The “Skills Gap” that Lord Leitch discussed in 2006 is a real thing.
The “Academic-Commercial Gap” is making it worse.
The UK Skills Gap(1) affects every UK organisation. But the Skills Gap is not a single thing nor does it derive from a single source and it affects everyone differently(2). Problematically the singular term disguises the numerous sources of competitive disadvantage weakening the industrial giant that once was and every organisation within it. We must be brave and tackle this most destructive of rots for it contributes directly to our productivity decline and the disparity with competitor nations. It ultimately means that taxes will always increase, SMEs will struggle to survive let alone make profit and that stress, burnout, mental health problems and social imbalance will always prevail.
What does the Skills Gap actually mean?
The UK Skills Gap refers to the disadvantageous position of being un-productive in work environments. The Gap has long been associated with Training and Skills qualifications and the increase of employee and organisational productivity, performance and profits. Simply speaking: More Skills & Qualifications = Increased Productivity & Increased Profits. However, the UK finds itself learning the opposite is also true.
Unsurprisingly areas of lowest National Productivity are those areas with the greatest Skills deficit, despite our state education system providing a broadly comparable syllabus nationally. It can be said therefore the draw of London and potentially higher wages for the upwardly mobile attracts workers with suitable skills, creating a shortfall where they left. The use of our Gross Domestic Product (GDP) calculation and the inclusion of our capital market incomes’ skews wildly our reality. Remove the contribution of our financial markets from the GDP calculation and we see that Lord Leitch’s findings still ring true and in reality are worse. Where is it worst? See Appendix 1, 2 + 3.
Key Points from Leitch’s Review of Skills 2006
‘Basic Skills’ include functional Literacy, Numeracy, English/EFL, soft skills and role specific skills
‘Intermediate Skills’ include high school leavers with educational and vocational skills and apprenticeships (5 x GCSE / equivalent)
‘Advanced Skills’ are high class Bachelors & Masters and PhD degrees
‘Economically Valuable Skills’ include Human Resources, Sales, Management, Leadership and Accountancy
Productivity is driven by skills
Managers are most likely to have low levels of qualifications
Self-employed workers tend to be more un-educated than the average worker
In 2005 UK invested 1.1% GDP in training v Germany investing 4.4%
20-25% of the Productivity Gap lies with our lack of skills and qualifications (all levels) against competitor Nations
10-15% of the Productivity Gap arises from the differences in Management and its efficacy
Higher Intermediate Skills and Economically Valuable Skills are critical to the success of businesses at all levels
High Skilled Workforces drive innovation, leadership and Management by enabling business competitiveness in Global environment
Increasing skills equates with decreases in child poverty and increases in fairness and also a reduction in Income Inequality
Todays 14-19 year olds need equipping with skills for a workplace twenty years in the future
For Developed countries who can’t compete on natural resources, success demands a more service led economy and high-valued industry
Source: Leitch Review Skills, 2006
Historical Origins of the UK Skills Gap
Adam Smith first noted in 1776(3) that the UK education system was not aligned with those needs of business or employment. Fast forward 240 years and we still have a ‘failing’ education system, a declining manufacturing base, a lack of primary resources, a low-wage workforce and incredibly a shortfall of basic, intermediate, high and economically valuable skills.
“Compared to an OECD average of 44 per cent or an EU average of 48 per cent in 2011, only 37 per cent of UK adults finished education at a level equivalent to A-level”.
& “The UK has one of the fastest shrinking shares of people completing education below GCSE level”.
(ONS, 2014 briefing paper).
Significantly The First and Second world War claimed a staggering amount of lives on all sides but more pertinently also their skills and knowledge. To re-build the country and it’s fortunes the UK Government rightfully embarked on a period of welcoming new workers to these shores. Each immigrant brought vital skills and their labour from their cultural and geographical origins but each of them would find themselves working for a firm run in a manner that has never been perfected and whose employers have done insufficient to master the application of their critical Economically Valuable skills. See Appendix 3.
Since 1945 debate has centred around the need for regulation to increase employer investment in training. The UK Governments 1964 move to instil The Industrial Training Board’s (ITB) Compulsory Training Act failed. The 1973 Manpower Services Commission (MSC) with statutory powers to improve Training heightened Unionism tension and quashed. The Commerce-led Training and Enterprise Councils (TECS) borne of the 1980’s with their subsidised training found organisations in a de-regulated landscape flanked by voluntary opportunities to improve themselves but floundered, lacking corporate will. The Government led National Training Organisations of the 1990’s (NTO’s), curtailed. The long standing Workplace Employment Relations Surveys (WERs) are also now long gone and forgotten. The Banking, Brexit and COVID crisis later and the UK Government has shown it’s lack of willingness to now even guide commerce to sources of nourishment. It has abandoned it’s Industrial Strategy leaving commerce(4) to make it’s own decisions without involving existing knowledge or experience.
In 2006 Lord Leitch noted, “too little investment in employees, too little responsibility being taken by individuals in their own learning and development and the existence of a qualification system that was divorced from the needs of workplaces” as being major problems. He had hoped by 2020 his advice would close the Skills Gap and the more visible Productivity Gap; but his insight and seminal work is little more than a fading memory. This article has been written in 2021 and the problem is worse than when it was first identified(5).
MIND The Academic-Commercial Gap!
British Government Policy has failed with regards to our Industrial Improvement allowing the Gap to widen(6). Recently the remnants of the Government support afforded commerce has been withdrawn(7) whilst UK employees trail competitor nations in all aspects of productivity, skills and qualifications. This is an unfortunate turn of events for HR because the Industrial Strategies had established and supported a series of ‘HR practices’ correlated with positive business outcomes but that were tragically optional allowing the Gap to grow.
It is pertinent that apart from with the largest organisations, strategic activity to close this Gap is limited. That is despite there being considerable evidence from multiple global studies from all sectors and industries and management styles that there is global convergence with HR Theory and in particular High Performance Work Processes (HPWP) (Dastmalchion et al, 2020)((8)). Awareness and application of the knowledge is restricted due to the relationship between Academia and Commerce being heavily influenced by our Politicians and affected by our education system.
It does not help that Academics do not get paid comparably with commerce. Academics and their Institutions instead get paid in part by downloads of studies authored by their Academics that are found hidden behind paywalls; only really read by Academics and Students as they develop popular and necessary Research Topics for their career development and certification. Indeed, the huge repositories of Data filed behind paywalls are expensive, complex and intense but it is in these documents scientific fact lies. Our national opinions towards learning require attention and development but where is the will to do so?
I suggest that Universities in our regions could become responsible for providing high quality academic and commercial research to aid all organisations in their territory. That academics and their institutions might be ‘publicly’ lauded for their quality activity and remunerated accordingly from the organisations enjoying their advice because Supply-driven industrial policy has failed, demand-driven Industrial policy has failed, now might be the time to re-think Voluntarist policies and enshrine HR to Law; as Accountancy is.
The Bitter Truth
At the heart of the problem within Organisational Theory and Commercial Reality is the debate about Employee and Employer Power and Control. Played out in real-time this split is divisive and often aligned with political views it is therefore, emotive. However there is scientific truth to the notion that a balance between both employee and employer power delivers a more impressive set of business outcomes and that the relationship is mediated by Human Resource activity. To solve this we must decide who is best placed to advise Commerce about the scientifically validated academic knowledge that is complex and hidden behind paywalls; Politicians, Itself or the Academics who put it there.
Reflecting on their data in 2020 the Organisation for Economic Co-operation and Development, (OECD)((6)), showed that People Management Practices have a large part to play in how skills are developed and that Learning and Development functions MUST BE combined with those of HR. On reflection it seems absurd therefore, that less than 1% of UK Small, Medium and Large Enterprises employ all of the best and known HR strategies. Despite Lord Leitch’s Report and fifteen years of access to this data the clear links between Regional Productivity (Appendix 1) and Regional Skills Data (Appendix 2) have been ignored as we see in 2019 that 41% of employees were under-qualified for their role (Appendix 1,2 &3).
1. Voluntarist Industrial Strategy has failed.
2. All levels of Industry, Management and Leadership must develop their Organisational Policies because positive business outcomes are mediated by HR and it’s derivatives; Talent Management (TM) & High Performance Work Processes (HPWP).
3. We must record all of our HR / TM / HPWP Data, develop it into Knowledge and then retain the Wisdom for any chance of long-term Productivity Improvement.
So how do “I” CLOSE THE GAP?
I, along with many other UK-centric Coaches, Facilitators, Consultants and Advisors work with Senior Leadership and their HR functions to help clients see their organisational actions and outcomes differently. I help clients see and take stock of what they have and need and most importantly WHY that is important and then change. Our HR Audit has been designed for this purpose. The HR Audit helps understand an organisations current position by exploring activity and outcomes in two key areas.
1. Functional areas of your business
Addressed with our HR Course, The Great British Productivity Challenge(9), organisations are given the processes, tools, insight and support to operate the best practices in combination and learn how to measure and manage them to the highest standard.
2. Personal Skills and abilities
By identifying what Basic, Intermediate and High level skills(10) you have and those that you need, schemes can be brought to life to foster and develop them. This process can be tackled by using Skills Matrices that are aligned with an organisations vision and values, roles and processes and can be a very effective tool for Training and Developing your people, their skills and your fortunes. It is entirely dependent on an empowered HR function and the support of each Business Director.
We can train for skills but understanding what skills are in place (per person) will give an HR Manager / HR Director greater ability to, influence results. Company wide analyses underpin corporate your Employment Relations decision-making because the subtle and farther reaching returns we must seek are most readily accessed by knowing what your employees are really best suited to as per their innate talents and skills, (Downey, 2011)((11)), not just what their cv says.
If you would like to look at or discuss where you might develop your skills and for easy to adopt steps please see:
1. HR Course – The Great British Productivity Challenge(12)
2. HR Measurement – Accounting for HR Performance(13)
3. New HR Theory + Business Framework – The Science of Productive Forces & Fractal Productivity(14)
4. Performance HR Platform – Copias Talent Management(15)
5. HR Audit(16)
Next Article: Sustainable Commercial Change.
If you would like to discuss what this might mean for your business, people and your results, please “Join the Conversation” @HRUKInsight or contact me via email at firstname.lastname@example.org
All available from www.talentmanagement.org.uk
Appendix 2 (UKCES)
Appendix 3 (UKCES)
Appendix 4 (UKCES)
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©Timothy Barlow, April 2021. c/o www.talentmanagement.org.uk
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