CBI highlights importance of good management in regional development and building a successful economy post-Brexit

25 May 2017 -

Increased investment in management training and development is key to closing not just the productivity gap between Britain and its G7 partners, but also the gaps that exist between different UK regions

Ian Wylie

Carolyn Fairbairn, director-general of the CBI, believes a “golden opportunity” exists for political and business leaders to create an industrial strategy that makes the UK the most competitive, innovative economy in the world by 2030.

Delivering this year’s McLaren lecture - an annual event held jointly by Aston University and CMI – Fairbairn drew on the findings of a CBI/McKinsey study that analysed data from 172 regions and districts in the UK to gain a greater understanding of productivity, which she described as the “defining issue of our age”.

“There’s a sense that the Brexit vote was linked to a real gulf in opportunities between different parts of the UK. And productivity is at the heart of this,” she said.

Read more: What managers want from Brexit

Mind the Gap

The productivity gap between Britain and Italy, France, the US and Germany is well known. But the big differences in productivity between different regions of the UK often go unnoticed.

London’s productivity, for example, is more than double that of the UK’s bottom six regions. But the researchers found that there is almost as much variation within regions as between them. In the West Midlands, for example, Solihull is a third more productive than Wolverhampton, just 20 miles away.

This has a knock-on effect on wages and living standards. Someone living in Wolverhampton, for example, earns on average £5,000 less than someone in Solihull.

Comparing the Regions

The CBI has published more than 250 scorecards, showing how the UK’s nations, regions and local areas are doing on the four primary factors that explain the bulk of the productivity differences: management practice, education and skills, transport links and exporting.

“In terms of management practices, there is much that business can do for itself,” said Fairbairn. “It’s about how we run our firms and understand the correlation between shopfloor engagement and productivity.”

The research, she said, showed that offering management training, the benchmarking of performance and incentive programmes are proven in making a significant difference to productivity.

In terms of education and skills, the CBI director-general said business had a role in inspiring young people through apprenticeship degrees and the forthcoming T-levels. She said the example of London schools, turned around largely through good leadership, needed to be spread nationally.

Fairbairn also contended that greater exporting could make a real difference to regional productivity. If each “potential exporter” became an “actual exporters” she estimated the number of British exporters would rise by almost 75%. “One of the shots in the arm that Brexit gave us is to make firms think more about exporting,” she said.

Leading the way with Devolution

In her wide-ranging lecture, Fairbairn praised the government’s appetite for devolution, though she warned that Brexit could crowd out regional issues. “This is a glass-half-full moment for the country. We’ve had the shock and we can go forward in a number of different ways,” she said.

“Today, there’s a real sense of excitement as regions and nations step up, lead and take charge of their own destiny. There is energy in the air, a greater focus on exporting, more conversations about what’s special about each region, and bringing decision-making closer to the people it affects.”

The CBI director-general called for an end to short-termism in government and for the setting of targets to make the UK the most competitive, innovative economy in the world by 2030, while closing the productivity gap between best and worst performing UK regions by 15%.

Progress towards these targets should, she argued, be monitored through a newly created “hold-feet-to-the-fire” unit modelled on the Office for Budget Responsibility.

She also called for an end to petty squabbling between regions. “We’re a small country and the more we get away from the damaging them-and-us regional rivalries, the better,” he said. “We need to think about our regions and cities competing globally, not with each other.”

Following the lecture, CMI chief executive Ann Francke, commented that while improving management in organisations is one of the main drivers in helping to unlock regional growth, the biggest boost to productivity – better managers – is often overlooked.

“By improving the employability of young people and helping them to make the transition into work, we can prepare the next generation of managers for the workplace, and help improve regional productivity,” she said. “With 56% of young people in the Midlands finding it difficult to get the experience they need to get a job they want, we need to address this earlier by creating closer links between employers and education.

“This is why we’re pleased to partner with Aston University to embed CMI accreditation in their courses and to produce some of the first Chartered Manager Degree Apprentices.”