Ambitious post-pandemic growth for Welsh businesses is being hamstrung by ‘accidental managers’, according to new research by the Chartered Management Institute (CMI) & CMI Cymru.
The research shows that 92% of SMEs in Wales fail to invest in leadership training. This is despite ONS data proving that good management can significantly improve productivity, with ‘better managed’ firms being shown to fare better throughout the pandemic.
The research suggests that Wales’s poor productivity compared to other UK regions is linked to an over-representation of micro-businesses – organisations with fewer than 10 people – which make up 95% of Welsh enterprises. One of the reasons these microbusinesses are failing to scale is because they cannot afford management training for employees, with only 8% of Wales’s SME’s investing in future leaders.
Percentage of SMEs offering training by region1
| UK | England | Scotland | Wales | NI | |
| SMEs providing any training | 33% | 33% | 35% | 28% | 36% |
| SMEs providing M&L training | 13% | 13% | 12% | 8% | 13% |
Furthermore, Wales has 73 x fewer management training courses (438) than in England (31,938) and 10 x fewer than in Scotland (4,461). Despite this, funding for current leadership initiatives in Wales, such as ION Leadership and the 20Twenty Business Growth and Leadership Programme, face a funding cliff in 2023 when European Social Funding ceases. Meanwhile, the Welsh Government’s apprenticeship levy is only available for priority sectors, unlike in England where it can be harnessed by any sector and for level seven qualifications the equivalent of a master’s degree or above.
Availability of management training courses and providers across the UK in 2021/225
| 2021/22 | Undergraduate courses | No. Providers | % of UK | Postgraduate courses | No. Providers | % of UK |
| Wales | 360 | 16 | 1.03 | 78 | 5 | 1.44 |
| Scotland | 3981 | 22 | 11.40 | 480 | 6 | 8.84 |
| England | 28026 | 292 | 80.28 | 3912 | 102 | 72.08 |
Failing to scale
Crwst, a small Welsh bakery in Cardigan, is one of many Welsh microbusinesses attempting to scale up but struggling to do so without a skilled manager – a position that would unlock the creation of eight local jobs and a turnover opportunity of over £1m.
Osian Jones, Crwst Director said:
“I cannot train someone internally, as I don’t know how to train a professional manager and there are no apprenticeships available for senior management in hospitality. Everyone seems to assume that because it is food-related we are looking for a low skill level, but we need a highly skilled manager and we can’t find one!”
Crwst’s story is an indication of the economic value that could be unlocked by giving Welsh microbusinesses access to leadership and management training and is symptomatic of the barriers to productivity that exist within Wales. As such, it is unsurprising that Wales’s productivity is lagging behind other regions in the absence of leadership training. In fact, the latest ONS data reveals that the output per job in Wales is the lowest compared to the average of any of the 12 UK regions (-5.5%), while output per hour is the second lowest (-4.4%)5
Output per job and output per hour relative to the median region, 20195
| Region | Output per job | Region | Output per hour |
| London | 61.5 | London | 49.4 |
| South East | 21.9 | South East | 21.7 |
| Scotland | 10.7 | Scotland | 11.1 |
| East England | 8.8 | East England | 6.7 |
| North West | 2.3 | South West | 1.6 |
| West Midlands | -0.8 | West Midlands | 0 |
| South West | -0.8 | North West | 0 |
| East Midlands | -1.9 | North East | -2.5 |
| Northern Ireland | -3.2 | East Midlands | -2.5 |
| North East | -3.3 | Yorkshire & The Humber | -3.7 |
| Yorkshire & The Humber | -3.4 | Wales | -4.4 |
| Wales | -5.5 | Northern Ireland | -9.6 |
The research follows Westminster’s extra £2.5bn level-up funding commitment and economy minister Vaughan Gething vowing to stop talent leaving Wales. CMI Cymru is urging Welsh Government to make management and leadership a strategic upskilling priority and has recommended a number of crucial initiatives in its new 10-point manifesto. These initiatives include opening up the Apprenticeship Levy to management qualifications outside of STEM priority sectors, all elected assembly members completing management qualifications themselves and the incorporation of leadership assessments into Welsh Development Bank lending criteria.
Kathryn Austin, chair of CMI Cymru, says:
“The percentage of SMEs in Wales offering leadership and management training is in single figures – how can this not be cause for concern?
“As much as we’d like to romanticise the ‘natural born leader’, good leaders and managers are moulded through training and exposure to best practise. There is a science to it, and other UK regions are taking it much more seriously because they recognise the tangible impact this training has on productivity and business outputs.
“There’s a lot of talk about ‘levelling up’, but developing technical skills within a few priority sectors will only take us so far. We need a generation of people in Wales who understand the recipe for a well-managed, productive organisation. This is the know-how our microbusinesses need so they can scale and, with it, our economy and prosperity can grow.”
CMI Cymru Wales’s Manifesto – December 2021
Strategic – leadership from the top is fundamental to growth
Business – Scaling up in Wales
Education and training
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Early support for CMI’s manifesto comes from a range of organisations from across Wales.
Keith Jones, Director, ICE Wales Cymru:
“You might be a teacher, a lawyer, or a civil engineer, it really does not matter what your career background is, in order to ‘level up’ and create a prosperous Wales, we need strong leadership in every profession”.
Christopher Byrne, Deputy Director, Creative Leadership and Enterprise Centre (CLEC), who runs the 20Twenty programme, is concerned that the link between productivity and leadership is not being fully appreciated by policymakers:
“20Twenty has been subsidised by the European Social Fund through the Welsh Government since 2010, but the EU funding will stop in 2023. The value of the project has been over £12m, and the EU subsidy accounts for over half of this. The loss of EU funding (without any replacement being put in place) would be disastrous in Wales. Not only for management and leadership provision, but also in the potential decline in productivity across many sectors of the economy.”
Suzanne Parry Jones, the ION Project Lead:
“At ION we have a proven return on investment in leadership training and we had ambitious plans to expand our services. However, we will be forced to close all of our existing programmes without some support funding to replace the European Social Fund […] I am very concerned that by not providing adequate professional development opportunities for our micro and small business leaders across Wales we really are capping future growth and this will impact particularly rural economies. It feels such a missed opportunity when for a modest investment we could springboard these same businesses to grow and create jobs.”
CMI will formally launch its manifesto on Wednesday 1st December at Swansea School of Management at the Bay Campus which will include a keynote speech from Henry Englehart, founder of Admiral Group plc.
