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Management Matters

Last September (2018), CfEE published research on the relationship between education, skills, and entrepreneurial success. The report, entitled ‘Human capital and business stay-up’, presented the findings of work commissioned by The Entrepreneurs Network (TEN) and funded by the Association of Business Executives (ABE) to inform its ‘Business Stay-Up’ campaign. Today that campaign culminates in the launch of TEN’s own report ‘Management Matters’.

In recent decades governments worldwide have employed an array of different policy tools to try to increase start-up rates in their countries, but relatively little attention has been paid to how to support ‘business stay-up’. In that it is among the fastest growing small businesses that employment growth, innovation and productivity gains are strongest, this lag in the progress of entrepreneurship policy should give us cause for concern.

Of those approaches to supporting business sustainability that have been tried, efforts to improve management practice have shown promise. This report adds to a growing body of evidence in this area, new research supporting the importance of human capital to entrepreneurial outcomes.

Using data on over 10,500 business owners in 21 countries, derived from the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC), Gabriel Heller-Sahlgren’s findings substantiate a relationship between business owners’ specific areas of qualification and the growth of their enterprise, and show that all areas of study are not equal in terms of stimulating success. The knowledge and training obtained through programmes in business, social science, and law, and in technical areas, such as engineering, appears to lead to employee growth – whereas programmes relating to other subject areas do not.

Accordingly the report argues that governments should seek ways to incentivise training in high impact areas, and in management skills specifically.  The most promising approaches, it finds, appear to focus on task-related training, in both an operational and specific sense. To maximise the probability of firm success, owners must therefore learn the operational skills of organisation and management, while at the same time keep up-to-date with the latest developments in the field in which they operate.

As the most probable avenue for such training lies in adult job- or career-related learning initiatives rather than formal education, Heller-Sahlgren argues it is important that support be given specifically to such initiatives. More bespoke, accessible and on-demand learning opportunities are necessary. There is a need for incentives to stimulate both the demand and supply side. Business owners need capital investment reliefs to prompt their commitment. Providers need this financial commitment to encourage them to work more closely with SME owners, and engage their education and training needs more realistically.

But it’s imperative also that these measures be accompanied by the establishment of proper research frameworks for identifying more precisely what works. Without randomised trials of promising training approaches, we argue, where education and training for entrepreneurial quality is concerned, we will simply end up with more of the same.

Read ‘Management Matters’TEN’s take on the subject, launched today, with wider analysis of the deficit of management capability that has driven management practices up the economic research agenda in recent years.

Media coverage of the CfEE report

Forthcoming: look out for coverage in the CIPD’s People Management Insight

‘Learning Is Key For Businesses Beyond Start-Up’, Minutehack, 12th January

‘We need to incentivise business education for our economy to thrive – and not just MBAs’,The Telegraph, Refresh, 30th October

Ground-Breaking Analysis of 10,500 Companies Reveals Training Programmes that Helps Firms Grow’, FE News, 12th September

The right training for business success’, Business Works, 12th September

The entrepreneurship conundrum’, Institute of Economic Affairs (IEA) blog, 12th September

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