People Skills: building ambition and HR capability in small UK firms

62 Pages·2017·0.86 MB·English

supported by
An evaluation of HR
business support pilots
September 2017
People Skills
Building ambition
and HR capability
in small UK firms
The CIPD is the professional body for HR and people
development. The not-for-profit organisation champions
better work and working lives and has been setting the
benchmark for excellence in people and organisation
development for more than 100 years. It has 145,000
members across the world, provides thought leadership
through independent research on the world of work, and
offers professional training and accreditation for those
working in HR and learning and development.
Our mission is to enable more people to contribute to and
share in the rewards of a growing economy. We believe that
reducing inequality and creating widely shared prosperity
requires collaboration of business, government, non-profit,
and other civic organizations, particularly in the cities and
metropolitan regions that power economic growth. We take a
comprehensive approach to increasing economic opportunity,
using our firm’s global scale, talent, and resources to make
investments and create partnerships in four priority areas:
workforce readiness, small business expansion, financial
capability, and community development.
While this report has been supported by the JPMorgan
Chase Foundation, the contents and opinions in this paper
are of the authors alone and do not reflect the views of the
JPMorgan Chase Foundation, JPMorgan Chase & Co, or any
of its affiliates.
1  People Skills: building ambition and HR capability in small UK firms
People Skills: building ambition and
HR capability in small UK firms
An evaluation of HR business support pilots
Contents
Executive summary 2
Pilot programme rationale 5
Overview of locations 9
1 People management in SMEs: what do we know? 10
2 Evaluation methods 18
3 Findings 22
4 SME deep-dive findings 44
5 Evaluation of the evaluation 49
Conclusions 50
Implications for public policy 55
References 57
Acknowledgements
This report was written by Professor Carol Atkinson, Professor Ben Lupton, Dr Anastasia
Kynigho, Dr Val Antcliff and Dr Jackie Carter, all of Manchester Metropolitan University
Business School. We would like to thank them all for their hard work.
1  People Skills: building ambition and HR capability in small UK firms
Executive summary
This report presents the outcomes leadership practice within the • Inspire SMEs to invest in and
of People Skills, a UK pilot SME community’. This vision was employ young people.
programme which provided small grounded in the long-standing • Deliver improved co-ordination
firms with HR support and advice. concern around productivity of local partnership networks
The programme was supported by levels in the UK and the view that to provide PM support and
J.P. Morgan through the JPMorgan better management, leadership services.
Chase Foundation, and delivered and skills utilisation are likely to
through the CIPD and local be some of the keys to addressing Take-up of the service exceeded
partners (local councils/chambers this. It also reflects a recognition expectations, considerably so in
of commerce). In each of three that small and medium-sized Stoke and Glasgow. 449 SMEs
locations – Hackney (London), enterprises (SMEs) represent a made an initial enquiry and 416 of
Stoke-on-Trent and Glasgow – a significant segment of the UK those proceeded to work with an
small bank of independent HR economy – accounting for nearly HR consultant. In most cases this
consultants was recruited to half of business employment and involved an initial telephone call,
provide free employment and turnover – but that constraints in followed by one or more site visits.
people management advice to time, resources and expertise often Seventeen SMEs were funded to
small businesses on demand, and present particular challenges for take advantage of ‘deep-dive’
the CIPD’s HR Inform online support them in developing PM capability. engagement with their consultant,
system was made available to The project also sought to develop involving more intensive work over
project participants. The pilot ran partnerships at local level that a longer period of time.
from July 2015 to October 2016 and were able to effectively support
has been evaluated by a team at SMEs with PM issues. Achievement of project outcomes
Manchester Metropolitan University is reflected in Figure 1.
through surveys and interviews with People Skills sought to achieve
project stakeholders. four specific outcomes: As Figure 1 indicates, People Skills
proved to be a highly effective
The project vision was to • Provide easy access to high- operating model that met demand
‘…support SME growth and quality support for SMEs. efficiently and effectively. As noted,
productivity by enabling better • Unlock demand for investing in take-up of the service was high,
people management (PM) and leadership and PM capability. though there was evidence to
Figure 1: Achievement of project outcomes
Partnership is better able to
SME community experiences
support the SME community’s
Improved PM and leadership practices
PM and leadership issues
Provide Unlock Inspire SMEs Improved
easy access demand for to invest in co-ordination
to high-quality investing and employ of local
support in PM and young people partnerships
for SMEs leadership and networks
capability to provide PM
support and
services
2  People Skills: building ambition and HR capability in small UK firms 3  People Skills: building ambition and HR capability in small UK firms
suggest that this was primarily from Small firms’ people management ‘...‘‘deep-dive’’
SMEs who already had relationships needs were overwhelmingly quite
respondents
with local partners/sought business basic (for example contracts,
support, and some concern legal compliance), and they were
were unanimous
that many ‘hard-to-reach’ SMEs often not ready to engage in
remained so. Survey responses more ‘transformational’ work (for
in reporting
indicated that the quality of support example workforce development,
provided was highly regarded. performance management). the substantial
SMEs particularly welcomed the
flexibility of the offering, and the The results suggest that ‘getting difference that
bespoke nature of guidance offered, the people management basics
People Skills had
and ‘deep-dive’ respondents right’ is highly valued in its
were unanimous in reporting the own right, and may provide a
made to their
substantial difference that People foundation for further development
Skills had made to their business. (and greater confidence) but that business.’
more transformational change is
People Skills’ achievements in likely to take longer to achieve.
unlocking demand for investment
in people management were more The project was less successful
modest. Survey data did not reveal in encouraging investment
shifts in attitudes in this area, for in employing young people/
example in increased levels of apprentices. While many SMEs
interest or investment in leadership were open to this, there were
and management development or also barriers reported in terms of
a more strategic approach to HR. the ‘work-readiness’ of school-
leavers, perceived bureaucracy
However, the survey data did of apprenticeship schemes, and
capture improved self-ratings lack of resources to support
among owner-managers on a inexperienced workers. With
number of workplace effectiveness a few notable exceptions, the
measures, suggesting the issue-led nature of the People
development of greater confidence Skills programme did not appear
among owner-managers and to provide the right context for
potentially a link to enhanced changing attitudes in this area.
workplace productivity.
Progress in improving the
For example, owner-managers co-ordination of local partnerships
surveyed were more likely to report was mixed depending on locality.
their organisation is better or much Where partners were highly
better than similar firms in their engaged and well embedded in
sector on measures of workplace the local business community
relations, labour productivity and (Stoke and Glasgow), there were
financial performance after using some tangible gains. In Glasgow,
the People Skills service than the city council continued to fund
they were prior to using it. These the project after the initial pilot
benefits also came through in the had ended, with local stakeholders
in-depth qualitative interviews with highly supportive of the People
owner-managers that participated Skills business support model.
in the People Skills initiative. However, stakeholders recognised
the lack of a central point where
The mixed findings here may SMEs could go to identify support
reflect the relatively short and that the overall offer in
timescale of the project, but also Glasgow to small businesses,
the ‘transactional’ nature of the alongside many other cities, was
majority of the interventions. quite complicated.
3  People Skills: building ambition and HR capability in small UK firms
‘The pilot project In Stoke, the chamber of The CIPD recommends a national
commerce was very positive about rollout of the People Skills
demonstrates that
the impact of its partnership role initiative as part of a renewed
in the People Skills initiative and focus in industrial strategy on
there is demand
there is a belief that People Skills enhancing workplace productivity
had improved the chamber’s by boosting managerial quality,
for HR support
partnership working with other increasing investment in skills
amongst SMEs, organisations, for example and strengthening the quality of
apprenticeship training providers. business support through local-
and that a model level institutions. The CIPD’s
In Hackney there was little provisional estimate is that if
of bespoke, face-
progress on this objective, and the People Skills model were
overall, across all three areas, adopted by all Local Enterprise
to-face provision
there was generally a sense that Partnerships in England, it would
by independent the business support architecture require initial funding of around
is seen as fragmented. £13 million per year for at least
consultants is an three years. This could be funded
Implications for public policy by allocating £40 million of the
effective way of
The pilot project demonstrates £23 billion National Productivity
that there is demand for HR Investment Fund. The three-year
meeting that.’
support amongst SMEs, and time period would allow for the
that a model of bespoke, anticipated changes to take root
face-to-face provision by and for the development (through
independent consultants is independent evaluation) of a
an effective way of meeting sound evidence base for future
that. Tangible improvements government policy.
to SME employment practices
can be delivered through
this model, which in turn
provides a foundation for more
transformational change and
greater business confidence.
Table 1: The top ten lessons from People Skills
1 People Skills is an effective operating model and the role of independent HR consultants is central to this
2 Importance of role and choice of programme partner
3 Difficulty of engaging ‘hard to reach’ SMEs
4 Twelve months is not long enough to build the required profile and reputation
5 Importance and difficulty of creating understanding in the SME community of need for and benefits of
addressing people management issues
6 A transformational large firm HR model may not be what is needed in transactionally focused SMEs
7 SMEs are open to employing young people but (some) are concerned about their work-readiness
8 Many SMEs are reluctant to work with apprenticeship programmes
9 Getting the people management ‘basics’ in place can build confidence around SME effectiveness
10 A simplified, better understood and more accessible business support infrastructure is needed
4  People Skills: building ambition and HR capability in small UK firms 5  People Skills: building ambition and HR capability in small UK firms
Pilot programme rationale
‘As Olympic athletes have Evidence from the Office for Improved management capability
shown, marginal improvements National Statistics2 shows that, in can address skills mismatch in
accumulated over time can deliver far too many cases, UK workers two ways. Owner-managers
world-beating performance. are not well matched with their who think more strategically
Applying those marginal gains to current jobs. Some are over-skilled and longer term may be more
the population of UK companies – they are capable of handling likely to invest in young people
could significantly improve UK living more complex tasks and their and apprenticeships and help
standards, even if those are harder skills are underused – while others build links with local schools
to measure than gold medals.’ Andy are under-skilled for their current and colleges. Further, more
Haldane, Chief Economist, Bank of jobs – they lack the skills normally developed people management
England, March 2017 needed for their role. practices can help ensure that
skills are used more effectively
The UK’s productivity and Over-skilling can be a problem in the workplace. There is less
skills challenge because it may lead to skills loss evidence for the first proposition,
The UK’s low productivity and a waste of the resources that but significant research4 suggests
growth and the gap with its were used to acquire these skills. that progressive high-performance
main competitors remains the In addition, over-skilled workers working practices are associated
key underlying concern in the earn less than workers who are with higher levels of employee
UK economy, with evidence well matched to their jobs and motivation, commitment and
suggesting that there is a clear tend to be less satisfied at work. positive business outcomes.
link between skills development This situation generates more
and use, and productivity employee turnover, which is likely The Bank of England’s chief
growth. A recent joint paper on to affect a firm’s productivity. economist Andy Haldane
productivity from the DWP and Under-skilling is also likely to also argues that a lack of
BEIS Committees has shown affect productivity and slow management quality is a plausible
that the contribution from skills the rate at which more efficient explanation for the UK’s long tail
improving the quality of labour technologies and approaches to of low productivity companies
may have accounted for up to work can be adopted. and suggests that there are
20% of productivity growth before potentially high returns to policies
2008, and has continued to make Quality of management is key that improve the quality of
a positive contribution ever since. The OECD suggests in a recent management within companies.
A significant part of the UK’s low analysis of productivity that This is particularly likely to be
productivity levels, compared the UK could increase average the case for smaller companies
with some other major OECD labour productivity by 5% if the (fewer than 50 employees) given
economies such as Germany, can degree of skills mismatch in the that there is a larger, longer tail
be attributed to poor workforce country – above average when of small firms with low, or even
skills development.1 compared with other OECD negative, levels of productivity
member states – was reduced to growth. Haldane finds there is
However, arguably as important a best practice level. The OECD high potential for productivity
as the development of workforce study also finds that better growth among firms of this size,
skills is the extent to which those managerial quality is associated as small companies tend to exhibit
skills are matched to employers’ with lower skill mismatch, which faster rates of productivity growth
needs and whether they are used is identified as material to than larger firms, even when it is
effectively in the workplace. improving labour productivity.3 from a lower base.
1 http://www.publications.parliament.uk/pa/cm201516/cmselect/cmbis/565/565.pdf
2 https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/
analysisoftheuklabourmarketestimatesofskillsmismatchusingmeasuresofoverandundereducation/2015
3 http://www.oecd.org/eco/growth/Skill-mismatch-and-public-policy-in-OECD-countries.pdf
4 http://www.employment-studies.co.uk/system/files/resources/files/mp36.pdf
5  People Skills: building ambition and HR capability in small UK firms
What can be done to boost However, the provision of existing people, for example through
SME managerial quality? low-cost or no-cost business apprenticeships
However, while evidencing support and advice for small 2 improving the utilisation of
management quality as potentially business is typically inadequate existing skills in the workplace.
material to the UK’s productivity or poorly marketed, with the
problem is fairly straightforward, recent BEIS Select Committee People Skills ran for a period of 15
identifying how to address this inquiry into industrial strategy7 months from July 2015 to October
issue, particularly among small concluding that business support 2016 in Hackney, east London,
businesses, is more difficult. for SMEs needs to be improved. Stoke-on-Trent and Glasgow, and
provided bespoke HR business
Many SMEs are preoccupied It noted: ‘[The] Growth Hub support for SMEs through key
simply with business survival and network, which provides a gateway local stakeholders such as the local
‘getting the job done’ rather than and advice service to many council or chamber of commerce.
investing in their management businesses seeking support, is
skills to increase productivity and providing a “patchy” service’ and We report here our evaluation of
growth. However, with SMEs that that ‘there is a need to set a clear the initiative and, in what follows,
employ staff (excluding, therefore, national direction and provide outline in more detail the rationale
the self-employed and sole stronger support.’ It goes on for People Skills, what existing
traders) accounting for more than to comment: ‘Furthermore, the research tells us about people
99% of private sector businesses, Federation of Small Business told management in SMEs, how we
over 51% of private sector us that they have “consistently undertook the evaluation and
employment and 43% of private raised concerns over a lack of present our findings. We build
sector turnover5 among employing co-ordination and duplication on this to draw conclusions as to
firms, the UK’s productivity of business support provision People Skills’ effectiveness and
problems cannot be tackled unless across both the public and private outline key policy implications.
small and medium-sized firms can sectors, including the interaction
raise their game in this area. between national and local Design of People Skills
schemes.”’ At the outset, People Skills was
Micro and small businesses designed to address key aspects of
have particular challenges in The People Skills skills mismatch. It was expected to:
how they invest in and manage intervention
their people to support business It is against this backdrop 1 be primarily focused on
growth because they do not have that the People Skills initiative addressing skills mismatch at a
dedicated HR support and owner- was developed, funded by the local level
managers have limited time or JPMorgan Chase Foundation. 2 have a twin focus on: (a)
capability in this area. People Skills was designed to improving the leadership,
test the merits of a locally based management and HR capability
Evidence from previous work intervention that provides high- of SMEs with the purpose
in this area funded by the quality information and support of boosting skills utilisation,
Department for Trade and directly to SMEs to enable them productivity and innovation at
Industry between 2003 and to address both aspects of skills a local level; and (b) improving
20046 suggested that SMEs would mismatch, focusing on: the connection between
benefit from bespoke business education providers and SMEs
support services that could (1) 1 the lack of alignment between and encouraging SMEs to invest
provide face-to-face support the skills that local SME in young people
and (2) bring networks of SMEs employers are looking for 3 have significant buy-in from
together so they can achieve and the jobs and careers that key local stakeholders.
economies of scale in accessing young people are interested This means genuine interest
such services and learn from in, as well as the reluctance and understanding of the
each other. of SMEs to invest in young importance of developing
5 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/467443/bpe_2015_statistical_release.pdf
6 DTI Shared Human Resources pilots, 2004.
7 https://www.publications.parliament.uk/pa/cm201617/cmselect/cmbeis/616/616.pdf
6  People Skills: building ambition and HR capability in small UK firms 7  People Skills: building ambition and HR capability in small UK firms
a holistic local skills strategy 5 have an effective strategic With the above in mind, and building
that includes an interest steering group to help maintain on connections and opportunities
in addressing skills mismatch, interest and momentum as they arose, People Skills was
growing employer demand 6 be integrated with other aspects established in three locations
for investment in skills and of local skills, employment and and embedded in host partner
improving the utilisation of skills innovation policy organisations, as outlined in Table 2.
4 be centred in a locality where 7 be based in a location that
representatives of the Local benefits from a high density of In establishing the programme in
Enterprise Partnership, local SMEs to maximise its reach and each area, efforts were also made
authority, education providers potential to engage widely with all potentially
and business leaders and 8 run for a minimum period of interested parties or stakeholders,
networks recognised the purpose 12 months to allow evaluation inviting support and connection.
and need for the initiative and of impact. This spirit continued throughout the
were prepared to back it duration of the programme.
Table 2: People Skills partner locations
Location Host partner
London Borough of Hackney Hackney Council
Glasgow Glasgow City Council
Stoke-on-Trent Staffordshire Chambers of Commerce
Figure 2: Embedding the People Skills pilot programme in Stoke
Consultants Key partner Other local partner
Local FE
Outreach/
Marketing
Stoke
SMEs
(focus
on 5–50
employees)
Connecting
to the service
Consultants/ Web resources
HR advisers Events
Stoke
co-ordinator Training
7  People Skills: building ambition and HR capability in small UK firms
In order to reach as many What did this look like for an
small businesses as quickly and SME?
effectively as possible, and to In each area the local partner
ensure that the programme ‘business support’ contact details
was integrated with other local were used as the initial point of
services, the programme in each contact with the co-ordinator. They
area was ‘embedded’ firmly then had an initial conversation
with and led by the local ‘host’ with a business before passing
partner. The model in Figure 2 was over to a specialist HR consultant,
implemented in each area, or a who would then work directly with
very similar set-up. the business.
A budget was prepared for each Participating SMEs could access
area that included funding for: free support in the form of:
• a dedicated People Skills • access to free online tools and
co-ordinator, ideally embedded resources, including the CIPD’s
within the host partner HR Inform, an employment law
• payment to local HR consultants subscription service
• local marketing and promotional • dedicated one-to-one support
activities from a professional HR
• training, networking and consultant, working with them
information events. in any way required, either
remotely or on site
In addition to the local-level • training and networking events
investment, central funds were also on relevant topics.
used to manage and oversee the
entire programme and provide for
comprehensive external evaluation.
8  People Skills: building ambition and HR capability in small UK firms 9  People Skills: building ambition and HR capability in small UK firms