Off with their heads

Do you remember those halcyon days when management training and development was on virtually every company's agenda? No, neither do I. Despite compelling evidence of excellent returns on investment, it has always been a bit of a hit and miss affair outside major corporations. For international players like Proctor and Gamble (P&G), Nissan and Toyota, it is their lifeblood. P&G openly attributes its entire success to the strength of its talent pipeline which, it says, "we build from within and manage with a disciplined process led by the CEO and the senior leadership team". For mid-range players, however, management development tends to be something done in the good times but put on the back burner when times are tough. And for SMEs – with little spare time and even less spare cash – it's always been a struggle. Today, however, the training industry is genuinely approaching crisis levels. According to Neil Smith, head of education and training at The Manufacturing Institute (TMI), the whole training market has gone down by about a third and management training is no exception. He has worked in training all his professional life and – at 50 – says: "This is as bad as it's ever been and no one can see an end to it." For TMI, it has meant delaying the start of some programmes because of slower demand and temporarily taking others out of the schedule. "But that's been pretty much reflected across the whole industry," he says. "Cutting training budgets is what everyone did when the recession first hit and I don't think it's come back much since." Government funding, despite claims to the contrary, has shrunk significantly and it is having a profound impact upon management training of all kinds (see box, p34). Indeed, The Daily Telegraph recently reported that the boss of Proskills, the sector skills council for process industries, has warned it faces closure as a direct result of losing backing in a recent public funding round. With clients also feeling the pinch, TMI is seeing a much stronger appetite for training with a direct, fast link to cost savings rather than its longer programmes. Lean training is in constant demand and its biggest growth area is its Six Sigma courses. On the other hand, it recently had to delay the start of its top-level programme, an MSc in manufacturing enterprise leadership accredited by Lancaster University Management School, until it had sufficient numbers. Yet this course, which has been running since 2005, is one of the best respected in manufacturing, largely because of the significant returns it has brought to its graduates' own companies. One of the first to qualify was Mike Vernon, production manager at AD Aerospace. His MD, Mike Horne says that cost savings and procedural improvements happened in the workplace very quickly afterwards because course modules and dissertations all reflected real life within the company. And Vernon himself is adamant that the course helped him see and think more strategically, and to understand why projects and, indeed, companies succeed or fail. In essence, it's what every supporting company hopes for from its key managers in difficult times. Yet Smith reports that today "many people are reluctant to invest in programmes that aren't going to deliver anything for a year or two." There's a logical flaw in all this. In a downturn, manufacturing has even more need of sharply honed management skills. Is it really allowing everything to grind to a halt? Or are companies just taking a different, more selective, pick-and-mix approach? Smith says size tends to dictate the form. Big companies tend to do as much as they can with internal resources, outsourcing only the parts beyond their competence. "Smaller companies don't have that option – they are almost driven to the external providers and open courses." Interestingly, in the past about two thirds of the candidates on the leadership programme came from large companies and about a third from SMEs. Now the figures are reversed, partly because many senior leaders in SMEs are putting themselves on it: "If you have got a personal benefit coming out of an educational programme, then it's worth investing." The one training source that is actually doing quite well at the moment is the local college. "The FE (further education) rather than the HE (higher education) sector had a lot of investment under Labour," explains Smith, "and they are pushing the boundaries of what they offer. SMEs are very much in their target area." He maintains, however, that the FE sector has always been bad at engaging with employers, coming up with bespoke solutions and ensuring follow-through: "They are good at delivering standard qualifications – which is what they are funded for – but not at delivering the benefits back to the workplace." In his view, customised on-site programmes work better, with the whole group focused on solving the same issue, albeit over a short period. Training and consultancy group Sora sees flaws in the whole concept of specifically developing management skills. "In every industry, if you are good technically, you get promoted," says director Ian Tindle. "Then the company realises the superb technician needs some general management training – but it's often too late by then." He points out that in Japanese manufacturers, people get taught things like strategy, planning, root cause techniques and data analysis at the earliest stages of their career: "The people who get promoted are the ones who marry technical skills to strategic ability. People who are strong technically pick up the strategic techniques pretty quickly. But with this approach – which we also use – they get a head start of five to 10 years." It's clear that many businesses won't consider even modest programmes until trading conditions improve. One manufacturing group, however, decided that management development was too valuable to curtail, even in this tough climate. It was Parker Hannifin Manufacturing – the Factory of the Year 2011 – and it's worth considering what it achieved by bucking the general trend. When Parkers took over Domnick Hunter in 2005, its then HR director Stephen Shearon decided that if it was to succeed as part of the much wider Parker Filtration Group Europe (PFGE), "doing the same thing we have always done is not an option". The result was two related development programmes: IOE (increasing organisational effectiveness) for group and divisional leadership teams, and LMP (line management programme) for middle managers and team leaders. The IOE concept was firmly based on improving individual, team and organisational performances. Its central principles are that no change management programme can be effective without it starting with the senior leadership team and that all organisational learning starts with the individual. Working with an external consultancy Opsis, it was designed to develop the management skills to model and drive new values, attitudes and behaviours across the company. Shearon was aiming for a dramatic shift in management authority, attitude and capability. He envisaged a new role for managers: helping all employees to learn, develop and willingly take up new responsibilities in their own work. Managers not only needed to lead by example but also have the skills to coach others to follow. Shearon says it's a challenge that is frequently underestimated. The programme basically contained the building blocks for an entire culture change: outward-looking education in strategic management and 'assessing, designing and redesigning organisations to maintain leading edge' ran alongside courses in 'discovering and managing yourself' and 'managing others and teams'. Anna Nichols, division HR manager, who has been through IOE herself, says it really prompted self-discovery: "There was a lot of focus on being able to receive feedback constructively. The whole programme is open, honest and confidential. It helped us understand our personal responsibility, our departmental responsibility and our strategic responsibility for the whole business. It gave us something in depth that made it clear what was expected of us." All divisional management now has shared goals as well as personal development plans. "The goals are reviewed on a monthly basis," explains Nichols, "so if someone is finding difficulty in achieving a team goal, it is discussed and an action plan is agreed to improve the metric." Nichols says that Opsis's partners – who had worked in senior roles in other businesses – were invaluable in adding an outside perspective to the Parker view of the world: "An external trainer is particularly useful when there are tough, make-or-break messages to instil in the leadership team." She believes starting at the top, with all the European general managers, before cascading the programme to divisional management teams was fundamental to its success. By the time PFGE was ready to develop LMP – which uses many elements from the IOE programme – its own training professionals could handle most of the work. "All our programmes have a common focus: you are an integral part of this business. Whether you are an employee or a member of the divisional management team, you have a role in influencing and developing it. If we had only done this with the senior management team, we would only have won half their minds." It shows. One of the primary reasons for its Best Factory win was the clear capability of the shopfloor teams to decide how to operate on a daily basis and their enthusiasm for taking the responsibility. It's important to note, however, that this was not a group-wide initiative. It was developed specifically for the nature and needs of the European business. When the downturn came, other management development programmes were curtailed but, uniquely, PFGE continued to invest. "We decided that it was too important to stop," recalls Nichols. "Even when the recession was at its height, there was a strong team sense that IOE was producing the new skills and approaches that would bring us success. Of course there were discussions about cost – it's clearly not cheap. But there were no doubting Thomases about the value of the programme." Others clearly agree. Shearon was promoted and is now rolling out a version of IOE to Parker's US filtration business. Businesses that have mothballed their own management training would do well to heed Nichols' firm message: "Although the recession has been tough, we would have been in a far worse place if the IOE and LMP programmes had not gone ahead." A lesson in clear leadership? In April 2011, the government announced funding to support leadership and management training for SMEs with potential for growth. Administered by the Leadership and Management Advisory Service (LMAS), it provided free consultation and a match funded grant of up to £1,000. Skills minister John Hayes urged SMEs to apply, saying: "This fund will give vital support to entrepreneurs who want to continue to develop their businesses." Less than a year later, the scheme seems dead in the water. LMAS's contract is not being renewed, despite a BIS-commissioned evaluation in September 2011 by York Consulting that found, for example, that the programme had led the vast majority of participants to develop new or improved skills across a range of management and leadership areas. Instead, BIS announced Business Coaching for Growth, a new programme "to help up to 10,000 high growth businesses a year to address barriers to growth and grow more rapidly." Details are scant apart from the fact that it will be delivered nationally by a consortium led by Grant Thornton, will start operating in early spring (optimistic given the apparent level of preparedness) and will target a "select group" of established SMEs and start-ups with the potential to increase employment rapidly. What is not mentioned is any help for those outside the narrow target area – and the word 'funding' is notably absent. In the meantime, despite the minister's avowal that "effective leadership can make the difference between survival and growth," there's a yawning gap. More information may shortly be forthcoming from the BIS or Skills Funding Agency websites. Or not.