Question of growing green shoots

Dan Matthews asks a panel of executives from the UK’s primary chartered business organisations, representing hundreds of thousands of businesses and all parts of the economy, how to super-charge growth


ANNE GODFREY

Chief executive, Chartered Institute of Marketing (CIM). CIM is the professional body for the marketing profession representing its members, and encouraging high standards and practice. It is the largest professional marketing body with some 35,000 members.

DAVID ROWSBY

Regional director Europe, Chartered Institute of Management Accountants (CIMA). The global organisation has more than 200,000 members and students, and delivers a range of courses and qualifications.

PETER CHEESE

Chief executive, Chartered Institute of Personnel and Development (CIPD). The CIPD is the professional body for HR and workplace learning, it exists to promote better working practices and working lives.

DAVID NOBLE

Group chief executive, Chartered Institute of Purchasing and Supply (CIPS). The largest global body of its profession with a community of more than 100,000, it champions best practice and standards in the supply chain, and campaigns for clarity and promotion of this area.

ANN FRANCKE

Chief executive, Chartered Management Institute (CMI). With a member network of 100,000 managers, CMI promotes good management and leadership practice, which can make a huge difference to managers’ practical skills and to business performance.

 

Business leaders, politicians and economists have waited patiently for the UK to return to sustained economic growth. After a few false starts there is building evidence – in the housing market, sector surveys and, crucially, business confidence – that green shoots are beginning to flower.

But will growth hold and what more can be done to promote it?

David Noble, group chief executive of the Chartered Institute of Purchasing and Supply (CIPS), agrees there is evidence for a strong upswing: “We produce a series of purchasing managers indexes every month across manufacturing, services and construction, and recently we have seen record highs for all three [the indexes are forward-looking and track real-time activity across each sector], so it’s very positive for the UK economy.”

“CIM produces a quarterly confidence index and for the third month in a row our members are telling us that they are witnessing a recovery,” says Anne Godfrey, chief executive of The Chartered Institute of Marketing (CIM). “However, over 80 per cent of the respondents are emphasising organic growth and remain reluctant to invest in new business. There is a genuine emphasis on skills and innovation which is heartening to hear.”

There is a genuine emphasis on skills and innovation which is heartening to hear

Peter Cheese, chief executive of the Chartered Institute of Personnel and Development (CIPD), says he is reluctant to talk about recovery, as he sees a “new normal” of restricted growth dominating the next decade, but he adds: “I’d echo what’s been said. Our indicators show a fifth consecutive quarter of growth in terms of an intention to recruit. There is unquestioningly an improved sentiment and there is evidence that businesses are taking more active steps to improve their competitive positions.”

“Having talked to employers there’s a significant number who are putting more resources towards graduate recruitment schemes, so there’s clearly more confidence,” agrees David Rowsby, regional director Europe, Chartered Institute of Management Accountants (CIMA). “There are more opportunities in finance for graduates, which is a real indicator of growth.”

It all reminds Ann Francke, chief executive of the Chartered Management Institute (CMI), of a quote by Unilever chief executive Paul Polman: “He likened it to telling investors ‘hurrah, I’ve grown Unilever by 0.6 per cent’ – imagine what they would say. Confidence is well below where it was five years ago and so we have to consider what we are going to work differently and better to create a new future, because we won’t go back to where we were pre-2008.”

It sounds like innovation is clearly important; what are businesses doing in this area?

“From a marketing point of view, we have to do more with less. Since 2008, there has been fragmentation of channels with the rise of social media so it’s a challenge,” says Ms Godfrey. “But smart companies set aside a fund for innovation. People understand that they have to innovate and try different things in order to grow.”

“There is a huge amount that needs to be innovated – how we work, how we manage and how we build more agile enterprises,” agrees Mr Cheese. “If you continue to do what you always did, then you are not going succeed. But the way we run our different functions needs to improve to create more responsive enterprises. Innovation is a much bigger agenda than it used to be.”

According to Ms Francke, innovation should be at the heart of management practices across the board as it leads to faster growth and better job satisfaction. But in many cases management practices are outdated: “In terms of hierarchies, bureaucracy and ‘command and control’ styles, management hasn’t really moved on since the Industrial Revolution. There’s a huge opportunity to change the way we work and it’s an agenda government would be well advised to support.”

“Innovation has to come from the top,” comments Mr Rowsby, “so the chief executive and the chief finance officer should set the vision, even though finance has been seen by some in the past to be a barrier. Finance should be a partner in the development of innovation across businesses. It can create different parameters and set budgets for projects to succeed, to change cultures and help a business grow. Collaborating across different disciplines is particularly important for this to work.”

“We are at an inflexion point,” adds Mr Cheese. “There have been endless crises in business, which led to questions about corporate culture and how we build better enterprises, recognising innovation is part of everything and not just something for the research and development department. It’s time to think differently because as a nation we could be a world leader in this area.”

Procurement and supply chain management are not always seen as obvious areas for innovation, admits Mr Noble. But he thinks all business disciplines need to redefine where they add value: “Procurement in particular is going through a huge change, because we’re waking up to the fact that all companies are in a supply chain and the key differentiator for success is supply management. Our value-added should be in creating new markets. Vince Cable [Business Secretary] says strategic procurement in government can create new markets and that for us is a huge innovation; our dilemma is getting the right people.”

How do you see the global setting impacting on UK growth?

“Our profession is the most global and there are few barriers to entry,” comments Mr Noble. “So you can’t sit back in the UK and say ‘we’re OK now’, because somewhere else growth is twice the speed, and they are creating lots more innovation and ideas. There is no sitting back because it’s easy to get caught out. It’s a case of innovate or die.”

“It’s not just about UK growth; it is globalisation and how things, such as social media, have impacted massively on management, human resources, marketing and business in general,” agrees Mr Cheese. “The nature of enterprise is changing rapidly and there are so many more factors at play.”

The jobs market is fuelled by small businesses and yet even institutions focusing on management skills, such as business schools, focus on big business

Ms Francke points to statistics to back up this view: “In our recent global CEO survey, UK chief executives ranked innovation eighth in their top-ten concerns. In China it was number one. It begs the question: are we thinking enough about how we raise the stakes in innovation?

“There’s a sense of risk-aversion left over from the recession and it’s coming from the top of organisations. Innovation isn’t something you can just switch off and on, you need to build a culture and at the moment there isn’t enough attention being focused on growing company cultures.”

How do ethics impact on business growth in the 21st century?

“Malpractice associated with our profession can be significant,” says CIPS’ Mr Noble, “for example, people saying that they’ll buy from a source because of price only with little awareness of the lower tiers of supply can be a lethal decision. Business practices in general need to step up a gear all around the world. As representatives of the profession, we need to take the lead and set the highest standards.

“It’s about restoring trust as business has gone through a number of credibility shocks recently, from the financial crisis to the horse-meat scandal, so it is an issue for governments who want to see their business community rising above it. It’s also an issue for British companies to understand more about where they source products and services as their own brands and reputations are at risk.”

“The conversation about corporate culture has never been as strong as it is now and I think there is a genuine desire to address all the issues involved,” says Mr Cheese, commenting on corporate ethical policies being taken seriously by the public. “We have to demonstrate what is good, ethical, moral behaviour and show that functions are operating professionally, held to account against a code of conduct and that these codes have some teeth.”

Ms Francke echoes the importance of professional codes of conduct: “Ethics have to be at the heart of 21st-century management. It’s no good hitting short-term targets if that means taking unethical short cuts which undermine the trust of our customers in the longer term.”

“The days when people thought it was about green-washing and having a squeaky-clean brand are long gone,” comments Ms Godfrey. “Businesses are genuinely ethical and responsible, for one thing, because they know it’s good business and, secondly, the people they employ are demanding it of them.”

She adds that by wearing ethical principles on their shirt sleeves, businesses can attract better talent: “Today you get 21 year olds saying that they don’t want to look at a corporate social responsibility policy, they want to hear how a prospective employer behaves in all its activities. They don’t want to work for you unless ethics are ingrained in your organisation.”

The media, it seems, plays a role in fanning the flames of corporate scandals while largely ignoring examples of good practice which dominate markets. “The media like bad news; getting good news out there is very hard, especially when one bad news story can reverse 20 good news stories,” says Ms Godfrey.

Incidentally, argues the group, popular TV shows such as the X Factor have a negative impact on the view of the professions among young people. But they also say school and university students increasingly can see through the showbiz tinsel.

“We must encourage realistic career expectations for ‘Generation Y’, and promote the importance of start-ups and the SME [small and medium-sized enterprises] sector. Recent CIMA research highlights that SME owner-managers don’t understand the wider value a professional accountant can bring to the business, beyond tax and audit. Given current financial constraints, and the increasing need for organisations to operate efficiently, effectively and ethically, finance now has a crucial and expanding role to play in improving the quality of planning, control and decision-making. This is an example of a hands-on, exciting role for the next generation,” says Mr Rowsby.

Is there enough of a focus on skills and training as a way to boost growth?

“There is a measure of short-termism here,” according to Mr Cheese. “It’s hard to get the attention of the investment community and sometimes chief executives too because an investment in people doesn’t show a short-term return. Building leadership is a long-term game. Everyone thinks it is critical, but in an environment where investors are asking about predictions for the next quarter, it doesn’t exactly encourage you to spend on skills.”

“The challenge we’re seeing is that there are more jobs out there for marketers, but they still don’t necessarily feel in a good place because organisations have cut down on training and development during the recession,” adds Ms Godfrey. “Marketers want to invest in talent and skills, but they haven’t necessarily been given the budget to pay for it.”

Mr Rowsby believes an essential problem is finding metrics for proving a return on investment in skills: “There is definitely a recognition that talent does matter. But how do you measure it on the balance sheet? There is always a lot of reporting around the financials, but very little around the non-financials, so it’s hard to measure the value of people.”

A separate, no less resonate, issue for Ms Francke is preparing students and new graduates for work with real-world skills: “The jobs market is fuelled by small businesses and yet even institutions focusing on management skills, such as business schools, focus on big business. It means graduates are unsuitable for the small businesses where they are needed.

“We as professions have an obligation to help produce young people who are actually practically qualified to make a real impact in the world of work.”

So how else can your respective professions work together to promote growth?

“We have to demonstrate we can innovate as functions, but also work together and collaborate. As chief executives we all have very different cultural language, which can get in the way of team-working,” asserts Ms Godfrey.

“We used to talk about marketers having a voice in the boardroom, now that’s accepted and it’s more about getting the customer’s voice heard in the boardroom. If to do that we have to speak the language of accountants or HR or procurement, then that’s what we expect professional marketers to be able to do.”

Ms Francke believes that, in many cases, middle-management positions are occupied by “accidental managers” who were promoted because they were good at their job, not necessarily because they were good managers. She says all disciplines need to wise up about the role that management practice serves, adding: “Part of being a good manager is taking a broader view from outside your specific function.”

“Innovation doesn’t sit in one place,” concludes Mr Cheese. “It comes from diversity of thought, experience and ideas. The best organisations raise the notion of diversity all the way through to board level and create a diversity of experiences which will drive innovation. Then you enable the organisation through its culture to encourage contributions from each department.”