CEO Turnover
By David F. Larcker, Brian Tayan
CGRI Research Spotlight Series. September 2016
This Research Spotlight provides a summary of the academic literature on relation between CEO performance and turnover. It reviews the evidence of:
The relation between performance and likelihood of termination
The relation between board attributes and likelihood of termination
Other factors that might influence CEO performance oversight
This Research Spotlight expands upon issues introduced in the Quick Guide “CEO Succession Planning.”
There is growing evidence that suggests that Environmental, Social and corporate Governance (ESG) factors, when integrated into investment analysis and decision making, it may offer investors potential long–term performance advantages. The number of companies disclosing information on their environmental, social and governance performance has grown very significantly in recent years. For large multinational companies, disclosure of ESG information has become a mainstream phenomenon It has become shorthand for investment methodologies that embrace ESG sustainable factors as a means of helping to identify companies with superior business models. ESG factors offer portfolio managers added insight into quality of a company’s management, culture, risk portfolio and other characteristics. By taking advantage of the increased level of scrutiny associated with ESG analysis, managers’ portfolios seek to identify companies based on performance indicators like
• Whether that company exhibits leadership in their industries.
• Whether that company is better managed and more forward thinking.
• Whether that company is better at anticipating and mitigating risk, meet positive standards of corporate responsibility.
• Whether that company is focused on the long term.
The applications of Sustainable Accounting, Reporting and Standardizations have taken a slow pace. The process began during early 1970s when it focused on social responsibility. During mid-late 1970s, it was shifted to employees and unions. 1980s saw explicit pursuit of economic goals with a thin veneer community concern and redefinition of employee rights as the major theme. In the 1990s attention shifted to environmental concern. Slowly, ‘environment reporting’, ‘triple bottom line reporting’, ‘sustainability reporting’ came into light.
Grant Thornton - Corporate Governance Review 2012Grant Thornton
Two decades have passed since the publication of the Cadbury Report which outlined a system for good corporate governance that still endures today. While business practice has evolved considerably over the last twenty years, with more than half of the FTSE 350 now complying with the UK Corporate Governance Code, challenges remain and practices continue to evolve.
By David F. Larcker, Brian Tayan
CGRI Research Spotlight Series. Corporate Governance Research Initiative (CGRI), April 2016
Download
This Research Spotlight provides a summary of the research literature on whether companies with diverse boards (in terms of background, gender, or ethnicity) exhibit better performance and governance quality than companies without diverse boards.
It reviews the evidence of:
The relation between diversity and corporate performance
The relation between diversity and compensation
The relation between diversity and governance quality
The impact of mandatory quotas
The impact of diversity on group performance
This Research Spotlight expands upon issues introduced in the Quick Guide “Board of Directors: Structure and Consequences.”
In this report we reveal the state of engagement in the world today. We will discuss how different contexts, from the macro- to the microlevel,can effect employee engagement.
Staggered Boards
Authors: Professor David F. Larcker and Brian Tayan,
Researcher, Corporate Governance Research Initiative
Stanford Graduate School of Business
This Research Spotlight provides a summary of the academic literature on how staggered boards impact shareholder value by insulating management from the pressures of capital markets.
It reviews the evidence of:
-Staggered board provisions in IPO charters
-The impact of staggered boards on merger activity
-The relation between staggered boards and market value
-Shareholder reaction to a decision to (de)stagger a board
-Firm outcomes following a decision to (de)stagger a board
This Research Spotlight expands upon issues introduced in the Quick Guide “The Market for Corporate Control.”
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
CEO Turnover
By David F. Larcker, Brian Tayan
CGRI Research Spotlight Series. September 2016
This Research Spotlight provides a summary of the academic literature on relation between CEO performance and turnover. It reviews the evidence of:
The relation between performance and likelihood of termination
The relation between board attributes and likelihood of termination
Other factors that might influence CEO performance oversight
This Research Spotlight expands upon issues introduced in the Quick Guide “CEO Succession Planning.”
There is growing evidence that suggests that Environmental, Social and corporate Governance (ESG) factors, when integrated into investment analysis and decision making, it may offer investors potential long–term performance advantages. The number of companies disclosing information on their environmental, social and governance performance has grown very significantly in recent years. For large multinational companies, disclosure of ESG information has become a mainstream phenomenon It has become shorthand for investment methodologies that embrace ESG sustainable factors as a means of helping to identify companies with superior business models. ESG factors offer portfolio managers added insight into quality of a company’s management, culture, risk portfolio and other characteristics. By taking advantage of the increased level of scrutiny associated with ESG analysis, managers’ portfolios seek to identify companies based on performance indicators like
• Whether that company exhibits leadership in their industries.
• Whether that company is better managed and more forward thinking.
• Whether that company is better at anticipating and mitigating risk, meet positive standards of corporate responsibility.
• Whether that company is focused on the long term.
The applications of Sustainable Accounting, Reporting and Standardizations have taken a slow pace. The process began during early 1970s when it focused on social responsibility. During mid-late 1970s, it was shifted to employees and unions. 1980s saw explicit pursuit of economic goals with a thin veneer community concern and redefinition of employee rights as the major theme. In the 1990s attention shifted to environmental concern. Slowly, ‘environment reporting’, ‘triple bottom line reporting’, ‘sustainability reporting’ came into light.
Grant Thornton - Corporate Governance Review 2012Grant Thornton
Two decades have passed since the publication of the Cadbury Report which outlined a system for good corporate governance that still endures today. While business practice has evolved considerably over the last twenty years, with more than half of the FTSE 350 now complying with the UK Corporate Governance Code, challenges remain and practices continue to evolve.
By David F. Larcker, Brian Tayan
CGRI Research Spotlight Series. Corporate Governance Research Initiative (CGRI), April 2016
Download
This Research Spotlight provides a summary of the research literature on whether companies with diverse boards (in terms of background, gender, or ethnicity) exhibit better performance and governance quality than companies without diverse boards.
It reviews the evidence of:
The relation between diversity and corporate performance
The relation between diversity and compensation
The relation between diversity and governance quality
The impact of mandatory quotas
The impact of diversity on group performance
This Research Spotlight expands upon issues introduced in the Quick Guide “Board of Directors: Structure and Consequences.”
In this report we reveal the state of engagement in the world today. We will discuss how different contexts, from the macro- to the microlevel,can effect employee engagement.
Staggered Boards
Authors: Professor David F. Larcker and Brian Tayan,
Researcher, Corporate Governance Research Initiative
Stanford Graduate School of Business
This Research Spotlight provides a summary of the academic literature on how staggered boards impact shareholder value by insulating management from the pressures of capital markets.
It reviews the evidence of:
-Staggered board provisions in IPO charters
-The impact of staggered boards on merger activity
-The relation between staggered boards and market value
-Shareholder reaction to a decision to (de)stagger a board
-Firm outcomes following a decision to (de)stagger a board
This Research Spotlight expands upon issues introduced in the Quick Guide “The Market for Corporate Control.”
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
The 7th European HR Barometer survey was carried
out by Aon Hewitt in cooperation with the European
Club for HR between December 2011 and January
2012. In this edition, fifty-two organisations completed
the survey. They operate in a wide range of sectors,
generating together 517 billion euro of revenues
and with a combined total of 2.4 million employees.
62 percent of participating organisations are listed
companies. Survey respondents encompass 13 different
nationalities. 71 percent are executives and directors
with exclusive responsibility for HR at European or
global level.
For more information, visit:
www.aonhewitt.com
www.europeanclub-hr.e
This report examines managers’ expectations for 2011 and some of the challenges that they anticipate, based on the annual end-of-year survey of UK-based managers carried out by the Chartered Management Institute (CMI) in November 2010.
Despite continued uncertain economic conditions, most companies remain persuaded that there is a strong causal link between their financial performance over a 5-10 year time horizon and their current commitment to improving their environmental, social and governance performance.
Against this background, a number of business leaders are reviewing their approach to sustainability, weighing new corporate strategies and new business models in efforts to ensure their long-term sustainability.
Executive Summary
Employee engagement has become a top business priority for senior executives. In this rapid
cycle economy, business leaders know that having a high-performing workforce is essential
for growth and survival. They recognize that a highly engaged workforce can increase innovation,
productivity,
and bottom-line
performance
while reducing
costs related
to
hiring
and
retention
in highly competitive
talent
markets.
But while most executives see a clear need to improve employee engagement, many have
yet to develop tangible ways to measure and tackle this goal. However, a growing group of
best-in-class companies says they are gaining competitive advantage through establishing
metrics and practices to effectively quantify and improve the impact of their engagement
initiatives on overall business performance.
Impact of Employee Engagement on Performance (Harvard Business Review)Pinky Gonzales
Employee engagement has become a top business priority for senior executives. Yet while most executives see a clear need to improve employee engagement, many have yet to develop tangible ways to measure and tackle this goal. However, a growing group of best-in-class companies says they are gaining competitive advantage through establishing metrics and practices to effectively quantify and improve the impact of their engagement initiatives on overall business performance.
Unemployment – and underemployment – has been one of the most significant problems for university graduates and their non-graduate peers alike since the financial crisis of 2008. The unemployment rate for young people has dwarfed that among older people, running at a level nearly three times as high – the largest gap in more than 20 years.
With CMI's full suite of leadership and management apprenticeships, you can offer your management apprentices a recognised professional development pathway ultimately leading to Chartered Manager status.
How can middle managers regain employee trust to ensure the continued success of their organisation?
Following the EU referendum result, our survey of 1,456 CMI members highlights a disturbing disconnect between middle and senior management.
Read on to learn more about the vital role middle managers play in the overall health of an organisation and CMI’s recommendations to keep the heart of UK business pumping.
How can middle managers regain employee trust to ensure the continued success of their organisation?
Following the EU referendum result, our survey of 1,456 CMI members highlights a disturbing disconnect between middle and senior management.
Read on to learn more about the vital role middle managers play in the overall health of an organisation and CMI’s recommendations to keep the heart of UK business pumping.
Connecting employers, further education and training providers.
CMI’s Learning Providing Conference in July 2016 affirmed that the skills landscape is going through significant change – which offers substantial opportunities to deliver employer-led training that can boost skills and performance.
This white paper captures the insights, ideas and perspectives on directions in further education and training shared by speakers at the conference.
MEN 40% MORE LIKELY THAN WOMEN TO BE PROMOTED IN MANAGEMENT ROLES
Analysis of the 2016 National Management Salary Survey of 60,000 UK managers reveals that that men are more likely than women to have been promoted into senior and higher paying management roles in the past year, with no progress made on reducing the 23% gender pay gap.
Employers still rewarding poorly-performing bosses with bonuses.
Data from the 2016 National Management Salary Survey reveal that many managers and professional staff still reap the benefits of bonus pay outs despite falling short of expectations.
Lessons from business leaders who have overcome adversity.
‘Bouncing Back’ is a new interview series with outstanding leaders sharing their hard-earned lessons on how they managed in tough times and triumphed over adversity. Personal conflict, reputation crises, project failure and business collapse. Adversity is part of the job for leaders. But those who succeed learn from failure and bounce back stronger.
Lessons from business leaders who have overcome adversity.
‘Bouncing Back’ is a new interview series with outstanding leaders sharing their hard-earned lessons on how they managed in tough times and triumphed over adversity. Personal conflict, reputation crises, project failure and business collapse. Adversity is part of the job for leaders. But those who succeed learn from failure and bounce back stronger.
Young people’s views on the challenges of getting into
work in 21st century Britain.
Employers across the UK are urged to back a school-to-work agenda in a new report published by the Chartered Management Institute (CMI) and the EY Foundation. This research incorporates the views of over 1,500 16-21-year-olds across the UK and highlights the challenges that young people face preparing for the world of work.
What can employers do today to develop the leadership and management talent of tomorrow?
Our survey of 1,510 16-21-year-olds reveals their aspirations to become the next generation of bosses and team leaders.
Read on to find out the challenges they face, and the steps employers and educators can take to equip young people with work-ready skills.
Nine in 10 people (90%) working in employee-owned companies describe its leadership style as ‘high performing, visionary, democratic and coaching’, compared to just six in 10 (58%) working in non-employee-owned businesses.
That’s according to CMI and MoralDNA™ who explore the performance and productivity benefits to organisations of employee ownership in The MoralDNA of Employee-Owned Companies: Ownership Ethics and Performance.
The report provides employers, and managers and leaders, with compelling, practical insight from research into the positive impact employee ownership makes on how a business is managed.
More at: http://www.managers.org.uk/moraldna
'Always on managers' are now working 29 days extra a year and are suffering rising levels of stress according to the 2016 Quality of Working Life study.
CMI and Work Psychology Group surveyed 1,574 UK managers. Read on to:
Find out what’s driving the long-hours culture and the impact it has on workers and employers
Learn from case studies of progressive businesses finding innovative ways to improve the quality of their employees’ working lives
Take away recommendations on the effective management skills that improve welfare at work
More at: http://www.managers.org.uk/qualityofworkinglife
Research shows that a lack of management skills is responsible for 56% of small business failures, yet just one in three businesses with 5-24 employees have provided management training in the last 12 months.
Growing Your Small Business connects SMEs with their local business schools and provides the information they need to raise their level of professional management and leadership skills to boost productivity and growth.
More at: http://www.managers.org.uk/growingSMEs
In December 2014 and January 2015, CMI conducted a survey of 535 Chartered Managers to explore the impact of becoming Chartered on their professional development, on their career progression, and the benefits that it has delivered to their employers.
The findings from the research are revealed in this report. They are accompanied by insights from over 20 case study interviews conducted with Chartered Managers, with employers who have used Chartered Manager as part of their management development, and with higher education institutes that offer the accreditation to complement qualifications.
More at: http://www.managers.org.uk/cmgr
Poor performers still reaping rich rewards: Too many managers are flouting the principles of good performance management, as despite being rated as poor performers, they are still being rewarded by their employers according to new research published by the Chartered Management Institute (CMI) and XpertHR.
More at: http://www.managers.org.uk/salarysurvey
Analysis of the 2015 National Management Salary Survey of 72,000 UK managers reveals that women working in equivalent full-time roles earn 22% less than men, meaning that they’re unpaid for 1h 40m a day – a total of 57 working days every year.
More at: http://www.managers.org.uk/mindthepaygap
British managers have the gloomiest outlook for their organisations and the economy since 2012, according to the findings of Future Forecast 2015, CMI’s annual look-ahead survey.
More at: http://www.managers.org.uk/futureforecast
Employers are at risk of making tech-savvy managers ‘switch-off’ from learning new skills with dated digital technology, according to the findings of Learning to Lead: The Digital Potential.
More at: http://www.managers.org.uk/digitallearning
The most difficult conversations the British public face in their lives are all in the workplace. Find out what topics people find hardest to talk about in their personal and professional lives with our difficult conversations infographic.
More at: http://www.managers.org.uk/difficultconversations
3. Executive Summary
•• Fifty-three per cent of managers feel optimistic about their organisation’s prospects
for next year, up from 43 per cent a year ago.
•• Managers’ top priorities for the year ahead include controlling costs, managing
performance, developing strategic partnerships, developing their people and improving
employee engagement.
•• Managers have substantial concerns over their organisations’ people capabilities. Some
43 per cent do not believe their organisation has the right people to fulfil business objectives
in 2013. The most common problem is a shortage of key skills which along with poor
morale, general lack of manpower and poor leadership, are substantial concerns.
These factors are up considerably from last year, by 19, 15, 14 and 13 percentage
points respectively.
•• Managers’ priorities for their own professional development include strategic decision
making, negotiating and influencing, change management and coaching and mentoring.
•• Feelings of job insecurity have reduced, with 33 per cent of managers feeling insecure
compared to 39 per cent a year ago. Public sector managers remain most pessimistic
about their continued employment. Confidence in the jobs market remains low, with
only 47 per cent of all managers believing that they could find comparable employment
within three months should they be made redundant.
•• Fifty-nine per cent of those surveyed experienced redundancies in their organisations
over the last twelve months – including 96 per cent of those working in the public
sector.
•• Looking at the prospects for the economy as a whole, 25 per cent report that they are
optimistic about the year ahead – up 17 percentage points since last year.
•• The restructuring of the public finances, technological change and the price of energy are
the top external factors expected to have a damaging impact on organisations in 2013.
•• Skills and employment policy are seen as priorities for government action. Integrating
management and leadership development into the education system, ensuring that
interns receive the minimum wage, and tax incentives for investment in management
and leadership development are the most widely supported employment law and
labour market policy initiatives among survey respondents.
•• Family-oriented policies such as extending the right to request flexible working and
reforming parental leave are also popular, although more so among women managers
than their male counterparts.
3
4. Survey Findings
Performance Asked about the performance of their organisation over the past 12 months, 33 per cent
in 2012 reported growth, slightly more than those reporting decline (27 per cent), with 41 per cent
describing their organisation as stable. Comparison with the figures from last year’s Future
Forecast survey1 suggests a small improvement, as the number of those reporting decline
has decreased by five percentage points and the numbers reporting growth has increased
by 3 percentage points.
Within the private sector specifically, 39 per cent of respondents report growth, up from
36 per cent in the previous two years. Meanwhile, fewer report decline: 22 per cent, compared
to 29 per cent last year. The not-for-profit sector showed considerable change on last year,
rising from 27 to 38 per cent reporting growth. In the public sector, only 19 per cent report
growth (compared to 17 per cent in the last two years), an unsurprising difference.
The majority of managers (60 per cent) reported that the performance of their organisation
was in line with targets (an increase by five percentage points from 2011), while just over
a quarter (27 per cent) reported that their organisation’s performance was worse than had
been forecast (a decrease by 4 percentage points). This compares with just 14 per cent
of organisations that exceeded their targets.
Star performers The survey asked managers for their verdict on the best managed organisation in the UK
in 2012 over the last year. As was the case in 2011, John Lewis was voted the winner, with managers
impressed that they “kept to [their] mission and values while making minor adjustments
to [the] changing environment”, with staff who “seem to care about performance of the
business”. John Lewis was closely followed by Virgin Group which, came across as being
an “open and honest” company, winning admiration from some for fighting the government’s
decision on the West Coast Mainline franchise and winning a review. One respondent
viewed Virgin’s courage as an example to other companies: “We need brave leaders, now
more than ever, to revitalise the corporate world and the economy”.
The success of the London Olympics and Paralympics was also reflected in the voting,
with numerous managers citing the Games as a whole, or the Olympic Delivery Authority
and LOCOG specifically. Meanwhile, in the battle between the supermarket chains,
Sainsbury’s leapfrogged Tesco.
Best managed company 2011 Best managed company 2012
John Lewis Partnership John Lewis Partnership
Tesco Virgin Group
Sainsbury’s London 2012 Games (joint third)
Marks and Spencer (joint fourth) Sainsbury’s (joint third)
Ryanair (joint fourth) Tesco
Table 1 (above) and Figure 1 (below) Best managed companies 2012
1 earson, G. Woodman, P., (2011) Future Forecast:
P
Expectations for 2012, Chartered Management Institute 4
5. Prospects The survey asked managers how optimistic they are about their prospects both for their
for 2013 organisation and for the economy as a whole during the next year. As with last year, the
results to these two questions tell very different stories. Just over half – 53 per cent – feel
optimistic about their organisation’s prospects, up by ten percentage points, while only
25 per cent feel the same way about the economy as a whole (albeit up from eight per cent).
60%
53
50% 48
Your organisation
40%
The economy
30% 28
25 25
21
20%
10%
0%
Pessimistic Neither Optimistic
Figure 2 Levels of optimism for organisational and economic prospects in 2013
Public sector managers are much more pessimistic about their prospects for next year,
while optimism in the private and not-for-profit sectors is stronger (62 and 54 per cent).
Organisational optimism amongst public sector managers is however 13 percentage
points higher than in 2011 so this is at least a move in the right direction.
External threats In spite of this increased confidence, it is clear that managers are still operating in a
to performance tough external environment and could face numerous potential threats in the coming
year. We asked which of these topical threats managers felt would have a negative
impact on their organisations’ performance.
80%
70%
60% 58
54
50%
40% 36
33 33
30% 26
22
20%
19
10%
0%
Restructuring Energy Technological Instability of Social Competition Trade union Capacity of
of UK public prices change the euro unrest from emerging activism UK transport
finances economies infrastructure
Figure 3 Agreement that factors will have a negative impact on organisational performance
5
6. As with last year’s findings, the restructuring of UK’s public finances are causing concern
for managers across all sectors. This is particularly apparent for those in the public sector
– 78 per cent of whom agree that this will have a negative impact on their organisation’s
performance. It is also the top concern for not-for-profit sector managers (62 per cent)
and the second biggest concern for private sector managers (47 per cent).
As shown in Table 2 below, the cost of energy is the primary concern for private sector
respondents (51 per cent agreement). Forty per cent of this group expect the instability of
the euro to have a negative impact on performance, although this number falls to 30 per cent
and 22 per cent in the not-for-profit and public sectors respectively. Bigger issues for
the public sector include the impact of social unrest (49 per cent), technological change
(46 per cent) and trade union activism (41 per cent).
Private sector Public sector Not-for-profit sector
Energy prices Restructuring of Restructuring of UK
UK public finances public finances
Restructuring of Energy prices Energy prices
UK public finances
Instability of the euro Social unrest Social unrest
Technological change Technological change Instability of the euro
Competition from Trade union activism Technological change
emerging economies
Table 2 Top factors expected to have a negative impact on organisational performance by sector
Organisational As at the start of 2012, there are two major priorities for managers going into 2013:
priorities controlling costs and managing performance. Developing strategic partnerships,
‘developing our people’ and improving employee engagement are all up in this year’s
survey (by 4, 5 and 7 percentage points respectively, compared to last year).
80% 78
75
70%
60%
50%
49 48 48 47
40%
39 37
30% 28
24
19 18
20% 16
10%
0%
Controlling Managing Developing Developing Improving Increasing Developing Restructuring Rebuilding Expanding in Exploiting Exploiting Becoming more
costs performance our people strategic employee turnover new products trust in international online business the rise of environmentally
partnerships engagement and services management markets channels social media sustainable
Figure 4 Factors seen as a high priority in the next 12 months
6
7. Unsurprisingly, the priorities are different for managers in different sectors (see Table 3). The
need to develop strategic partnerships is greater for those in the public and not-for-profit
sectors (57 and 50 per cent respectively) than for those in the private sector (42 per cent),
reflecting moves towards new models of public service delivery. Restructuring is again
the third highest priority for public sector managers, described as a high priority by
58 per cent.
Private sector Public sector Not-for-profit sector
Managing performance Controlling costs Controlling costs
Controlling costs Managing performance Managing performance
Increasing turnover Restructuring Developing our people
Developing our people Developing strategic Improving employee
partnerships engagement
Improving employee Improving employee Developing strategic
engagement engagement partnerships
Table 3 Top organisational priorities by sector
As shown in Table 4, controlling costs and managing performance are the top priorities
for organisations of all sizes. However, small organisations (1-50 employees) have a
greater focus on managing performance, increasing turnover and on developing strategic
partnerships. Medium and large organisations, appear to be more focused on improving
employee engagement and developing their people. Only 40 per cent of managers in small
organisations describe improving employee engagement as a high priority, compared to
52 per cent across medium and large organisations.
1-50 employees 51-250 employees 251-1000 employees 1000+ employees
Controlling costs Managing performance Controlling costs Controlling costs
Managing performance Controlling costs Managing performance Managing performance
Increasing turnover Improving employee Improving employee Restructuring
engagement engagement
Developing strategic Developing our people Developing our people Improving employee
partnerships engagement
Developing our people Increasing turnover Increasing turnover Developing our people
Table 4 Top organisational priorities by size
Fulfilling business Having looked at the organisational challenges and priorities for next year, we also
objectives in 2013 asked managers whether they believe they have the right people in place to meet their
objectives in 2013.
Overall, 47 per cent of respondents answered yes to this question, three per cent fewer
than last year. However, 43 per cent of managers believe that their organisation does
not have the right people in place. The view of private sector respondents is more
optimistic, where a small majority – 55 per cent – do believe they have the right people
in place (see Figure 5).
7
8. Private sector 35 55
No
Public sector 57 33
Yes
Not-for-profit sector 41 45
Negative % Positive %
Figure 5 Managers’ views on whether their organisation has the right people to fulfil business objectives in 2013,
by sector
To help explain these findings, the survey asked what issues managers faced as a result
of not having the right people. Shortages of key skills are reported by 79 per cent of all
managers: worryingly, this is up by 19 percentage points on last year. The number of
managers reporting poor morale and poor leadership also went up substantially (by 15 and
13 percentage points respectively). As Table 5 shows, there are once again substantial
differences between the sectors.
Overall Private Public Not-for-profit
Issue % % % %
Shortages of key skills 79 82 79 63
Poor morale 65 61 76 56
Poor leadership 63 63 59 70
Not enough manpower 54 51 62 44
Lack of ability to innovate 49 47 48 67
Lack of experience 44 49 38 52
Personality clashes 39 46 29 56
Lost people through redundancy 38 29 49 30
Too many people 10 11 9 11
Table 5 Issues faced by those who feel they do not have the right people
Job security, job Sixty-eight per cent of respondents report feeling secure or very secure in their jobs,
market confidence compared to 62 per cent last year. The overall number of managers feeling insecure has
and morale dropped six points to 33 per cent but remains higher among public sector respondents,
at 44 per cent.
Managers’ confidence in the jobs market has increased but remains low. Only 47 per cent
believe that they could find comparable employment within three months if they were to
lose their job. As with the findings from last year, public sector managers – the group
who feel least secure in their jobs – feel least confident about finding new work, with only
38 per cent believing that they could get comparable work within three months. This is
however up from 29 per cent points last year.
Managers from the public and not-for-profit sectors are most likely to look for a new job
in 2013, with 46 and 42 per cent of managers in these sectors indicating that they will
seek new employment. This compares to 33 per cent in the private sector. In all sectors,
these numbers are slightly lower than last year.
8
9. Our survey also asked for the first time how optimistic managers are about the prospects
for staff morale in their organisation in 2013. Overall, 46 per cent are optimistic, compared
to 31 per cent who are pessimistic. Again, public sector managers are the least positive
group: only 30 per cent optimistic with 49 per cent pessimistic. This compares to
optimism of 54 per cent in the private sector and 52 per cent in the not-for-profit sector
(with pessimism at 21 and 25 per cent respectively).
Redundancies Fifty-nine percent of all respondents report that their organisation has made redundancies
and headcount in 2012 but there were enormous differences between sectors. An enormous 96 per cent
of public sector respondents had experienced redundancies in their organisation in the
last year. Across the board, the experience of redundancy was higher than expected at
the start of the year – a noticeable difference compared to the previous year’s data, which
showed that expectations noted in this survey in December 2010 were largely borne out
over the following year.
As Table 6 also shows, some 80 percent of public sector managers predict further
redundancies in 2013 as austerity continues to bite. On a more positive note,more
managers are not expecting redundancies in 2013 than are expecting them (49 per cent
versus 45 per cent).
Managers whose
Managers expecting organisations made Managers expecting
Sector redundancies in 20122 redundancies in 2012 redundancies in 2013
% % %
Public 69 96 80
Private 18 41 26
Not-for-profit 38 47 44
Table 6 Expectation vs experience of redundancy in 2012, expectations for 2013
In terms of hiring expectations, 33 percent of private sector managers are expecting an
increase in their organisation’s headcount, compared to 28 per cent within the not-for-profit
sector and only 8 per cent among public sector respondents. In comparison to 2011,
the private sector has seen a slight increase by two percentage points whilst the
not-for-profit sector percentage remains static and the public sector figure is down by
8 percentage points.
Priorities for As in 2011, the top priority area for managers looking to strengthen their skills is
professional strategic decision making, highlighted by 47 per cent of managers across all sectors.
development Negotiating and influencing skills are the second most common area where managers
want to improve their abilities, especially for private sector managers.
2 earson, G. Woodman, P., (2011) Future Forecast:
P
Expectations for 2012, Chartered Management Institute 9
10. 45% 44
40%
35 34
35% 33 32 32
30
30% 28
25
25% 23 22
20%
15%
10%
5%
0%
Strategic Negotiating Change Coaching Project Financial Performance Developing Team Political Communication
decision and management and management management management others leadership astuteness
making influencing mentoring
Figure 6 Professional development priorities for 2013
Change management is more of a priority for managers in the public and not-for-profit
sectors reflecting the higher levels of restructuring and redundancies that have taken
place (43 per cent and 33 per cent). Project management skills are also a more common
focus for public sector managers (39 per cent).
When examining development needs according to management level, strategic decision
making is highlighted by all managers from junior roles through to directors. As Table 7
shows, coaching and mentoring skills become more of a priority from middle management
levels upwards while team leadership and negotiating and influencing are more of a
requirement for junior managers.
Directors also gave more varied responses than other managers, with performance
management, negotiating and influencing, and change management ranked jointly
as the 4th highest priorities.
Senior Manager/ Middle Manager/ Junior Manager/
Director/Partner Principal Consultant Advisor
Strategic decision making Strategic decision making Strategic decision making Strategic decision making
Coaching and mentoring Negotiating and influencing Change Management/ Project Management
Project Management
Financial management Financial management Negotiating and influencing Team Leadership
Performance management/ Coaching and mentoring Coaching and mentoring Negotiating and influencing
Negotiating and influencing /
Change management
Developing others/ Political astuteness Performance management Performance management/
Political astuteness Change management
Table 7 Priorities for professional development by managerial level
10
11. Approaches to The most popular approaches for managers developing their own skills in the coming
development year are set to be on-the-job learning, CPD programmes, training and short courses and
self directed learning. Chartered Manager also features highly on the list, identified by just
under one in five. This reinforces the positive findings from CMI’s recent Professionalising
Management about the experiences of those managers who have attained Chartered
status and the impact they have on their organisations’ performance.3
Development method
%
On the job learning 51
Continuous Professional Development (CPD) programme 50
Training and short courses 47
Self directed learning 45
Coaching/ mentoring 29
Chartered Manager 20
Professional qualification 20
Voluntary opportunity 14
Academic/ business school 13
Secondment/ job rotation/shadowing 10
Table 8 Managers’ approaches to personal skills development
Team This year’s survey also looked at the likely approaches for managers to developing their
development teams in the coming year. The table is topped by in-house training, while on-the-job
learning and coaching and mentoring put a particular onus on managers to examine
how they can directly support development and learning among their team members.
Development method
%
IIn house training 72
On the job learning 68
Coaching/ mentoring 63
Continuous Professional Development (CPD) programme 47
Self directed learning (e.g. e-learning) 43
Secondment/ job rotation/shadowing 24
Professional qualification 23
Voluntary opportunity 16
Academic/ business school 14
Chartered Manager 4
Table 9 Managers’ approaches to team development
3 rofessionalising Management: the impact of Chartered Manager,
P
Chartered Management Institute (2012) 11
12. Public policy in With economic growth still high on the political agenda, this year’s survey assessed
the year ahead CMI members’ support for a range of policy options relating to employment law and
economic policy.
Despite the pressures on businesses to manage their costs, as with 2011, the survey
results again show there is strong support for the National Minimum Wage for all workers,
including interns who are currently often unpaid, and maintaining its level for young people.
With the Government due to take forward its Modern Workplaces agenda for workplace
reform, it is notable that 65 per cent back reform of parental leave to enable more equal
sharing of the leave entitlement between both parents. A similar number, (66 per cent)
back the extension of flexible working rights.
Among a number of questions related to skills policy, there was strong support for
integrating management and leadership development into education and skills systems at
all levels from schools to higher education (87 per cent), as recommended in the Heseltine
Review4. It suggests a recognition from practising managers that management and
leadership skills can be nurtured from an early age. There is widespread support from
CMI members for tax incentives to encourage business investment in management and
leadership development and increased employer ownership of skills funding, as noted
a year ago and also in CMI’s Economic Outlook series.
With extensive political and media focus on the question of women’s under-representation
in senior management roles, it was notable that a majority reject quotas for women on
company boards). This is in line with CMI’s preferred route of ensuring that women are
able to enter the boardroom on merit through good management and leadership that
utilises talent effectively.
Ensuring interns receive
9 81
the minimum wage
Offering National Insurance holidays for 20 65
businesses taking on additional employees
Offering National Insurance holidays 20 65
for businesses taking on young people
A moratorium on new regulations
16 62
affecting small businesses
Reforming parental leave to enable 26 65
more sharing between parents
Integration of management and leadership
development into education and skill system, 6 87
at all levels from schools to higher education
Increased employer ownership of skills funding 8 75
Extending the right to
request flexible working
28 66 Support
Local Enterprise Partnerships taking a lead on local Oppose
initiatives to improve leadership and management 11 72
Tax incentives for employee share ownership 40 38
in exchange for reduced employment rights
Tax incentives for investment in management
9 81
and leadership development
Requirements for companies to report on 35 58
gender diversity at senior management levels
Mandatory quotas for the number
of women on company board 57 34
Reducing the minimum wage
81 13
for young people
Negative % Positive %
Figure 7 Support for potential policy measures
4 o stone unturned in pursuit of growth (2012), Department for Business, Innovation and Skills.
N
www.bis.gov.uk/heseltine-review 12
13. Conclusion: another challenging year ahead
For the last two years, our survey has told a story of insufficient skills, poor leadership
and a lack of manpower negatively affecting organisational performance. This year’s
results have much in common with those findings.
Many of the challenges facing the UK economy remain: weak consumer demand, prolonged
economic uncertainty and weak performance in the Eurozone, and – as confirmed in the
Chancellor’s Autumn Statement at the start of December 2012 – a fiscal picture that is
worse than anticipated a year ago. There is no doubting the seriousness or scale of the
factors shaping the environment in which managers are operating.
Yet it is not an unremittingly bleak picture. The economy emerged from its double dip
recession and while a triple dip is still feared, most predictions are for very modest growth
next year. Some 39 per cent of private sector managers report that their companies did
achieve growth in the last year and a majority performed in line with their targets. Managers’
optimism in this survey is up ten percentage points compared to a year ago, with more
than half of those surveyed now expressing a positive outlook. This is not a picture of an
economy in freefall.
The conclusion for managers has to be that lean times still lie ahead for many, if not
most, parts of the economy. There will continue to be a premium on the skills needed to
deliver organisational priorities in this tough climate. Cutting costs and managing change
will again be important themes this year. The importance of negotiating and influencing
skills might be a result of the growing need to build strategic partnerships – or of the
need to protect scarce internal budgets.
There is also an important role for managers in getting the most from their people. Improving
employee engagement is a priority for many in the year ahead. Raising performance
levels might mean developing team members’ skills, and many managers are interested
in developing their own coaching and mentoring skills which will help in this regard. It also
implies a focus on better performance management.
The challenge will be to reconcile these priorities, ensuring that the pressure on
employees to perform – including on those in management roles – does not simply lead
to a resurgence in command and control, authoritarian management styles. Empowering
staff, giving them a real voice in business decisions and finding ways to innovate despite
limited resources may seem like a more difficult prospect. For those that can rise to the
challenge, the rewards will be far greater.
13