Focus on the higher-skilled damages UK productivity


Organisations are devoting the majority of their training and development resources towards the higher skilled, to the detriment of the UK’s ability to improve productivity.

In the first of its annual series of HR Trends and Prospects, the Chartered Institute of Personnel and Development (CIPD) has found that low-income workers receive less training, feature less in the recruitment and reward strategies of organisations and are much less likely to return to work when they become parents owing to prohibitive childcare costs.

Unsurprisingly, many UK workers do not believe generally that their organisations or senior executives have their interests at heart, with only one in three workers trusting senior management "a lot" to look after their best interests.

John Philpott, the CIPD’s Chief Economist comments, "It is easy to see why organisations devote so much attention towards recruiting and retaining the best staff given the pressures of an increasingly competitive marketplace. But it does so at the expense of improving performance and productivity at all levels of the organisations.

This need not be the case since the two are mutually inclusive. For example, with more than three quarters of organisations encountering difficulty in finding suitable recruits for at least some of the vacancies in 2002, perhaps more could be done to up-skill existing staff."

But while most organisations feel that their reward schemes are either quite or very effective at recruiting and retaining, only half feel they improve productivity.

Philpott continues, "This picture may explain why the Government is struggling to meet its objective to improve productivity. Clearly it is doing its part with initiatives ranging from employer training pilots for the lower-skilled to childcare tax incentives. Organisations must respond to this too, although it is encouraging that our most recent survey, the annual reward survey 2003, shows that as many as one fifth of organisations plan to include childcare vouchers as part of their new reward structures for 2003."

HR Trends and Prospects 2003 also shows that organisations are undertaking more innovation and initiatives in its attempt to recruit and retain the best staff. This remains HR’s biggest challenge against a growing perception among HR managers that employees are becoming less loyal to their employers and more focused on their careers.

The main objective of organisational recruitment strategy is to retain ‘skilled, experienced or highly productive individuals.’ Training and development is the most popular measure used by organisations to retain its best staff (66 per cent) and is followed by promoting a good image (47 per cent) and increased pay (44 per cent).

Key findings

  • The CIPD’s Who Learns at Work survey shows a substantial gap between the ‘training haves’ and the ‘training have-nots’, with part-time workers and people in lower grade jobs or with lower educational achievements among those less likely to be trained.
  • More than three-quarters (75.8 per cent) of the highest social class (AB) have received training in the past twelve months compared with 65 per cent of social class (C2DE).
  • People with minimal or no educational qualifications are three times less likely to turn down training than those with degrees.
  • On-the-job training remains by far the most favoured training option among trainees and employers. Given its flexibility and immediate relevance, the CIPD believes that organisations should pay more attention to improving the quality of work-based learning.
  • Low-income parents are also less likely to remain in the workplace as indicated by figures from the CIPD’s Work, Parenting and Careers survey. Those earning less than £20, 000 are most likely to reduce their working hours when they become parents. By contrast those earning over £40, 000 are most likely to stick to working hours. The survey shows that 22 per cent of parents who earn less than £20, 000 have stopped work completely compared with 10 per cent of those who earn more than £20,000.
  • The CIPD’s annual employee attitudes survey, Pressure at Work and the Psychological Contract, shows that UK workers do not believe that their organisations or senior executives necessarily have their best interests at heart. Trust in senior management is not particularly high: only one in three people trust senior management "a lot" to look after their best interests.
  • The proportion of younger workers aged between 25-29 who express significant levels of trust in senior management is lower still at only 1 in 5. Substantially more people in both the public and private sectors are willing to trust their immediate line manager than to trust the organisation as a whole.
  • The three most important reward priorities for organisations include supporting business goals (83 per cent), rewarding high performance (76 per cent) and recruiting and retaining high performers (71 per cent).
  • Offering employees an individual cash payment is the most widely used type of bonus and variable pay scheme. Just under two thirds of employers offer cash bonuses to senior managers (64 per cent), middle/first-line managers (58 per cent), non-manual managers (44 per cent) and manual staff (34 per cent).
  • Management staff are also more likely to receive health and company-car benefits than other employee groups. For instance, senior managers (60 per cent) are much more likely to get a company car than middle/first-line management (38 per cent), non-manual non-management (7 per cent) and manual non-management (2 per cent).