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Investors in People: Gold standard or sub-standard?

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MAGNIFYING GLASSProfessors Kim Hoque and Nicolas Bacon of Nottingham University Business School call into question the value of the government's £30m support for the Investors in People Small Firms Initiative.







Successive UK governments have encouraged small- and medium-sized enterprises (SMEs) to pursue Investors in People (IiP) recognition with a view to increase levels of employer-provided training in the sector. Central to this has been the Investors in People Small Firms Initiative, which was established in 2003 with business support from IiP UK, the Learning and Skills Council and the Small Business Service.

Photo of KIM HOQUE"The government's financial commitment to raise recognition rates and boost training levels among small firms through IiP UK's Small Firms Initiative has failed to achieve its aims"

Now as the sixth anniversary of the Small Firms Initiative approaches, our research has called into question the wisdom of promoting Investors in People in the small firm sector. In particular, our analysis of survey responses from over 9,000 employees suggests that in small firms, Investors in People recognition does nothing to boost the training levels of non-management employees, with levels of training provided to non-management employees being no higher in small firms that have secured the award than in those that have not. The research also reveals no increase in levels of IiP recognition among small firms (defined as having between five and 49 employees).

It would appear from our results that the government's financial commitment to raise recognition rates and boost training levels among small firms through IiP UK's Small Firms Initiative has failed to achieve its aims. It would also appear that the revisions to the IiP Standard in 2000 and 2004 to make the award more palatable to small firms by reducing levels of bureaucracy and making it easier to understand have not had the desired effect.

One implication of this is that, especially given the current economic climate, it is perhaps unlikely that the number of small firms engaging with training initiatives such as IiP will increase in the future without either greater incentive or compulsion. The alternative might be either to introduce a new initiative that is better geared to small firm needs, or to seek to revise IiP further to ensure that it encourages the type of training seen as appropriate by small firm employers. However, given the financial support the government has made available for small firms seeking IiP and also the revisions that have already been made to the Standard, it is difficult to see how IiP could be made more attractive to small firms while still requiring them to engage in some form of meaningful and identifiable form of skills training.

Photo of NICHOLAS BACON"In small firms, Investors in People recognition does nothing to boost the training levels of non-management employees, with levels of training...being no higher in small firms that have secured the award than in those that have not"

Non-managers miss out

As for our finding that IiP fails to boost non-management training in the small firm sector, this certainly raises questions concerning the relevance of IiP to small firms and also the wisdom of the government's policy of supporting IiP in the sector. The Trades Union Congress advocated the extension of government support for the uptake of IiP in small firms as a way of increasing training provision for employees (CBI/TUC, 2001). It would, however, only be advisable to continue to advocate and fund an increase in small firm recognition rates if it can be identified in the first instance that IiP is genuinely associated with training activity. Our results suggest that where non-managers are concerned, it is not. Given this, the government's continued emphasis on IiP as a means by which training levels in small firms can be raised would seem to be misguided – it is unlikely that it will achieve its goals of raising training activity in the sector by continuing to offer support to IiP.

Strong exports

Ironically, while the effects of IiP recognition in small firms are questionable, IiP UK has been extremely successful in exporting the Standard to other countries. Indeed, IiP UK has licence agreements in over 20 countries as far afield as Africa, continental Europe, North America, the Middle East and Australasia. Our results suggest any country that has either adopted, or is considering adopting IiP, should be cautious about its likely benefits.

The question is still, 'what needs to be done to boost the effectiveness of Investors in People in the UK's small firm sector?'


Kim Hoque and Nicolas Bacon are professors at Nottingham University Business School

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