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When it comes to the development of regional economies, the vital importance of management and leadership skills is often overlooked by politicians and policymakers.
Yet there is overwhelming evidence that management training is instrumental in supporting economic growth by enhancing organisational productivity and stimulating innovation to remain competitive in global markets, adapt to technological changes, and respond to emerging challenges. This, in turn, can boost the overall productivity of a region or nation and boost its competitiveness.
Well trained managers are also adept at attracting and retaining talent, ensuring that businesses not only maintain a resilient and competent workforce but also ensuring the optimal utilisation of resources, minimising wastage, and fostering a culture of calculated risk-taking and strategic foresight.
Beyond the direct economic benefits, management training accentuates the importance of ethical business conduct and champions the cause of sustainability, creating a foundation for long-term economic health and ethical business practices.
Therefore, the link between robust management practices and superior business performance is becoming increasingly evident and data from the Office for National Statistics has shown that there is a direct correlation between sound leadership approaches and enhanced productivity.
Whilst elevating management practices can result in striking productivity gains for smaller firms, many have failed to fully optimise their management strategies. This results in lagging productivity, especially when compared to their larger counterparts. This is not due a lack of investment capital for supporting such skills. While firms are prepared to invest heavily in tangible assets like infrastructure and equipment, they often overlook the equally crucial area of management practices. This is baffling given the evidence showcasing the benefits of better management at a corporate level including increased profitability, accelerated growth, reduced chances of failure, heightened R&D investments, talent acquisition, and enhanced employee welfare.
So is the lower productivity of the less prosperous nations and regions of the UK being affected by lower investment into management and leadership skills?
In the case of Wales – which was recently ranked as the second least productive economy in the whole of the UK and at only 84% of the average productivity nationally – data from the Hodge Foundation showed a real hesitancy amongst businesses to embrace good management practices such as strategic planning.
Their focus, predominantly on short-term profitability and growth, overshadows the long-term vision necessary for sustained success. While firms acknowledge the importance of leadership, barriers such as skill shortages, limited management bandwidth, and insufficient access to information prevent them from capitalising on it.
Moreover, the tendency to underutilise external networks as conduits for innovative ideas limits their potential further.
In other words, they simply don’t have the resources or support necessary to be able to maximise the opportunity for better management and leadership training.
So what can be done by national and regional bodies to focus their efforts on developing higher calibre managers and leaders which, in turn, leads to better businesses and a more productive economy?
One potential solution has been offered by a recent report from the Chartered Management Institute (CMI) written in conjunction with my alma mater, Aston University, which sets out how management skills can boost growth in the West Midlands region.
It has vital lessons for other parts of the UK, including Wales, on how to ensure that management and leadership skills are not only upgraded but are seen as a key part of the drive to ensure a more productive economy.
One of the main recommendations is for greater regional collaboration for economic progress which is driven by a synergistic approach involving employers, universities, training providers, chartered professional bodies, and other regional stakeholders.
By working together, these bodies can streamline employer support and ensure that funding for long-term productivity essentials like management and leadership development is prioritised. More importantly, they can share knowledge and formulate collaborative interventions centred on developing managerial excellence.
To date, that simply isn’t happening in Wales and there has been very little effort to ensure that we have a coherent national strategy for maximising the opportunities from better leadership and management training.
Yes, the problem has been acknowledged by those bodies focusing on skills within Wales. For example, the North Wales Skills and Employment plan states that “leadership and management skills are needed to help our SMEs to face the challenges that lie ahead in a turbulent economy” whilst the Cardiff Capital Region’s employer skill survey showed that leadership and management was, alongside skills in new technology, the main skills challenge being experienced by businesses in the region.
Yet despite this, there is nothing being done to specifically address this deficit which has serious consequences for the future of Welsh businesses. Simply put, if Wales had better managed businesses, it would lead to superior performance that would, in turn, create better jobs and higher levels of economic prosperity and competitiveness.
Surely that is a no-brainer for policymakers to support and ensure that one of the key factors contributing to the woeful level of productivity that is holding back any improvement in the Welsh economy is finally addressed.
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