Jam UK - and how we get out of it

23 November 2016 -

CMI’s CEO gives her take on Chancellor Philip Hammond’s Autumn Statement and what more needs to be done to close the productivity gap

In his Autumn Statement today, Chancellor Philip Hammond offered a package of welcome support for what are now described as the “JAMs” – those who are “just about managing”, striving just above the breadline in a challenging climate of austerity.

But it’s not just individuals who are just about managing. The current productivity deficit in the UK – 21% below the rest of the G7 – is testament that the UK is itself is just about managing too – and not doing so very successfully.

CMI’s research into this productivity gap conclusively shows that the key way to get out of this particular jam is to invest in better leadership and management practice to create a more skilled and talented workforce. A recent report from IIP calculated that poor people management is costing the UK £84bn per year, and bad management is the number one cause of business failure and the biggest preventer of SME growth.

Our businesses are overloaded with accidental managers – employees who are highly competent technically in their job – e.g. IT or Finance, then promoted into a management role, but given no formal training. We currently have 3 million UK managers not delivering to their full capability and CMI research shows 43% of managers are rated as ineffective by their teams.

The good news is that this can be addressed.

We’ve seen that organisations that introduce effective leadership and management behaviours increase their productivity by 32%. Better trained managers and leaders also create cultures of trust between leaders and managers through their behaviours.

In high-growth businesses, 68% of managers have high trust levels.

CMI welcomes the Chancellor’s ongoing commitment to investing in employer-led Higher Apprenticeships to address our skills shortage and his commitment to the skills Levy, which provides an essential investment fund boost to help British business invest in creating productive and successful leaders and managers.

But it’s still not enough. We need 2 million more new managers by 2024 to compete in the post-Brexit business world, which means as well as addressing better practices in our businesses now, we need to embed leadership skills into our education system now for the next generation too.

For too long, in the words of the White Queen in Alice Through the Looking Glass, the UK has worried about “jam tomorrow and jam yesterday … but never jam today”.

We need urgent action from the Government and UK businesses to invest in leadership and management skills now, to boost productivity at the individual, organisational and macroeconomic level – else this is a jam that we’ll all be perennially stuck in.