Bharthi Keshwara of the Chartered Management Institute shares insights from the CMI’s recent ‘Management & UK 2030’ report, and makes the case for long-term investment in improved management capabilities.
The UK has seen a return to economic growth earlier than expected, inflation has stabilised to target levels, and the Bank of England has cut interest rates for the first time in over four years. However, the country’s muted productivity and weak economic growth outlook remain unresolved. But there is a path out of this problem, argues a recent CMI report, Management and UK 2030. The report finds that for the country to overcome its poor productivity performance, it needs more capable, robust and resilient management and leadership.
An examination of the OBR’s recent forecasts suggests that investment in people and capital are the key to raising UK economic output. Generally, around half of the expected growth in potential output is due to increasing labour supply and just under half is due to total factor productivity, i.e., how efficiently we are able to produce from each unit of input such as labour and machinery, the remainder comes from investment in plant and machinery.
Given this context, the report underscores the importance of investing in human capital—particularly in enhancing management and leadership skills. The analysis points out that the UK’s leadership and management skills are undervalued compared to those in competitor nations like the United States, Germany, and South Korea. This skills gap is a significant factor behind the UK’s lagging productivity.
Research by economists John Van Reenen and Nicholas Bloom reveals that management capability alone accounts for about half of the productivity gap between the UK and the US. Countries excelling in management offer key lessons for the UK: competitive markets, supportive institutions, and a culture prioritising long-termism and continuous skill development. For instance, the competitive US domestic and European single markets are a crucial driver of management performance across those geographies, as global market competition drives management quality by encouraging improved performance and enabling diffusion of learning across supply chains.
Meanwhile, countries such as South Korea, Sweden, and Germany have institutional frameworks that promote lifelong learning and skills development. In South Korea, long-term skills policies are tailored to regional needs, while Germany and Sweden have successfully implemented dual education and training systems that combine classroom learning with practical apprenticeships, which has improved human capital including better management practices.
The UK’s position in the global management landscape is concerning. The World Management Survey ranks the UK 6th globally, indicating significant room for improvement. In a scenario in which the management gap with Germany was closed over the next few decades it could potentially prevent an estimated £127 billion in lost output. Additionally, CMI analysis shows employers in the US are 10 per cent more likely than their UK counterparts to demand formal management skills for those entering management positions further highlighting the skills deficit or the lack of demand for skills in the UK.
The Labour government has announced initiatives to enhance the nation’s skillset, including the devolution of skills budgets and the creation of Skills England to support the industrial strategy. However proposed changes to the apprenticeship levy, which is likely to introduce a more flexible “growth and skills levy” could risk weakening the economic impact of apprenticeships. For example, according to CMI’s economic value of apprenticeships model, a 100% cut to Level 7 apprenticeships could result in a loss of £772 million to national output per year by year 10. Therefore maintaining investment in policies that develop management capabilities—such as Level 5, 6, and 7 management apprenticeships—is crucial for boosting productivity.
The broader policy landscape has not given enough attention to management capability. Although supply-side policies to enhance skills and productivity may take time to be reflected in official statistics, especially within a single political cycle, they are vital for long-term economic growth. Unlike many proposed solutions to Britain’s productivity issues, improving management practices can be implemented quickly, cost-effectively, and directly by business leaders, provided the government offers the right support.
The Management & UK 2030 report suggests practical steps to boost UK management capability and productivity. First, improve management across the civil service by implementing standards and training options across government departments. Organisations that wish to do business with the government should show evidence of investing in formally accredited management training.
Secondly, the government should support the private sector by securing trade agreements that strengthen the position of UK businesses in global supply chains and globally competitive markets.
Thirdly, embed management skills in key government strategies, including green transition plans. The Government should make a virtue of developing high-level management capabilities that form part of a long-term skills strategy. This includes maintaining some current effective policies like high-level management apprenticeships that have proven to improve productivity.
Finally, use the tax system to incentivise investment in management and upskilling. The treatment of taxation and accounting standards can be reviewed to recognize human capital as assets on corporate balance sheets and encourage equal investment in R&D, human capital, and physical capital. For the UK to secure a path to sustained economic growth, further encouragement and investment in people—both by firms and individuals—are essential. Management lies at the heart of this investment, as it directly influences firm-level productivity and the broader development of skills within the workforce.
