A report by the TUC says that British management is plagued by mediocrity and short-termism, and that this management culture is holding back the Government’s drive to boost productivity.
Research quoted in the report includes a study of 200 British manufacturing firms which found that ‘low road’ work practices - short-term contracts, no employer commitment to job security and low levels of training - were significantly associated with poor performance. Firms with high levels of turnover scored particularly badly on product and process innovation, and all the ‘low road’ practices (high turnover, temporary contracts and fixed term contracts) were linked to low labour productivity.
The TUC has also drawn attention to other recent surveys by other organisations, and the results aren't encouraging. An Australian survey of Asian business executives asked them to rank other countries’ managers by a series of attributes. The UK had a worse leadership score than the USA or Japan, but the scores for adaptability, entrepreneurship and technical skills were even worse.
A recent study of productivity by the Engineering Employers’ Federation found that foreign-owned firms are more likely to introduce workplace innovations than UK-owned firms. Of 12 types of initiative, US-owned firms were more likely to use every one, usually substantially more likely. The difference between UK-owned firms and EU-owned was less clear-cut, but EU-owned firms were overall more likely to innovate.
Companies in English-speaking countries:
- Are more likely to have their shares traded on stock markets
- The shares of these companies are more diffusely owned
- Shares are held for a shorter time
- The main mechanism for holding managers accountable is the hostile takeover
Managers respond by:
- Maximising short-term shareholder returns, rather than long-term value
- Releasing a higher proportion of profits as dividends, instead of being re-investing them in the firm
A recent survey by the Institute of Management found that over a third of all managers rate the quality of leadership in their organisations as poor. Only one in a hundred rates it as high, and even CEOs are not impressed, often describing the quality of leadership as 'mediocre.'
Government figures (WERS survey) describe what workers think of their managers’ skills:
- 24% thought their managers were poor at ‘dealing with work problems’
- 30% at ‘keeping everyone up to date about proposed changes’
- 34% at ‘responding to suggestions from employees’
- 38.5% at ‘providing everyone with a chance to comment on proposals.’
