RESEARCH The Development of Management and Leadership Capability and its Contribution to Performance: The evidence, the prospects and the research need John Burgoyne, Wendy Hirsh and Sadie Williams Research Report RR560 Research Report No 560 The Development of Management and Leadership Capability and its Contribution to Performance: The evidence, the prospects and the research need John Burgoyne, Wendy Hirsh and Sadie Williams The views expressed in this report are the authors’ and do not necessarily reflect those of the Department for Education and Skills. © Lancaster University 2004 ISBN 1 84478 286 7 1 ACKNOWLEDGEMENTS
This report has been written by John Burgoyne, Wendy Hirsh and Sadie Williams as members of the Management and Leadership Development Research Network. This group consists of researchers concerned with the topic of this research. Other members have made specific contributions. Chris Mabey has provided a special input on nature and effects of corporate management development. Kim James, David Beech, and Lew Perren have provided special reviews on corporate management and leadership development strategies, leadership and the development of management and leadership capability in small and medium enterprises respectively.
The general approach to the project, locating specific studies, drawing conclusions from these, and the judgements about useful future research priorities have been informed by discussions in the network group and comments by its individual members as the review has progressed. The members not already mentioned are: Kamal Birdi, Richard Bolden, Johnathan Gosling, Jim Hillage, Matias Ramirez, Penny Tamkin, Marc Thompson, Stephen Watson and Stephen Wood. 2
The conclusions are based on the inferences that can reasonably be made from empirical research, and are, in that sense, evidence based. The reader will find more on the evidence and methods of this in the main report. This executive summary concentrates on the conclusions. A ‘summary of the summary’ can be made in these few points: Management and leadership development can and does, in the UK and elsewhere, enhance performance for economic and social benefit. It does not currently do so to its full potential, and there are therefore further performance gains to be had from improving it.
This improvement can come as much or more from improving the precision with which the management and leadership development investment is made (by individuals organisations and the state), than by increasing the scale of the investment – though the latter might usefully grow as confidence in performance benefit becomes more secure. This is because management and leadership development contributes to performance in multiple rather than a single way, and what is effective varies very much ith situation and context. Fitting the right approach to the specific context is the key. Management and leadership capability is located collectively in organisations, sectors, and regions, and initiatives to develop these, in addition to ones based on education, training and development to create individual capability are needed. Not all capability that exists at the individual level is fully used in collective organisational processes, for a mixture of motivational, organisational and reward reasons.
A major priority for future research therefore needs to be oriented to improving understanding of what forms of management and leadership development work in what situations. To do this future research in this area needs to be more coordinated, more about effect and impact as well as describing the status quo, more longitudinal (to allow for the identification of effects over time) and involve more evaluation to improve, and learn the lessons from, ongoing practice. 1
In slightly more detail, the main conclusions from this review are: This report by the Management and Leadership Development Research Network (MLDRN) for the Leadership and Management Unit (LMU) of the DfES and DTI addresses the question, based on a review of existing literature and research, of how confident we can be, on the basis of evidence, that management and leadership development enhances management and leadership capability, and that this in turn contributes to increased performance.
It is useful to think of management and leadership, and indeed entrepreneurship, together as aspects of organising to achieve productive outcomes, while recognising that these terms helpfully label different aspects of this process. Management and leadership activity in the UK (and elsewhere) is substantial and the quality of the capability is difficult to assess. The overall conclusion is that (a) weaknesses in management and leadership capability cannot be proved to be a source of competitive disadvantage in economic and social terms for the UK, but that (b) there is an opportunity to gain further advantage from its enhancement.
Therefore, although the research generating the evidence is not as extensive as we would like it to be, it can be concluded with reasonable confidence that management and leadership development can lead to increased management and leadership capability which in turn enhances performance. Whether it does so in all situations where this might be possible is far from clear, and there is every reason to believe that it could make a bigger impact with more, and more precisely focused, investment.
This latter point is important, since it suggests, from a cost benefit point of view, that improving the precision with which investments in management and leadership capability is made, not just increasing the size of the investment, has the potential to enhance benefit. While the case for the potential for management and leadership development to contribute more can be made, suggesting some support for the argument of a ‘tail’ of both organisations and people who are not developed to their full management and leadership development potential, the case cannot be made for a particular UK deficit in this respect.
In a sense this matters less than the implication that there is scope for adding value. It may be better to think of the opportunity in the UK as being to get distinctive advantage through better leadership and management, both through being good at old forms of business and quick to reap the advantages of new ones, rather than facing a catch-up, deficit situation. It is also concluded that there is no single form of management and leadership capability that enhances performance in the same way in all situations, and no single way in which management and leadership development creates this capability.
Rather there are many different forms of management and leadership development that can generate many different forms of management and leadership capability, which in turn can increase performance in different ways. Furthermore, the forms of management and leadership development that create different forms of management and leadership capability which in turn create effective performance of different kinds, vary very much with situation and context – public private and voluntary sectors, large and small organisations, different economic sectors and others. 2
Although it is clear that performance enhancing management and leadership capability can be developed, it is also clear that this is not currently being achieved to maximum effect in all situations. This suggests that there is considerable benefit to be gained through the improvement of management and leadership development methods, and that this is to be achieved not through the applications of universal formulae, but by improving the precision with which the right approaches are used for the right purposes to achieve the right outcomes as they vary according to circumstance.
The management and leadership development that contributes most clearly to performance enhancement is that carried out in or close to companies and organisations, and for managers and leaders who are in or entering posts. It is more difficult to establish this effect for training and education efforts further back in the talent producing value chain – in Schools, Further and Higher Education including Business Schools, as they affect the development of people and their talents at earlier career and life stages.
While there is no reason to doubt that education in many forms contributes to management and leadership development it is more difficult to prove and to assess which parts of it make the greater contribution. It also appears that the effect of education on management careers and performance is a mixture of a general and vocational education effect, and probably through providing a signalling and selecting mechanism as well as through developing individual human capital for management and leadership work.
It is also clear that management and leadership capability is not only that which resides with individuals, or in an organisational setting consists simply of the sum total of the capabilities of those within the internal labour market. Important though these are, there is also a collective management and leadership capability that affects performance and transcends individual capability. Firstly this involves connecting individual talent to organisational process through career management and broader human resource management systems to secure the efficiency and effectiveness with which management and leadership capability is used.
Secondly, organisations (and perhaps sectors and nation states too) have systems, procedures, cultures, traditions and community-located bodies of practice and understanding that affect performance and transcend the coming and going of able individuals. Management and leadership development must be interpreted to include those kinds of initiatives (organisation change and development, learning organisation, learning society) that seek to enhance leadership capability in the collective as well as the individual sense, in organisations, sectors and whole societies.
Although the research and evidence is strong enough to support this point, it is less strong in telling us what policies and practices to adopt to enhance collective management and leadership capability. There is a policy and practice gap to be filled in the development of collective management and leadership capability, and a gap in the evidence based research to steer this process.
As an extension of this point, it is clear that not all the management and leadership capability that exists with individuals is fully utilised in organisational settings. This is because of mixture of motivational factors, revolving around whether people are recognised as having these abilities and are rewarded for using them, and structural issues concerning work planning, career development and organisation design affecting the extent to which individual capability can contribute to collective capability.
Human resource management processes that link leadership and management capability utilisation with organisational strategy and processes are critical to reaping the performance potential of management and leadership capability. 3 Although there has been a significant amount of research and evidence collection to allow for the conclusions summarised here to be drawn, it is, with the benefit of hindsight, and with an eye to what should be done in the future, not as good as it could or should be.
Key general points for useful research to improve the evidence base for both policy and practice are: • • Research needs to be more coordinated, conceptually, operationally and in terms of shared databases to allow for conclusions and knowledge generated to be cumulative. There needs to be more longitudinal and longer term research to improve understanding of how effects unfold over time. There is a special opportunity to follow up companies about which data has been collected a number of years ago and sometimes over a number of years.
Research needs to be more comparative across situations, organisations and nation/state cultures to address the challenge of understanding what works, in what way, and how in different situations. For example, at the level of organisations, effective leadership approaches, and ways of developing these, may vary with sector, size and life-stage of organisations, and at the national level UK practices and their effects on productivity and other performance indicators could be better understood by benchmarking against ther nation states. More evaluation research needs to be built into management and leadership development initiatives themselves, so that evidence is used to steer and improve, on the base of evidence, their effectiveness, and so that they generate knowledge that can be transferred to other situations. More research is needed to understand how management and leadership capability contributes to performance, and how the different channels through which this operates are activated in different contexts.
This will help to target management and leadership development effort. More research is needed to understand the education, training and development processes that are effective in developing management and leadership capability, not in terms of finding universally effective methods, but in terms of finding out what works for what purpose in what situations, and how to fine tune the precise design of management and leadership development in particular situations.
Useful research for the future needs to be more concerned with understanding the effects of initiatives as well as describing the situation in relation to management and leadership capability. The most up to date and theoretically well informed research methods need to be used, and policy makers and practitioners concerned with management and leadership development need to know how to make the best use of research to optimise the use of the evidence base for their decisions.
Investments in the development of management and leadership capability are made in a complex combination of ways by individuals, employing organisations and the state. The state is involved directly through education, through its policy setting for the public sector as employers, through indirect measures such as taxation and financial policies that encourage or discourage forms of development investment, and 4 • • • • • • initiatives like Investors in People and the Management Standards that are intended to support and encourage good practice.
Another kind of research, is needed to help consider what combination of these forms of investment and initiative are of most use. This would involve developing and testing a model of the multi-stakeholders investing in, owning, and drawing economic benefit from, management and leadership human capital. The model would be used to consider whether the incentives to invest in this human capital are best distributed to achieve the general good, and draw any appropriate policy conclusions. 2: Introduction The proposition that the economic and social wellbeing of society, and those in it, is substantially dependent on the effective and efficient performance of organisations of all kinds, that this in turn depends on adequate or excellent management and leadership capability, and that this in turn can be learnt and developed, would be accepted by many as likely to be true in common sense and everyday observation.
It is also the case that organisations of all kinds, Government and Government agencies, and individuals investing in their own development, in the UK and internationally, behave on the basis of this belief, through the very substantial investments that they make in management and leadership education, training and development, and initiatives to support this. Boyatzis et al (1996) estimate the global investment as $37 billion.
However Porter (2003) in his recent influential report on the British economy is cautious in being confident that management is a decisive factor in organisational and national performance. From his largely macro-economic perspective and on the basis of international comparative economic data he places a lot of emphasis on the business environment of the company: infrastructure, liberality of economic and regulatory policies, investment traditions and practices.
He positions management capability, and particularly the willingness and ability to adopt ‘modern management techniques’ as much or more as a consequence of investment alongside advanced technology and highly skilled labour, than as a likely cause of making increased investment, up-rating technology, strategic positioning in high added value trading networks and developing workforce skill levels. This debate has the potential for being a purely theoretical and philosophical ‘chicken and egg’ debate.
However the empirical contribution to this debate from this study is to assess the evidence that developed management and leadership capability drives, rather than is driven by, investment, innovation, lifting workforces skills, and taking advantage of circumstances external to the firm. This part of the debate is couched largely in terms of the private sector, but similar principles can be considered to apply to the public and not-for-profit sector in terms of the efficiency and effectiveness with which they achieve their purposes in the large sector of the economy that they occupy. The aims of the investigation reported here are several.
The first is to be clear what we might mean by management and leadership capability (and the place of entrepreneurship in this), and what we can say about its state, quantitatively and qualitatively, in the UK at least (Ch. 3). The second is to see how confident we can be, on the basis of evidence, that management and leadership development creates management and leadership capability, which in turn contributes to the achievement of economic and social performance (Ch. 4). This question is therefore about whether management and leadership development does or can produce economic and social benefit.
The third question is, if so: how management and leadership development contributes (Ch. 5). It is known that management and leadership operates in a very wide range of contexts: public, private and not-for-profit sectors, organisations of very different sizes, different industrial sectors. It is known that management and leadership is, or could be, carried out by many different kinds of people in terms of diversity categories like age, ethnicity and gender. It is also known that people are involved in management and leadership at different career stages and come to it from differing occupational and educational backgrounds.
An extension of the how question 6 concerns the forms of management and leadership development that work in different contexts. From both a policy and practice point of view the answer to these three main questions are relevant to the decision about how much priority and investment to allocate to management and leadership development and, if this priority and investment is to be made, what form it should take. The fourth and fifth questions are about research to support management and leadership development policy, operations and theory. The fourth question (Ch. 6) is about how we judge research presented to us, and how we do it.
The fifth question (Ch. 7) is what the most useful research priories should be now, in the light of this review, and taking into account practical opportunities and current initiatives. At the core of this review and inquiry is the idea of a possible value chain in which management and leadership development creates or adds to management and leadership capability, and that this in turn, through the creation and maintenance of organisational processes, creates economic and social benefit. Figure 1 sets this out visually, as explained below: Figure 1: MLD MLC Performance context
MLD = management and leadership development MLC = management and leadership capability Performance = that of or for individuals, organisations or the nation state, includes the achievement of economic and social goals and as variously measured by ‘bottom line’, target performance, stakeholder satisfaction (e. g. balances scorecards) and other methods. 7 While suggesting a very simple two link value chain: development creating capability and capability creating performance, this representation allows for some likely complexities: • • Performance may come in many forms and be measured in different ways.
Management and leadership capability may come in different forms (e. g. located in individuals, teams, organisations, and be for different things (e. g. innovation, efficiency, motivation and commitment). There may be many different processes by which forms of capability contribute to forms of performance. There may be many different development processes that develop different forms of capability. How these processes work may vary with context (economic sector, size or organisation, etc. ). • • •
In these terms: Chapter 3 deals with what management and leadership capability is, and what can be said about its current state – for the UK and generally. Chapter 4 deals with the evidence-based confidence that we can have that management and leadership development contributes to performance through enhancing capability. Chapter 5 deals with what we know about how this works and how it varies with context. Chapter 6 deals with the research issues in making these conclusions evidence based, in a way that improves policy and practice choices.
Chapter 7 deals with the priorities that this review suggests for future research. 8 3: The Nature and Current State of Management and Leadership Capability This chapter examines some of the definitional and background issues as background to the following chapters. It addresses the questions: • • • What is the population of managers in the UK? (section 3. 1) What do we mean by ‘management and leadership capability’? (section 3. 2) What do we know about the scale and nature of management development activity in the UK, and how it is changing? (section 3. 3) Chapter overview
The population of managers and leaders in the UK • • We can estimate that there are 4-4. 5 million ‘managers’ in the UK, including those in small firms (perhaps 40% of managers). There is a demand for about 400,000 new entrants to management each year, both to renew and to grow this population. Many people who are not occupationally classified as managers carry out management and leadership roles, in particular very many professional workers. Management and leadership capability • Our current ideas about the nature of management and leadership have evolved through several decades.
New ideas, such as emotional intelligence, tend to add themselves to older ideas, such as planning and organising. The debate about management versus leadership will no doubt continue, but has probably served its purpose. Suffice it to say that the aspects of management concerned with giving people direction and motivating them are now seen as very crucial. There has been significant research into attributes of managers who are ‘high performers. ‘ However, different researchers have approached this task in different terms. Some have looked at tasks/ activities, some at skills/ behaviours and some personal qualities.
Research has usually been focused on improving selection, so has not told us much about the relationship between capability and management development. ‘Competence’ frameworks are used in many organisations as summaries of descriptions of desired management behaviours, often including activities and personal qualities as well. National Management Standards have been in existence for a decade, and have been amended several times over that period; mainly reflecting informed opinion about management and leadership rather than rigorous research.
Major employers continue to use their own competence frameworks, even in the public sector, although the National Standards are widely used to accredited vocational management education. The research • • 9 summarised in the following chapters shows that competence can be linked to performance and serve a useful way of focusing learning goals. • Many of our ideas about management and leadership capability come from work on senior managers, and may not apply so well to junior and middle managers. There are also limitations to the evidence base in terms of nationality (much work is American), gender (mostly male) and race (mostly white).
Trends in management and leadership development • Management and leadership development in the UK is provided by a complex mix of further and higher education, and formal and informal training provided by employers. A range of other suppliers (large and small training companies and management consultancies, professional bodies etc) play into both the education and employer sectors. Nearly 100,000 qualifications in management and business are awarded each year, including about 19,000 first degrees and 10,000 MBAs (about 7,500 of these are UK students). There is large raft of varied vocational qualifications – NVQs, certificates, diplomas etc. warded in both further and higher education. Management training in employing organisations in the UK has been growing slowly from a low base. Work-based learning approaches (coaching, project work etc. ) are popular with HR professionals and with individuals, but they are often difficult to support and we have no reliable estimates of the volume of such development activity. The more exciting and innovative approaches to management and leadership development tend to be offered only to small populations – senior managers or those on high potential development programmes. • • 3. The population of managers and leaders in the UK The UK has a large number of managers and this population continues to grow. Williams examined the ‘stocks and flows’ of managers in the workforce for the CEML enquiry and estimated about 4-4. 5 million people who might be said to be managers, many of whom work in small firms (Williams, 2001). An estimated 400,000 new managers might be required each year, of which the majority enter from other occupations. About 10% of these entrants to management are assumed to be meeting the growth in this part of the workforce, and the remainder are replacing retirement and other losses.
So there is a continuous challenge to supply organisations with the managers they need. Small firms are a crucial component of the national economy. Perren and Grant (2001) estimate SMEs as employing over 56% of the UK workforce, including over 1. 75 million managers. A detailed analysis of the demographics of management can be found in Bosworth’s paper for the Skills Taskforce (Bosworth, 1999). It is also important to bear in mind that many other workers not recorded as ‘managers’ by occupation need management and leadership skills. Most professionals manage projects, 10 rogrammes or work and often staff while using their professional skills. Only a minority of these would be recorded as ‘managers’, but they still need management and leadership development. 3. 2 Management and leadership capability 3. 2. 1 Changing ideas about management and leadership The present debate about ‘management’ and ‘leadership’ is not new. There is a long history of research into what management is, what managers do, and what managers need to have in order to do their jobs well. ‘Leadership’ has been of interest at different times and in different ways.
It may help to start by highlighting some of the key ideas about management and leadership that colour our current views on management and leadership capability. Some of these ideas are based on empirical research, but some are simply making sense of what people perceive to be the changing nature of the managerial or leadership task: • Work by Mintzberg (1973) showed that management work as actually carried out is not an orderly and pre-planned process, and that managers actually spend their time in a fragmented and responsive way.
The idea of the manager as ‘fixer’, problem-solver, and fire fighter is very prevalent in the UK. Bass (1985) talked of transformational leadership, as characterised by vision, optimism, integrity, intellectual challenge and consideration for individuals. Kets de Vries (1996) writes of the charismatic versus the architectural leader, and Shamir (1995) of the differences between the ‘nearby’ and the ‘distant’ leader. AlimoMetcalfe and Alban-Metcalfe (2003) have examined the idea of transformational leadership in relation to the public sector, covering the elements of innovation, culture and people.
Argyris has examined the notion of empowerment in relation to leadership (1998) and the tension between extracting compliance from the workforce as opposed to raising their internal commitment, especially during change. Strebel (1999) has also highlighted the link between leadership and change and the delicate balance to be struck between top-down and bottom-up approaches to achieving change. Hiltrop (1998) points to the self-reliance and resilience needed by leaders, linked with the recently fashionable idea of ’emotional intelligence’ (Goleman, 1996). Learning to learn’ is seen as an increasingly important meta-skill for managers (Winterton, Parker et al. , 2000). Antonacopoulou and Bento (2003) take the idea of learning much further in placing the idea of learning at the heart of leadership: ‘Leadership is not taught and leadership is not learned. Leadership is learning. ‘, a thought previously also applied to management by Burgoyne (1994). Many other studies have looked at specific skills needed by senior managers.
They include the ability to see the ‘big picture’ and deal with relationships (Clutterbuck and Megginson, 1999), and the ability to work across boundaries (Colvin, 1998). The more complex the situation, for example in mergers or business alliances (Garrow et 11 • • • • • • al. , 2000), the more a capacity to deal with personal relationships is necessary to enable progress towards achieving the strategic business vision. • Mabey and Thomson (2000) highlighted some management skills in high demand: managing people, leadership, team working and customer focus.
Within leadership they picked out motivation and teamwork followed by strategic vision and delivering results. We see all these ideas, and more besides, in the current discussion of managerial skills. It is fairly unclear which of all these skills have been shown to link with performance, and which just seem sensible ideas. • A recent telephone survey of Business Schools conducted by the Institute for Employment Studies asked about the people management and leadership skills which individual managers attending Business Schools were highlighting as their own learning needs.
The list included: giving negative feedback; dealing with the tension between ‘hard’ and ‘soft’ management styles, delegating well when under pressure; and dealing with conflict and politics (Tamkin, Hirsh and Tyers, 2003). It is interesting to note that Business Schools were unsure as to whether they followed genuine changes in the demands on managers, or whether they themselves ‘led’ shifts in thinking by finding new angles for training programmes.
Some older empirical work by psychologists has attempted to discover which features differentiate managers who perform well, so as to identify capabilities which link with performance. These studies have looked for features of different kinds and used different methods. Meta-analyses of high performance leadership competencies • Schippman and his colleagues (1991) identified 21 main task dimensions of management work, informed by an analysis of 21 research studies between 1949 and 1986. They used an activity-based approach.
Fleishman and his colleagues (1991) specified 13 leader behaviour dimensions evaluated in relation to 65 classifications of leadership behaviour between 1944 and 1986. This approach is based on describing behaviour in relation to four superordinate operational functions involved in all human work activities: information acquisition; information processing and decision; information storage; physical and communicative action. This cognitive perspective on human functioning tends to downplay the role of emotion. Yukl and colleagues (1990) defined 13 specific leadership behaviours or managerial practices.
This work was based on factor analysis of the behavioural skills required for effective performance. Tett and his colleagues (2000) identified 53 management competencies that reflect a combination of personal attributes and behavioural skills. This study builds on work in 12 earlier studies of managerial performance between 1951 and 1993. • • • So the definition of what managers and leaders need can be expressed in terms of management tasks; management or leadership skills or behaviours; or in terms of personal 12 qualities.
It is important to think about these different ways of expressing management and leadership capability when seeking to use any of the frameworks on offer. Beech (2003) is in favour of unpicking tasks, personal attributes and skills in order to clarify the objectives, design and measurement of management and leadership development. The knowledge that managers also need to have has been rather neglected in this field of work, although organisations see this as one important critical outcome of career experience (Hirsh, 2003) and, of course, it is largely what Business Schools have taught.
Leadership and management The term ‘leadership’ causes considerable confusion. Some people assume leaders are those near the top of organisations and therefore define leadership in such terms, often emphasising strategy and vision. Others use the term ‘leadership’ to describe the more transformational aspects of management at any level, especially the motivation of employees and the management of change. So in English, the idea of ‘leadership’ embodies both the heroic leader at the top (Wellington or Nelson) and the brave foot soldier – a pretty confusing mix.
Management on the other hand, appears a more mundane and formal affair, the dictionary definition including words like ‘direct’, ‘control’ and ‘resources. ‘ Some writers seem to take it as given that leadership and management are distinct. For example, Boyatzis (1993) sees management concerned with competitive advantage, predictable results, and solving problems. He sees leadership as concerned with mission, purpose, change, excitement, and inspiration. Others feel that management and leadership are ‘inseparably interwoven in life at work’ (Beech Working Paper, 2003).
This debate about whether leadership is different from management has probably now served its purpose in the UK – to recognise that managers need to provide direction and motivate people as well as organise work. 13 3. 2. 2 Competencies and frameworks Boyatzis and others took up ideas about managerial work in the study of ‘management competency. ‘ Boyatzis (1982) was interested in identifying competencies, which he saw as attributes of the individual which are ‘causally related to effective or superior performance in a job. ‘ So for Boyatzis, competencies were rather stable characteristics of the person.
Many have used a similar approach to identify such competencies, usually by finding high performing managers and using structured interview techniques to elicit the behaviours they show at work which are different from the behaviours of lower-performing managers. Spencer et al. (1992) gives a useful account of the development of this field, especially the work of McClelland, and how it has translated into practice, especially through the consultancy HAY McBer. The resulting HAY McBer model had six broad clusters of competency – achievement competencies (e. g. initiative), helping/ service competencies (e. g. nterpersonal understanding), influence competencies (e. g. relationship building), managerial competencies (e. g. developing others), cognitive competencies (e. g. analytical thinking), and a personal effectiveness cluster (e. g. self-confidence). Derivatives of the work of Boyatzis and McClelland are widely used. Competence frameworks used by employers Both the idea of management competencies, and their arrangement in frameworks, has proved very attractive to major employers as part of their approach to HRM. In translation to use, the idea of ‘competency’ as a personal attribute became muddled with ‘competence’ as skills to do a job.
However, even though the two spellings and a variety of meanings persisted, by the late 1980s many large employers had developed competence frameworks and were using them in a variety of HR applications. Hirsh and Bevan (1988) conducted a content analysis of 100 competence frameworks from 40 organisations. Three key features of the notion of competence emerged: • • • that competence concerned managers in the context of their organisation and a job role that competence was associated with superior job performance that competencies were described in terms of behaviours which could be observed in the job
Some of the commonest items in the frameworks examined in the IES research were communication, leadership, judgement, initiative, organising, and motivation. While these frameworks had a strong ‘family resemblance’ in the terms they contained, their meaning (as defined by more detailed behavioural statements) was quite context specific. 14 National Management Standards and general frameworks The ideas of management competence were adopted at national level in the MCI Management Standards, in the 1990s.
These were offered as a tool for employers, but also as a framework for structuring management and leadership development in the education sector i. e. for the accreditation of vocational qualifications. The standards were first accredited as the basis for qualifications in 1991, and a revised set similarly accredited in 1997. The original Standards were a complex framework, taking a largely task-based view of management broken down into managing operations, managing finance, managing people, managing information. Each of these main groups was broken down into units of competence and further into elements of competence.
For each element, performance criteria and range indicators were produced, for use in assessment. These early Standards were also differentiated for various levels of management – supervisory, first line, middle, and senior management. Management standards Nearly ten years on and after several rounds of adjustment, the national Management Standards are now maintained by the Management Standards Centre, part of the Chartered Institute of Management. The current Standards define the purpose of management as ‘to achieve the organisation’s objectives and continuously improve its performance. There are now seven ‘key roles’ making up the framework – manage activities, manage resources, manage people, manage information, manage energy, manage quality, and manage projects. A proposed revision of the National Standards (on the MSC website) makes the framework slightly simpler. There is a proposed new definition of the key purposes of management and leadership – ‘to provide direction, gain commitment, facilitate change and achieve results through the efficient, creative and responsible deployment of people and other resources. 51 skill items are proposed arranged into six clusters: providing direction, facilitating change, achieving results, working with people, using resources, and managing self. It is interesting to note that this rather simpler, more fluid and person-centred framework is closer to those employers have been using for a long time. Versions of competence frameworks are used across large areas of the public sector, for example the Senior Civil Service (see Cabinet Office website) and the leadership of the NHS. Employers have struggled with earlier versions of the National Standards and how to use them alongside their own competence frameworks.
The complexity of accrediting tailored management learning against the Standards has made such accreditation problematic for employers (Hirsh, Burgoyne and Williams, 2002). This is one of the issues being addressed in the shortly to be released revision of the standards. 15 As part of the CEML enquiry, Perren and Burgoyne (2002) attempted a meta-analysis of competencies, based on 1013 leadership abilities from the literature which they condensed into 83 nodes into 8 meta-groups, checked out with interviews.
Their model contained: • • • four sets of people abilities: manage and lead people, manage self, lead direction and culture, manage relationships three sets of task abilities: manage information, manage resources, manage activities and quality a set of abilities concerned with thinking strategically They concluded that the link between these abilities and performance is only implied. The framework… ‘represents a wide range of opinion of the management and leadership abilities that will improve performance. ‘ 3. 2. Issues in relation to management skills and competencies • Although many skill frameworks used by employers are based on some analysis of good performers, the approach to National Standards has been that of informed opinion. So although national approaches to management and leadership rest on a kind of consensus, we cannot be sure that the resulting definition of capability captures the essence of high performing managers. We also do not know which competencies can be significantly improved by training, or what kind of training may achieve this.
Organisations behave as though they value knowledge as well as skills, especially knowledge gained through career experience of functions, industries, recurring situations etc. (Hirsh, 2003). Approaches to capability have tended to by-pass knowledge and its relationship with performance. Psychological research on management and leadership capability has mostly focused on selection or performance management. Using competence-based management development is perceived as effective, but tends to come later than other uses (Strebler and Bevan, 1996), and presents several significant challenges.
One is that we really do not know which competencies can be improved by training. Although it is a common belief that all competencies can be learnt – and that advances in learning methodologies make this more so – there is evidence based argument that some characteristics, particularly the emotional and motivational aspects of leadership are more fixed – they can be selected for but not developed (Nicholson 1998). Another is that the assessment of competence is far from easy. A third is that there are tensions between using competencies for performance management and using them for development.
To put this last one crudely, why would you confess to the need to develop competencies when your pay rise depends on your showing you are already perfect? Although many of the skills needed by managers and leaders are common to the whole management population, they need to take different forms for managers at 16 • • • different levels and in different types of organisation. The manner in which the CEO of a major corporation leads change will be different from that of a departmental manager in the same organisation and different yet again for the MD of a small firm.
Many competence frameworks used are influenced by American research conducted long ago on small numbers of male senior managers. This is one reason why major companies insist on tailoring their approaches, and often differentiating by level of management. • Many of the idealised attributes of leaders and managers are not really behaviours rewarded at work. As Keep and Westwood put it (2003) there is a ‘gulf between what managers do and are required to do by the organisations that employ them, and what theory or even best practice models say they ought to be doing. This rhetoric-reality gap presents a real problem for the suppliers of management and leadership development. Boyatzis (1993) may be witnessing this same tension when his data shows that some managers have the skills to act as leaders but choose not to use them. 3. 2. 4 Ethnic minority groups in management and leadership and gender differences The number of women in senior management roles remains well below that of men (12% of the female population of working age as opposed to 19-20% of the male population of working age) (Williams 2001).
Similarly, there are disparities between the ethnic minorities with some over-represented in management as a percentage of their numbers in the total employed population (particularly Indian ethnic groups) and others (particularly black groups) under-represented. These issues are not easy to address and more legislation is not the answer. The reasons for the differences between ethnic groups in management occupations are little understood. Much more data would be needed to identify key factors.
For example, it may be that some groups are over-represented because they tend to start their own businesses and thus become owner managers. The reasons why this might be so in some ethnic minorities but not in others are little understood. There is simply insufficient evidence to say. Similarly, not enough is known about the job choices and career patterns of underrepresented groups. More research is needed if appropriate national strategies are to be introduced. There are similar problems with gender.
Not enough is known about the kinds of jobs held by women. It is possible that they are ‘clustered’ just below senior management positions and have difficulty ‘breaking though’ the glass ceiling to rise to the top. On the other hand, it may be (Nicholson 2000) that they deliberately choose more ‘female friendly’ arenas because they seek less competitive and more caring environments than that found in most management occupations. This idea is also reflected in another recent study which explores what it means to be a woman and a manager (Bryans & Mavin 2003).
The study is based on questionnaires and group discussions with women managers, and finds that women are faced with a contradiction: whether to learn to fit into the dominant paradigm of management, or to play a different game. Research undertaken among MBA graduates found that there were differences between men and women in the effect on their careers (Simpson – see box). Other research supports these findings. Nicholson and West (1988) found that while men valued external benefits such as salary and status, women placed more importance on working relationships and job satisfaction.
Gender differences in the management population arise therefore from a complex set of issues and will not be easily resolved. 17 Gender differences in career effects of MBA A study of MBA alumni (Simpson 2000) found that the MBA serves different functions for men and for women. For men, the benefits were mainly in terms of enhanced pay and status. For women, they were in terms of personal development, increased confidence and a greater sense of self-worth. Women did progress in the middle levels of management, but less so to the most senior levels.
The research suggests that this reflects differences in the values which men and women hold and the way in which they view their own development. 3. 3 Management and leadership development: current state, recent and future trends. 3. 3. 1 Volume and nature of management and leadership development in the UK Management development consists of a wide range of activities including the following, associated with which there are discernable trends: • Management training given by employers in the form of courses and, more recently, through e-learning.
The trend to e-learning as the latest form of distance learning has been a recent one. There has been some pulling back from this after the initial enthusiasm, and the current preferred approach is blended learning – a mix of elearning and face-to-face activity. Training provided to employers by private training suppliers. This has been a growing trend and is linked to the growing business trend to outsourcing, including HRM and other business functions. Management education (often associated with Business education) through open programmes delivered in further and higher education and leading to a wide range of qualifications.
This has been a growing and expanding activity over the longer term, which has levelled off or even declined in recent years in terms of UK use. For many Business Schools and programmes (for example full time MBA’s) the greater use has been international, particularly the economically developing parts of the world that are not yet self sufficient in management education, and from which study abroad is seen as supporting developing business in the global economy. In terms of potential impact on the large UK management and leadership population, programmes from the Further Education sector are of considerable significance.
Executive education delivered by Business Schools as part of in-company or consortium activity, which has been an area of recent growth for larger companies. Learning in the workplace on-the-job and through career movement, which has always gone on, but is increasingly done deliberately and with facilitation by organisations. Management training provided through a wide range of professional bodies as part of accreditation and continuing professional development (CPD). This is an area where • • • • • 18 here is a significant perceived opportunity, and some initiatives, and one which was identified by CEML as an area of future opportunity (Perren 2001). Some of these forms of management development are easier to quantify than others. We have not included here the literature on organisation development (OD). This has a blurred boundary with management and leadership development. OD interventions may be of considerable significance as leadership becomes more recognised as a collective as well as individual capability in organisational settings (see 7. 1).
Boyatzis et al (1996) estimated the value of management development activity as thirtyseven billion dollars worldwide. It was not clear on what this figure was based. Although national studies have often bemoaned the low access to management education in the UK, based on 1999 estimates over 100,000 qualifications in business and management are awarded in HE and FE each year. This figure is based on a rough and ready addition of the figures given below. The CEML advisory group looking at management and leadership development outside HE (2002), mapped this provision and attempted to quantify it where possible.
This report suggests: • 20 million days a year of formal management training in the UK, not including management training for those not classified as managers. This estimate is based on Thomson et al. ‘s (1997) estimate of 4. 6 training days per manager in small firms and 5. 5 in larger organisations, so these figures are now somewhat dated. High use of structured on-the-job training for professionals and managers (CIPD training survey, 2001). Numbers of vocational qualifications obtained outside HE in 1999/2000 were estimated, at around 54,300.
Over 70% of all these qualifications were at Level 3, with only 9,500 at levels 4 or 5. About 10% of all the vocational management qualifications taken outside HE were NVQs or SNVQs. It is interesting to note that ‘the number of people achieving management units within other NVQs, far outweighs those achieving management NVQs as such. • • • Brown (1999) points to the relative failure of the NVQ structure to impact on management training in the UK. He points to doubts about Standards and the cost/ unreliability of assessment .
Thomson, Mabey et al. (2001) also point to the ‘confused and overlapping qualifications’ in management. In spite of the fragmented nature of management and leadership development provision, the CEML advisory group found ‘no evidence of a shortage of learning opportunities, though employers often find it difficult to identify provision that meets their needs. ‘ 19 A parallel CEML advisory group (CEML Business Schools report, 2002) examined the provision of management and leadership development within the HE sector.
CEML data on management related higher education • • There are about 140,000 undergraduate and postgraduate students in Business and management studies in UK universities (1999/2000). 19,100 first degrees were awarded in Business and Management in 1999/2000, although this number rises to over 31,000 using the wider category of ‘Business and Administrative Studies’ Around 10,000 MBAs were awarded in 2000, but only 56% of these were awarded to UK students (many MBAs are overseas students). UK students only accounted for 28% of full-time MBAs.
Nearly three times as many home students got their MBA by part-time study as by full-time study. In addition to first and higher degrees, universities also offer a range of vocational courses in business and management. In 1999/2000 nearly 5,000 such qualifications were awarded at postgraduate level, plus about 6,800 at undergraduate level (including HNDs). Most of the executive education provided to employers by Business Schools is concentrated in a very small number of institutions, at least some of which are of high quality.
This form of management and leadership provision tends to be used only for senior or high potential managers. There are about 7,000 teaching faculty in Business and Management in HE – a very substantial resource. • • • • When it comes to formal training provision by employers, Thompson and Mabey’s studies (1997) suggest a modest increase in formal management development provision by employers over a ten year period to 1996. They concluded ‘the priority given by organisations to management development has increased significantly compared to ten years ago, and is expected to increase further in the foreseeable future.
Mabey and Thomson (2000) estimated 8 days of informal training in addition to over 6 days of formal training per manager, and a training spend of ? 1000 per manager by organisations able to give figures. Of its nature, the volume of work-based management development (i. e. development other than courses) is impossible to estimate (Woodhall and Welchman, 1998). It is important when comparing patterns in different countries to realise that their histories of management education vary very widely. Some of these features are reported by Mabey and Gooderham (2003) on the basis of empirical work.
The UK spends rather less on management development than the European average in terms of formal training. Some 20 countries, such as Germany, rely on in-company management and leadership development plus career experience to develop their managers. Others, such as Denmark, have strong systems of vocational education alongside academic education, and much management learning occurs in the education system. The UK emerges rather oddly as having vocational qualifications in management, but HRD professionals who ascribe little value to this way of learning management and leadership.
The UK also emerges, as so often, as having a shortterm attitude to management and leadership development compared with some European neighbours. It is worth mentioning here that professional bodies in the UK are starting to become more active in the provision of management and leadership development for people who would be classified as ‘professionals’, more than ‘managers’. • Perren (2001) in survey for CEML of 149 professional bodies found that these bodies did see management and leadership as important, but that such skills are not often included in membership entry or CPD.
Professional bodies in the fields of policy, administration and business support (e. g. local government, information, personnel, purchasing and supply) placed higher value on management and leadership than bodies representing other fields of work. Fox et al. (2001) sought the views of a small sample of professionals as well as some professional associations and some development specialists. The terms ‘management’ and ‘leadership’ were used interchangeably. The professionals themselves felt that the most important aspects of management/ leadership were interpersonal/ relationship skills and communication skills.
The professional bodies and trainers agreed less on what was important. The trainers used mainly conventional learning methods (classroom, courses) but also learning sets or action learning and e-learning. Coaching was also fairly prevalent. Practitioners favoured informal means of development and selected formal learning on an ad hoc basis. Most of the associations had some links with suppliers of management and leadership training. Some accredited university courses in management as part of their CPD offering to members. • 3. 3. Trends in management and leadership development As we have seen from the quantitative estimates above, UK investment in management and leadership development does seem to be increasing, albeit from a low base. Although on the whole this is good news, there are still many managers, especially in smaller firms, who have no formal management education or training prior to entering work and little in the workplace (Williams, 2001). Both shortages of money and of time impede access to management training by some of those who might benefit from it.
There are also changes in the type of management and leadership development activities being undertaken. IES conducted a review of trends in management development, based on literature and seminars held with about 30 major employers (Hirsh and Carter, 2002). It found that changes in management and leadership activities stemmed from changes in: • The nature of the challenges organisations perceived for their managers, especially in what might called the ‘leadership’ aspects of their jobs (as discussed in section 3. 2) 1 • Changing notions of how people learn, especially higher interest in work-based or action learning, and also types of learning engaging managers at a deeper personal level in their learning. Evidence on general changes in the delivery of management development • An IDS review of management development (1989) pointed to many of the trends we still see today. There was a strong desire to tailor training and make it useful and this led to arguments for and against on-the-job training as opposed to off-the-job courses.
Some companies felt they did best through tailored in-house provision and others joined consortia. MBAs were supported by some companies, with some developing company or consortia MBAs. Secondment was on the agenda in the late 1980s, but mentoring and coaching were not mentioned in this review. Thomson et al. (1997) carried out a large scale survey of management development practice in the UK. Companies reported a move away from ‘sheep dip’ training and also spread their training input across all levels of management.
Although they wished to see management development as a longer-term activity, it was still tactical and short-term in implementation, largely focused on current job requirements. However, over half the organisations supported managers taking further qualifications. The trend to more context specific training such as coaching, mentoring and project working has been widely discussed (see also Horne and Stedman Jones, 2001). However Mabey and Thomson (2000) indicate that formal training is still very important – 33% of large organisations use more informal than formal management learning, 24% both equally, and 42% more formal than informal. 360-degree feedback has proved to be a powerful lever for engaging managers with their own need for skill development (Kettley, 1997) and at it is most useful when integrated into a development programme. Woodhall and Welchman’s study (1998) on ‘work based management development’ in 31 organisations concluded there was a gap between all the talk of tailored individual learning in the workplace and its implementation. ‘Coaching and, increasingly, special projects are the interventions most likely to be consciously promoted, but explicit guidance on using these learning interventions is rare. A good deal of development activity in the 1990s was directed at the issue of managing or leading change. Doyle (1995) found that the impact of formalised management training activity during change was often resisted due to the residual culture and style of the managers. In seeing management development as part of culture change, Holbeche (1999) discusses the problem of senior management training as appearing remedial. She argues that feedback can help managers to see the need for change, but their willingness may still be lacking.
There is considerable interest in the use of e-learning, sometimes presented as programmes or modules within a ‘corporate university’ (Sloman, 2001; DTI, 2000; Burgoyne 2001). Burgoyne found that companies were seeking to use e-learning alongside face-to-face leadership skill development rather than intending to replace personal contact in management development. Evidence from the CIPD training survey (2002) shows that, while e-learning is used by many employers, it tends to be used alongside other training methods and is more used for IT staff than for managers. 2 • • • Development for senior managers and business executives • Marx and Demby (1998) found that that standard development programmes still prevail in most companies, with senior managers rewarded to a certain extent by attendance at prestigious Business Schools. However, more individually tailored development such as executive coaching is likely to be more effective. They found a growth of consortia programmes designed to broaden the thinking of senior managers by bringing them into contact with people from other organisations.
Kettley and Strebler (1997) echo this in their study of the changing role of senior managers. They note that ‘formal business education and training for senior managers is increasingly context specific, delivered in partnership with external experts and focused on new business concepts and strategic learning. Many are experimenting with more individually focused approaches to learning including coaching, counselling and personal feedback. ’ Many companies have defined generic and/or senior management competencies (as discussed in section 8. ), although they vary in the extent to which these really underpin management development. Holbeche (1998) identifies many companies using competency approaches, 360 degree feedback, personal development plans and assessment centres to help link their succession planning processes with corporate and management development strategies. Many companies have also determined a set of generic leadership competencies (e. g. BP, Texaco, Smithkline Beecham), but Holbeche warns against ‘the limited shelf life of success profiles when business requirements change’. Alimo-Metcalf et al. 2000) points to some of the same trends in leadership development: emphasis on feedback (including 360 degree feedback), action learning, cross-functional teamwork and the involvement in senior people of delivering development themselves (e. g. as coaches or mentors). Mentoring and coaching have received increased attention in recent years, especially for more senior people at one extreme and new joiners at the other. Ford (1991) argues that executive coaching can transform performance by allowing executives to establish their own criteria for improvement.
Some organisations have used formal mentoring ‘schemes’ mainly for either graduate entrants or senior managers. Clutterbuck and Megginson (1999) identify mentoring as covering a wide range of different support to individuals. Three common roles are defined as executive coach (a short-term help with specific skills), elder statesperson (sounding board and role model), and reflective mentor (increasing self-awareness through constructive challenge). Carter (2001) in a review of the use of executive coaching, shows that this approach is very popular with large organisations and quite attractive to many managers.
However, extending its use to wider populations of managers is limited by its cost and the restricted supply of high quality coaches. • • • • • 23 An IES review of trends in management development (Hirsh and Carter, 2002) included the following findings: • Management training still needs to provide a coherent view of what managers need to learn, but delivery needs to be more flexible and to fit into the busy working lives of managers, for example through shorter or more modular training courses. The development of inter-personal and leadership skills is a high priority and not easily achieved through conventional formal training.
There has been a huge growth of interest in more personal forms of development support such as coaching and mentoring. Most managers are now told to manage their own careers, but do so with little effective support or information. Line managers have been given a number of important roles in the development of their subordinates, but they may not yet be equipped to carry these out, or really be encouraged to develop others. High attention is often given to senior managers and ‘high potential’ staff both in their skill development and in career planning.
These approaches are labour intensive and not easy to extend to the majority of the management workforce. Career development is a vital form of management and leadership development. Proactive career management is mainly used for very senior managers or populations of special interest (such as high potential managers or graduate trainees). • • • • • • 24 4: Does Management and Leadership Development Enhance Performance? This chapter examines the evidence for a positive effect of management and leadership development on national, organisational or individual performance.
It seeks to address the following broad questions: • • • • Does management and leadership capability make a difference to national performance? (4. 1) Does management and leadership development increase organisational performance? (4. 2) Does management and leadership development increase individual management and leadership capability and individual performance? (4. 3) Does higher education, especially higher education in business and management, increase individual management and leadership capability, individual management and leadership performance, or organisational performance? 4. 4) The issues of how management and leadership development affects performance in different contexts is dealt with in Chapter 5. Chapter overview: Management and leadership capability and national performance • The UK has tended to ascribe its relatively low productivity to poor quality management, although there is evidence that other factors may be more critical to national economic performance. Fewer UK managers have had high-level qualifications (especially degree level) than those in some other developed countries.
This has been a function of the generally low historic rate of participation in higher education in the UK – now no longer the case. There is really no reliable evidence of the relative quality of managers in different countries. Qualifications are not a reliable indicator of management and leadership capability, especially when comparing between countries. Other occupations show more serious skill shortages than management, but there is evidence of a ‘skills gap’ in the quality of UK managers as perceived by employers and by the staff they lead. • • •
Management and leadership capability, management and leadership development and organisational performance • We have relatively small numbers of studies that provide direct empirical evidence of an effect link between management and leadership development activity and organisational performance. Those we do have are, however, positive about this link, but suggest that it is the coherence of the management and leadership development 25 effort and top-level commitment to it, which may affect organisational performance more than the volume of management and leadership development activity. There is a large volume of evidence on the wider relationship between HRM practices and organisation performance. This seldom looks in depth at management and leadership development but often finds that aspects of employee development, which would include management and leadership development, are important correlates of organisation performance. Again the most recent work tends to emphasise that it is the alignment of HRM with business strategy, the internal coherence of HRM, and the quality of implementation which are probably affecting organisational performance, not just a set of ‘best practice’ HRM policies.
There may be ‘low skill’ business strategies that can succeed in some sectors with low investment in employee or management development. The work on HRM provides clear evidence of the importance of people management in organisational performance. In that managers and leaders are nearly always those who deliver HRM through their ability to lead and motivate staff, this is a strong body of evidence pointing to a link between these aspects of management and leadership capability and organisational performance. • •
Management and leadership development, individual capability and individual performance • There is very little direct evidence of an effect link between management and leadership development activity and individual changes in capability or performance. This may in part be because little research activity has been directed here. It may also be because ‘unpicking’ this causal chain is made very difficult by the wide range of contextual factors that affect learning outcomes and their translation into performance outcomes.
Small-scale evaluations of management training conducted by employers may now quite frequently measure behaviours before and after training, but these studies are rarely published in the UK. Wider research on training and development as part of HRM would seem to indicate that the link between learning and performance is likely to involve employee attitudes (e. g. commitment, the psychological contract, morale) as well as capability. So management and leadership development will need to influence the attitudes of managers as well as their skills.
Managers and employees believe that training and development of a more active type, closer to work tasks, is more likely to improve performance. However direct empirical evidence that this is the case is still lacking. What goes on before and after a learning intervention is also crucial to its impact. In pursuing the link between management and leadership capability and performance we may need to consider wider factors, such as how managers work with each other and the high level HR capabilities needed to align management and leadership to the needs and direction of the organisation. • • Business and management higher education and performance • There is considerable evidence that degree level educational qualifications in business and management confer employment benefits on the individual, and that individuals 26 choose such courses largely for vocational reasons. In the case of the MBA, shortterm salary benefit is higher for full-time courses at prestigious institutions. • Although graduates often report positively on their learning at Business Schools, this does not translate into positive evidence of improvements in their performance at work.
This is not to say that Business School learning does not affect performance, but rather that systematic attempts have not yet been made to document such an effect. There is very little, if any, published evidence that investment in business and management higher education improves organisational or national performance. Courses including practical and interpersonal skill development appear to be somewhat more likely to improve the quality of UK management and leadership compared with those using traditional higher education teaching methods. 4. 1 Management and leadership capability and national performance Many would feel that the question ‘Does management and leadership capability make a difference to organisational or national performance? ‘ is hardly worth asking. Managers and leaders, it can be argued, are bound to affect performance both in their direct contribution to better business decisions and better-managed people, and indirectly through their impact on wider institutions and policies both at organisational and national level.
However, we start examining evidence at this point because the national argument about low productivity and its supposed link with poor quality of management has strongly influenced government interest in issues of management and leadership, as witnessed by the CEML enquiry reporting in 2002. 4. 1. 1 Does management and leadership affect national productivity? There is persistent concern that levels of productivity are low in the UK. Reports dating back to the 1980s (e. g. Handy, 1987; Constable and McCormick, 1987) assumed a fairly simple link between national economic performance and a deficit of good managers.
Although the evidence of a link between the supply of managers and this economic under-performance is far from clear, the government’s interest in this relationship remains unabated (DTI, 2001). Porter and Ketels (2003) have recently reviewed the evidence for causes of the UK’s relatively poor productivity compared with other countries. Porter questions to some extent that the UK’s economic performance is poor, and more strongly questions that the quality of UK management is the most important determinant of economic performance. Other institutional factors seem likely to be more important.
On the issue of management quality, Porter recognises that ‘there is always room for improvement’ but also that ‘efforts to upgrade management will not however be sufficient to achieve a sustained improvement in UK competitiveness. ‘ Porter also judges it likely that the issue of management quality should be of more concern at lower levels of management, where the UK management development infrastructure is weaker. A recent report from SKOPE (Keep and Westwood 2003) also takes a cautions tone. These authors cast doubt upon the efficiency of managerial practices and quote research showing 27 hat only a minority of business process re-engineering programmes added to share values. The same was true for mergers and acquisitions. They use these facts to support their argument that management skills are not adequate. Overall, it has to be concluded that there is clearly a great deal that we do not know about how managerial behaviour affects business performance. 4. 1. 2 Does the UK have a management skills shortage? If management and leadership were having a negative effect on the economy, one might expect a clear deficit of management and leadership skills to be reported.
The evidence shows that management skills are by no means the biggest skills challenge for the UK. The National Skills Taskforce examined skill shortages and skill gaps in many sectors. Management skills were part of this study in each sector. Although the sectoral reports of the National Skills Taskforce often mention managers, management skills are not included in the six main areas of skill deficiency identified overall in the UK (basic skills, generic skills, maths, intermediate level skills, ICT, adults with no qualifications) (DfEE, 2000). Campbell et al. 2001) in the ‘Skills in England’ report reinforce the view that skill shortages are predominantly in technical skills, but they do mention management skills as an employment ‘hotspot’ along with intermediate level skills, ICT, generic/ transferable skills and numeracy. More detailed evidence from other studies reinforces the view that there may be qualitative shortfalls in management skills, but such evidence is based on perceptions of management quality by other employees. • Horne and Stedman Jones (2001) in a survey of 1500 managers found that over a third of anagers and almost half junior managers rated the quality of leadership in their organisations as poor (although this survey did have a low response rate). This study also casts doubt on asking top managers their opinion of leadership. Senior managers and executives were far more likely than junior managers to rate the quality of leadership as high. Charlesworth et al. (2003) in a survey of over 1800 public sector managers found only a third of managers giving a high rating to senior management teams, but 44% giving a high rating to their immediate manager.
Keep and Westwood (2003) use wider business arguments, for example the low business gains from business process re-engineering programmes and mergers, to argue a lack of managerial skill. These failures are by no means unique to the UK. • • There is little reliable data on the quality of UK management relative to that of other countries. The Institute for Employment Studies has recently helped DTI scope the availability of internationally comparative data on the management population and its qualifications (Jagger et al. 2002), which showed just how difficult this task is. One international difference, which is relatively easy to measure, is the proportion of managers who have higher-level educational qualifications (typically degrees or equivalent). 28 Johnson and Winterton (1999) reported 18% of managers qualified to degree level. The influential Handy report (1987) posed the argument that managers in the UK have not been well educated compared with their counterparts in other countries. Bosworth (1999) in a very comprehensive overview of the stock of UK management highlights the low qualification levels of UK managers relative to those of competitor nations, and comes to rather pessimistic conclusions about the quality of UK management. His conclusions can be taken as pessimistic on the grounds that he does not acknowledge capability that is not formally accredited by formal qualification, and that he may not accept that ‘lower’ level qualifications could reflect the appropriate capability for many situations.
It seems possible that less higher education may mean UK managers are less well prepared for their work, but the argument is not secure in terms of evidence. It is a function of the UK’s educational history and also our broad definition of the occupational group ‘manager’ that many managers have not in the past had degree level qualifications. This does not necessarily mean that they were not able people of high intelligence and inter-personal skills. The UK now has quite high participation rates in higher education (Campbell et al. , 2001), so this situation will in any case change, albeit slowly in terms of the overall stock of managers.
Wood (1992) concludes this is likely to lead to some improvement in the quality of managers. Assessing whether lower qualifications also means low managerial skills relative to other countries is tricky. We have very little reliable evidence as to whether UK managers are ‘better’ or ‘worse’ than those of other countries. For example, Bosworth quotes an Australian survey of Asian business executives (Savery et al. , 1994) and their opinions of the managers of various other countries. It is hard to know on what direct experience of UK managers such opinions would be based in a study conducted in Asia.
While examining the bit of the chain that may link education to management capability to national performance, it is also worth flagging the dangers of using low levels of education to prescribe management education in particular. Section 4. 4 shows the evidence for and against the impact of business and management higher education. 4. 2 Management and leadership development capability, management and leadership development and organisational performance 4. 2. 1 Management and leadership capability and organisational performance Most of the time we take it as given that the quality of managers and leaders affects organisational performance.
However, there is little direct evidence of the extent or nature of this impact. The work of Peters and Waterman (1982) was one highly influential example of an attempt to link the nature of management and leadership with organisational culture, as well as with more formal managerial processes and systems. Some of the features of organisations that they saw as causing ‘excellence’, identified through their case study approach, were motivation, ‘bias for action’, and productivity through people. By implication they suggest that these in turn are achieved through management and leadership effort.
A different and more focused approach to linking the quality of management with business results is shown in the analysis of the employee-customer-profit chain. 29 The employee-customer-profit chain Rucci el al. (1998) analysed two quarters of data from 800 stores in the Sears retail group in the US. The data covered business data, customer and employee attitude data. Causal pathway modelling was used to unpick the cause and effect relationships linking employee attitudes, customer attitudes and business results.
Employee attitudes towards the job and attitudes towards the employer both emerged as key factors associated with customer attitudes and in turn with business results. The line manager emerged as a key link in this chain through a critical item ‘how does the way you are treated by those who supervise you influence your overall attitude about your job? ’ Barber et al (1999) conducted a similar study with nearly 100 stores of a major UK retailer. The data collected spanned 65,000 employees and 25,000 customers.
Employee satisfaction and employee commitment were related to sales increases. There were also more indirect links to sales through improved staff attendance and increased customer loyalty (linked with customer service). The quality of line management as perceived by staff emerged as an important link in this value chain via its impact on employee commitment. This evidence would tend to reinforce the high interest in managers as motivators of staff who then produce better business results. Cockerill (1993) tried to link management capability with organisational performance. He sought to validate a framework of seven competencies (information search, conceptual complexity, team facilitation, impact, charisma, proactive orientation, achievement orientation) on 150 managers in 5 organisations. He found that the selected competencies were positively related to measures of organisation performance except one, achievement orientation. Overall, the competence of a manager explained about 15% of unit performance in dynamic environments.
In more stable environments, there was little relationship between the high performing management competencies and unit performance. This points to an interesting possibility, that we need managers and leaders more when things are changing. Perhaps the strongest evidence that managers ‘make a difference’ to organisational performance lies in the research linking HRM with performance (4. 2. 3 below). The delivery of people management, as conducted very largely by managers, is now well proven to have a strong association with organisation performance, although proving causality is still difficult. . 2. 2 Management and leadership development and organisational performance While much has been written about the broad benefits of investing in management development, what evidence is there concerning the specific impact on organisational performance of training and development of managers? Empirical studies are still small in number. 30 Management development and organisational performance • A management-training programme provided by British Telecom was claimed to have saved the company ? 270 million.
This figure was an estimate made by managers of the value of errors made by untrained junior managers, and waste caused by missed deadlines, customer complaints etc. Performance improvements were examined following each training course (Lee, Coaley and Beard, 1993). Winterton and Winterton (1996) in an in-depth analysis of 16 UK organisations, looked at the impact of competence-based management development activity on performance. They found a statistically significant relationship between competencebased HRD systems and business performance, especially where the management development activity was linked to business strategy.
Although a frequently quoted example, this was a comparatively small-scale study. DTZ (1998) examined 127 firms that were using TEC (Training and Enterprise Council) related management development activity. 63% of firms could identify an impact of this development on business performance. The types of impact most often mentioned by respondents were: improved morale of staff, an improved response and greater flexibility shown by managers, and improvements in quality, leading in turn to greater customer loyalty or new business.
Indirect impacts were identified to be: an improved management style, better tracking of projects and evaluation of their worth to the firm, and greater understanding of the value of training and human resource development in general. Only 18% of firms felt they could identify ‘definite and direct’ business impact, and fewer than 9% could quantify this impact. Of the 11 firms that felt able to provide a monetary estimate of the impact of training, nine were involved in the Investors in People process.
Fox and McLeay (1991) examined the recruitment and selection, management development, performance appraisal, rewards and recognition and career planning processes of 49 UK companies operating in the engineering and electronics sectors. The team were careful to distinguish intent (HRM systems), practice (the reality of how staff are recruited, promoted, rewarded and developed) and the internal coherence of such activities. They found a clear positive relationship between financial performance and the degree of integration between corporate strategy and the human resource management functions in practice.
So it was the implementation of HR that was the important variable, rather than the supposed systems. In a UK study of management training which secured the views of both HRD managers and MBA managers participating in training activities (Mabey and Thomson, 2000), it was found that positive outcomes of management development investment, whether measured by perceived success in achieving objectives, perceived organisational impact or personal satisfaction, could largely be attributed to the way an organisation made its policy choices concerning the setting up and running of management training and development processes.
Particularly important in this regard was the commitment given by the company to training activity. Policy statements, high priority, centralised management development systems and responsibility for management development emerged as the key elements of this 31 • • • • visible corporate commitment. • Thompson (2000) found that company performance in over 600 aerospace establishments was not related at all to total management development spend, but high performing firms spent more of their management development budget on people management skills (27% of spend) than low performing firms (9% of their spend).
Mabey and Ramirez (2003) have led an EC funded research project analyzing management development in six European countries. Interviews were conducted with the HRD manager and a line manager in 600 private sector organisations. Findings indicate that 25 per cent of variance in organisational performance is explained by three factors: a strategic approach to HRM, a long-term, proactive and strategic approach to management development and, on the part of line managers, a belief that their employer takes management development seriously.
These results hold true, irrespective of country, size, sector and growth. Interestingly, neither the presence of management development systems/procedures, nor the amount and diversity of management training activities enhance performance to a significant effect (Mabey and Gooderham, 2003). This study used a seven-item measure of performance, benchmarked by sector, a mean score of that reported by HRD and line managers.
A further analysis on a sub sample of 180 companies where financial data was available (from the Amadeus database) discovered that where line managers reported positively on their employer’s management development strategy, this explained a modest but significant amount of variance (15%) in firm productivity. • Few studies have taken leadership, as opposed to management, development as their focus. Leadership development and organisational performance • Barling et al (1996) conducted a study on the effects of transformational leadership training in one region of a large Canadian bank.
The study was small but noteworthy for its stringent design. This took pre- and post-training ratings and compared those receiving training (one day, plus four booster sessions at monthly intervals) with a matched sample of managers who did not. Significantly positive impacts were found for those participating in the training when measured by subordinate perceptions of their leadership, subordinate ratings of their own organisational commitment and two aspects of branch level financial performance.
In a study of the state of leadership in UK organisations, Horne and Stedman Jones (2001) concluded that where systematic implementation of leadership development did exist, this related strongly to the perceived quality of leadership in that organisation and organisational performance. The latter was measured by self-report estimation of financial turnover during the past three years. The leadership development methods perceived as most effective were found to be formal mentoring, project management and 360 degree feedback. • 32
Training and organisational performance A limited amount of research has been conducted which focuses on the organisational impact of employee (rather than management) development or training. Although these studies do not differentiate managers from other employees, they do throw further light on the ways in which development can enhance performance. Dearden et al. (2000) used longitudinal data from the Labour Force Survey and industrylevel productivity data to show that investment in training increased the value of each worker in productivity terms far more than it cost in increased wages.
In a study of 319 US business units, Koch and McGrath (1996) investigated whether the amount of formal training undertaken and the extent to which firms promoted from within improved their productivity. They concluded that such effects were indirect because they only occurred when other, more sophisticated HR planning and evaluation, recruitment and selection strategies were used in combination with training.
Macdonald and Smith (1995) found that firms, in their sample of 437 publicly traded companies, with performance management systems (explicit job goals, incentives and feedback mechanisms) and ample learning opportunities to achieve these goals, performed at or above industry averages. This study had a longitudinal element, pointing to a likely causal effect. Rix et al (1993) conducted a qualitative study of 24 groups of employers and 19 groups of employees, some committed to IiP and others uninvolved.
About half of those committed to or recognised by IiP, saw the enhancement in training activity bringing business benefit, although this was not measured in financial terms. 4. 2. 3 Wider HRM and organisation performance, and management and leadership Although there are relatively few, though cautiously positive, studies of the impact of management and leadership development on organisational performance, there is a large and increasingly coherent body of data on the link between HRM practices more widely and organisational performance.
There is a ‘double relationship’ between management and leadership development and HRM in relation to performance. On the one hand HRM is a major area of the application of management and leadership development – HRM is managed and lead, and the evidence that HRM contributes to performance supports the case that good management and leadership in this area contributes to performance. On the other side, from a traditional point of view, management and leadership development is one of many HRM practices, and the evidence that it plays a part in HRM effect, alongside other strands of HRM, is also of importance.
Finally, the HRM – performance research is amongst the most thorough, extensive, and international, so we can draw important lessons from it methodologically. This field of research is important to the management and leadership development debate in several ways: 33 • As we will see, training is almost always one of the HRM practices associated with superior organisational performance.
This makes it very likely that management training, as part of wider training, makes a positive contribution to organisational performance. Indeed, in a synthesis of research in this area, Becker and Huselid (1998) identify ‘management development and training activities linked to the needs of the business’ as one of four key HRM systems. Managers are an input to HRM as well as an output. Nearly all the HRM processes identified as important in this research are ones which managers need to implement through their personal
RESEARCH The Development of Management and Leadership Capability and its Contribution to Performance: The evidence, the prospects and the research need John Burgoyne, Wendy Hirsh and Sadie Williams Research Report RR560 Research Report No 560 The Development of Management and Leadership Capability and its Contribution to Performance: The evidence, the prospects and the research need John Burgoyne, Wendy Hirsh and Sadie Williams The views expressed in this report are the authors’ and do not necessarily reflect those of the Department for Education and Skills. © Lancaster University 2004 ISBN 1 84478 286 7 1 ACKNOWLEDGEMENTS