The CIPD (Chartered Institute of Personnel and Development) are calling on the Government to invest £13m a year to boost workplace productivity in small businesses.
Solving the Productivity Puzzle
The call comes after completion of its research, supported by J.P. Morgan, which suggests that giving small businesses basic HR support can help to lift workplace productivity. This could help solve the UK’s ‘productivity puzzle’.
The CIPD is calling on Government to invest £13m a year to provide HR support to small businesses, as new research shows that it could be a key part of efforts to unlock the UK’s productivity puzzle – a long-standing productivity deficit that seems to particularly affect smaller businesses.
The research is based on the evaluation of year-long ‘People Skills’ pilots. Developed by CIPD with the support of J.P. Morgan through the JPMorgan Chase Foundation, the pilot scheme provided HR support for more than 400 small businesses SMEs in Hackney, Stoke-on-Trent and Glasgow. Small businesses enjoyed up to two days’ worth of free HR support, including face-to-face advice, a telephone helpline, online information and templates, as well as group training events.
The pilot was so successful in Glasgow that the City Council continued to fund the programme after the research grant ran out.
Improving People Management
Although much of the support provided by the People Skills initiative was quite basic, covering aspects such as job descriptions, the evaluation report revealed that this can provide a foundation for boosting productivity.
Ben Willmott, CIPD’s head of public policy, said: “People Skills shows the potential benefits of targeted investment to improve small firms’ capability around the management of people through co-ordinated high-quality, locally-delivered business support via channels such as Local Enterprise Partnerships, chambers of commerce and local authorities.”
After using the People Skills service, owner managers were more likely to report their organisation was better or much better than similar firms in their sector than before, based on measures of:
These benefits also came through in the in-depth qualitative interviews with owner managers that participated in the People Skills initiative.
Willmott continued: “If policy makers are serious about addressing the UK’s long-standing productivity deficit – particularly among the nearly 1.3 million small businesses that employ between 1 and 50 people – then they have to start seriously thinking about how to improve management quality, which the Bank of England’s chief economist Andy Haldane has identified as a key area for focus. People Skills provides a template of how to actually do this on the ground among small businesses.
“We calculate that about £40m from the Government’s National Productivity Investment Fund would support the £13m annual cost of running a People Skills-type service across all 38 Local Enterprise Partnerships in England for three years and could revolutionise the quality of business support for small firms.”
Hang Ho, EMEA head of the JPMorgan Chase Foundation, said: “Small business success is an essential element of the UK economy and a critical component in creating thriving local communities. Today’s report shines a light on the importance of basic HR practices to the success of small businesses, whether that is improving productivity, boosting the effectiveness of the management team or handling crises.
“While we hope the People Skills pilot will benefit participating companies in the long term, the findings clearly also demonstrate to policy makers a real need for HR support amongst SMEs.”
Online business support is inadequate unless supplemented by personalised advice and support – face-to-face advice particularly valued.
Fragmented business support provided at a local level should be rationalised to prevent duplication and confusion.
Policy makers should re-think how they encourage SMEs to employ and train young people – in most cases, they don’t have the interest or capability to do this. Re-focusing a proportion of government investment to providing enhanced support for people management skills for SMEs would, over time, give them the capability and confidence to supporting young people into work in the future.
The support provided by People Skills did not disadvantage existing private sector providers as owner managers participating in People Skills had not previously accessed HR support services.
If you are a small business owner, do you feel confident in your HR skills, or do you feel that support would benefit you?
Want to learn more?
Subscribe to our newsletter to get accounting tips like this right to your inbox
About The Author
An experienced business and finance writer, sometimes moonlighting as a fiction writer and blogger.