions for SMEs. This firm has a small central base, but the professionals:

‘are physically on the site of the client company as their functioning HR department and the client gets the dedicated person who is always the one that’s there’ (CW14/BMCA/1-10).

These types of organizational form highlight the flexibility of BPS firms. This has important implications for training and skill development. Such firms have limited requirements for support staff and, in many cases, the professional will be self-employed.

SKILL SHORTAGES

Skill shortages relate to a shortage of people with a good sales background (CWO7/Recruitment Agency/1-10). An emphasis was placed on the importance of people skills and personality. These are difficult to develop and smaller companies found it difficult to attract highly skilled individuals given the attraction of Birmingham and higher salaries elsewhere.

One company cogently noted that it is important to remember that:

‘you buy from a person, you don’t buy a product. It is simply you buy from a person; you don’t but, if you don’t like someone. It is important to get the right staff . . . There is no point in getting staff in simply for the sake of it. If they don’t care then people won’t deal with you and they won’t come back’ (CW04/Recruitment Agency/1-10).

The same company noted that they had difficulty in finding people who had an appreciation of office work especially in terms of:

‘politics, rules in offices, the work environment and the inability to grasp these’. (CW04/Recruitment Agency/1-10)

An important skill shortage appears to be in the area of staff recruitment. Many small companies have difficulties in selecting employees that will fit with the culture, work environment or expectations of the firm. This is not surprising as SMEs have limited experience of recruiting staff.

Aan architectural practice employing 20 staff noted that their failure to recruit the right professional people had meant that they had stopped expanding the business. They explained that they:

‘advertised and ran through the interviews and the people obviously put their noses out and did very well at the interview, but when they actually came and started work it was a different matter. I think the phrase is they talked a good job but didn’t actually do it’ (CW01/Architect/11-24).

ABSENCE OF SUPPORT STAFF

In common with many of the other LSC areas some of the BPS firms in the sample identified a reluctance for recruiting support staff that have no fee generating capacity.

A recruiting agency noted that: SERU, University of Birmingham Page 128 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

‘your revenue comes from filling jobs, so if you’ve got someone that is not filling jobs then they are costing you money. We prefer to have a small headcount and struggle then struggle with all the work and take on people for the sake of it’ (CW04/Recruitment Agency/1-10).

TRAINING

Training provision in these companies was extremely limited. This reflects the size of the firms as well as sector. Professional staff had to engage in CPD, but support staff training was often neglected.

An emphasis was placed on time pressures as well as cost. These two factors should be taken together. Thus, a commercial surveyors employing 16 people with two offices argued that:

‘I am always interested in grant aided training schemes particularly for the admin. staff in terms of learning about computers and all the rest of it. If I was presented with a course which I foresaw was going to be of use to the company then I wound be minded to say look do you want to go and do this. But I would’nt envisage anything more than a single day type scheme (CW10/Real/1-10).

A recruitment company highlighted the difficulties a small company (6 people in this office and also an office in London) faced in running the business. They noted that:

‘We’re quite a small company and we’ve got to be a commercial business and we’ve got to make a profit. We don’t get any money for training from the government to fund anything like this so when someone’s not down there actually producing something and they’re out there and we are paying for a course then it’s not productive and if we had lots of activities going on then we drop away, you know we don’t make any money and therefore we fail as a business. And so that’s, maybe that’s not what they want to hear but that’s the facts of the matter’ (CW07/Rec/1-10).

It is important to remember that many BPS jobs are relatively simple and often extremely repetitive. For example, some small local accountancy firms drew attention to the repetition that occurs during the accountancy year with similar activities occurring at the same time in the business cycle.

One recruiting agency noted that:

‘on-the-job training was the best way to develop staff as you get someone in and you start them there and you show them how to do it, although it is different on a day-to-day basis, the actual nuts and bolts of the job are the same, it’s the same thing’ (CW07/Recruitment Agency/1-10).

It is important to distinguish between support staff training and that of professionals. Support staff require good communication skills, technical expertise related to their area, for example legal secretaries or knowledge of relevant ICT. Professionals need sophisticated client relationship management expertise, technical competence and all this is supported by CPD. The requirement for CPD that is forced upon professionals in some cases is considered to be a mere box ticking exercise. However, in many cases CPD is an essential part of the business, as without it the professional will be out-of-date and not aware of current developments (legislation, etc) that are impacting on their clients’ activities.

RECRUITMENT

In the smaller firms recruitment is generally by word of mouth or by local advertisements. There did not appear to be any significant problems with recruitment apart from a shortage of people with an ability to sell and the difficulties of attracting and retaining professionals given the proximity of Birmingham.

Formal recruitment mechanisms were used by larger firms or branch offices. In one case an environment consultancy based in St Albans decided to open an office in the area to deal with clients located in the West Midlands. The difficulty of opening the office from afar and timing meant that the firm had to obtain support staff from a recruitment agency, but the professionals were obtained by word of mouth or were friends (CW09/Arch/1-10).

The same company complained that agencies were fairly aggressive in this industry and that:

‘once they get hold of your staffs’ mobile numbers or they get one of your staff going for interviews then that person will give his mates telephone numbers and then you get everybody in the whole office has had a phone call offering more money’ (CW09/Arch/1-10).

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COMPETITIVE ADVANTAGE

Like many of the other LSC areas, firms in Coventry and Warwickshire argued that their competitive advantage was related to the quality of their expertise, client focussed approach, as well as cost. Thus an architect noted that:

‘as a small company our rivals are a lot bigger so we tend to be able to offer more affordable costs to our clients and that’s quite important and the other thing as well we are all qualified in our work’ (CW15/ARCH/1-10).

Changing regulations and the growing complexity of employment legislation may be impacting on the ability of smaller BPS firms to compete with larger firms.

According to a small recruitment company two things were negatively impacting on the firm’s competitiveness.

First, client:

‘companies get very nervous about things like equal opportunities, so they go to big nationals because their liability is a lot bigger and you are going to look bad if you have been let down by a big multinational company that everyone knows, whereas with little ones its more your kind of cowboy outfits’ (CW04/Recruitment Agency/1-10).

This implies that some clients may be retreating to large firms as they are perceived to offer greater protection during periods of difficulty.

Second, is related to large companies located in Birmingham and their ability to attract the best staff because they can afford to pay higher salaries.

SERU, University of Birmingham Page 130 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

FOCUS GROUP: COVENTRY AND WARWICKSHIRE LSC, COVENTRY (12/12/2005)

The following is a summary of the topics and issues discussed.

1. Confusion regarding what training is available locally. Limited idea of what is available and what is provided:

2. ‘There are bits of training available locally but employers do not know how to access it or are unaware and also confused about the type of training they want. Professionals are driven by the need for CPD, but recently relaxed much of this. CPD could now include course on softer skills and management issues’.

3. HE plays an important role in attracting young people into the West Midlands. They can come from elsewhere and on graduation may decide to stay in the area:

4. ‘Entering professions is via full-time higher education. There are excellent universities in the region. Quality local training will persuade people to stay in the region’.

5. The area has a small business and professional service practice economy. This is an important issue as most of the firms are small with limited internal resources. Many BPS professionals in the area must multitask and be multi- skilled.

6. A key concern is the difficulty of recruiting support staff, especially secretarial staff. FE colleges used to provide specialist secretarial courses but these are no longer available. Support staff are difficult to find, and many have major weaknesses, for example they do not know how to behave as an employee or how to fit into a team.

7. ‘The turnover of support staff in SMEs is high. Training levels are poor and many of the firms rely on natural turnover to staff to develop their skills. It is difficult to keep a good administrative person for more than 3-4 years. An issue is why invest in training them if they are going to leave’.

8. ‘Training needs to be available locally. People who work during the day to not want to travel more than 20 miles to obtain training. This is also a problem for employees on day release’.

9. Emphasis based on the historic evolution of specific skill competencies in specific FE colleges. Some FE colleges are known to be excellent in certain skills.

10. A key problem is that Coventry is not an attractive location for BPS professionals. New entrants to BPS will prefer to live and work in Birmingham or London rather than Coventry. The difficulty it persuading people to relocate or even stay in the area. The issue concerns this area’s image compared to other places. Also note the dominance of small practices in the area. These provide fewer training opportunities and a relatively weak BPS local economy compares to other areas:

11. ‘Birmingham is now seen to be the place to be for BPS, We are competing with Birmingham rather than London, and Birmingham firms consider that they can cover this area from Birmingham. Leamington has a quality of life and perception advantaged over Coventry. People want to come and work there, they have a better quality of life and are also able to obtain Birmingham business ’.

12. Family ties and previous place-based associations are some of the most effective mechanisms for attracting and retaining people in this area.

13. FE and HE are about the provision of teaching regulated courses that have a set of predetermined learning outcomes. The courses are provided to a set timetable and in a prescribed place. Private sector trainers are less interested in providing training and more concerned with changing workplace behaviour.

14. Every BPS firm is individual. Operational procedures will have developed to meet the requirements of a particular set of circumstances ranging from very old established firms to start-ups.

15. The training needs of a BPS firm are identified and assessed by individuals who have limited understanding of the required management skills in this area. Many have very out-of-date understandings of FE. Need to train BPS management in staff appraisal and development.

16. BPS firms and professionals tend to be largely unaware of their training requirements. They have difficulties in identifying training needs, but when prompted it some becomes apparent that training is required.

17. A key issue concerns limited appreciation, awareness and understanding of appraisal techniques. SERU, University of Birmingham Page 131 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

18. A key issue concerns soft skills – communication skills and personal skills that are essential in developing and maintaining client relationships. It is important to note that good soft skills are required for support staff that are not expected to deal with clients. This is an issue regarding the internal market within the firm.

19. On-the-job training is not considered as training.

20. Private sector trainers provide solution based training:

‘Public sector trainers are more interested in getting people through exams – they are qualification driven. People want the skills but not necessarily the qualifications’.

21. Training will be developed to meet a need that has been identified as a weakness that needs to be remedied over a set time period. Private trainers perceived as supplying commercially aware training:

‘As a trainer we provide a change in work behaviour rather than supply teaching. Private sector trainers are trying to alter the workplace behaviour. It is about focus. We come from a business background, senior managers and we are also employers. We try to change behaviour and we do this by providing a more intimate style of training’.

22. Market failure – no training solutions appear to exist between the long course provided by FE and HE and the short courses supplied by private trainers.

23. BPS members of the focus group did not know enough about FE and were thus unable to comment on this sector in any depth.

24. The FE image is one of large numbers of students aged between 16-18 and not as a provider of bespoke training solutions. A key issue is the perceived absence of flexibility in the FE and HE sectors.

25. Focus group placed considerable emphasis on a one-stop-shop solution for accessing training. This would be a website that would list all available local training opportunities. The key issue is that BPS firms are unaware of what is available locally.

26. An issue is the intangible nature of training. Why pay for something that you cannot see? However, an important link between training and competitiveness was identified.

27. A key issue is the attraction and retention of staff. One part of a staff package is training. The training opportunities and the quality of the working environment can be as important as salary levels.

28. It is important to monitor training and to evaluate training.

POLICY ISSUES

29. One-stop-shop website, diversity of BPS implies diversity of training and skill needs; important to remember that the low density of BPS firms in the area reduces the attraction of the area as well as the availability of suitable local training opportunities.

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HEREFORD AND WORCESTERSHIRE LSC REGION

This region contains the second smallest number of survey firms. The 92 enterprises represent 7.7% of all firms but a high 15.1% of all employment. The latter figure is however seriously inflated by the presence of a single very large employer.

The characteristics of firms in Hereford and Worcestershire make it a distinctive region as perusal of Table 7.4.1 demonstrates:

• Single site organisations dominate (66.1% of the total). • Privately limited is the most common type of organisation (44.5%) but it is under represented relative to the rest of the West Midlands, whereas sole proprietorship is over represented (26.5%).. • Business activities dominate as usual but the mix is very different since architectural and engineering firms are considerably over represented while labour recruitment firms are significantly under represented. • Firms in Hereford and Worcestershire tend to be small. Some 93.5% employ ten or less people on-site. • Firms are long established; oOver a quarter of these enterprises have been in continuous occupation of their current premises for 20 years or more.

The small sample size precludes detailed analysis of Table 7.4.2 but it is interesting to note that this region does not seem to suffer the significant problems found elsewhere when seeking to fill professional jobs.

Table 7.4.3 records responses to questions about skills and their improvement:

• Approximately one in ten firms reported staff proficiency problems in the main occupational groups, but the position was twice as bad in sales and customer services. • Surprisingly, sales was not the occupational area of most concern as the situation in administrative and secretarial occupations was marginally worse. • In common with other regions “lack of experience or recent recruitment” was rated the main cause of staff lacking proficiency. There was more recognition than usual that failure to train is also a significant factor. • A wide range of skills needing improvement were identified by about half of the firms with skills gaps. These included office administration and IT skills which generally are not of much concern. • Few firms nominated skills that might threaten competitiveness. Only personal skills gathered anything other than minimal support. • Inadequately skilled staff was thought most likely to increase operating costs but a range of other negative impacts were nominated. The pattern was not dissimilar to that found in the rest of West Midlands.

Table 7.4.4 summarises key information about training provided in the business and professional services sector:

• The extent to which firms engage in strategic planning is comparatively low. Nearly one third of Hereford and Worcestershire firms do not employ any of the four procedures – the worst performance of any region • Only 53.3% of firms arranged training for their staff during the previous 12 months – again the lowest figure for any region. • In line with other regions, the preferred mode of training is on-the-job delivered by employees. Private training consultancies were a distant second best while FE colleges were the least preferred source for training. • Private training consultancies (88.3%) were easily the most frequently used external provider with FE colleges (22.5%) well behind in second place. • The most important provider was used virtually always for job specific training and only occasionally for a variety of other training roles. • The need for specialised, job specific training was the most frequently cited reason for choosing a particular external provider.

Overall this region exhibits a distinctive BPS structure based on small, single site, and long established firms. The data suggests low levels of commitment to modern business practice and to formalised training and skills acquisition.

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Table 7.4.1 Characteristics of firms in the Hereford & Worcester LSC region

Hereford & Worcester All other firms Number firms % Number % Business Activity (SIC divisions and selected groups) Base: all firms 65 Financial intermediation 4 4.3 101 9.1 66 Insurance & pension funding 8 8.6 54 4.9 67 Activities auxiliary to financial mediation 3 2.9 49 4.4 70 Real estate, renting & business activities 13 13.6 123 11.1 71-73 Computing & Research 4 4.3 23 2.1 74 Other business activities 61 66.3 755 68.4 of which 74.1 Legal, accounting, business consultancy 22 24.3 297 26.9 74.2 Architectural & engineering activities 27 29.3 213 19.3 74.5 Labour recruitment 2 2.6 181 16.4 Years at current premises Base: all firms Less than a year 0 0.0 47 4.3 1 - 2 years 16 17.3 222 20.1 3 - 5 years 19 20.6 243 22.1 6 - 10 years 20 21.6 229 20.7 11 - 20 years 12 13.0 179 16.3 More than 20 years 25 27.6 173 15.6 Don't Know/ Refused 0 0.0 10 0.9 Organisational type Base: all firms Only site 61 66.1 572 51.8 HQ, regional or divisional HQ 12 12.6 161 14.6 HQ elsewhere in UK 20 21.3 346 31.4 HQ outside UK 0 0.0 24 2.2 Legal status Base: all firms Partnership 16 17.1 199 18.0 Sole Proprietorship 24 26.5 159 14.4 A Public Limited Firm 11 11.9 156 14.1 A Private Limited Firm 41 44.5 578 52.4 Number of on-site workers Base: all firms 1 - 10 86 93.5 880 79.7 11 - 24 4 3.9 112 10.2 25 - 99 1 1.5 81 7.4 100+ 1 1.1 30 2.7

Table 7.4.2 Job vacancies of firms in the Hereford & Worcester LSC region

Hereford & Worcester All other firms Number firms % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 4 100.0 4 23.2 Professional occupations 0 0.0 35 55.0 Associate professionals & technical occupations 1 25.0 19 34.4 Administrative and secretarial occupations 2 42.0 24 31.2 Skilled trades occupations 1 46.8 2 43.8 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 0 0.0 6 22.7 Process, plant & machine operatives 0 0.0 1 26.1 Elementary occupations 0 0.0 1 18.8 Base: firms with difficult to fill Reasons why vacancies difficult to fill vacancies Too much competition from other employers 1 22.5 8 9.4 Not enough people interested in this type of job 0 0.0 13 14.4 Poor terms and conditions offered for post 0 0.0 4 4.5 Low number of applicants with the required skills 4 67.5 43 48.4 SERU, University of Birmingham Page 134 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Low number of applicants with required attitude 0 0.0 20 22.4 Low number of applicants generally 0 0.0 21 23.7 Lack of work experience the company demands 0 0.0 20 22.2 Lack of qualifications the company demands 0 0.0 17 19.7 Poor career progression / lack of prospects 0 0.0 5 5.7 Job entails shift work/unsociable hours 1 10.1 2 2.7 Remote location/poor public transport 1 22.5 4 4.2

Table 7.4.3 Skill needs of firms in the Hereford & Worcester LSC region

Hereford & Worcester & All other firms NumberWarks Country firms% Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 5 6.5 53 5.3 Professional Occupations 5 13.0 51 11.2 Associate Professionals/ Technical Occupations 3 10.4 59 14.3 Administrative and Secretarial Occupations 5 10.1 84 13.4 Sales/ Customer Service Occupations 4 21.9 29 13.7 Personal Service Occupations 0 0.0 3 15.3 Elementary Occupations 0 0.0 8 8.5 Base: firms with at least one occupation not fully Occupations with skills gap of most concern proficient Managers 4 25.4 46 22.0 Professional Occupations 4 23.7 49 23.0 Associate Professionals/ Technical Occupations 1 8.5 53 25.0 Administrative and Secretarial Occupations 5 32.1 79 37.4 Sales/ Customer Service Occupations 4 25.4 29 13.8 Personal Service Occupations 0 0.0 3 1.2 Elementary Occupations 0 0.0 5 2.4 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 5 33.9 50 23.5 Recruitment problems 0 0.0 40 19.1 High staff turnover 0 0.0 20 9.5 Inability of workforce to keep up with change 1 8.5 42 19.7 Lack of experience or their being recently recruited 12 74.6 143 67.9 Staff lack motivation 1 8.5 48 22.6 Other 0 0.0 2 0.7 No particular causes 3 17.0 35 16.6 Skills needing improvement Base: occupations experiencing skills Communication skills 9 50.0 111 42.2gaps Technical and practical skills 8 44.2 112 42.4 Customer handling skills 9 50.0 106 40.4 Practice/ general management skills 9 50.0 105 39.7 Personal skills (motivation, ability to fit in) 4 22.1 108 41.1 Problem solving skills 5 29.5 106 40.3 Office admin. Skills 8 44.2 98 37.2 Team working skills 4 20.5 92 35.1 General IT skills (word processing, email, internet) 8 42.6 81 30.7 Leadership skills 4 20.5 77 29.1 Data analysis 3 14.7 71 26.9 IT professional skills 5 27.9 66 25.1 Accounts/ finance 1 7.4 59 22.2 Technical skills related to the occupation 4 22.1 54 20.4 Human resource management skills 3 14.7 44 16.8 Literacy 0 0.0 39 14.9 Numeracy skills 0 0.0 31 11.7 Foreign language skills 1 7.4 21 8.0 No particular skills 0 0.0 20 7.5 Other skills 0 0.0 12 4.7 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 3 17.0 31 14.6 SERU, University of Birmingham Page 135 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Customer handling skills 1 8.5 21 10.1 Sales ability 1 8.5 21 10.0 Communication 1 8.5 21 9.9 IT / computer skills 1 8.5 14 6.4 Technical skills 0 0.0 13 6.4 Office administration skills 0 0.0 9 4.5 General lack of experience 0 0.0 7 3.4 Accounting/ finance 0 0.0 7 3.4 Numeracy 0 0.0 7 3.1 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps Loss of business or orders to competition 4 25.4 58 27.3 Delays developing new products or services 5 32.1 56 26.7 Difficulties meeting customer service objectives 5 33.9 72 34.0 Difficulties meeting required quality standards 3 17.0 47 22.3 Increased operating costs 8 49.1 93 44.2 Difficulties introducing new working practices 1 8.5 33 15.8 No particular problems/ none of the above 3 17.0 57 27.0

Table 7.4.4 Workforce training by firms in the Hereford & Worcester LSC region

Hereford & Worcester All other firms NumberWark firms % Number % Incidence of strategic planning Base: all firms Has a business plan 48 52.1 813 73.6 Has a training plan 41 44.7 670 60.7 Has a training budget 20 22.0 529 47.9 Has annual performance review or appraisal system 46 49.8 789 71.5 All of the above 13 14.0 400 36.3 None of the above 27 29.4 130 11.8 Training conducted during past 12 months Base: all firms Arranged training 49 53.3 756 68.5 mainly for Existing workforce 25 27.2 275 24.9 New recruits 0 0.0 26 2.4 Both 24 26.1 455 41.2 Have not arranged training 43 46.7 348 31.5 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 69 75.0 887 80.3 On the job - delivered by external provider 23 24.9 286 25.9 Off the job - delivered by employees 20 21.2 318 28.8 Off the job - delivered by a training consultancy 30 32.2 329 29.8 Off the job - delivered by a FE college 13 13.9 234 21.2 Other method 3 2.9 13 1.2 No preference 13 14.4 120 10.9 For existing workforce On the job - delivered by employees 72 77.8 844 76.5 On the job - delivered by an external provider 20 21.8 348 31.5 Off the job - delivered by employees 16 17.6 301 27.2 Off the job - delivered by a training consultancy 32 34.7 425 38.5 Off the job - delivered by a FE college 17 18.3 240 21.7 Other method 3 2.9 14 1.3 No preference 9 10.0 112 10.1 Off job training providers Base: all firms using external training Further education provider 8 22.5 150 providers30.3 Higher education provider 4 10.9 99 20.0 Private sector training consultancy 30 88.3 359 72.5 Public sector training provider 3 7.8 72 14.5 Other training company 1 3.9 65 13.2 Training by most important provider Base: all firms using external training Health and safety training 14 40.7 187 providers37.7 SERU, University of Birmingham Page 136 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Induction training 3 9.5 121 24.4 Supervisory training 9 25.1 138 27.8 Management training 15 43.8 210 42.4 Training in new technology 15 42.8 220 44.4 Training in foreign languages 0 0.0 11 2.2 Job specific training 29 85.2 327 66.0 None of the above 1 3.9 24 4.9 Base: all firms using external training Top ten reasons firms use particular external providers providers Require specialised/ job specific training 7 19.5 59 11.9 They offer the relevant training/ qualifications 3 7.8 56 11.3 Has the best expertise in this subject/ best trainer 0 0.0 39 7.8 No-one else does training/ lack of alternative options 3 7.8 33 6.7 Course is tailored to our needs 1 3.9 33 6.6 Easily accessible/ convenient 3 9.5 28 5.6 Head office decision/company policy/not our 1 3.9 25 5.0 decision Due to regulations/ professional or legal requirement 3 7.8 23 4.7 No in-house training available 1 3.9 21 4.3 Low cost/ free/ value for money 3 7.8 20 4.0

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IN-DEPTH INTERVIEWS: HEREFORD AND WORCESTER LSC

Fourteen in-depth interviews were held in the Hereford and Worcestershire (H&W) LSC region with all the firms employing less than 10.

LOCATION

BPS firms located in H&W are relatively isolated from the main concentration of BPS firms in the West Midlands. This is both an advantage and a disadvantage. It is advantageous in that the relative isolation enables H&W firms to develop niche specialisms that in counties like Warwickshire would be supplied from Birmingham.

Thus the H&W BPS community has a number of distinctive characteristics that are partially explained by it location.

Second, some BPS firms experienced difficulties in recruiting professional staff. Thus one accountant noted that:

‘we have capacity problems . . . the problem is you see is in Herefordshire we’re the county at the edge of the world. If you are a person with the skills that we need often you’ll tend to be working in a bigger city – so it’s a geographic problem – you’ll be in Birmingham or perhaps Coventry, Leicester, more likely to be there that in sleepy old Herefordshire you see’ (HE01/Acc/1-10).

ORGANIZATIONAL FORMS

It is important to remember that BPS firms are established by individuals who are capitalising on their expertise, personality, reputation and network of contacts. Much BPS work is performed at the client’s premises or even remotely via information communications technology (ICT). BPS professionals enjoy stimulating creative environments, but some also enjoy the delights of rural environments. This means that BPS firms can be established in relatively remote locations and still provide services to local, national and international clients.

A number of home-based BPS firms were interviewed. For example a company specialising in property-related compensation claims is:

‘a rural business, very rural. Basically it is in the middle of a load of fields and we’ve had a load of baling done. It is a home office – our PA has got the hay fever to prove it’ (HW06/Leg/1-10).

Micro-firms or sole practitioners are also quite prominent as well as virtual firms that rely on established relationships with self-employed associates.

A Malvern based building surveyor has a long-term relationship with an architect based in Hereford. About 15 years ago the surveyor used to work for the associate, but decided to establish his own practice in 1997. Both individuals are self employed so that:

‘I am the sole principal, so it is my organisation, I am registered in my own right, he is registered in his own right, and I am an associate to him. So in simple terms I have my projects, he has his. I have mine, which he helps me on, and he has his that I help him on, hence we are not, although we are one man bands strictly, we are not, because if one of us is away the other deals with it’ (HW10/Arch/1-10).

Similarly, an environmental consultancy company used to draw upon the expertise of self-employed consultants. However, the business has grown to such an extent that:

‘in the past it’s just been me and I’ve used subcontractors so one of my chaps was a self-employed subcontractor for me regularly last year and basically it got to the point where his accountant was saying you’re not really. I was using him to do so much we decided that I basically employed him from the beginning of the new financial year, so that’s how I recruited him. The others are really people I have known. I haven’t advertised because in this sort of a job its specialist and one of the chaps is a friend and he’s been working for himself and has decided he’s not the best person to work for himself so he has come to work for me (HW12/Arch/1-10).

These cases illustrate the flexibility as well as dynamism of organizational forms in the BPS sector of the economy.

It is important to remember that micro-firms that operate using associates have very different skill needs to larger firms. Many do not employ support staff, for example the Malvern based surveyor’s wife acts as the company’s administrator (HW10/Arch/1-10). This highlights the combinational skill problem that appears to be experienced by many small companies. Such firms may be technically competent in their specialist areas, but be underperforming because of SERU, University of Birmingham Page 138 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

poorly developed support skills (time management, organisation, sophisticated understanding of computer packages, etc).

SKILL SHORTAGES

Multitasking is a common feature of many small BPS organisations. Limited or even no support staff means that professionals must undertake a range of basic and more advanced support tasks. This implies that many professionals could benefit from training in the skills that are required to support their business. However, such training would have to be differentiated from that targeted at support staff; professionals would be reluctant to train alongside support staff.

In this context it is worth noting that some companies identified deficiencies in the availability of simple courses, for example:

‘here in Herefordshire you will try to find someone who will do training [in] some stupid thing like time management -where would you find that in Herefordshire?’ (HE01/Acc/1-10).

TRAINING

The Hereford and Worcester LSC is an extremely diverse county. Parts are extremely rural, but the area includes some major market towns (Worcester and Hereford). HE provision is relatively underdeveloped compared to Staffordshire, Warwickshire, Black Country and Birmingham as the area only obtained its first University in September 2005.

The geography of the county must be taken into consideration in any analysis of access to and provision of training. However, it is worth noting that like all public services, FE and HE educational provision is point specific. Thus, those closest to the provision obtain the greatest benefits whilst firms in remote locations may be denied access to the available skills training.

This means that availability of training within an LSC area can be undermined by difficult infrastructure or a relatively dispersed population. Shropshire, Staffordshire and Hereford and Worcester LSC areas all suffer from unequal access to FE provision.

A good example of this unequal access was provided by the compensation specialist located in rural H&W. His PA required training in word processing and a suite of computer packages. This company has:

‘had help from the Rural Development Commission but we also had another rural based group contact us to ask us if we wanted to get staff into training. And yes, that was a definite yes for us and the problem was we are a rural establishment. The training and the facilities offered to us were so far afield that although we have to have staff that can drive and can have their own cars that it meant that we basically, it wasn’t the amount of time that they would be doing the actual courses, it would actually be the amount of time they would take to travel to the areas in which there were these courses running. Because there weren’t any really local courses and there was nothing to offer courses actually in situ, which if you think about it, if you have got a rural group or QUANGO of government offering courses for rural people they are expecting them to travel into Hereford or Stourbridge or Ludlow or whatever, well Ludlow is 15 miles from here and if I had to send our PA to go to Ludlow that is in fact nearly 40 miles from where she lives one way. So it hasn’t been very successful so I am having to do the retraining myself (HW06/Leg/1-10).

This company just struggled on trying to cope with the additional workload that is associated with a partly trained administrator. It noted that Bridgenorth College had just closed and was being converted into a hotel and that the course they had registered on had been cancelled.

It is important to note the extent of the difficulties being experienced by rural based BPS.

First, the difficulties associated with attracting and retaining support and professional staff. Difficulties in recruiting professional staff can be partially solved by drawing upon the expertise of self-employed professionals. However, the support staff issue is a major problem in regard to recruitment and training. Thus this company clearly identified a relationship between training deficiencies and productivity. They provided the following example:

‘Well if I use an example of mail shots basically, I wanted to learn more about wanting to be more time efficient on mail shots and . . . I would say that probably we spend half a day doing work that maybe if we had been fully trained and got another system installed . . . we could have done it in an hour. She wanted to do the course and I wanted her to do, but of course because it was only run at Ludlow college it just wasn’t feasible for her to go from Worcester to Ludlow’ (Hw06/Leg/1-10).

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This company had also being offered heavily subsidized computer training, but it was only available in Ludlow. The college was very accommodating in trying to provide flexible training that would fit around the business activities of this company. But:

‘at the end of the day it came down to 80 miles and extra hours. And also I have to say selfishly, although we were offered remuneration on wages and things like that, it still couldn’t stack up for us and it was sickening because it is designed, put in place for us but on a transport point of view which is the main thing with rural development and IT skills, whatever you are training for, there was no provision for that at all’ (HW06/Leg/1- 10).

A surveyor/estate agency switched from FE training provision to the private sector as their experience of FE:

‘and the NVQ thing, has not been good’.

They used an FE college that was using:

‘some sort of training provider under the umbrella of the college’ but ‘it wasn’t on a bus route – that isn’t very good for seventeen year olds. That was a bad experience because the kids couldn’t get there . . . I think that much of the training that goes on is rubbish. That’s why we tend to use provide providers, who rely on the people who go on the course to say that they want to go on the next one . . . I haven’t been on an [FE] course, but I speak to the kids when they come back and they are not motivated. The chap does it now is really good’ (HWO4/Rea/1-10).

It is important to remember that BPS niche or specialist providers have very distinctive training requirements that cannot be provided in H&W. Sometimes this training is provided locally, for example by a professional body/government agency using specialist trainers who are brought into the area to provide training in a specific area.

One accountancy company that has a relatively sophisticated staff development process (TNA and appraisal) noted that:

‘If the training need is there then we will go to whatever provider provides that. It doesn’t matter whether it’s a further education college or whatever. Often it’s not, our market is too small and too niche, it’s usually independent providers or our institute provides that sort of training. It’s quite hard to find a college to do skills training in this neck of the woods (HE01/Acc/1-10).

A number of commonalities can be identified from the in-depth interviews undertaken in H&W.

First, there is an important relationship between point specific provision of key training courses and the location of clients. This is a difficult problem to solve as it is not commercially viable to develop a heavily dispersed network of training providers. However, it would be possible to combine face-to-face training provision with student-centred learning. The balance between formats could vary depending on the trainees’ location.

Second, skill deficiencies exist in management as well as basic support functions (computer packages).

Third, effective training changes employees’ attitudes. Thus, the emphasis placed by the surveyor on the relationship between training and motivation as well as other firms noting that good training meant that employees returned with enhanced confidence.

Fourth, the distinction between the requirements for very specialist training to support professional CPD compared to the needs of support staff.

Fifth, FE colleges are associated with young people and with the provision of less specialist expertise. According to an accountant:

‘we haven’t [used FE] because I think we haven’t really spotted anything that would be applicable to the level of staff we’ve got. I understand there might be a further education course in aspects of the business we are in but I think that is geared more towards new entrants, late starter if you like. But we have found that all of the skills that we are looking to develop, courses are available free or at discounted rates from the places I’ve described to you (Institute of Financial Planning, Society of Financial Advisors) (HW13/Acc-1-10).

Sixth, a key skill in BPS is attention to detail. Some companies had recruited professional staff that were lacking in this essential skill. They argued that the checks and balances that exist in large firms would enable such individuals to

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survive but within SMEs there are few such checks. They also noted that it would be nearly impossible to develop a training course in this area.

RECRUITMENT

Recruitment in H&W is very similar to the other LSC areas. It is difficult to identify and recruit specific types of specialist expertise. The difficulty is one of salary scale as well as the small size of the BPS sector in this area. There are similar issues with support staff.

It is worth noting that recruitment is less of a problem in the main population centres in the area, and that rural firms have major problems in attracting, retaining and recruiting staff. These are so significant that many of these firms are failing to grow or perhaps, even worse, downscaling their activities.

A surveyor has been unable to recruit a:

‘decent surveyor – good people, sadly, don’t seem to want to come and work in Herefordshire. They want to stay in Bristol or Cardiff or Birmingham because it’s perceived as being a better place to be working and more job opportunities’ (HWo4/Rea/1-10).

One firm of accountants wanted to recruit a financial advisor. They made enquiries amongst other companies and people them knew and found that no one was willing to work for the package that was on offer. To identify someone they decided to employ:

‘a telephone canvassing lady who we heard about through a mutual business colleague who . . . said well if you want to buy an hour or two of her time - then I pay her and she does what I tell her to do. If I tell her to not cold call clients but to cold call advisors and talk about what you are offering. If you get any takers then you can talk to them. So we bought a couple of days of her time, she reported back that she felt she was wasting her time and our money and that was very honest of her to do that after only two days’ (HW13/Acc/1- 10).

All of the companies are searching for individuals with well-developed personal skills. Many argue that it is:

‘easy enough to give people skills and knowledge – that’s easy to do, but you can’t give people a way of acting or a personal skill – that is often inbred in them, you can influence it, but you can’t change it’ (HE01/Acc/1- 10).

COMPETITIVE ADVANTAGE

The competitive advantage of BPS firms located in H&W is founded upon price, personalities involved in the delivery of the services and specialist or niche expertise.

According to an accountant and business consultancy firm employing nine people:

‘in the commodity end of the market, where we are just providing straight accounting services then price is something of an issue, not a major one, because we are largely undifferentiated apart from the personalities involved in doing the accounts, but were we are doing business growth work and business development work then price isn’t so much of an issue’ (HE01/Acc/1-10).

Another accountant noted that:

‘we have a unique business proposition . . . what we were actually giving people was advice, not products, we don’t sell products, products are the end products, solutions of the advice we give. And when you focus on that it is an easy step to say we charge people fees because the product is incidental, we talk about commission because commission is available because it is the business we are in. But we can zero it and we can take it. And if we take it, it gets offset against the fees the client pays based on our time. And we said well our unique business proposition is we are offering people a service which is professional independent financial advice which could be on bank accounts right through to offshore investments, tax planning’.

Furthermore the company considers itself to be:

‘the hub of the wheel, we are the only person with professional connections the client might have that sees the whole picture. The inner spokes are solicitors, accountants, stockbrokers, and the client. And if the client goes to the stockbroker the stockbroker generally doesn’t talk about legal matters, doesn’t view their share SERU, University of Birmingham Page 141 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

portfolio from an accountancy point of view. We in the middle know a little bit about all of those elements and we bring those elements together and talk to the client based on yes you can do that but what about the effect it has on this? (HW13/Acc/1-10).

A financial management company providing services to people with serious financial difficulties as well as restructuring of housing-based investment portfolios argues that:

‘we tend to have a reasonably niche product . . . we try to keep ahead of the market’ (HW09/Auxfin/1-10).

Hereford and Worcester appear to have a number of distinctive advantages that, with the exception of Birmingham, were not as apparent in the other LSC areas. We speculate that the quality of the residential environment, as well as distance from Birmingham, has stimulated the development of niche firms and BPS specialisms.

BPS professionals may be attracted to the area given the quality of its rural environment (the Golden Valley factor) or given the area’s relative remoteness local firms may have been able to develop expertise that would normally be provided from a large city. Further research would be required into BPS firms in the area to support these speculations.

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FOCUS GROUP: HEREFORD AND WORCESTERSHIRE LSC, MALVERN (10/10/2005)

The following is a summary of the topics and issues discussed.

1. Require flexibility in the delivery of training.

2. Professional training is provided nationally. BPS firms seek out the best courses, often those accredited by the professional bodies. Support staff training is provided locally.

3. Training provision has an uneven geography over the region in terms of access and quality.

4. BPS firms lack basis skills in terms of staff appraisal and training needs analysis:

‘In SMEs there is an absence of appraisal mechanisms. Some don’t even have employment contracts’. ‘Within SMEs in this sector everyone is always too busy – too busy growing the business. You go out in the short term and use others, buts lots of training is on the job – the task in the SME is to find the right external expertise’.

5. Timing is an issue – when and how courses are delivered – out of hours or during working hours:

‘If we have a training need we always speak to our local college, but we are told that we have to wait a month and go to Malvern. We then speak to the Chamber and find that a course is available where and when you want it but at twice the price’.

6. Problem of knowing what is available. Too many mixed messages are being projected all the time.

7. There is an absence in the area of support staff with key skills. It is difficult to obtain staff and persuade them to undertake training. The fear is that a firm is training for others.

8. ‘It is difficult to obtain professional staff. There is a real shortage in the area as we nearly have full employment. We pinch high skilled staff from someone else’.

9. ‘Basic skills are a big problem at the moment – need to get the basics rights before one can really train people’.

10. On-the-job may be as good as using a trainer, but it also takes fee earners away from their core activity – the trainer and the trainee.

11. FE – perception is of variable quality.

12. HE – perception is also of variable quality.

13. Part of the problem is poor communication between FE and HE.

14. Choice of training is based on cost, location as well as referrals:

‘I get offered courses all the time but they are in London and Manchester. I can’t afford to spend a day out. I have a business to run’.

‘You need confidence in the training. The University of Gloucester is trying to sell courses all the time, but they keep reducing the cost. They set a price and see who will buy it and then reduce it. They need to identify who are the customers and what they need. They need to act like a business. I have lost faith in the public sector and now look at the private sector’.

15. ‘FE is not commercially minded – they are in a different world. I gave a contact in FE my card and asked them to contact me about a course – they never got back to me’.

16. FE provider responded:

‘ We are commercially minded, but getting dragged back to being a college – dragged back to out-dated training, but we are trying to develop something for local needs’.

17. FE has a lack of commercial focus and understanding in the training it provides.

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18. FE does not market itself to commercial sectors. It provides training that is too generic; training is not tailored to the needs of firms. The core FE market is young people and not the world of business:

‘FE markets itself as a provider of education rather than training for people leaving school’.

‘If I knew what was on offer from FE as a provider of education then I would look at FE but would need some convincing’.

‘FE needs to show that their staffs understand industry’.

19. Example of Kidderminster College:

‘What is so good about Kidderminster? We have a good relationship with the Business Department. We can phone them to discuss needs and if there is a demand they might provide a course. The course notes are good, but one needs to wait a couple of months . . . The relationship developed by chance. I went there to learn Welsh and got to know the people in the college’.

20. ‘It is a waste of money putting them though FE if they don’t have basic skills’.

POLICY ISSUES

21. The key issue in training is cost, availability and accessibility.

22. BPS firms require training that is tailored to the needs of a particular firm.

23. BPS managers need to be trained in training needs analysis. Appraisal systems are often too informal or absent.

24. BPS employers need to enter into a dialogue with training providers, and providers need to respond to employer needs.

25. Need a local database of available courses that is designed to meet the needs of business firms.

26. BPS – professional learning is advanced and often strategic. It is about constant learning in order to seek business opportunities that the firm can exploit.

27. Poor training could destroy a BPS business. Quality standards are required in this area.

28. The training system needs to be simplified. There are too many courses available, too many types of training provider and so many different types of funding.

29. LSC could develop a set of case studies of what training has done for a particular group of firms. The case studies would raise local awareness and might alter the perception held of FE provision.

30. Trainers must have current experience so that they can respond to client needs. Need to explore and develop the communication skills of FE lecturers and trainers – communicating with trainees as well as BPS firms.

31. ‘Each provider needs to market themselves on quality. We need blended delivery – FE and private sector partnerships’.

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SHROPSHIRE LSC REGION

The Shropshire LSC region is the smallest in the West Midlands. As a result just 59 firms were included in the survey which represents just 4.9% of the entire sample. Measured in terms of employment Shropshire emerges as even less significant since it accounts for just 1.2% of the entire workforce covered in this study. These small numbers undermine some analyses while in other cases generalisations are difficult to sustain.

Table 7.5.1 provides insights into the distinctive make-up of the business and professional services sector in this region:

• Single site enterprises dominate (63.6%) of the total. • The majority of organisations are private limited firms (51.4%) but it is sole proprietorship that is significantly over represented (28.0%). • Other business activities is the biggest SIC division (73.4%) but of its constituent groups legal, accounting and business consultancy are well above and labour recruitment well below West Midlands levels. • Enterprises are overwhelmingly small as far as on-site employment is concerned. Only one firm has more than 10 workers. • Long standing firms are slightly over represented but in fact the duration of residence distribution is not very different from the West Midlands as a whole.

Table 7.5.2 cannot be analysed since none of the Shropshire firms reported vacancies that were difficult to fill.

Table 7.5.3 does not offer a lot more information but comment is justified:

• Relatively few Shropshire firms had staff that they believed not to be fully proficient. • Proficiency problems in the professional, administrative and secretarial occupations were of most concern (but the sample sizes are small). • In agreement with the other regions, lack of experience or the fact that staff had only been recently recruited was viewed as the principal cause of proficiency shortcomings. • Unusually, emphasis was placed on the need to improve technical and practical skills and general management skills. Social skills got comparatively low levels of support. • There was no clear pattern in the identification of skills deficiencies thought to harm competitiveness but interesting that none of the top four elsewhere got any support from Shropshire firms. • There was general agreement that the most likely impact of staff not being fully skilled would be to increase operating costs.

Table 7.5.4 reveals something of the attitudes and commitments of Shropshire firms to training:

• The incidence of strategic planning of various types is well below levels in much of the West Midlands although marginally better than the figures for the Hereford and Worcestershire region. • The extent to which training has been provided in the 12 months before the survey is a little low (62.2%), Rather unusually, efforts are concentrated on the existing rather than the whole workforce. • In accord with the other regions, the preferred mode of training is on-the-job and delivered by employees. Private training consultancies are placed a modest second and FE colleges are looked upon more favourably than is typical for the West Midlands as a whole. • private sector training consultancies are the most popular external provider • The most important provider is heavily involved in job specific training and, to a lesser extent, training in new technology. • The need for specialised/job specific training is the most popular reason for choosing an external provider.

Overall, this region is very similar to Hereford and Worcestershire. In both regions small scale, single site, and frequently long established organisations are key features. Modern practice is less evident and training provision is less impressive than elsewhere in the West Midlands. The main difference is that the situation in Shropshire is less extreme.

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Table 7.5.1 Characteristics of firms in the Shropshire LSC region

Shropshire firms All other firms Number % Number % Business Activity (SIC divisions and selected groups) Base: all firms 65 Financial intermediation 3 6.0 101 8.9 66 Insurance & pension funding 5 8.4 57 5.0 67 Activities auxiliary to financial mediation 1 2.4 50 4.4 70 Real estate, renting & business activities 4 7.3 131 11.5 71-73 Computing & Research 1 2.4 25 2.2 74 Other business activities 43 73.4 773 67.9 of which 74.1 Legal, accounting, business consultancy 23 39.1 296 26.1 74.2 Architectural & engineering activities 14 24.5 225 19.8 74.5 Labour recruitment 3 4.9 180 15.9 Years at current premises Base: all firms Less than a year 0 0.0 47 4.2 1 - 2 years 10 17.1 228 20.1 3 - 5 years 14 24.5 248 21.8 6 - 10 years 11 19.6 237 20.9 11 - 20 years 11 19.6 180 15.8 More than 20 years 11 19.3 187 16.4 Don't Know/ Refused 0 0.0 10 0.9 Organisational type Base: all firms Only site 37 63.6 596 52.4 HQ, regional or divisional HQ 7 12.2 165 14.5 HQ elsewhere in UK 12 20.6 354 31.1 HQ outside UK 2 3.5 22 2.0 Legal status Base: all firms Partnership 10 17.1 204 18.0 Sole Proprietorship 16 28.0 167 14.7 A Public Limited Firm 2 3.5 165 14.5 A Private Limited Firm 30 51.4 589 51.8 Number of on-site workers Base: all firms 1 – 10 57 97.9 909 79.9 11 – 24 1 2.1 115 10.1 25 – 99 0 0.0 83 7.3 100+ 0 0.0 31 2.7

Table 7.5.2 Job vacancies of firms in the Shropshire LSC region

Shropshire firms All other firms Number % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 0 0.0 8 38.3 Professional occupations 0 0.0 35 54.5 Associate professionals & technical occupations 0 0.0 20 34.4 Administrative and secretarial occupations 0 0.0 26 32.4 Skilled trades occupations 0 0.0 3 44.3 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 0 0.0 6 21.5 Process, plant & machine operatives 0 0.0 1 26.1 Elementary occupations 0 0.0 1 18.8 Base: firms with difficult to fill Reasons why vacancies difficult to fill vacancies Too much competition from other employers 0 0.0 10 10.2 Not enough people interested in this type of job 0 0.0 13 13.5 Poor terms and conditions offered for post 0 0.0 4 4.2 Low number of applicants with the required skills 0 0.0 47 49.6 SERU, University of Birmingham Page 146 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Low number of applicants with required attitude 0 0.0 20 21.0 Low number of applicants generally 0 0.0 21 22.2 Lack of work experience the company demands 0 0.0 20 20.8 Lack of qualifications the company demands 0 0.0 17 18.4 Poor career progression / lack of prospects 0 0.0 5 5.3 Job entails shift work/unsociable hours 0 0.0 3 3.1 Remote location/poor public transport 0 0.0 5 5.3

Table 7.5.3 Skill needs of firms in the Shropshire LSC region

Shropshire firms All other firms Number % Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 1 3.0 57 5.5 Professional Occupations 3 12.5 54 11.2 Associate Professionals/ Technical Occupations 1 13.4 60 14.1 Administrative and Secretarial Occupations 3 9.6 86 13.3 Sales/ Customer Service Occupations 0 0.0 33 14.9 Personal Service Occupations 0 0.0 3 12.7 Elementary Occupations 0 0.0 8 8.4 Base: firms with at least one occupation not fully Occupations with skills gap of most concern proficient Managers 1 20.0 49 22.3 Professional Occupations 3 40.0 49 22.5 Associate Professionals/ Technical Occupations 1 20.0 53 24.0 Administrative and Secretarial Occupations 3 40.0 81 36.9 Sales/ Customer Service Occupations 0 0.0 33 15.1 Personal Service Occupations 0 0.0 3 1.2 Elementary Occupations 0 0.0 5 2.3 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 1 20.0 54 24.4 Recruitment problems 0 0.0 40 18.4 High staff turnover 1 20.0 19 8.5 Inability of workforce to keep up with change 1 20.0 41 18.9 Lack of experience or their being recently recruited 6 80.0 149 68.0 Staff lack motivation 3 40.0 46 21.0 Other 0 0.0 2 0.7 No particular causes 0 0.0 38 17.1 Skills needing improvement Base: occupations experiencing skills Communication skills 3 33.3 117 43.0gaps Technical and practical skills 7 83.3 113 41.3 Customer handling skills 0 0.0 115 42.3 Practice/ general management skills 6 66.7 108 39.6 Personal skills (motivation, ability to fit in) 1 16.7 111 40.6 Problem solving skills 0 0.0 112 40.9 Office admin. Skills 1 16.7 105 38.3 Team working skills 0 0.0 96 35.2 General IT skills (word processing, email, internet) 1 16.7 87 31.9 Leadership skills 0 0.0 80 29.4 Data analysis 0 0.0 73 26.9 IT professional skills 4 50.0 67 24.5 Accounts/ finance 3 33.3 57 20.9 Technical skills related to the occupation 3 33.3 55 20.1 Human resource management skills 0 0.0 47 17.2 Literacy 3 33.3 36 13.3 Numeracy skills 1 16.7 29 10.8 Foreign language skills 0 0.0 22 8.2 No particular skills 0 0.0 20 7.3 Other skills 1 16.7 11 4.0 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 0 0.0 33 15.2 SERU, University of Birmingham Page 147 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Customer handling skills 0 0.0 23 10.3 Sales ability 0 0.0 22 10.2 Communication 0 0.0 22 10.1 IT / computer skills 1 20.0 14 6.1 Technical skills 1 20.0 12 5.5 Office administration skills 1 20.0 8 3.7 General lack of experience 1 20.0 6 2.7 Accounting/ finance 0 0.0 7 3.2 Numeracy 1 20.0 5 2.3 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps Loss of business or orders to competition 0 0.0 62 28.1 Delays developing new products or services 1 20.0 60 27.3 Difficulties meeting customer service objectives 3 40.0 74 33.8 Difficulties meeting required quality standards 1 20.0 48 22.0 Increased operating costs 6 80.0 95 43.4 Difficulties introducing new working practices 1 20.0 33 15.2 No particular problems/ none of the above 0 0.0 60 27.2

Table 7.5.4 Workforce training by firms in the Shropshire LSC region

Shropshire firms All other firms Number % Number % Incidence of strategic planning Base: all firms Has a business plan 32 54.9 829 72.9 Has a training plan 22 37.8 689 60.5 Has a training budget 22 37.8 527 46.4 Has annual performance review or appraisal system 24 41.3 811 71.3 All of the above 11 19.6 402 35.3 None of the above 16 26.9 141 12.4 Training conducted during past 12 months Base: all firms Arranged training 36 62.2 769 67.6 mainly for Existing workforce 25 42.7 275 24.2 New recruits 0 0.0 26 2.3 Both 11 19.6 467 41.1 Have not arranged training 22 37.8 369 32.4 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 47 80.4 908 79.9 On the job - delivered by external provider 20 34.3 289 25.4 Off the job - delivered by employees 16 26.9 322 28.3 Off the job - delivered by a training consultancy 26 44.0 333 29.3 Off the job - delivered by a FE college 13 22.0 234 20.5 Other method 0 0.0 15 1.4 No preference 7 12.2 126 11.1 For existing workforce On the job - delivered by employees 40 68.2 876 77.0 On the job - delivered by an external provider 22 36.7 347 30.5 Off the job - delivered by employees 14 24.5 303 26.6 Off the job - delivered by a training consultancy 22 36.7 435 38.3 Off the job - delivered by a FE college 17 29.4 239 21.1 Other method 0 0.0 17 1.5 No preference 6 9.8 115 10.2 Off job training providers Base: all firms using external training Further education provider 4 15.0 153 providers30.6 Higher education provider 6 20.0 97 19.4 Private sector training consultancy 19 65.0 371 74.0 Public sector training provider 7 25.0 67 13.4 Other training company 3 10.0 64 12.7 Training by most important provider Base: all firms using external training providers SERU, University of Birmingham Page 148 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Health and safety training 6 20.0 195 38.9 Induction training 3 10.0 121 24.2 Supervisory training 1 5.0 145 28.9 Management training 7 25.0 218 43.5 Training in new technology 14 50.0 220 44.0 Training in foreign languages 0 0.0 11 2.2 Job specific training 23 80.0 333 66.5 None of the above 0 0.0 26 5.1 Base: all firms using external training Top ten reasons firms use particular external providers providers Require specialised/ job specific training 9 30.0 57 11.3 They offer the relevant training/ qualifications 0 0.0 58 11.7 Has the best expertise in this subject/ best trainer 3 10.0 36 7.1 No-one else does training/ lack of alternative options 3 10.0 33 6.6 Course is tailored to our needs 1 5.0 32 6.5 Easily accessible/ convenient 0 0.0 31 6.2 Head office decision/company policy/not our 0 0.0 26 5.3 decision Due to regulations/ professional or legal requirement 1 5.0 25 4.9 No in-house training available 0 0.0 22 4.5 Low cost/ free/ value for money 0 0.0 22 4.5

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IN-DEPTH INTERVIEWS: SHROPSHIRE LSC

The in-depth interviews support the findings of the telephone survey as they highlight the dominance of small BPS firms in this county. Six in-depth interviews were held with companies employing less than ten persons. There are a number of commonalities amongst this group that are worth taking into consideration in the development of a skills policy framework in this county:

RECRUITMENT

Shropshire BPS firms tend to recruit staff from a small pool of local people that are known to them. For example an accountancy practice noted that:

‘the recruitment here, I would say exclusively comes through people that I know’ (SHO1/Accountant-1-10) or a quantity surveyor observed:

‘we have only taken on three people in seven years. Two of those have come from personal contacts and one has come in from advertisements’ (SH04/Arch-1-10)

Recruitment practices reflect the small size of these firms as well as the small size of the local BPS community. It also means that the BPS community is extremely close. For example an accountancy firm located in Oswestry noted that:

‘Oswestry has a population of about 12,000 people . . . in the town we probably have a dozen accountancy practices, so it’s not unusual for each of us to know who works where and indeed when hiring people you often hire somebody who’s already in a similar job in a competing firm’ (SH01/Accountant/1-10).

GENERALIST FIRMS

The absence of significant concentrations of BPS firms in rural areas and small market towns differentiates counties like Shropshire from places that have significant concentrations of BPS professionals. This means that it is difficult for local BPS firms to develop specialist expertise as the client base does not support this level of activity.

ABSENCE OF SUPPORT STAFF

The majority of the firms in the Shropshire sample do not employ support staff; with the exception of law firms, all employees generate fee income. This reflects the fact that many of these firms had been established in the last five years. Thus, an accountant states that:

‘the support staff are fee earners as well. We have got someone who does it, but they do a bit of both (SHO5/AAC/1-10).

For another accountancy firm employing three-full time and two part-time professionals the relationship between the size of the firm and the requirement for support staff was an issue.

Thus, in this company:

‘everybody’s qualified within their own discipline and we have no support staff – the professional staff will answer the phone, will type the letters and stuff, and I mean we are primarily geared towards everybody being fee generating. I have worked in larger firms before, and they do have dedicated reception people, typing people and other support staff, but I can’t see that changing in the lifetime of this firm – I think people like to have a bit of variety in their daily life, and certainly don’t mind the distraction of doing something slightly and even mundane’ (SHO1/Acc/1-10).

TRAINING

Training reflects the demands placed upon professionals working in the multi-tasking environment of small BPS firms. Much of the training is on-the-job and is undertaken to meet the demands of CPD. The constant distractions experienced within small firms means that many prefer to go on courses as:

‘if you don’t put yourself on a course, you have a tendency to put it off’ (SHO5/Accountant/1-10).

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Many of these courses are organised by the professional bodies or by private sector training providers. Professional training is taken extremely seriously, but support staff training tends to be ad hoc and responsive to need rather than a process of proactive skill development.

One accountancy firm subscribes to an external course provider who sends the firm a CD-ROM every month. This has sound, visuals, and training notes and it means that they can sit in their office and play on the computer.

However, the company recently sent two staff members on a half day training course. This was run by a private trainer 80 miles away from the firm’s premises. This company is on the mailing list of quite a number of course providers, but:

‘never in all my years of experience have I come across any courses such as what I need to go on that are provided by a college of Further Education. I am not even on their mailing list – I don’t think that the animal exists. What happens at the moment is that external providers tend to be commercial organisations who hire a venue and a course speaker and that course speaker is a professional lecturer who travels around the country. So I don’t think that it would be feasible to provide it at local level. No I can’t see that it would be commercially viable’ (SH01/Accountant/1-10)

It is important to note that previous experience of a provider tends to influence, and in many cases determines, future decisions. This one accountant had been trained by a private company that was one of the largest training providers in this area. Subsequently, other professionals in the firm used the same provider. But the company was considering recruiting a 16-18 year old that they will probably send to the local FE collage to obtain ATT qualifications (SHO5/ACC/1-10).

The legal firm employs specialist legal training providers, like Central Law Training. There is always training available in the firm, and if it is not available internally then they use external courses. They have never used FE providers.

LOCATION

Shropshire’s BPS community suffers from many of the locational difficulties that are experienced by other rural counties in the West Midlands.

First, the availability of local training is limited and many professionals have to travel to Birmingham and London to undertake CPD activity. Support staff training is available in key centres, but note the importance of multi-skilling in these firms and the subsequent reduction in the requirement for support staff.

Second, Shropshire has difficulties with attracting staff and retaining young professionals. The age profile of many of the firms appears to suggest processes of spin-out have occurred in the county leading to the establishment of new practices in the area. It might also suggest that Shropshire people are returning to establish local firms after a period spent in one of the key BPS locations (Birmingham, London, etc).

Shropshire’s difficulty is that:

‘the majority of the major [BPS] offices are in Birmingham and Wolverhampton, and therefore, they are an automatic drain on whatever resources are available locally. There is nothing you can do about this. You can only offer them a better environment and sometimes comparable pay’ (SH04/ARCH/1-10).

COMPETITIVE ADVANTAGE

Shropshire firms consider that their competitive advantage rests on speed of response as well as be able to:

‘spend a lot more time on each individual job than comparable firms’ (SHO1/Accountant/1-10) and

‘doing an absolutely thorough job that is to the benefit of our client’ (SH04/ARCH/1-10)

This means providing a personal service as well as being able to prioritise work. These advantages are not unique selling points held by these companies. The majority of Shropshire BPS firms are providing expertise to local clients and are not directly in competition with larger practices.

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FOCUS GROUP, SHROPSHIRE LSC, TELFORD (22/11/05)

The following is a summary of the topics and issues discussed.

1. Generic training is available locally, but not advanced professional training. Local training is of variable quality and provision is geographically uneven.

2. The key BPS skill is communication skills – understanding of the ways in which people interact. Marketing training is important, but this is only available in specific locations. The general level of training is good in this area, especially NVQ Level 2, but BPS require Levels 3 & 4. Local FE colleges provided this 4 years ago, but no longer due to financial pressures. Class sizes were not economic and the expertise was lost from the local FE colleges.

3. BPS firms tend to take a short term firm to training management.

4. Shropshire firms tend not to develop the expertise, but to import trained people into the area:

5. ‘Is the skill issue one of geography? Graduates are recruited from outside the area. Therefore Shropshire’s sleepiness may be an advantage as it attracts people. The issue is importing skills and keeping them here. We educate our children well and they go away to University and do not come back. They only come back when they have children’.

6. ‘Shropshire is a sleepy county. It has no university. The issue is core training needs and the training is not there at the moment. There is a need to profile the firms in the region. They have their own needs and these will be different to other regions’

7. ‘Shropshire is not sleepy; Telford is a growth pole for the region. There is a large difference between Telford and the rest of Shropshire’.

8. Universities provide students with subject knowledge, but are poor in developing the softer skills that are so essential for BPS firms.

9. Important to remember that different jobs within BPS firms require different skills. Thus, one firm grades employees as: finders, minders and grinders. Grinders never meet clients. Not all people have the ability or personality to deal with clients and these employees become grinders. But note the number of grinders in BPS firms is shrinking as more employees are becoming fee earners.

10. The future of a BPS firm is in its own hands. It can provide the training and attract the right staff. However, it is difficult to attract higher skilled people into the area. Paying enhanced salaries does not attract them.

11. Telford is a problem. It lacks the street life of Birmingham which is booming and it is attracting the best BPS people:

12. ‘BPS professionals do not want to sit in front of a log fire, but be out enjoying city culture – they thrive on it’.

13. Shropshire needs to attract and retain bright young things but these go to Birmingham and London.

14. Shropshire needs a pull policy to attract people to the area – local improvements need to be targeted at attracting and retaining highly skilled people:

‘For top notch solicitors we have to pay the going rate and the issue is attracting them to Telford. If we can get them here it is not a problem. The majority of our lawyers come out of Birmingham’. ‘Does it matter if we have to import the expertise? Does it matter if they have to pay more? It just means that the people have to add more value to the business’.

15. BPS managers need to be trained in how to identify the training needs of their employees. They need to become professional managers. Most BPS managers last experienced FE colleges some 20 years ago and they have memories of hard benches and poor quality training. They need to be brought up-to-date with current provision.

16. Good local trainers are poached by regions that can pay higher salaries.

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17. For the business it does not matter if training is provided by private or public trainers. The key issue is quality and cost. There are some very bad private trainers. One looks at the quality first and the location of the provision does not really matters.

18. FE colleges – the key problem is one of perception. Employers are unaware of what is available. FE has too wide a spectrum of training provision and not enough targeted at the needs of local business.

19. London is the base for much professional training. Professional training is regulated and frequently provided by the professional bodies.

20. ‘Twenty years ago we did not expect BPS to have developed social skills. But now to compete the key skills are interpersonal skills and relationship development. The freedom to advertise that was introduced some years ago means that social skills have come to the fore’.

‘Much of this training comes via experience. Most graduates are very poor when they come out of University, but they are very good at copying others and getting up to speed’.

21. ‘The conurbation has got so many people. Telford has not got a large office pool. If people are good they will stay in their job. It is much more difficult to recruit in Telford. We needed to employ a market research firm and we had to go to London to obtain this expertise. It was impossible to find it locally’.

POLICY ISSUES

22. FE colleges have a captive market of young people. They don’t and do not have to market their services. This is a key problem as BPS firms are unaware of the training that is available from them. The region requires a one-stop- shop that employers can use to identify local training courses. All training providers should be included in the one- stop-shop.

23. The BPS COG has a key role to play as it provides a regional voice for BPS as well as consistency.

24. Shropshire has its own regional identity that it needs to protect and develop. What happens around firms is extremely important as it attracts and encourages people to stay in the area.

25. Need to encourage a dialogue between the BPS COG and training providers.

26. Access to training is important. People should not be forced out of the county to non-local training providers. Shropshire has no direct train link with London and the E-W roads are poor. Providers should be forced to provide local training.

27. There needs to be more information regarding FE provision. FE and HE suffer from poor marketing. Telford’s problem is one of marketing – attracting people into the area.

28. BPS needs specific training for industry – training that is fitted around the needs of BPS firms.

29. The acquisition of skills is only part of the story. People also need to have the confidence to exploit the skills they have obtained.

30. The public private training divide is an artificial one – the issue is quality and cost.

31. ‘We need a course on client relationship management – this is not available locally – we have to go to London for this’.

32. ‘Focus groups are a training opportunity. They open peoples’ eyes to what can be done and they develop a dialogue within the BPS cluster’.

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STAFFORDSHIRE LSC REGION

The Staffordshire LSC region contains 110 of the survey firms, making it the third largest of the six regions. Collectively these represent 9.2% of the entire sample and provide employment for 1,423 people (6.9% of the total).

The characteristics of firms in the Staffordshire region largely reflect West Midlands patterns as revealed by data in Table 7.6.1:

• The majority of firms occupy a single site (60.1%). • 53.9% of firms are private limited companies and this is similar to the figure for the rest of the study area. • Firms are small – 76.1% employ 10 or less people – but the number in the 25-99 category is relatively high. • Other business activities dominate as usual and its composition is similar to that found in the rest of the West Midlands. • The duration of residence distribution is typical of the West Midlands as a whole.

Analysis of the job vacancy data is hampered by few firms recording hard to fill vacancies (Table 7.6.2). However, it is worth noting that “low number of applicants” was the most cited reason why vacancies were difficult to fill.

Information about the skill needs of Staffordshire firms is set out in Table 7.6.3.

• Associate professionals and technical occupations is the category Staffordshire firms nominated most often as one in which staff lack full proficiency. However, the problem was only marginally more serious than in the professional and administrative occupation categories. • Staffordshire firms are more concerned about skills gaps in the manager, professional and associate professional categories than is the case in the rest of the West Midlands. The position is reversed for the administrative and secretarial occupations. • “Lack of experience/recent recruitment” again emerges as the single most important of staff lacking proficiency. Staffordshire gives greater weight to “lack of motivation” than is typical for the West Midlands • There is only broad correspondence between the Staffordshire and rest of West Midlands orderings of skills needing improvement. Notable differences are that Staffordshire firms seem to downplay practical skills while emphasising group work (cf team working, leadership and problem solving). • Staffordshire firms seem to more readily accept that skill deficiencies are a threat to competitiveness. • Inadequate communication skills get top billing with poor personal skills in second place. • Insufficient skill is viewed as likely to increase operating costs but obstacles to introducing new working practices is another consequence feared.

Training practice and preferences for Staffordshire are revealed by Table 7.6.4.

• In terms of the incidence of strategic planning, the pattern in Staffordshire is similar to the region as a whole. Slightly more firms use all four planning techniques and slightly less uses none, than is found elsewhere. • The proportion of firms arranging training (64.9%) is marginally lower than the figure for the rest of the region. (67.6%). • As elsewhere, on-the-job training delivered by employees is easily the most popular mode. All the other options get a similar but much lower level of support. • Private sector consultancies are the most frequently used type of external provider. FE colleges are in second place at 37.2%. This is the highest figure for any of the regions. • The most important provider is critical for job specific training but in Staffordshire much less important than normal for management and new technology training. • The main reason for choosing an external provider is that they offer relevant training/qualifications.

Overall, Staffordshire conforms quite closely to West Midlands averages but there are some idiosyncrasies such as the high ratings given to group skills.

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Table 7.6.1 Characteristics of firms in the Staffordshire LSC region

Staffordshire firms All other firms Number % Number % Business Activity (SIC divisions and selected groups) Base: all firms 65 Financial intermediation 5 4.5 100 9.2 66 Insurance & pension funding 5 4.5 57 5.2 67 Activities auxiliary to financial mediation 9 8.1 43 3.9 70 Real estate, renting & business activities 12 11.0 123 11.3 71-73 Computing & Research 1 0.7 26 2.4 74 Other business activities 78 71.2 737 67.9 of which 74.1 Legal, accounting, business consultancy 26 23.5 294 27.0 74.2 Architectural & engineering activities 26 23.7 214 19.7 74.5 Labour recruitment 20 18.2 163 15.0 Years at current premises Base: all firms Less than a year 5 4.1 43 3.9 1 - 2 years 17 15.4 221 20.4 3 - 5 years 28 25.4 235 21.6 6 - 10 years 22 19.5 227 20.9 11 - 20 years 22 20.0 169 15.6 More than 20 years 16 14.7 182 16.8 Don't Know/ Refused 1 0.8 9 0.8 Organisational type Base: all firms Only site 66 60.1 567 52.2 HQ, regional or divisional HQ 14 13.0 158 14.6 HQ elsewhere in UK 29 26.2 337 31.0 HQ outside UK 1 0.7 24 2.2 Legal status Base: all firms Partnership 23 20.5 192 17.7 Sole Proprietorship 14 13.1 169 15.5 A Public Limited Firm 12 10.9 155 14.2 A Private Limited Firm 59 53.9 560 51.6 Number of on-site workers Base: all firms 1 - 10 84 76.1 883 81.3 11 - 24 10 9.3 106 9.7 25 - 99 14 12.6 69 6.3 100+ 2 2.0 29 2.7

Table 7.6.2 Job vacancies of firms in the Staffordshire LSC region

Staffordshire firms All other firms Number % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 0 0.0 8 40.1 Professional occupations 1 21.8 34 57.6 Associate professionals & technical occupations 2 44.0 18 32.5 Administrative and secretarial occupations 2 33.8 24 31.7 Skilled trades occupations 0 0.0 3 44.3 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 0 0.0 6 23.5 Process, plant & machine operatives 0 0.0 1 26.1 Elementary occupations 0 0.0 1 18.8 Base: firms with difficult to fill Reasons why vacancies difficult to fill vacancies Too much competition from other employers 0 0.0 10 10.8 Not enough people interested in this type of job 2 35.3 11 12.3 Poor terms and conditions offered for post 0 0.0 4 4.4 Low number of applicants with the required skills 2 47.0 44 49.7 SERU, University of Birmingham Page 155 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Low number of applicants with required attitude 0 0.0 20 22.2 Low number of applicants generally 3 53.0 18 20.4 Lack of work experience the company demands 0 0.0 20 22.0 Lack of qualifications the company demands 1 11.8 17 18.8 Poor career progression / lack of prospects 0 0.0 5 5.6 Job entails shift work/unsociable hours 0 0.0 3 3.3 Remote location/poor public transport 1 11.8 4 4.9

Table 7.6.3 Skill needs of firms in the Staffordshire LSC region

Staffordshire firms All other firms Number % Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 8 7.8 51 5.2 Professional Occupations 7 15.8 49 10.8 Associate Professionals/ Technical Occupations 7 20.4 54 13.5 Administrative and Secretarial Occupations 8 14.2 81 13.1 Sales/ Customer Service Occupations 2 11.3 31 14.6 Personal Service Occupations 0 0.0 3 13.0 Elementary Occupations 1 5.2 7 8.4 Base: firms with at least one occupation not fully Occupations with skills gap of most concern proficient Managers 7 32.0 43 21.2 Professional Occupations 7 33.9 45 21.9 Associate Professionals/ Technical Occupations 7 31.4 47 23.0 Administrative and Secretarial Occupations 6 28.6 78 37.9 Sales/ Customer Service Occupations 2 9.4 31 15.2 Personal Service Occupations 0 0.0 3 1.3 Elementary Occupations 1 4.1 4 2.0 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 4 20.4 51 24.7 Recruitment problems 4 17.6 36 17.8 High staff turnover 3 13.5 17 8.4 Inability of workforce to keep up with change 5 24.0 38 18.4 Lack of experience or their being recently recruited 14 62.8 141 68.9 Staff lack motivation 7 30.6 42 20.6 Other 2 6.9 0 0.0 No particular causes 3 13.5 35 16.9 Skills needing improvement Base: occupations experiencing skills Communication skills 13 42.1 107 42.8gaps Technical and practical skills 11 37.8 108 43.1 Customer handling skills 13 41.9 103 40.9 Practice/ general management skills 11 36.8 103 40.8 Personal skills (motivation, ability to fit in) 12 38.7 100 40.0 Problem solving skills 16 51.8 96 38.2 Office admin. Skills 10 31.4 96 38.4 Team working skills 14 46.6 82 32.6 General IT skills (word processing, email, internet) 6 21.3 82 32.6 Leadership skills 13 42.1 67 26.9 Data analysis 8 27.7 65 25.9 IT professional skills 6 20.4 65 25.9 Accounts/ finance 8 25.3 52 20.8 Technical skills related to the occupation 7 23.1 51 20.2 Human resource management skills 8 25.1 39 15.6 Literacy 6 19.4 33 13.3 Numeracy skills 3 11.5 27 10.9 Foreign language skills 4 12.8 18 7.4 No particular skills 3 10.5 17 6.6 Other skills 1 3.0 12 4.6 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 4 17.1 30 14.5 SERU, University of Birmingham Page 156 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Customer handling skills 2 11.0 20 9.9 Sales ability 3 12.4 20 9.6 Communication 4 18.7 18 8.8 IT / computer skills 2 8.3 13 6.4 Technical skills 2 10.7 11 5.4 Office administration skills 1 4.1 9 4.2 General lack of experience 1 2.8 7 3.2 Accounting/ finance 1 4.1 6 3.0 Numeracy 0 0.0 7 3.2 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps Loss of business or orders to competition 6 28.6 55 27.0 Delays developing new products or services 7 33.0 54 26.4 Difficulties meeting customer service objectives 4 18.7 73 35.6 Difficulties meeting required quality standards 4 18.7 46 22.2 Increased operating costs 11 49.3 90 44.0 Difficulties introducing new working practices 8 35.0 27 13.2 No particular problems/ none of the above 5 24.2 54 26.5

Table 7.6.4 Workforce training by firms in the Staffordshire LSC region

Staffordshire firms All other firms Number % Number % Incidence of strategic planning Base: all firms Has a business plan 78 70.6 783 72.1 Has a training plan 63 57.1 648 59.7 Has a training budget 46 42.0 503 46.3 Has annual performance review or appraisal system 81 73 754 69.4 All of the above 39 35.2 375 34.5 None of the above 13 12.0 144 13.2 Training conducted during past 12 months Base: all firms Arranged training 71 64.9 734 67.6 mainly for Existing workforce 31 28.1 269 24.8 New recruits 2 2.2 24 2.2 Both 38 34.6 440 40.6 Have not arranged training 39 35.1 352 32.4 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 80 72.3 876 80.7 On the job - delivered by external provider 23 20.6 286 26.4 Off the job - delivered by employees 24 22.2 313 28.9 Off the job - delivered by a training consultancy 27 24.7 331 30.5 Off the job - delivered by a FE college 25 22.8 221 20.4 Other method 1 0.5 15 1.4 No preference 19 17.4 114 10.5 For existing workforce On the job - delivered by employees 74 67.7 842 77.5 On the job - delivered by an external provider 26 24.1 342 31.5 Off the job - delivered by employees 28 25.4 289 26.6 Off the job - delivered by a training consultancy 39 35.1 418 38.5 Off the job - delivered by a FE college 24 21.5 233 21.5 Other method 2 1.4 15 1.4 No preference 19 16.9 103 9.5 Off job training providers Base: all firms using external training Further education provider 16 37.2 142 providers29.1 Higher education provider 8 18.2 95 19.5 Private sector training consultancy 32 75.0 357 73.4 Public sector training provider 5 12.3 69 14.2 Other training company 4 9.0 63 12.9 Training by most important provider Base: all firms using external training Health and safety training 17 39.5 184 providers37.8

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Induction training 11 26.8 113 23.2 Supervisory training 13 31.5 133 27.3 Management training 12 27.9 213 43.8 Training in new technology 15 35.8 219 45.1 Training in foreign languages 0 0.0 11 2.3 Job specific training 30 70.7 326 67.0 None of the above 2 3.5 24 5.0 Base: all firms using external training Top ten reasons firms use particular external providers providers Require specialised/ job specific training 6 14.3 59 12.2 They offer the relevant training/ qualifications 7 15.8 52 10.6 Has the best expertise in this subject/ best trainer 3 7.1 36 7.3 No-one else does training/ lack of alternative options 4 9.6 32 6.5 Course is tailored to our needs 2 5.6 31 6.5 Easily accessible/ convenient 1 3.4 30 6.1 Head office decision/company policy/not our 3 6.3 24 4.8 decision Due to regulations/ professional or legal requirement 2 5.5 24 4.9 No in-house training available 3 7.2 19 4.0 Low cost/ free/ value for money 2 5.6 20 4.1

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IN-DEPTH INTERVIEWS: STAFFORDSHIRE LSC

Twenty-six in-depth interviews were held in Staffordshire with 21 firms employing less then 10 people, two between 11 and 24 and four between 25 and 99.

LOCATION

Staffordshire experiences the same locational difficulty that was identified in Hereford and Worcester, Shropshire and also Coventry and Warwickshire. This concerns the attraction and retention of professional employees. There is a related considerations which is the relative size of the BPS community in relation to that of Birmingham or Manchester. This means that it is difficult, and in some cases impossible, to recruit locally. One mid-sized corporate recovery specialist (26 employees) had difficulties recruiting:

‘on the professional side, the biggest hindrance that we have is that there’s special areas that we work in. There are no qualified people in and around Stoke on Trent and North Staffs who are qualified to do insolvency; generally they are in Manchester or Birmingham. And they won’t relocate to Stoke on Trent, because of the reputation (ST14/Auxfin/25-99).

A surveyor located in Stoke on Trent but with offices in Worcester and Birmingham made a much more explicit statement regarding the problems experienced in attracting professionals to the area. This company was having difficulties in recruiting an additional surveyor. The firm is:

‘looking for another potential surveyor at the moment, but because they’re currently entering such a small market, there are only a limited amount of people who work locally that would be interested in moving. And it’s not the easiest of places to attract people. They’re working in Birmingham and Manchester, why would they want to go and work in Stoke on Trent? It’s not the most sexy location. If we’re looking to recruit in the Birmingham office, it is easier because there must be fifty firms of surveyors within Birmingham city centre, and the general area. So there’s a lot more people to go round. A lot more people there to move’ (ST21/Arch/1-10).

ORGANIZATIONAL FORMS

Staffordshire contains a diverse BPS community. It has a collection of specialist small firms, many of which employ few support staff and provide services to clients by drawing upon the expertise of self employed consultants/associates. However, the branch offices of quite large service providers are also located within the area. It is thus possible to segment the supply of BPS in into five types:

1. Micro single person firms with no employees. 2. Small single office local firms. 3. Small firms with more than one office. 4. Branch offices of medium-sized firms. 5. Branch offices of large firms.

The in-depth interviews clearly demonstrate that staff appraisal systems and training needs analysis are features of larger organisations and especially multi-office enterprises. More branch office establishments were interviewed in Staffordshire then in Shropshire, Coventry and Warwickshire and Hereford and Worcester.

SKILLS SHORTAGES

Skills shortages in Staffordshire are related to place-based perception of the area, or perhaps more correctly the enhanced attractions of other areas. The primary difficulty is in the recruitment of professional staff, but some companies also highlight support staff issues.

Larger companies in the sample have a dual recruitment system. On the one hand, professional staff are recruited nationally using company websites. On the other hand, support staff are recruited using the local press as:

‘we are likely to find someone who is local to the area’.

Nevertheless, the local adverts leave the company:

‘inundated with applications, the majority of which are not suitable for the position, but this is where our filtering process comes into play’ (ST14/Auxfin/25-99).

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Difficulties in recruiting staff are attributable to two factors.

First, identifying individuals with the right skill set. This includes combinations of expertise related to technical competence, softer skills as well as attitude to work.

Second, local labour markets mirror the needs of local businesses. Thus, the availability of a pool of potential employees is closely related to the presence of similar firms in a locality. A relationship exists between the ability to recruit staff and the density of firms in an area. Thus, a branch office of a provider of commercial insurance to SMEs found it difficult to recruit staff:

‘partly because of the departure of insurance companies from around here . . . we are isolated’ (ST24/NLI/25-99).

For this company the skills problem rested on two pillars. First, the number of people who had failed to achieve five GCSEs; this was the firm’s minimum entry qualification. Second, applicants who had failed to acquire the right levels of experience and qualifications.

TRAINING

Training provision in BPS firms in Staffordshire can be classified into four types.

First, small BPS firms only have the resources (usually time) or the inclination to provide limited training and often only sufficient to meet the requirements of CPD.

Second, companies that provide only on-the-job training for support staff and CPD time for professional staff.

Third, training that is integrated into the weekly activities of a company that is determined by an interaction between the HQ of the firm, branch office and regulator or professional body. Thus, the manager of a local building society noted that training provision was:

‘very much down to myself. Well I mean we have regular one to ones where, you know, we pick and do coaching and development sessions on, could be anything, you know, any aspect of the job. But the company also, you know, they do send, we do have half an hour every Wednesday morning where we get directives sometimes, you now for the legal stuff that we have to do every year. Like Health & Safety and the money laundering aspects. . . . So yes the company does instigate an awful lot, which is a legal requirement and also comes up with, you know, when we have new promotions and stuff like that - then we get a pack sent down. And I mean I’ve just been through a 4 week, 4 x 1 day training courses for Developing the Mortgage Advisor, because obviously we tend to put a big onus upon what the mortgage business is’ (ST28/Bank/1-10).

This branch had never used FE as a training provider as it considered that it was targeted at young people.

Fourth, specialist BPS firms that require highly specialist training for professional and technical staff as well as training for support staff. Larger companies and branch offices took a professional and proactive stance towards the identification of suitable training providers. A large multi-site engineering consultancy noted that:

‘Because of the nature of the training that we look for, it will be anywhere if it is the right course. We do have regular contact with the big training organisations . . . , but at the same time we have had people who are quite obviously running one man outfits, going round and training in specific things, for them to come in and do things. If it is the right thing to do, location is not necessarily an issue, who is providing it isn’t necessarily an issue and, to be honest, some of us as managers are almost encouraged to go and try out training courses in order to feedback to our central HR who administer the training provision and say how was that, and we do have a fairly lengthy and detailed feedback questionnaire on training courses that go in to central HR and the HR admin who deal with training, when a training request comes in, they will look at the ones we have done before and find where the good feedback has been on who has been providing that particular type of training (ST12/Arch/25-99).

A number of Staffordshire firms had developed graduate entry schemes. An engineering consultancy firm sponsored:

‘. . . about 5 or students going through at any one time at various parts of their university education. We take on summer placement students, usually mainly 3 or 4 a year, and we usually then try and bring them in after they have graduated’ (ST12/Arch/25-99).

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This firm also encouraged employees to acquire MSc or MBA degrees and also operates a staff appraisal scheme in which objectives are reviewed, evaluated and appraised and training needs identified. During this process:

‘the line managers collate the training requirements from the appraisal process and find out where the priorities lie, feed that back up into technical management where the budget is held for training, and then that is then prioritised across groups and if there are lots of people who need the same training and then we will do a block booking or we will bring somebody in to do it, and if its individuals and we say that person needs to do that, then we get it sorted (ST12/Arch/25-99).

The focus of the training is on technical expertise whilst more formal management training (MBA etc) is left to the individual and it really depends on their motivation. The company contributes towards the cost and will also pay for training that might be of marginal relevance to the company. One employee was reading for an Open University degree in French. This is not directly related to the firm’s needs, but the firm does have French clients but:

‘in the pure sort of “is there a business case?” then possibly not, but its not like we are going to deny somebody an education on the basis that we can’t actually see where the bean counters are going to put the numbers, and those sorts of things are quite important. (ST12/Arch/25-99).

A commercial surveyor with offices in Birmingham, Worcester and Stoke on Trent organizes an annual internal conference for its surveyors. This company employs 25 surveyors (2 based in Stoke on Trent). According to the company:

‘we have a conference day once a year, where all the surveyors go off to a hotel and all that. The location changes; it was in Shrewsbury this year, and Worcester last year. In and around the Midlands. But often we have a training element to that day as well. We’ve had external companies come in and give training. They’re very general because we’ve got all the surveyors there, but things like presentation skills, and sales techniques. General skills that we all need. Rather than specific needs to a particular surveyor’ (ST21/Arch/1-10).

FE colleges were used by some firms for the provision of support staff training or for training paraprofessionals, for example accountancy technicians (ST08/ACC/1-10). Specialist training and CPD training was either obtained via the professional bodies or from private trainers. Some firms argued that their skills deficiencies could only be remedied by on-the-job training especially in BPS functions that revolved around people-based skills.

A recruitment agency argued that they did not use external training providers:

‘because a lot of skills in recruitment come from experiences, it is nothing in a text book you can teach somebody really and I think bar just shadowing someone and being mentored by someone is the best performer, people have either got it or they haven’t because a lot of it is about attitude and motivation, it is very sales orientated, you can give someone text….but they have got to be motivated and sort of have that drive anyway. I don’t think you can teach anybody those skills, it has got to be something within which is something that we sort of pick out at recruitment level so the guys are more than adequate, they have got that but we just need to give them the experiences which we do through shadowing so I think that is why it is done internally. And the basic sort of legalities that they need to understand is all in front of them on a PC anyway (ST26/Rec/1-10).

Another small recruitment company (one office, 5 employees) encouraged training. It uses external training providers (day release) as well as internal training that is undertaken by the owner/manager. The firm has:

‘meetings every Monday and we say “well, what went wrong this week” and “what was good this week” and if something went wrong and was preventable because of lack of knowledge then [the owner] will make sure that that it is straightened out and is taught so [the owner is] constantly training (ST16/Rec/1-10).

RECRUITMENT

There are four ways in which BBP firms recruit employees in Staffordshire.

First, a small number of companies recruit via the Job Centres (ST17/Adv/11-24), but this tends to be for less technical and more manual BPS employees, for example for outdoor advertising operatives, as well as for support staff (secretarial) (ST25/Legal/1-10).

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Second, word of month and existing contacts are used by both small and large companies. In most cases this is an informal system, but in some companies it has been built into their formal recruitment system. One company has:

‘a personal incentive scheme for referrals, where we pay a not insignificant amount of money to members of staff who can introduce people they already know, as long as those people stay for their probationary period of 6 months’ (ST12/Arch/25-99).

Another firm noted that:

‘if we were looking for a surveyor in Stoke, I know the majority of surveyors in the area who are rated and those who aren’t. Initially you would look at people working locally. We have used recruitment agencies in the past as well (ST21/Arch/1-10).

Third, recruitment agencies are used by large firms as well as by firms that are establishing new branch offices. Large firms are much more sophisticated than smaller firms; many of the smaller firms have limited experience and frequently no experience of recruiting employees. Larger firms were also participating in university recruitment fairs (Oxford, Cambridge and Durham (ST12/Arch/25-99).

Fourth, medium-sized and larger firms also advertise on their own websites. A branch office of a corporate recovery specialist with an HR function based in Manchester and a ‘peoples’ centre’ in London advertises positions internally and subsequently on its website. They argue that for professional staff the firm must search nationally whilst support staff are recruited locally using the local press. The website attracts a wide range of applicants but these are filtered by simple English and Maths tests. Nevertheless, the company receives:

‘website applications from Bangalore, or you know, other strange places, and I’m not saying we discount them just out of hand, because of where they are from, but when we actually get into it, these applicants don’t really want, what they want is a move to England. And you can see that they are not going to stay with us for very long. Most of them are actually over qualified for what we want. We also get the odd application from London, but again, they tend to be over qualified’ (ST14/Auxfin/25-99).

It is worth emphasising that professional staff are recruited regionally and nationally rather than locally. Local recruitment of professionals occurs, but frequently this is via existing contact networks. Support staff are recruited locally. FE providers need to ensure that their students possess the skills required to succeed in this sector of the economy. This distinction between support and professional staff was found in the majority of the in-depth interviews. Thus:

‘the support staff are much more limited in number across the company. We draw them from a different cross section of society. Generally more locally based anyway, whereas the technical staff tend to be a lot more mobile, and so we recruit them nationally because we, as an organisation, we are looking to be taking from the top 10%, typically, so we expect them to want to move’ (ST12/Arch/25-99).

Similarly, a smaller firm noted that for:

‘Recruitment for the secretarial side, we would probably go down the traditional route of speaking with a temping agency or advertising in the local press. The secretary here came by an agency. Yes it’s knowing your market isn’t it. Either there are people locally that we rate, and if we’re looking for another employee you would initially think of them and perhaps stick with them’ (ST21/Arch/1-10).

COMPETITIVE ADVANTAGE

Competitiveness amongst Staffordshire BPS firms was founded upon the quality of services provided as well as the staff (professionals and support). One small surveying company considered that:

‘We give good service. We’ve got a lot of work over the years by word of mouth and by people coming back to us to such extent that in some cases, we’re not being asked to give prices we’re just being asked to do the work and submit the bill’ (STo7/Arch/1-10).

A key issue for maintaining competitiveness is the difficulty in recruiting qualified support and professional staff. A provider of commercial insurance noted that:

‘in economic terms it’s probably the lack of qualified staff because without the staff we can’t push out for new business. We have all the tools to get the new business except the staff. We have people at a senior level doing work which is below them because the work has to be done’ (ST24/NLI/25-99). SERU, University of Birmingham Page 162 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

This reflects a double bind. On the one hand, there is the difficulty of attracting or retaining people in parts of Staffordshire and, on the other hand, skill deficiencies amongst the local population. FE provision should target the latter whilst the former requires a coordinated campaign to improve the image of the region.

Nevertheless, it must be remembered that, in part, the perceptional problem being experienced by parts of Staffordshire is more about individuals being pulled to other locations and it would be impossible for the region to become another Birmingham or London.

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FOCUS GROUP: STAFFORDSHIRE LSC, STOKE-ON-TRENT (27/09/05)

The following is a summary of the topics and issues discussed.

1. Professional training appears not to be an issue. This is dealt with by firms internally, or by going for the best courses irrespective of location.

2. Professional training is provided in-house or by private sector trainers. Private sector is the preferred option as the location, timing, and type of training can be tailored to the needs of the individual firm. The issue is not just the avoidance of FE but the rigidity of the training available from that source.

3. Private sector trainers are not perfect; they frequently ‘provide the same old stuff’ even if they have promised or contracted to provide tailored training.

4. Key issue with professional staff is not the availability of training, but retention within the area. The problem is one of developing and maintaining critical mass so that professionals consider that the region is a suitable location for the development of their own careers. The problem is that people (staff) are trained and then head for Birmingham and then London and then perhaps to a global firm:

‘The reality is that for professional staff it is really nothing to do with the availability of skills and training, but about getting people to come to work in North Staffordshire’.

5. There is concern about ensuring that local clients use local firms. A client using a lawyer beyond the region my also decide to employ other non-local BPS firms.

6. A central concern was the provision of the ‘right skills for the right jobs – over- and under-skilling’.

7. A problem exists regarding knowledge of what is available and where it is available as well as funding. LSC brokering pilot mentioned in a positive light.

8. Diversity of region – distance decay factor related to location of provision. Problems arising from concentration of provision in key urban area.

9. Problem of poor transport links – easier to travel to Manchester to obtain training than Birmingham. ‘Reasonable access’ to training depends on age/level of staff.

10. Support staff training – especially paraprofessional – is an issue as it is available in some FE colleges but not all, and some FE college groupings force students to travel between providers. There are a series of invisible barriers here, arising from the location of provision as well as timing. There was constant mention of the fact that the mostly female junior support staff cannot afford reliable cars (‘20 year old cars’) and are reluctant to travel far on wet winter evenings – ‘far’ can be Stoke-on-Trent to Birmingham.

11. FE seen as a provider of inappropriate skills training/skill groups. By inappropriate or not relevant is meant skills that are not required by companies and an absence of training in key generic skills that are required by BPS. Mention was made of an overemphasis on computer packages (Excel, PowerPoint) and a lack of focus on soft skills – people-based, telephone skills, dealing with clients etc. These are considered to be a major problem both in terms of recruiting staff and training staff. Much of this training is provided on-the-job as FE colleges appear to neglect these essential skills:

‘FE colleges do not produce what we want. The problem is one of perception of what is required in an office environment and what training is provided. FE colleges think that PowerPoint is important, but what is important are basic skills types: people skills, interpersonal skills, any business skills. The issue is that we employ lots of support staff that are directly and indirectly involved with clients’.

12. FE unable to provide sophisticated training for senior professionals.

13. Importance of on-the-job and at-the-job training provision.

14. Issue of FE accountability – do they research who takes their courses – where they come from and what they need.

15. FE colleges sometimes subcontract to a private tutor who will come to the workplace. CHECK does this occur.

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16. How to ensure BPS will use FE – answer is a local panel of clients that would be involved in curriculum planning and design. The reputations of the firms and the inputs might improve the actual and perceived quality.

17. Segmentation approach to the problem:

• Top professionals – problem is attracting and retaining them in the region. The reward is the same as elsewhere, but the issue is one of perception of career advancement. • Paraprofessionals - problem is invisible barriers related to the location of what is available in the region – the old car issue. Also timing. • Support – needs BPS engagement with FE to ensure that the right skill groups are provided.

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OVERVIEW AND SYNTHESIS

There is clearly a very large quantity of quantitative and qualitative information contained within the above overviews of the skill needs of BPS firms in each of the six LSC regions within the West Midlands.

From the perspective of highlighting commonalities as well as differences in the needs and issues amongst the six regions, it is useful to construct a table (Table 7.7) that provides briefly annotated comparisons for each LSC region as follows:

• General characteristics of the survey firms (from telephone survey) by: o Key attributes o Job vacancies o Skill needs o Workforce training

• Location

• Skills shortages

• FE provision

• Recruitment

• Competitive advantage

The outcome consolidates the conclusion that there are a number of common issues for BPS firms across the West Midlands, including:

• A segmented approach to exploring and understanding the skill needs of BPS is vital; reflects the functional, organisational, and size range of businesses.

• Ways of addressing skills and training needs are dichotomised between micro-scale and small firms and the medium/large firms, especially where the latter are part of larger national or international organisations.

• BPS firms within large and diverse (mainly urban) business communities or complexes face different issues to those located in primarily rural, low density groupings of BPS.

• The recruitment and retention of professional staff is an issue in all LSC areas.

• Proficiency problems that primarily affect professional and technical occupations, and administrative and technical occupations.

• Enhancement of proficiency in ‘soft skills’ is more pressing than enhancement of technical skills (although there is a need for the latter).

• Most HtfV are associated with professional occupations and key paraprofessionals.

• Multi-tasking is unavoidable in small BPS firms; training is on a ‘needs must’ basis with professional staff undertaking required CPD while support staff training is often neglected.

• Skill needs are sometimes ‘hidden’ in the sense that small firms will only hire support staff as a last resort; preference is for recruitment of fee-earning staff.

• Strategic planning for skills and training, as well commitment of company expenditure, is more likely to be undertaken by medium-sized and large firms; since these are also more likely to located in the larger, urban groupings of BPS this reinforces the ‘skills availability advantage’ of those areas. It tends to work against the more rural LSC areas.

• Training is dominated everywhere by on-the-job input by employees.

• Private training providers are the most likely source of bought-in training because they offer flexibility and customisation; cost is an issue but is outweighed by other factors. SERU, University of Birmingham Page 166 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

• FE and HE are well behind private trainers in the provision of training for BPS firms, both in volume and range of provision used.

• Prejudices and perceptions about what FE and HE actually provide, especially the former, are widespread among BPS firms. This is compounded by a lack of knowledge of what is available from the BPS side and only limited efforts to understand BPS needs and to deliver accordingly on the college side.

• Recruitment difficulties are identified but it is important to recognise that for many BPS firms, recruitment is a comparatively infrequent activity.

• The role of word of mouth and personal networks/contacts, especially outside the larger BPS complexes, should not be underestimated as a recruitment device.

• Recruitment of graduates, especially into professional vacancies, is important but some firms are turning to school leavers who are then trained to the level required. This is helping to address the graduate recruitment and retention problem that occurs in most of the LSC regions.

• Many firms are not prepared to acknowledge a link between competitiveness and skill needs. Most prefer to cite quality of service, professionalism and expertise of staff, careful response to client needs, or competitive pricing as the foundation for their competitiveness. The larger groups of BPS within the region again acquire some advantage because of the size of the client base and the diversity of the potential support and professional staff available to them.

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Table 7.7 Comparative synthesis of key skill needs and issues: quantitative and qualitative survey sources, by LSC region, West Midlands

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Birmingham and Black Country LSC Coventry and Hereford and Shropshire LSC Staffordshire LSC Solihull LSC Warwickshire LSC Worcestershire LSC commitment to lower than WM most widely used of strategic planning is planning well below line with WM as strategic planning; on- average; on-the-job all regions; firms with comparatively low; levels in much of whole; arrangement the-job training training favoured; training plan also worst of all LSC WM; investment in of training marginally favoured mode; off- limited use of other highest; strong regions; on-the-job training last 12 below average; on- job dominated by modes, led by private commitment to training by employees months also lower; the-job training by private sector training consultancies. training; on-the-job or preferred mode; on-the-job training by employees main consultants private external private training employees preferred; mode; private sector training. preferred. consultancies pre- external by private consultants dominate eminent. trainers. external provision Location Diversity of BPS Complex BPS Not an attractive BPS community has Similar difficulties to Concerns about community makes community reflecting location for BPS distinctive other ‘rural’ LSCs; attraction and generalisations needs of local clients; professionals characteristics, partly availability of local retention of difficult; large firms link between (Coventry); highly explained by location; training limited; professionals as a make this LSC economic history of innovative firms in relatively isolated professionals travel to function of location, different; majority of sub-region and BPS this LSC; including within WM and in Birmingham or size of local BPS firms able to fill specialisms; legal and relation to other BPS London; difficulties community relative to professional proximity to organisational concentrations; recruiting and Manchester or vacancies; best prefer Birmingham a structures; flexibility recruiting and retaining young Birmingham. to work in London; problem; but young of approach means retaining professional professionals; age attraction of London professionals firms have limited staff difficult because profiles of some firms not mentioned by choosing to live in BC support staff of ‘remote’ location, suggests spin-offs into smaller firms; eventually choose to requirements; especially firms new practices or branches of national work there; small professionals often operating from rural return migration by firms recruit support reverse shift. self-employed. locations.. Shropshire staff in region, professionals after professional staff period in London etc. recruited by HR team elsewhere; importance of national organisation structure Skills Shortages Difficult to recruit Shortage of certain Emphasis on people Multi-tasking a Absence of significant Skills shortages staff able to make types of employees (soft) skills and common feature; concentrations of BPS caused by attraction immediate related to the personality (partly limited or no support in the LSC region of other areas; contribution to expertise base of sub- function of no of staff means that makes it difficult for especially significant business; also region; staff recruitment firms); professionals local BPS either to for professional staff; commercially aware ‘poaching’ common difficult for small undertake mix of recruit or to develop also support staff; professionals; skills amongst traditional firms to attract highly basic and advanced staff with specialist identifying gap between ‘self BPS; recruitment rare skilled staff or support tasks; benefits from expertise expected by individuals with skills’, management occurrence for small staff, the attraction of training professionals clients; notable appropriate skill set a skills, technical skills; firms but when Birmingham, higher in skills that will absence of support problem; pool of

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Birmingham and Black Country LSC Coventry and Hereford and Shropshire LSC Staffordshire LSC Solihull LSC Warwickshire LSC Worcestershire LSC key shortage of necessary have salaries elsewhere; support their business staff in many firms; skills reflects individuals with experienced real reluctance to recruit but would be reluctant limits effects of skills presence of similar intangible skills. difficulties. support staff without to be trained issues. firms; departures of fee generating alongside support similar businesses can capacity. staff. lead to ‘skills isolation’. Training Small firms only Few companies Depth-interviews Availability of Reflects demands Dichotomy between undertake ‘essential’ investing in training contradict telephone training undermined placed on formal and proactive CPD training; via for support staff; well- survey – training by difficult professionals working approach of larger, professional bodies or developed staff provision very limited infrastructure, in a multi-tasking specialist BPS firms private training appraisal by larger (apart from CPD for dispersed population; environment typical (professional and providers; larger firms firms. professional staff); some provision is of small firms; CPD support staff) and have well-developed support staff training point specific; those key driver; support inclination to provide staff appraisal neglected. closest to the staff training tends to minimal training systems and more provision obtain the be ad hoc. (other than CPD) on formal training greatest benefits, part of small firms; procedures. firms in remote latter provide limited locations denied training for support access to available staff.; some firms had skills training developed graduate entry schemes. FE Provision Limited role; location Few use FE colleges; Image problem; not a FR colleges FE colleges have FE colleges used by and timing of accountants use for provider of bespoke associated with captive market; they some firms for provision important; technician training training solutions; no provision of less don’t and do not have support staff training key issue is and some firms used training solutions specialist expertise; to market their or for training persuading BPS firms for support staff between long course concerns about access courses; the key paraprofessionals; that FE colleges are (customer provided by FE/HE (distance and time). problem is that BPS generally FE seen as suitable training relationships); FE and short courses firms are unaware of provider of providers; need colleges do not offered by private the training that is inappropriate skills proper dialogue provide commercially trainers. available; needs to be training; absence of between FE providers aware training more information training in key generic and BPS professional opportunities. about FE provision; skills required by BPS bodies and networks access is important, such as soft skills should not need to go out of county.

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Birmingham and Black Country LSC Coventry and Hereford and Shropshire LSC Staffordshire LSC Solihull LSC Warwickshire LSC Worcestershire LSC Recruitment Role of extant Word of mouth, Generally by word of Difficult to recruit Tend to recruit from Some use of Job relationships and schools, agencies, mouth or by local specific types of small pool of local centres but for less personal referrals local press. Specialist advertisement for specialist expertise; people known to technical BPS (networks); small firms had great smaller firms; more recruitment less firms; reflects size of employees; word of firms use local press difficulties but these formal mechanisms problematic in main firms and small size mouth and existing and word of mouth; tend to operate as used by larger firms population centres; of BPS community; contacts used by small larger firms rely on ‘close knit or branch offices, very much a rural firms tend to know and large BPS firms, agencies; many firms communities’ in especially for support BPS firm problem; so each other, who is mainly on informal paid recruitment which informal staff (recruitment significant that some hiring or not hiring basis; recruitment bonuses to existing contacts are vital in agencies used) but firms failing to grow, etc. agencies used by large staff if recommending the recruitment word of mouth or or even downscaling. firms, some also someone eventually process; some friendships important participating in recruited by firm. companies overlook when recruiting university recruitment graduates, recruit and professionals. fairs; advertising via develop school corporate websites. leavers; many firms noted great difficulty recruiting professional staff; succession issues for small firms. Competitive Similar to other LSC Founded upon In common with other Founded upon price, Speed of response, Founded on quality of Advantage regions; key personalities, LSC regions, related personalities thorough attention to services provided as difference is size of reputations, contact to quality of expertise involved, specialist or detail, providing a well as staff local client base, networks, expertise of offered, client niche expertise; personal service; most (professional and diversity of potential fee earners; stress focussed approach, quality of life factors, of the firms in this support); difficulty employees (support placed on uniqueness cost; some clients as well as distance region are providing recruiting qualified and professional, of each firm’s retreating to larger from Birmingham has expertise to local support and availability of collection of clients firms as perceived to stimulated clients; not in direct professional staff training; competitive which creates offer more protection development of niche competition with acknowledged to be a BPS firms are possibility to develop in times of difficulty; firms and BPS larger practices. key issue for extremely flexible, act unique market contributes to specialisms. maintaining strategically, are position which may strengthening competitiveness. highly visible in form around localised Birmingham’s role. chosen marketplace. friendship network.

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8 BPS SKILL NEEDS AT SUB-SECTOR LEVEL

This section provides detailed information for firms in the largest four of the SIC groups included in this study. These are:

70.3 Real estate activities 74.1 Legal, accounting & business consultancy 74.2 Architectural & engineering activities 74.7 Labour recruitment.

REAL ESTATE ACTIVITIES (SIC 70.3)

Firms involved in real estate activities form one of the largest SIC groups covered in this study. Its 125 establishments amount to just over 10% of the entire sample.

Table 8.1.1 reveals that this group is evenly distributed among the six West Midlands LSC regions. There is evidence of slight clustering in the Coventry & Warwickshire and the Birmingham & Solihull regions and under representation in the Black Country but these differences are quite small. The group is characterised by:

• Small enterprises (89% have 1-10 workers on-site) • Private limited firms but it is partnerships which are over represented at 25% • Unusually single site firms are not the largest type of organisation as firms with a HQ outside the West Midlands are even more numerous • Firms are comparatively long established and 42% have been resident for more than ten years (compared to 31% in the case of other firms).

Hard to fill vacancies are not a serious problem for real estate firms judging from the limited data available in Table 8.1.2.

Table 8.1.3 confirms a relatively low incidence of problems among real estate firms:

• There are only a few reports of proficiency problems and no significant concentration in any occupational group • Only in the associate professional, administration and secretarial areas was any real concern expressed about skill gaps • Insufficient experience was seen as the only major cause of staff lacking full proficiency • Technical/practical topped the list of skills needing improvement with management, customer handling, and problem solving also felt to be areas of weakness. • There seemed little support for the view that skill deficiencies might affect competitiveness. The skills that seemed most vital (eg personal, customer handling, communication) might be expected to be critical in the real estate industry. • An inadequately skilled workforce was felt most likely to affect a firm’s performance by increasing operating costs and undermining customer service objectives.

The training arrangements of the real estate firms are set out in Table 8.1.4.

• The practice of working to business plans and regularly reviewing staff is well established in the real estate industry. In contrast training plans and budgets have not been so widely adopted. This pattern is reflected in low percentages of firms employing all 4 or none of these measures • There is a lower than average commitment to training • On-the-job training done in-house is clearly the preferred mode with only modest support offered for other types of training. The FE sector is least popular. • Where external providers are used, there is a strong chance that it will be a private sector training consultancy. • The main external provider services a wide variety of training needs headed as usual by job specific training but in this sector management training is also important. • The fact that “course tailored to our needs” is the most popular reason for selecting an external provider hints at possibility that these firms have special requirements.

Overall the real estate industry seems to have few general skills problems but there are particular areas of concern. Attitudes to training do not seem as positive as some other sectors but it may be because the local office has less responsibility in this area.

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Table 8.1.1 Characteristics of Real Estate Activities firms (SIC 70.3)

SIC 70.3 firms All other firms Number % Number % LSC Region Base: all firms Birmingham and Solihull 61 48.8 486 45.3 Black Country 25 20.0 264 24.7 Coventry & Warwickshire 11 8.8 88 8.2 Hereford & Worcester 13 10.0 80 7.4 Shropshire 4 3.4 54 5.1 Staffordshire 11 9.0 99 9.2 Years at current premises Base: all firms Less than a year 10 8.1 37 3.5 1 - 2 years 22 17.8 216 20.2 3 - 5 years 20 16.4 242 22.6 6 - 10 years 18 14.1 231 21.6 11 - 20 years 26 21.0 165 15.4 More than 20 years 26 20.7 172 16.1 Don't Know/ Refused 2 1.9 7 0.7 Organisational type Base: all firms Only site 51 41.0 582 54.3 HQ, regional or divisional HQ 16 13.2 156 14.6 HQ elsewhere in UK 57 45.8 309 28.8 HQ outside UK 0 0.0 24 2.3 Legal status Base: all firms Partnership 31 24.9 183 17.1 Sole Proprietorship 18 14.1 166 15.5 A Public Limited Firm 23 18.2 144 13.4 A Private Limited Firm 53 42.3 566 52.9 Number of on-site workers Base: all firms 1 – 10 112 89.4 855 79.8 11 – 24 9 7.3 107 10.0 25 – 99 3 2.6 79 7.4 100+ 1 0.7 30 2.8

Table 8.1.2 Job vacancies in Real Estate firms (SIC 70.3)

SIC 70.3 firms All other firms Number % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 0 0.0 8 41.2 Professional occupations 1 28.5 34 56.5 Associate professionals & technical occupations 1 10.0 19 36.0 Administrative and secretarial occupations 1 14.0 25 33.7 Skilled trades occupations 0 0.0 3 58.9 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 0 0.0 6 24.6 Process, plant & machine operatives 0 0.0 1 26.1 Elementary occupations 0 0.0 1 18.8 Base: firms with difficult to fill Reasons why vacancies difficult to fill vacancies Too much competition from other employers 0 0.0 10 10.5 Not enough people interested in this type of job 1 38.0 12 12.8 Poor terms and conditions offered for post 0 0.0 4 4.3 Low number of applicants with the required skills 1 22.7 46 50.5 Low number of applicants with required attitude 0 0.0 20 21.6 Low number of applicants generally 1 38.0 20 21.7 Lack of work experience the company demands 1 20.2 19 20.9 SERU, University of Birmingham Page 173 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Lack of qualifications the company demands 1 19.0 17 18.4 Poor career progression / lack of prospects 0 0.0 5 5.5 Job entails shift work/unsociable hours 0 0.0 3 3.2 Remote location/poor public transport 0 0.0 5 5.5

Table 8.1.3 Skill needs of Real Estate firms (SIC 70.3)

SIC 70. 3 firms All other firms Number % Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 2 2.1 56 5.8 Professional Occupations 1 3.1 55 12.1 Associate Professionals/ Technical Occupations 4 6.0 57 15.7 Administrative and Secretarial Occupations 3 4.1 86 14.3 Sales/ Customer Service Occupations 1 1.9 33 16.2 Personal Service Occupations 0 0.0 3 13.8 Elementary Occupations 1 6.9 7 8.0 Base: firms with at least one occupation not fully Occupations with skills gap of most concern proficient Managers 1 14.3 49 22.5 Professional Occupations 0 0.0 52 23.8 Associate Professionals/ Technical Occupations 3 36.6 51 23.4 Administrative and Secretarial Occupations 3 37.7 81 37.0 Sales/ Customer Service Occupations 1 7.0 33 14.9 Personal Service Occupations 0 0.0 3 1.2 Elementary Occupations 1 11.4 4 1.9 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 1 14.0 54 24.6 Recruitment problems 1 14.0 39 17.9 High staff turnover 1 7.0 20 8.9 Inability of workforce to keep up with change 0 0.0 43 19.6 Lack of experience or their being recently recruited 6 79.2 149 68.0 Staff lack motivation 2 29.5 47 21.3 Other 0 0.0 2 0.7 No particular causes 1 14.0 37 16.7 Skills needing improvement Base: occupations experiencing skill Communication skills 3 39.9 117 43.6gaps Technical and practical skills 5 68.7 114 42.5 Customer handling skills 4 47.0 112 41.5 Practice/ general management skills 4 54.1 109 40.7 Personal skills (motivation, ability to fit in) 3 37.4 109 40.7 Problem solving skills 4 46.8 108 40.1 Office admin. Skills 3 42.7 103 38.2 Team working skills 1 14.4 95 35.3 General IT skills (word processing, email, internet) 2 28.8 86 32.0 Leadership skills 3 37.1 77 28.8 Data analysis 2 23.4 72 26.6 IT professional skills 1 19.0 70 25.9 Accounts/ finance 2 21.3 58 21.6 Technical skills related to the occupation 2 21.7 56 20.8 Human resource management skills 2 28.2 45 16.6 Literacy 0 0.0 39 14.6 Numeracy skills 0 0.0 31 11.5 Foreign language skills 2 28.8 20 7.5 No particular skills 0 0.0 20 7.4 Other skills 0 0.0 12 4.6 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 2 29.5 31 14.2 Customer handling skills 1 15.6 21 9.8 Sales ability 0 0.0 22 10.2 Communication 1 7.0 22 9.9 SERU, University of Birmingham Page 174 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

IT / computer skills 1 7.4 14 6.6 Technical skills 0 0.0 13 6.2 Office administration skills 0 0.0 9 4.3 General lack of experience 0 0.0 7 3.3 Accounting/ finance 0 0.0 7 3.2 Numeracy 0 0.0 7 3.0 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps Loss of business or orders to competition 3 42.4 58 26.6 Delays developing new products or services 2 21.0 60 27.3 Difficulties meeting customer service objectives 4 52.0 73 33.3 Difficulties meeting required quality standards 0 0.0 50 22.7 Increased operating costs 5 60.4 96 44.0 Difficulties introducing new working practices 1 13.8 34 15.4 No particular problems/ none of the above 1 11.4 59 26.9

Table 8.1.4 Training arrangements of Real Estate Activities firms (SIC 70.3)

SIC 70.3 firms All other firms Number % Number % Incidence of strategic planning Base: all firms Has a business plan 87 69.9 774 72.2 Has a training plan 68 54.7 642 60.0 Has a training budget 45 36.1 504 47.1 Has annual performance review or appraisal system 87 69.7 748 69.8 All of the above 34 26.9 380 35.5 None of the above 12 9.9 145 13.5 Training conducted during past 12 months Base: all firms Arranged training 74 59.7 731 68.2 mainly for Existing workforce 26 20.5 275 25.6 New recruits 2 1.9 24 2.2 Both 47 37.3 432 40.3 Have not arranged training 50 40.3 340 31.8 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 106 85.0 850 79.3 On the job - delivered by external provider 33 26.8 275 25.7 Off the job - delivered by employees 37 29.3 301 28.1 Off the job - delivered by a training consultancy 28 22.6 330 30.8 Off the job - delivered by a FE college 18 14.1 229 21.4 Other method 2 2.0 13 1.2 No preference 10 7.7 124 11.5 For existing workforce On the job - delivered by employees 104 83.1 812 75.8 On the job - delivered by an external provider 34 27.4 334 31.2 Off the job - delivered by employees 35 27.8 282 26.4 Off the job - delivered by a training consultancy 41 32.8 416 38.8 Off the job - delivered by a FE college 17 13.6 240 22.4 Other method 0 0.0 17 1.6 No preference 8 6.0 114 10.6 Off job training providers Base: all firms using external training Further education provider 7 17.6 151 providers30.7 Higher education provider 7 19.0 95 19.4 Private sector training consultancy 28 72.9 361 73.6 Public sector training provider 8 20.1 67 13.6 Other training company 2 4.6 65 13.2 Training by most important provider Base: all firms using external training Health and safety training 16 40.8 185 providers37.7 Induction training 11 29.6 113 23.0 Supervisory training 16 41.8 130 26.5 Management training 21 55.1 204 41.5 SERU, University of Birmingham Page 175 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Training in new technology 19 49.5 215 43.9 Training in foreign languages 1 2.9 10 2.0 Job specific training 25 65.9 330 67.4 None of the above 2 4.3 24 4.9 Base: all firms using external training Top ten reasons firms use particular external providers providers Require specialised/ job specific training 4 9.4 62 12.6 They offer the relevant training/ qualifications 2 4.6 57 11.6 Has the best expertise in this subject/ best trainer 1 3.7 37 7.6 No-one else does training/ lack of alternative options 2 6.0 33 6.8 Course is tailored to our needs 5 12.3 29 5.9 Easily accessible/ convenient 4 9.6 28 5.6 Head office decision/company policy/not our 1 2.9 25 5.1 decision Due to regulations/ professional or legal requirement 2 5.5 24 4.9 No in-house training available 3 7.5 20 4.0 Low cost/ free/ value for money 1 1.5 22 4.4

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LEGAL, ACCOUNTING AND BUSINESS CONSULTANCY (SIC 74.1)

This is the largest SIC group and its 319 firms cover a very diverse range of activities. Generalisations are problematic for enterprises whose circumstances and traditions may vary widely.

Table 8.2.1 reveals that the group does have some distinctive features:

• Regional disparities are limited since these town centre oriented activities are scattered fairly uniformly across the West Midlands. There is though a slight over representation in the multinucleated Black Country. • Enterprises are overwhelmingly single site (70.6% of the total). • Partnerships and sole proprietorships are particularly important. Together they account for 54.3% of the SIC 74.1 firms and 43.6% of such organisations in the West Midlands as a whole. • Firms are small in terms of on-site workforce but not particularly for the service sector. • The frequency of different durations of residence is similar to other firms apart from a relatively high number of recent arrivals

Legal, accounting and business consultancies appear to be experiencing some problems in filling vacancies (Table 8.2.2). These are primarily in professional, administration and secretarial occupations. The majority of firms with recruitment difficulties felt that insufficient applicants had the required skills.

Table 5.2.3 sets out the key information about skill gaps in the Black Country region

• Lack of proficiency was a significant problem with administrative and secretarial staff. Skill shortages were also frequently noted with professionals but at much the same level as experienced by other firms. • It is the above two occupational groupings that cause most concern for SIC 74.1 firms. In particular over half of the considerable number of firms with skill gaps in administration and secretarial staff, expressed concern with the situation.. • Lack of experience/recent recruitment is the most frequently cited (68.7%) cause of staff lacking proficiency. A comparatively high 29% of firms accepted some responsibility by failing to offer adequate training. • Firms in this sector offer a fairly uniform level of support for a wide range of skills that it is felt need improving. There was no clear favourite – instead 14 skills were nominated by 20% or more of the firms with skill gap problems. • Relatively few firms though believed that deficiencies in any of these skill areas were a serious threat to competitiveness. • However, concerns were expressed about their impact on operating costs and product development,.but it should be noted that a relatively high 35% of firms did not feel that skill problems have any significant impacts on the business.

Training arrangements and priorities for firms offering legal, accounting and business consultancy services are set out in Table 8.2.4:

• The take-up rates for business plans, training plans and training budgets are unexceptional but the practice of staff review is below that of other firms. As a result only 30.1% of all firms use all four measures. • The percentage of firms training staff during the past year is at 68.2% virtually identical to the West Midlands average. • Firms strongly favour on-the-job training delivered by employees whether for new recruits or the existing workforce. For both groups, private training consultancies are in a clear second place. • Private training consultancies are easily the most frequently used external provider (80.3% of firms). More use is made of FE colleges than usual (36.9%). • The main external provider is used largely for job specific training. • A need for specialised or job specific training is the most important factor in choosing an external provider.

Overall, the legal, accounting and business consultancy group of services is distinctive in terms of its modal size, type of organisation and legal status. However, its skill problems and training problems do not appear exceptional.

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Table 8.2.1 Characteristics of firms in Legal, Accounting and Business Consultancy services (SIC 74.1)

SIC 74.1 firms All other firms Number % Number % LSC Region Base: all firms Birmingham and Solihull 142 44.4 405 46.2 Black Country 84 26.2 206 23.5 Coventry & Warwickshire 23 7.1 77 8.7 Hereford & Worcester 22 7.0 70 8.0 Shropshire 23 7.2 36 4.1 Staffordshire 26 8.1 84 9.6 Years at current premises Base: all firms Less than a year 12 3.7 35 4.0 1 - 2 years 77 24.1 161 18.4 3 - 5 years 67 21.0 195 22.3 6 - 10 years 72 22.6 176 20.1 11 - 20 years 43 13.5 148 16.9 More than 20 years 48 14.9 151 17.2 Don't Know/ Refused 0 0.0 10 1.1 Organisational type Base: all firms Only site 226 70.6 407 46.5 HQ, regional or divisional HQ 43 13.5 129 14.8 HQ elsewhere in UK 47 14.8 319 36.3 HQ outside UK 3 1.1 21 2.4 Legal status Base: all firms Partnership 94 29.4 121 13.8 Sole Proprietorship 80 24.9 104 11.8 A Public Limited Firm 17 5.3 150 17.1 A Private Limited Firm 126 39.6 493 56.2 Number of on-site workers Base: all firms 1 – 10 257 80.6 709 80.9 11 – 24 31 9.7 85 9.7 25 – 99 18 5.6 65 7.4 100+ 13 4.2 18 2.0

Table 8.2.2 Job vacancies in Legal, Accounting and Business Consultancy services

SIC 74.1 firms All other firms Number % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 4 54.0 4 29.3 Professional occupations 11 39.8 24 65.4 Associate professionals & technical occupations 1 15.9 19 34.7 Administrative and secretarial occupations 11 35.1 15 29.6 Skilled trades occupations 0 0.0 3 49.2 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 0 0.0 6 25.1 Process, plant & machine operatives 0 0.0 1 26.1 Elementary occupations 0 0.0 1 18.8 Base: firms with difficult to fill Reasons why vacancies difficult to fill vacancies Too much competition from other employers 4 15.6 6 8.3 Not enough people interested in this type of job 1 3.4 12 17.1 Poor terms and conditions offered for post 0 0.0 4 5.7 Low number of applicants with the required skills 13 54.3 33 47.9 Low number of applicants with required attitude 6 25.0 14 19.5 Low number of applicants generally 6 23.2 15 21.8 Lack of work experience the company demands 7 28.3 13 18.2 SERU, University of Birmingham Page 178 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Lack of qualifications the company demands 3 10.3 15 21.3 Poor career progression / lack of prospects 1 4.4 4 5.6 Job entails shift work/unsociable hours 0 0.0 3 4.2 Remote location/poor public transport 3 13.2 2 2.5

Table 8.2.3 Skill needs of firms in Legal, Accounting and Business services (SIC 74.1)

SIC 74.1 firms All other firms Number % Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 15 5.6 43 5.3 Professional Occupations 25 11.8 31 10.9 Associate Professionals/ Technical Occupations 5 6.8 57 15.4 Administrative and Secretarial Occupations 36 17.8 53 11.2 Sales/ Customer Service Occupations 2 10.9 31 14.7 Personal Service Occupations 0 0.0 3 14.6 Elementary Occupations 4 16.4 4 5.4 Base: firms with at least one occupation not fully Occupations with skills gap of most concern proficient Managers 12 19.0 38 23.5 Professional Occupations 22 35.0 30 18.4 Associate Professionals/ Technical Occupations 4 5.8 50 30.8 Administrative and Secretarial Occupations 34 54.3 50 30.3 Sales/ Customer Service Occupations 2 3.3 31 19.0 Personal Service Occupations 0 0.0 3 1.6 Elementary Occupations 1 1.3 4 2.6 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 18 29.2 37 22.3 Recruitment problems 9 14.8 31 18.9 High staff turnover 4 6.8 16 9.7 Inability of workforce to keep up with change 10 15.7 33 20.2 Lack of experience or their being recently recruited 44 68.7 112 68.2 Staff lack motivation 13 19.9 36 22.2 Other 1 0.9 1 0.6 No particular causes 8 13.2 29 17.9 Skills needing improvement Base: occupations experiencing skill Communication skills 33 36.3 87 47.0gaps Technical and practical skills 35 38.5 85 45.6 Customer handling skills 28 30.3 88 47.3 Practice/ general management skills 27 29.5 87 46.8 Personal skills (motivation, ability to fit in) 28 30.8 84 45.4 Problem solving skills 27 29.8 84 45.5 Office admin. Skills 27 29.3 79 42.7 Team working skills 26 28.3 70 37.9 General IT skills (word processing, email, internet) 33 36.6 55 29.7 Leadership skills 21 23.5 59 31.7 Data analysis 23 25.3 50 27.1 IT professional skills 26 28.9 45 24.2 Accounts/ finance 23 25.4 37 19.7 Technical skills related to the occupation 20 22.3 37 20.1 Human resource management skills 10 10.6 37 20.1 Literacy 12 13.0 27 14.8 Numeracy skills 11 11.9 20 10.8 Foreign language skills 5 6.0 17 9.1 No particular skills 10 10.8 10 5.4 Other skills 3 3.6 9 4.9 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 5 7.3 29 17.6 Customer handling skills 2 3.5 20 12.5 Sales ability 0 0.0 22 13.7 Communication 5 7.8 17 10.5 IT / computer skills 3 5.4 11 7.0 SERU, University of Birmingham Page 179 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Technical skills 5 7.2 9 5.5 Office administration skills 1 2.0 8 5.0 General lack of experience 3 4.0 5 2.9 Accounting/ finance 4 5.9 3 2.1 Numeracy 2 3.5 4 2.7 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps Loss of business or orders to competition 12 19.4 49 30.2 Delays developing new products or services 17 27.1 44 27.0 Difficulties meeting customer service objectives 15 23.1 62 38.2 Difficulties meeting required quality standards 11 17.1 39 23.8 Increased operating costs 25 40.0 76 46.3 Difficulties introducing new working practices 8 13.4 26 16.1 No particular problems/ none of the above 22 35.2 37 22.9

Table 8.2.4 Training arrangements of Legal, Accounting and Business services (SIC 74.1)

SIC 74.1 firms All other firms Number % Number % Incidence of strategic planning Base: all firms Has a business plan 204 63.7 657 75.0 Has a training plan 186 58.4 524 59.8 Has a training budget 143 44.7 407 46.4 Has annual performance review or appraisal system 206 64.4 629 71.8 All of the above 96 30.1 317 36.2 None of the above 55 17.3 102 11.6 Training conducted during past 12 months Base: all firms Arranged training 218 68.2 587 67.0 mainly for Existing workforce 97 30.2 204 23.2 New recruits 8 2.4 19 2.1 Both 114 35.6 365 41.6 Have not arranged training 102 31.8 289 33.0 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 250 78.2 706 80.5 On the job - delivered by external provider 85 26.7 224 25.5 Off the job - delivered by employees 71 22.2 267 30.5 Off the job - delivered by a training consultancy 118 37.0 240 27.4 Off the job - delivered by a FE college 81 25.3 165 18.9 Other method 1 0.4 14 1.6 No preference 38 11.9 95 10.9 For existing workforce On the job - delivered by employees 233 72.9 683 78.0 On the job - delivered by an external provider 110 34.3 258 29.5 Off the job - delivered by employees 71 22.2 246 28.1 Off the job - delivered by a training consultancy 151 47.3 306 34.9 Off the job - delivered by a FE college 83 26.1 173 19.8 Other method 3 0.9 14 1.6 No preference 32 9.9 90 10.2 Off job training providers Base: all firms using external training Further education provider 59 36.9 98 providers26.7 Higher education provider 34 21.3 68 18.6 Private sector training consultancy 129 80.3 261 70.6 Public sector training provider 22 13.5 53 14.3 Other training company 16 10.1 50 13.6 Training by most important provider Base: all firms using external training Health and safety training 38 23.5 163 providers44.1 Induction training 24 15.1 100 27.1 Supervisory training 38 23.7 108 29.3 Management training 66 41.0 159 43.2

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Training in new technology 59 37.0 175 47.5 Training in foreign languages 3 1.9 8 2.1 Job specific training 118 74.0 237 64.3 None of the above 7 4.4 19 5.0 Base: all firms using external training Top ten reasons firms use particular external providers providers Require specialised/ job specific training 24 14.7 42 11.3 They offer the relevant training/ qualifications 16 9.8 43 11.6 Has the best expertise in this subject/ best trainer 6 4.1 32 8.7 No-one else does training/ lack of alternative options 10 6.0 26 7.1 Course is tailored to our needs 6 3.4 28 7.7 Easily accessible/ convenient 9 5.9 22 5.9 Head office decision/company policy/not our 8 5.1 18 4.9 decision Due to regulations/ professional or legal requirement 12 7.4 14 3.9 No in-house training available 5 3.2 17 4.7 Low cost/ free/ value for money 8 4.8 15 4.0

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ARCHITECURAL & ENGINEERING ACTIVITIES (SIC 74.2)

This is the second largest SIC group of activities in the West Midlands. Its 240 firms are almost exactly 1 in 5 of the survey firms.

This group has a number of distinctive characteristics (Table 8.3.1):

• Firms are well distributed across the West Midlands but are slightly over represented in the more rural regions (Hereford & Worcester, Shropshire and Staffordshire). • Single site firms dominate (67.8% of all firms). Firms with HQs outside the West Midlands are under represented. • Private limited firms are in a clear majority (59.9% of firms). • Small units dominate but there are a greater proportion of firms employing 25-99 workers on site than usual. • Firms tend to be established with relatively few in premises for less than three years,

Table 8.3.2 reveals that there is a general problem with filling vacancies in the professional grades. Finding sufficient applicants with the required skills seems to be the single most important reason compounded by “low numbers of applicants generally”.

Data on skill gaps for Architectural and Engineering firms is to be found in Table 8.3.3:

• Problems of staff proficiency are most pronounced in associate professional and technical occupations • However, firms in this group seem equally concerned with skill gaps in professional, administrative and secretarial occupations. • As with other sectors, “lack of experience/ recent recruitment” is seen as the most important cause of staff lacking proficiency but unusually “inability of workforce to keep up with change” also received considerable support. • Over half of the firms with skill gaps thought that skills of a technical and practical nature needed improvement. A wide range of other skills were also identified. • Deficient technical skills headed the list of threats to competitiveness with personal skills in a close second place. • Unusually firms in this SIC group put “difficulties meeting customer service objectives” ahead of “increased operating costs” as the most important negative consequence of an under-skilled staff.

Table 8.3.4 presents selected series relating to the training arrangements and preferences of firms engaged in Architectural and Engineering activities:

• Adoption levels for all four instruments of strategic planning are below West Midlands norms. As a result a relatively high percentage of firms are not using any of these procedures. • The degree to which staff were provided training in the last 12 months is below the average for all other firms. • Like firms in other sectors, on-the-job training in-house is the most popular mode but to a lesser extent than generally found. Other modes obtain more support than usual with private sector consultancies in second place but FE colleges not far behind. • Private sector training consultancies are the most used external provider (66.2% of firms) but usage of other types of providers is comparatively high. • The most important provider is used for job specific training but to an almost equal extent for health and safety and new technology training. • There is no clear consensus about the criteria for choosing an external provider but the need for “specialised/job specific training” is most frequently nominated.

Overall, the Architectural and Engineering group of firms exhibit more variation than other groups reflecting the presence of a significant number of larger, corporate enterprises. The incidence and concern about skill deficiencies is typical of the BPS sector as a whole but more importance than normal is attached to technical and practical skills. In contrast commitment to training is not as strong.

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Table 8.3.1 Characteristics of firms in Architectural and Engineering activities (SIC 74.2)

SIC 74.2 firms All other firms Number % Number % LSC Region Base: all firms Birmingham and Solihull 108 44.9 439 45.9 Black Country 52 21.6 238 24.8 Coventry & Warwickshire 13 5.3 86 9.0 Hereford & Worcester 27 11.3 65 6.8 Shropshire 14 6.0 44 4.6 Staffordshire 26 10.9 84 8.8 Years at current premises Base: all firms Less than a year 4 1.7 43 4.5 1 - 2 years 36 15.2 202 21.1 3 - 5 years 54 22.4 209 21.8 6 - 10 years 57 23.9 191 20.0 11 - 20 years 45 18.8 146 15.3 More than 20 years 41 16.9 158 16.5 Don't Know/ Refused 3 1.1 7 0.8 Organisational type Base: all firms Only site 163 67.8 470 49.2 HQ, regional or divisional HQ 36 15.0 137 14.3 HQ elsewhere in UK 36 15.0 330 34.5 HQ outside UK 5 2.2 19 2.0 Legal status Base: all firms Partnership 39 16.5 175 18.3 Sole Proprietorship 41 17.1 142 14.9 A Public Limited Firm 14 5.8 153 16.0 A Private Limited Firm 144 59.9 476 49.7 Number of on-site workers Base: all firms 1 – 10 188 78.3 779 81.4 11 – 24 22 9.3 94 9.8 25 – 99 25 10.4 58 6.0 100+ 5 2.0 26 2.7

Table 8.3.2 Job vacancies in Architectural and Engineering activities (SIC 74.2)

SIC 74.2 firms All other firms Number % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 1 35.1 6 39.1 Professional occupations 16 84.0 19 42.1 Associate professionals & technical occupations 2 30.9 18 33.9 Administrative and secretarial occupations 2 32.7 24 31.7 Skilled trades occupations 3 67.7 0 0.0 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 0 0.0 6 22.0 Process, plant & machine operatives 1 29.3 1 23.0 Elementary occupations 0 0.0 1 18.8 Base: firms with difficult to fill Reasons why vacancies difficult to fill vacancies Too much competition from other employers 1 2.5 9 12.8 Not enough people interested in this type of job 3 13.7 9 13.5 Poor terms and conditions offered for post 1 2.5 3 4.8 Low number of applicants with the required skills 13 55.2 34 47.7 Low number of applicants with required attitude 4 18.0 15 21.9 Low number of applicants generally 6 24.3 15 21.5 Lack of work experience the company demands 4 15.1 16 22.7 SERU, University of Birmingham Page 183 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Lack of qualifications the company demands 5 22.7 12 17.0 Poor career progression / lack of prospects 0 0.0 5 7.1 Job entails shift work/unsociable hours 1 5.3 2 2.4 Remote location/poor public transport 1 4.8 4 5.5

Table 8.3.2 Skill needs of firms in Architectural and Engineering activities (SIC 74.2)

SIC 74.2 firms All other firms Number % Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 9 4.2 50 5.7 Professional Occupations 12 10.0 44 11.7 Associate Professionals/ Technical Occupations 14 17.1 47 13.4 Administrative and Secretarial Occupations 14 10.7 75 13.8 Sales/ Customer Service Occupations 3 9.8 30 15.1 Personal Service Occupations 0 0.0 3 13.6 Elementary Occupations 2 5.9 6 8.9 Base: firms with at least one occupation not fully Occupations with skills gap of most concern proficient Managers 8 20.7 42 22.5 Professional Occupations 12 31.4 40 21.3 Associate Professionals/ Technical Occupations 13 32.7 41 22.0 Administrative and Secretarial Occupations 14 36.0 70 37.2 Sales/ Customer Service Occupations 3 7.9 30 16.0 Personal Service Occupations 0 0.0 3 1.4 Elementary Occupations 2 5.3 3 1.6 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 11 27.0 44 23.7 Recruitment problems 5 11.7 36 19.0 High staff turnover 3 6.9 17 9.3 Inability of workforce to keep up with change 12 29.5 31 16.7 Lack of experience or their being recently recruited 22 55.6 133 71.0 Staff lack motivation 8 21.6 41 21.6 Other 0 0.0 2 0.8 No particular causes 9 23.7 28 15.1 Skills needing improvement Base: occupations experiencing skill Communication skills 23 47.4 97 42.6gaps Technical and practical skills 25 50.5 95 41.7 Customer handling skills 17 33.9 99 43.3 Practice/ general management skills 21 42.3 93 40.8 Personal skills (motivation, ability to fit in) 22 44.9 90 39.6 Problem solving skills 21 42.5 91 39.9 Office admin. Skills 21 42.1 85 37.5 Team working skills 18 37.1 78 34.2 General IT skills (word processing, email, internet) 18 36.1 71 31.1 Leadership skills 14 29.5 66 28.9 Data analysis 15 30.5 59 25.7 IT professional skills 13 25.9 59 25.7 Accounts/ finance 11 23.4 48 21.2 Technical skills related to the occupation 10 19.8 48 21.1 Human resource management skills 9 18.0 38 16.7 Literacy 8 15.5 32 13.9 Numeracy skills 5 10.3 26 11.3 Foreign language skills 3 6.5 19 8.4 No particular skills 3 6.6 17 7.3 Other skills 0 0.0 12 5.4 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 5 13.1 28 15.1 Customer handling skills 2 4.6 21 11.1 Sales ability 1 1.7 22 11.6 Communication 4 9.2 19 9.9 IT / computer skills 4 10.4 11 5.8 SERU, University of Birmingham Page 184 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Technical skills 5 13.8 8 4.3 Office administration skills 3 8.2 6 3.3 General lack of experience 1 3.2 6 3.2 Accounting/ finance 0 0.0 7 3.8 Numeracy 1 3.7 5 2.7 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps Loss of business or orders to competition 9 22.6 53 28.1 Delays developing new products or services 10 25.7 51 27.3 Difficulties meeting customer service objectives 16 41.4 61 32.5 Difficulties meeting required quality standards 9 22.6 41 21.7 Increased operating costs 16 40.7 85 45.3 Difficulties introducing new working practices 5 11.8 30 16.0 No particular problems/ none of the above 8 21.7 51 27.3

Table 8.3.4 Training arrangements of Architectural and Engineering activities (SIC 74.2)

SIC 74.2 firms All other firms Number % Number % Incidence of strategic planning Base: all firms Has a business plan 147 61.4 714 74.6 Has a training plan 116 48.3 595 62.2 Has a training budget 95 39.5 455 47.6 Has annual performance review or appraisal system 132 55.3 702 73.5 All of the above 61 25.3 353 36.9 None of the above 51 21.2 106 11.1 Training conducted during past 12 months Base: all firms Arranged training 149 62.3 656 68.6 mainly for Existing workforce 75 31.3 225 23.6 New recruits 5 2.2 21 2.2 Both 69 28.8 410 42.8 Have not arranged training 90 37.7 300 31.4 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 167 69.7 788 82.5 On the job - delivered by external provider 70 29.4 239 24.9 Off the job - delivered by employees 46 19.3 291 30.5 Off the job - delivered by a training consultancy 77 32.3 281 29.4 Off the job - delivered by a FE college 68 28.4 178 18.6 Other method 6 2.6 9 1.0 No preference 41 17.1 92 9.6 For existing workforce On the job - delivered by employees 156 65.1 760 79.5 On the job - delivered by an external provider 68 28.5 300 31.4 Off the job - delivered by employees 46 19.1 271 28.4 Off the job - delivered by a training consultancy 103 43.1 354 37.0 Off the job - delivered by a FE college 69 28.8 188 19.6 Other method 4 1.8 12 1.3 No preference 34 14.1 87 9.1 Off job training providers Base: all firms using external training Further education provider 40 33.8 118 providers28.6 Higher education provider 39 32.6 64 15.6 Private sector training consultancy 79 67.3 310 75.3 Public sector training provider 19 15.7 56 13.6 Other training company 11 9.6 55 13.4 Training by most important provider Base: all firms using external training Health and safety training 61 51.9 139 providers33.9 Induction training 27 22.5 98 23.8 Supervisory training 22 18.4 124 30.2 Management training 29 24.8 196 47.6

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Training in new technology 68 57.3 167 40.6 Training in foreign languages 2 1.4 9 2.3 Job specific training 79 66.8 277 67.4 None of the above 4 3.3 22 5.3 Base: all firms using external training Top ten reasons firms use particular external providers providers Require specialised/ job specific training 12 10.2 53 13.0 They offer the relevant training/ qualifications 11 9.6 47 11.5 Has the best expertise in this subject/ best trainer 10 8.6 28 6.9 No-one else does training/ lack of alternative options 8 7.1 27 6.7 Course is tailored to our needs 6 5.3 28 6.7 Easily accessible/ convenient 6 5.4 25 6.0 Head office decision/company policy/not our 6 5.2 20 4.9 decision Due to regulations/ professional or legal requirement 2 1.7 24 5.8 No in-house training available 7 5.9 15 3.8 Low cost/ free/ value for money 7 6.1 15 3.7

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LABOUR RECRUITMENT (SIC 74.5)

This SIC group comprises 183 firms which amour to approximately 15% of the entire sample.

Labour recruitment firms have distinctive characteristics as Table 8.4.1 reveals:

• Firms are distributed fairly uniformly across four of LSC regions but are significantly under represented in the most rural regions of Hereford & Worcester and Shropshire. • Almost uniquely, single site businesses do not dominate this SIC group as the majority are branches or subsidiaries of organisations with HQs outside the West Midlands. • Not surprisingly a large majority of firms are privately limited • Most units are small as measured by size of on-site workforce • A relatively high proportion of firms have occupied their present site for 3-10 years but more established and recent arrivals are under represented.

The small numbers limit analysis of the information in Table 8.4.2 but hard to fill vacancies are most commonly experienced in the professional and associate professional grades. The main reasons that some positions are difficult to fill are that applicants often lack required skills or qualifications.

Table 8.4.3 records responses to questions about skill shortages and their impact on the business:

• Problems of staff proficiency were most pronounced for sales/customer services and associate professional/technical occupations • The skills gap that gave respondents most concern was in associate professional/ technical occupations although sales/ customer service and administration/ secretarial was also problematic. • Lack of experience or recent recruitment was rated the principal reason staff lacked proficiency. Recruitment problems and staff lack of motivation were important secondary factors. • A number of skills needing improvement received strong support. Customer handling and team working were nominated by at least half of all firms with skill gaps. A further six skills had at least 40% support. • There was a strong feeling that skills deficiencies threaten competitiveness. The two areas most frequently nominated were sales ability and personal skills. • In agreement with most business sectors increased operating costs was viewed as the most likely consequence of staff not being fully qualified. Exceptional, “loss of business to competition” was cited almost as frequently.

Table 8.4.4 summarises some of the key information about training arrangements and preferences:

• Labour recruitment seems to be at the forefront of good business practice as is evident from the high adoption levels for the management tools investigated. As a result 56% of firms used all four measures the highest figure for the business types covered in this survey. • Over three-quarters of the firms conducted staff training during the past 12 months • On-the-job training in-house was easily the most popular type of training but unusually off-the-job training by employees also got substantial support. Not many firms were positive about FE training. • Private sector consultancy was the most used type of external provider. The other types of providers were used with much less although much the same frequency as other firms.. • Job specific training was the main way that the most important external provider was used with management training a close second. • The two most important reasons nominated for choosing a training provider were “they offer relevant training/qualifications” and “ “specialised/job specific training” is required.

Labour recruitment firms have distinctive features including tendency to locate in urban locations and to be part of larger, multi-site organisations. The importance of skills to business success is widely accepted by these firms and commitment to training is at a comparatively high level.

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Table 8.4.1 Characteristics of firms in Labour Recruitment (SIC 74.5)

SIC 74.5 firms All other firms Number % Number % LSC Region Base: all firms Birmingham and Solihull 85 46.2 462 45.6 Black Country 46 25.0 244 24.1 Coventry & Warwickshire 28 15.0 72 7.1 Hereford & Worcester 2 1.3 90 8.9 Shropshire 3 1.6 56 5.5 Staffordshire 20 10.9 90 8.9 Years at current premises Base: all firms Less than a year 6 3.4 41 4.0 1 - 2 years 35 18.8 204 20.1 3 - 5 years 61 33.5 201 19.8 6 - 10 years 45 24.7 203 20.1 11 - 20 years 23 12.4 169 16.6 More than 20 years 13 7.1 185 18.3 Don't Know/ Refused 0 0.0 10 1.0 Organisational type Base: all firms Only site 50 27.2 583 57.6 HQ, regional or divisional HQ 25 13.7 147 14.6 HQ elsewhere in UK 100 54.7 265 26.2 HQ outside UK 8 4.4 16 1.6 Legal status Base: all firms Partnership 17 9.2 198 19.5 Sole Proprietorship 8 4.5 175 17.3 A Public Limited Firm 40 21.6 127 12.6 A Private Limited Firm 116 63.5 503 49.7 Number of on-site workers Base: all firms 1 – 10 142 77.5 824 81.4 11 – 24 25 13.4 91 9.0 25 – 99 14 7.7 68 6.8 100+ 3 1.4 29 2.8

Table 8.4.2 Job vacancies in Labour Recruitment (SIC 74.5)

SIC 74.5 firms All other firms Number % Number % Hard to fill vacancies by occupation Base: firms with vacancies in the occupational group Managers & senior officials 1 51.8 7 36.6 Professional occupations 3 58.1 31 54.2 Associate professionals & technical occupations 9 34.1 11 33.1 Administrative and secretarial occupations 4 39.6 22 30.7 Skilled trades occupations 0 0.0 3 44.3 Personal service occupations 0 0.0 0 0.0 Sales & customer service occupations 3 39.9 3 13.7 Process, plant & machine operatives 1 47.3 1 18.9 Elementary occupations 0 0.0 1 33.3 Base: firms with difficult to fill Reasons why vacancies difficult to fill vacancies Too much competition from other employers 1 6.3 8 11.2 Not enough people interested in this type of job 5 24.9 8 10.5 Poor terms and conditions offered for post 3 14.1 1 1.6 Low number of applicants with the required skills 8 40.7 39 51.9 Low number of applicants with required attitude 6 29.0 14 18.9 Low number of applicants generally 2 9.7 19 25.5 Lack of work experience the company demands 4 21.9 15 20.6 Lack of qualifications the company demands 6 33.0 11 14.6 SERU, University of Birmingham Page 188 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Poor career progression / lack of prospects 2 11.3 3 3.7 Job entails shift work/unsociable hours 0 0.0 3 3.9 Remote location/poor public transport 0 0.0 5 6.7

Table 8.4.3 Skill needs of firms in Labour Recruitment (SIC 74.5)

SIC 74.5 firms All other firms Number % Number % Firms lacking full proficiency in main occupations Base: firms offering stated occupation Managers 9 5.0 50 5.5 Professional Occupations 7 21.0 50 10.6 Associate Professionals/ Technical Occupations 20 20.8 41 12.2 Administrative and Secretarial Occupations 14 12.8 75 13.3 Sales/ Customer Service Occupations 12 23.9 21 11.6 Personal Service Occupations 2 28.0 1 4.6 Elementary Occupations 0 0.0 8 8.6 Base: firms with at least one occupation not fully Occupations with skills gap of most concern proficient Managers 7 14.4 44 24.2 Professional Occupations 7 14.0 46 25.3 Associate Professionals/ Technical Occupations 18 38.5 36 20.0 Administrative and Secretarial Occupations 12 26.5 72 39.7 Sales/ Customer Service Occupations 12 26.3 21 11.6 Personal Service Occupations 2 4.3 1 0.3 Elementary Occupations 0 0.0 5 2.8 Causes of staff lacking proficiency Base: all firms with skill gaps Failure to train and develop staff 9 20.0 46 25.3 Recruitment problems 14 29.7 27 14.7 High staff turnover 8 16.6 12 6.9 Inability of workforce to keep up with change 10 22.2 33 18.1 Lack of experience or their being recently recruited 36 76.5 119 66.3 Staff lack motivation 11 24.3 38 20.9 Other 1 1.9 1 0.3 No particular causes 7 14.8 31 17.0 Skills needing improvement Base: occupations experiencing skill Communication skills 23 44.6 97 43.2gaps Technical and practical skills 22 41.4 98 43.7 Customer handling skills 28 53.2 88 39.0 Practice/ general management skills 23 45.1 90 40.1 Personal skills (motivation, ability to fit in) 26 49.6 86 38.5 Problem solving skills 25 48.7 86 38.4 Office admin. Skills 22 42.9 84 37.2 Team working skills 26 50.0 70 31.2 General IT skills (word processing, email, internet) 16 31.2 72 32.1 Leadership skills 18 34.6 62 27.7 Data analysis 14 27.3 59 26.3 IT professional skills 8 16.2 63 27.9 Accounts/ finance 10 19.1 50 22.2 Technical skills related to the occupation 11 21.3 47 20.8 Human resource management skills 11 22.0 35 15.8 Literacy 9 17.6 30 13.4 Numeracy skills 6 11.3 25 11.1 Foreign language skills 3 6.7 19 8.4 No particular skills 1 2.1 19 8.4 Other skills 6 11.5 6 2.9 Skills deficiencies as threats to competitiveness (top 10 of all mentions) Base: all firms with skill gaps Personal skills 10 21.6 23 13.0 Customer handling skills 7 15.3 16 8.6 Sales ability 15 31.3 8 4.3 Communication 6 13.5 16 8.8 IT / computer skills 2 3.8 13 7.3 Technical skills 0 0.0 13 7.5 SERU, University of Birmingham Page 189 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Office administration skills 4 8.4 6 3.1 General lack of experience 1 1.2 7 3.7 Accounting/ finance 1 1.9 6 3.4 Numeracy 1 1.3 6 3.3 Effects on firm of all staff not being fully skilled Base: all firms with skill gaps Loss of business or orders to competition 22 47.7 39 21.9 Delays developing new products or services 14 29.6 48 26.4 Difficulties meeting customer service objectives 19 40.1 58 32.4 Difficulties meeting required quality standards 11 22.6 39 21.7 Increased operating costs 24 51.1 77 42.8 Difficulties introducing new working practices 9 18.7 26 14.4 No particular problems/ none of the above 9 20.3 50 27.9

Table 8.4.4 Training arrangements of firms in Labour Recruitment (SIC 74.5)

SIC 74.5 firms All other firms Number % Number % Incidence of strategic planning Base: all firms Has a business plan 165 89.9 696 68.7 Has a training plan 141 77.1 569 56.2 Has a training budget 117 63.6 433 42.7 Has annual performance review or appraisal system 164 89.5 671 66.3 All of the above 103 56.1 310 30.7 None of the above 6 3.3 151 14.9 Training conducted during past 12 months Base: all firms Arranged training 142 77.2 664 65.5 mainly for Existing workforce 24 13.3 276 27.2 New recruits 9 4.7 18 1.8 Both 109 59.2 370 36.5 Have not arranged training 42 22.8 349 34.5 Preferred mode of training Base: all firms For new recruits On the job - delivered by employees 165 90.2 790 78.0 On the job - delivered by external provider 55 29.9 254 25.1 Off the job - delivered by employees 74 40.5 264 26.0 Off the job - delivered by a training consultancy 54 29.2 305 30.1 Off the job - delivered by a FE college 24 13.1 222 22.0 Other method 0 0.0 15 1.5 No preference 12 6.5 122 12.0 For existing workforce On the job - delivered by employees 157 85.8 759 74.9 On the job - delivered by an external provider 61 33.2 307 30.3 Off the job - delivered by employees 68 37.0 249 24.6 Off the job - delivered by a training consultancy 64 34.7 393 38.8 Off the job - delivered by a FE college 29 15.9 228 22.5 Other method 3 1.8 13 1.3 No preference 14 7.6 107 10.6 Off job training providers Base: all firms using external training Further education provider 17 20.1 140 providers31.7 Higher education provider 9 10.0 94 21.2 Private sector training consultancy 62 72.3 327 73.8 Public sector training provider 14 15.8 61 13.7 Other training company 13 15.6 53 12.0 Training by most important provider Base: all firms using external training Health and safety training 34 39.8 166 providers37.5 Induction training 23 27.1 101 22.8 Supervisory training 30 34.9 116 26.2 Management training 46 53.8 179 40.3 Training in new technology 28 32.8 206 46.5 Training in foreign languages 1 0.6 10 2.4 SERU, University of Birmingham Page 190 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

Job specific training 52 61.2 303 68.4 None of the above 5 6.3 20 4.6 Base: all firms using external training Top ten reasons firms use particular external providers providers Require specialised/ job specific training 12 13.5 54 12.1 They offer the relevant training/ qualifications 13 15.5 45 10.2 Has the best expertise in this subject/ best trainer 8 9.7 30 6.8 No-one else does training/ lack of alternative options 6 7.5 29 6.6 Course is tailored to our needs 8 9.1 26 5.9 Easily accessible/ convenient 5 5.5 26 6.0 Head office decision/company policy/not our 5 5.8 21 4.8 decision Due to regulations/ professional or legal requirement 4 4.3 22 5.1 No in-house training available 5 6.3 17 3.9 Low cost/ free/ value for money 5 5.5 18 4.0

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9 POLICIES FOR THE SKILL NEEDS OF BPS FIRMS

OVERVIEW

Before specifying the issues that skills and training policy might usefully address, it is useful to overview what the survey of BPS firms indicates about this target sector. This serves to illustrate the difficult challenges ahead.

BPS firms

BPS firms are established by individuals who are capitalising on their expertise, personality, reputation and network of contacts. Much BPS work is performed at the client’s premises or even remotely via information communications technology (ICT). BPS professionals enjoy stimulating creative environments, including the delights of rural environments. This means BPS firms can be established in relatively remote locations and still provide services to local, national and even sometimes to international clients.

Success in the BPS world is attributable to three interrelated factors:

1. Individuals and firms must acquire and continue to develop technical expertise.

2. There needs to be an ability to transform technical expertise into something that has commercial value by providing distinctive inputs into the activities of client firms.

3. People-focussed skills involving presentation and communication techniques are key skills; these can be subsumed under the term impression management or client relationship building.

The first factor is relatively easily acquired whilst the second might come with experience, but the third factor is difficult to develop in someone that does not have the right personality.

Also fundamental to BPS competitiveness is the ability of firms and professionals to lock client companies into their business on the basis of an established personal relationship that is founded on friendship and trust that has developed over a period of time.

Diversity of the sector

The evidence presented earlier in this report highlights the way in which skill needs and priorities are to a degree best assessed and understood on a case by case basis; each BPS establishment, firm, or organisation has a unique mix of human resources at its disposal. There is some scope however, for understanding skill needs by adopting a segmentation approach that highlights, for example, different organizational forms such as micro single person firms with no employees; small single office local firms; small firms with more than one office; branch offices of medium- sized firms; and branch offices of large firms.

Small and medium-sized firms far outnumber much larger firms that have either grown to support the needs of larger local client firms or are the branch offices of national and international service suppliers. Many of the latter appear to have entered the West Midlands market place over the last 10 years and have experienced high growth rates.

Larger BPS firms in the West Midlands are also much more complex. They can be budget or cost centres in their own right, have near independence from the parent headquarters or be completely controlled from outside the region. There are many different combinations of legal structure. Most, however, are responsible for the recruitment of support staff while, in some cases, the recruitment of professional staff is dealt with by a national HR division that is likely to be located outside the West Midlands.

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Legal and organizational diversity, and therefore skills and training needs, is not confined to large BPS firms. For example, there is a marketing company that operates as a collective in which professional ‘employees’ are self- employed video producers, web designers, animators and illustrators who are all accessible through one website which makes the firm look larger than is actually the case.

There is also a virtual human resources company providing outsourced HR functions for SMEs that has small dedicated central base with the professional staff ‘in the field’ providing dedicated advice at the site of the client company. A number of home-based BPS firms were interviewed; micro-firms or sole practitioners are quite prominent, alongside the virtual firms and collectives that rely on established relationships with self-employed associates.

These examples demonstrate the importance of organizational flexibility in BPS. This, in turn, has important implications for training and skill development. Such firms have limited requirements for support staff and, in many cases, the professional will be self-employed. Micro-firms that operate using associates have very different skill needs to larger firms. Many do not employ support staff. This highlights the combinational skill problem experienced by many small companies. Such firms may be technically competent in their specialist areas, but are underperforming because of poorly developed support skills (time management, organisation, sophisticated understanding of computer packages, etc).

Flexibility can also mean that self employed associates are responsible for fulfilling their own training and development needs. It can also involve stretching the working day to meet the needs of clients and it can also involve manipulating salary levels.

Segmentation is also of course relevant to exploring skills and training for broad categories of occupations within BPS. The key segments are professional staff, paraprofessionals, and support staff. In order to highlight the different types of training and skills needed by each segment one of the surveyed firms’ graded employees into: finders, minders and grinders. Grinders never meet clients since not all employees have the ability or personality to deal with clients and these employees become grinders. It is worth noting that it would appear that the number of grinders in BPS firms is shrinking as more employees are becoming fee earners.

Recruitment

When exploring recruitment by BPS firms it must be recognised that for many it is activity that is engaged in only rarely, if at all. The recruitment experiences of BPS firms can be divided into three types: firms that do not recruit, those that recruit infrequently and, those that recruit on an annual basis. If this is mapped on to the types of organizational form typical of BPS i.e. the relatively small number of medium-sized and large firms, it will be appreciated that formal recruitment processes are the exception rather than the norm.

Thus, extant relationships and referrals are at the centre of the BPS recruitment process. They are the dominant modes of recruitment amongst small and medium-sized enterprises and are by no means absent in the recruitment activities of larger companies. In relation to the latter it is perhaps important to distinguish between branch offices of firms with headquarters outside the region and local firms. In the majority of cases support staff are recruited locally via advertisements in the local press or word of mouth.

The challenge of attracting and retaining professional staff is shared by most firms across the region, but especially in those areas such as Shropshire or Staffordshire that do not have a critical mass of BPS activities. Professionals are more geographically mobile than support staff and this has revealed an interesting relationship between the London BPS market and that of a regional economy such as the West Midlands.

Professionals may be trained in London, work there for some years and then relocate to work in other cities. It may also be that the best locally trained BPS professionals migrate from the West Midlands to London in order to advance their careers. However, the evidence to support this is limited and further research into the career biographies of BPS professionals, for example, would be useful.

It is also worth noting that many of the larger firms highlighted the fact that professionals moved between firms in the area and that the market could be very competitive; sometimes larger firms engaged in a sort of ‘Dutch auction’ to attract professionals

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Training

Effective training changes employees’ attitudes. There is a relationship between training and motivation; good training means that employees have enhanced confidence. This can come from on-the-job training, in-house or external courses, but employers should be able to notice a difference in the employee – in attitude, confidence and technical ability.

Training in BPS is therefore not just about achieving the appropriate qualifications as required by professional bodies or in order for employees to be able to perform particular roles or to gain promotion. BPS managers also need to be trained in how to identify the training needs of their employees. Many lack professional management skills. The training needs of a BPS firm are identified and assessed by individuals who have limited understanding of the required management skills in this area. Many have a very limited, poorly developed and perhaps outdated understanding of staff appraisal and development processes. No BPS set of standard procedures have developed in this sector. Best practice exists, but it is rare and hidden within the better managed companies.

The distinction between support staff training and that of professionals is stressed by all the survey respondents.

For support staff there were numerous references to a requirement for good communication skills, technical expertise related to their area, for example legal secretaries or knowledge of relevant ICT.

Professionals need sophisticated client relationship management expertise, technical competence and all this is supported by CPD. The requirement for CPD, which is forced upon professionals, in some cases, is considered to be a mere box ticking exercise. However, for most firms CPD is an essential part of the business, as without it the professional staff will be out-of-date and not aware of current developments (legislation, etc) that have an impact on their clients’ activities.

Firms look at the quality first and for some the location of the provision does not really matter. For others, however, there is an important relationship between point specific provision of key training courses and access to the providers. This is a difficult problem to solve as it is not commercially viable to develop a heavily dispersed network of training providers. However, it would be possible to combine face-to-face training provision with student-centred learning with the balance between formats depending on the trainees’ location.

Further Education Colleges

BPS firms in the West Midlands see Further Education Colleges as having a limited but important role to play in fulfilling their training and staff development needs. They are viewed as being inflexible and more interested in examination and pass rates rather than in the provisions of more intangible soft skills. Courses are only subsidized if taken in full and with a certificate provided if they are satisfactorily completed. Other forms of bespoke or short course are not subsidized.

FE colleges must provide course that produce well-trained support staff; individuals who are able to provide world- class administrative support to BPS professionals and who have the potential to become fee earners. The latter is essential as over time BPS firms will require reduced numbers of support staff. This training should meet the requirements of BPS firms in general and should be commercially focussed around core BPS skills: creative writing, attention to detail, time management, relationship management, impression management as well as general administrative skills.

Some support staff have the ability, inclination and dedication to acquire skills that will enable them to become fee earners or to directly support a fee earner. The FE Colleges provide an essential and effective means of upskilling support staff to the level of a paraprofessional (accountancy technician/legal secretary) and sometimes to full professional status. All LSC areas in the West Midlands must ensure that benchmarked nationally excellent courses are locally available. The key issue is persuading BPS firms that the local FE College is a suitable training provider. FE colleges must be also perceived by the professional bodies as suitable providers and they must deliver training that meets the requirements of BPS firms in terms of timing and location of provision.

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Succession and small firms

POLICY ISSUES FOR ADDRESSING SKILLS NEEDS IN THE WEST MIDLANDS BPS COMMUNITY

It is easiest to group the issues that skills and training policies might usefully address into three types:

• Generic

• Local/regional

• FE-related

GENERIC ISSUES

These essential BPS skills are:

• Verbal dexterity.

• An ability to relate to people from a wide variety of backgrounds and cultures (gender, ethnicity, age, nationality).

• An ability to listen (to try to understand what the client wants and then to be able to frame an appropriate response).

• Appreciation of body language (its interpretation and projection); impression management.

In addition, much of activity engaged in by BPS is about creative writing. Therefore, advanced literacy skills are required, as well as a level of numeracy.

There is therefore a need for the development of courses that address issues surrounding client relationship management.

Although not exclusively an issue for support staff in BPS firms, there is evidence pointing to poorly developed soft skills, including managing relationships – internal and external to firms..

This deficiency does not just arise from any inadequacies in the monitoring and training regimes used by employers. It is complicated by a failure on the part of new employees to appreciate some of the survival techniques that are required in the world of employment. This includes an appreciation of the nature of the work environment in BPS, SERU, University of Birmingham Page 195 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

understanding how as individuals they relate to other employees (as well as clients), and the requirements associated with working as part of a team.

There is a triple cost to external training:

1. Management time spent identifying skills and training needs.

2. Time and effort invested in identifying suitable courses.

3. Fee earning or support staff time lost as a result of training.

A fourth cost enters the equation if the source of the training is located 20-30 miles away i.e. tired and less motivated staff in the workplace.

On the job training has a double cost which arises from:

1. Pre-occupation of the internal trainer and the trainee with the task in hand.

2. Tendency in many instances for the training not to be concluded because everyday business activities have a tendency to distract the participants.

LOCAL AND REGIONAL ISSUES

In Stafford, Coventry and Warwickshire, and Shropshire we have been informed that the key attraction is some form of family tie to the locality.

Firms claimed that salary levels were comparable (and sometimes enhanced) with those in Birmingham, but they still found it difficult to attract suitable highly skilled staff.

The concentration of some support staff training suppliers in Birmingham is also seen as a major problem, especially when account is taken of transportation infrastructure problems (e.g. the reference by a firm in Stoke-on-Trent to mostly junior female staff being unable to afford reliable cars and therefore being reluctance to travel far on wet winter evenings). The impact of such ‘invisible’ barriers to sourcing training by BPS firms should not be underestimated.

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FE-RELATED ISSUES

The perception of the FE sector amongst BPS professionals is that:

• It provides training for school-leavers.

• It commands a captive market and does not actively go out to attract business clients.

• The generic training available is of variable quality.

• It is inflexible in relation to timetabling, curriculum content.

The Units would have a steering group of key regional employers and develop strong linkages with local Chambers, Business Links, and key local, regional or national business lobbying groups. Stafforshire first, Birmingham Forward or Telford Business Partnership, for example, could play a pivotal role in supporting and facilitating such an initiative from the BPS side.

The key message is that FE colleges should:

• Build upon their key primary advantages of location, regional identity, availability of local infrastructure and resources.

• Develop a local knowledge base to meet the demands of local business.

• Learn from the best private sector training providers (i.e. they should benchmark themselves against private sector providers). SERU, University of Birmingham Page 197 Skill Needs of Business and Professional Services in Objective 2 Areas of the West Midlands

• Provide targeted training to meet a particular business need.

• Be flexible in skills delivery to match client expectations and timeframes.

• Improve, develop and re-badge what they are currently doing.

• Develop a modular framework of very short units so that employers could, for example, identify a short (say two-day module) that could be selected to fulfil their particular requirements.

• Bespoke training provision for a particular company or group of firms is also a key requirement.

OTHER POLICY ISSUES

The focus group meetings in particular generated a number of other comments or observations that are policy-related and worth noting. These are listed below (in no particular order):

• Public sector training is primarily driven by government targets rather than by the real skill needs of BPS firms.

• LSCs should be closed down and the money put into front line training.

• Change the way in which LSC measure success; too much emphasis on completion of a course, employers may only want some of the skills that are provided.

• There should be a local database of available courses that is explicitly designed to meet the needs of businesses.

• Poor training can destroy a business; quality standards for trainers are needed.

• The training system needs to be simplified; there are too many courses available, too many types of training provider, and so many different types of funding.

• There is scope for a useful dialogue between the BPS COG and training providers, public and private.

• The public/private training divide is artificial; the fundamental issue is quality and cost.

• It may be worth setting up local training collectives of BPS firms to, for example, support graduate entry into professional employment.

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