More than nine out of ten (93%) UK businesses believe they are at risk of being held back by a shortage of skilled managers, according to new research published today by the Institute of Leadership & Management (ILM). With a proven direct link between best management and leadership practice and business performance [1], UK plc is in real danger of falling far behind its global competitors.

The survey, which asked 750 managers with responsibility for their organisation’s talent management about their talent plans and current management capability, revealed a significant weakness in leadership and management skill levels, particularly at first line management level. Nearly half (47%) of employers identified a lack of internal staff capability as the single biggest barrier to ensuring an effective supply of leaders and managers through their organisation.

The leadership and management talent pipeline also revealed a lack of succession planning within UK businesses, with 43% of businesses having no talent plan in place at all. Because of this, organisations are failing to capitalise on internal talent, with only 55% of managerial vacancies filled internally. At senior level, just half (50%) of companies recruit from their internal talent pool, with critical leadership skills like strategy and financial acumen undervalued and underdeveloped at lower management levels.

Meanwhile, less than one in five (18%) employers expected candidates to have received management training prior to being appointed to a management position.

The findings also revealed a shortage of ‘softer’ leadership and management skills as a particular challenge facing UK employers, with organisations consistently struggling to find managers – at every level – who are emotionally intelligent, inspirational and creative.

The shortfall in these areas is particularly pronounced at first line management level: whilst first line managers perform particularly well on technical and functional skills (which the survey identifies as the main factor determining their appointment), almost half (49%) of respondents said it was hard to find first line managers who were entrepreneurial and 39% admitted it was hard to find ‘emotionally intelligent’ managers at this level. UK companies therefore risk ending up with teams led by ‘expert novices’ – managers with excellent technical capability but lacking management capability or leadership potential, and, moreover, ill-prepared for the demands of more senior roles as technical and functional skills recede in importance.

Charles Elvin, chief executive of the Institute of Leadership & Management, said: “The clear link between management and leadership capability and productivity means that organisations should be fully focused on developing managers not just for their current role, but for the future goal of their organisation. The UK needs to address the current shortage of management and leadership skills revealed in this survey in order to compete on the international stage.

“Now more than ever, businesses should be investing in leadership and management development at all levels to ensure strong business performance and effectiveness. They need to consider the personal qualities of managers as well as their technical skills, helping them become more innovative, inspirational and emotionally intelligent in order to prepare them for the demands of 21^st century leadership.

“Developing leadership capability at all levels enables organisations to promote from within instead of relying on external recruitment, which can be expensive and risky. Businesses with strong internal talent plans can also reap the benefits of improved company culture and employee loyalty.”

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