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The Complex Links Between Skills, Productivity and Workplace Configuration Evidence and thinking from the UK Ewart Keep.

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Presentation on theme: "The Complex Links Between Skills, Productivity and Workplace Configuration Evidence and thinking from the UK Ewart Keep."— Presentation transcript:

1 The Complex Links Between Skills, Productivity and Workplace Configuration Evidence and thinking from the UK Ewart Keep

2 Proving It Pays A great deal of research has been conducted across the OECD to try and prove that investment in: Skills and training Skills and training High Performance Work Organisation (HPWO) High Performance Work Organisation (HPWO) Produces a positive return/improved performance. Its easier said than done!

3 Potential Research Users 1. Researchers themselves and the academic publishing/research system 2. Managers in organisations 3. Policy makers

4 Mis-Aligned Expectations These 3 groups have different expectations of, and uses for, the research and hence divergent expectations about what is required. Most research is either done by academics for themselves, or is commissioned by policy makers in order to prove to business the need for business to do something policy makers want.

5 Researchers Different disciplines – economics, HRM/HRD, wider E&T, consultants. Different disciplines – economics, HRM/HRD, wider E&T, consultants. Interested in relationship between skills (and/or HPWO) and performance, but often at very different levels. Interested in relationship between skills (and/or HPWO) and performance, but often at very different levels. Often only able to provide one-off snapshots Often only able to provide one-off snapshots

6 Managers Focus is on their own sector and organisation. General lessons may not be deemed to hold good therein. Focus is on their own sector and organisation. General lessons may not be deemed to hold good therein. Focus on performance, but performance using measures they recognise (e.g. profitability, not productivity). Focus on performance, but performance using measures they recognise (e.g. profitability, not productivity).

7 Policy Makers Often interested in whole economy. Effects at level of individual firm simply assumed. Often interested in whole economy. Effects at level of individual firm simply assumed. Obsess about productivity Obsess about productivity Use qualifications as main/sole proxy for skill Use qualifications as main/sole proxy for skill

8 Policy Makers Cont. Have little interest in why skills or HPWO make a difference to economic performance – the firm is viewed as a black box. Have little interest in why skills or HPWO make a difference to economic performance – the firm is viewed as a black box. As a result, policy tends to be a one-size- fits-all approach. As a result, policy tends to be a one-size- fits-all approach.

9 A Complex Research Challenge Defining and measuring inputs Defining and measuring inputs Defining and measuring performance Defining and measuring performance Snapshots rather than longitudinal data Snapshots rather than longitudinal data Many other mediating factors intervene Many other mediating factors intervene Fit or universal best practice Fit or universal best practice Even if we had proof would it work?

10 Skills - Defining Input Factors How do we measure skill/training? Years of schooling Years of schooling Qualifications Qualifications Days per year of off-the-job Days per year of off-the-job No good measures of informal learning Weak figures on employer investment

11 Poorly Input Data If research is meant to be proving a return on investment, we need to know the scale of that investment. Figures on employer training spend in the UK are very general and weak. If research is meant to be proving a return on investment, we need to know the scale of that investment. Figures on employer training spend in the UK are very general and weak. Also, what elements of the overall spectrum of training provision make the difference? Also, what elements of the overall spectrum of training provision make the difference?

12 Defining HPWO There are many different names for HPWO and many different definitions. There is a strong belief that HPWO works best where work organisation/employee relations practices are bundled together, but the degree of bundling necessary is the subject of deep controversy. Using the same data, one set of UK academics decided only 2% or firms had strong HPWO, while another group decided the figure was 26% by using different bundling thresholds.

13 Defining and Measuring Performance In the vast bulk of studies it is productivity In the vast bulk of studies it is productivity Profitability Profitability Gross Value Added (GVA) Gross Value Added (GVA) Share price/performance Share price/performance Customer satisfaction/service quality Customer satisfaction/service quality Scrap rates Scrap rates

14 Performance at What Level? Individual (bulk of skills research) Individual (bulk of skills research) Occupation Occupation Workplace or Firm Workplace or Firm Product market or niche therein Product market or niche therein Sector Sector Region Region National economy National economy

15 Snapshots Vast bulk of both skills and HPWO work has been done through one-off, survey based work using a one-moment-in-time dataset. It is very hard to generate causality from a snapshot.

16 Many Other Mediating Factors Exchange rates Exchange rates Interest rates Interest rates State of world trade State of world trade Consumer confidence Consumer confidence Ownership of enterprise Ownership of enterprise Technological change Technological change Capital or R&D investment Capital or R&D investment New products New products State of wider labour market State of wider labour market

17 If You Cant Hold Those Constant……. Then it is very difficult to disentangle the impact of skills or HPWO from any of the other factors that may be raising or lowering performance (however you have chosen to define that).

18 Best Fit or Universal Best Practice? At a theoretical level, trying to link skill levels or the adoption of HPWO to organisational performance runs up against the issue of whether there is one best way for everything for every organisation, or whether work organisation and employee relations policies need to be tailored to deliver a particular organisational strategy. A low skilled workforce can be appropriate in some circumstances!

19 To Put It Another Way The kind of work practices and skill levels that make sense for a Michelin ** restaurant might not pay off for Burger King. Research indicates that market segmentation gives rise for the need for policies and practices that fit organisational strategies. Policy often assumes universal best practice.

20 And the Results…….? In the field of skills, no conclusive proof of a simple, direct causal link at firm level to investment in skill. Best effort - Tamkin et al, People and the bottom line, In the field of skills, no conclusive proof of a simple, direct causal link at firm level to investment in skill. Best effort - Tamkin et al, People and the bottom line, Mixed results in the area of HPWO. Mixed results in the area of HPWO.

21 Even If There Was Proof, Would It Be Enough David Guests Voices in the Boardroom study (2001). Presented senior managers with US and UK findings on the value of HPWO. RESULT: Many managers were deeply skeptical about the value and meaning of such research. It was not enough to change their opinions or behaviour.

22 The Weak Value of Externally Generated Evidence Our interviewees questioned whether (the research findings) told the whole story, and were unsure whether they were of sufficient relevance to their organisations to justify any change in their current practices. As confident senior executives, they trusted their own experience and values considerably more than any research findings, however convincing and however well presented. Guest et al, 2001: 73

23 It Sounds Nice But…….. These practices are nice-to-haves; I could implement all of them in my own company and still go bankrupt. The awful truth is, some of the most successful companies are run by bastards! Respondent (running a business support agency) to an unpublished government study of HPWO, 2006.

24 In Skills Policy The government still keeps trying to make the business case for investment in skills (but it investment to meet government targets not business need). The all graduate workforce is 30% more productive than the no-graduate workforce story.

25 So Whats the Future Hold? Irish Republics National Centre for Partnership and Performance, and the Workplace Innovation Strategy. Irish Republics National Centre for Partnership and Performance, and the Workplace Innovation Strategy. Scotland may be willing to copy. Scotland may be willing to copy. Proposition starts with innovation and firm performance, and skills and HPWO follow. Proposition starts with innovation and firm performance, and skills and HPWO follow.

26 Things to Read D. Guest et al Voices in the Boardroom. London: Chartered Institute of Personnel and Development. D. Guest Smarter Ways of Working, SSDA Catalyst Issue 3, Sector Skills Development Agency. P. Tamkin, M. Cowling & W. Hunt People and the Bottom Line, Department for Innovation, Universities and Skills (research report). Keep, E., & Mayhew, K. Can Employers Be Persuaded That Training Pays?, Glasgow: Futureskills Scotland. National Centre for Partnership and Performance Working to our Advantage - A National Workplace Strategy, Dublin: NCPP.


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