The effective use of skills in workplaces has potential benefits for employers, employees and society as it can help to raise productivity and innovation for businesses, and help to increase wages and job satisfaction for employees. Public policy makers can work with employers to help create the conditions or provide direct support for strengthening skills use in workplaces. This chapter explains the importance of transforming workplaces to make even better use of the skills of the workforce in Northern Ireland (United Kingdom) and provides an overview of current practices and performance. It then explores three opportunities to transform workplaces and improve skills utilisation: strengthening management and leadership capabilities; developing engaging and empowering workplaces; and strengthening support structures for businesses.
OECD Skills Strategy Northern Ireland (United Kingdom)
4. Transforming workplaces to make better use of skills in Northern Ireland
Abstract
The importance of transforming workplaces to make better use of skills
Northern Ireland already recognises the importance of a strong skills system. Since 2011, the Success through Skills reports set out a new vision for the skills system. Likewise, in recent years, multiple studies have highlighted the crucial role of skills as a response to megatrends, to strengthen inclusive growth and to raise innovative performance (Skilling, 2019[1]; Gunson, Murray and Williamson, 2018[2]). However, the impact of Northern Ireland’s efforts could be strengthened by an enhanced focus on skills utilisation (see Annex 4.A for definitions and measurement). In recent years, there has been growing awareness that the success with which employers use skills in the workplace may be just as important as the skills their workers possess. To take full advantage of the initial investment in skills development, and to limit the depreciation and obsolescence of unused or under-utilised skills, countries should strive to use these skills as intensively as possible in the economy, workplaces and society (OECD, 2019[3]).
The more effective use of skills by employees could help Northern Ireland to address a number of persistent and well-documented challenges, including low levels of productivity, an economy characterised by relatively low value-added sectors, stalling the growth of many small enterprises and weak business innovation (Flynn, 2017[4]; Skilling, 2019[1]). Megatrends exacerbate these challenges: an ageing population will make productivity growth, rather than population growth, an increasingly important driver of future economic growth; technological developments make it more relevant to create jobs in high-value sectors that are less vulnerable to automation; globalisation requires that firms are competitive in an international environment; and climate change will have substantial implications for the labour market and skills demand (e.g. new “green jobs”). Furthermore, these challenges need to be faced in the context of uncertainty related to the United Kingdom’s (UK) exit from the European Union (EU), as well as the context of an economic shock following the COVID‑19 (coronavirus) pandemic.
There is evidence that skills utilisation could drive productivity and innovation in workplaces, which could assist Northern Ireland’s transition towards more high value-added activities and support economic growth (OECD/ILO, 2017[5]). Studies using data from the OECD Survey of Adult Skills, a product of the Programme for the International Assessment of Adult Competencies (PIAAC), demonstrate the positive impacts of the effective use of skills on performance of the employee (e.g. wages, job satisfaction), the economy (e.g. productivity, innovation) and society (e.g. economic growth and well-being, including better health, trust and political efficacy) (OECD, 2016[6])) (see Figure 4.1, Panel A).
Figure 4.1. Correlations between skills use, productivity and the adoption of high-performance workplace practices (HPWP) in OECD countries, 2012/15
Note: Skill use indicators show how often skills are used, scaled from 1 (“never”) to 5 (“every day”).
Source: Calculations based on OECD (2019[7]), Survey of Adults Skills (PIAAC) (2012, 2015, 2018) (database), http://www.oecd.org/skills/piaac/.
Many factors affect the way employees use their skills in workplaces, but arguably the most important ones are related to the way workplaces are organised. Organisational and management practices that shape how and why skills are used in the workplace, and that are known to affect the performance of employees and businesses positively, are often referred to as high-performance workplace practices (HPWP) (see Figure 4.1, Panel B) (see Annex 4.A for definitions). These HPWP include work flexibility and autonomy; teamwork and information sharing; training and development; and benefits, career progression and performance management. For businesses, it is important to implement a bundle of HPWP, given that partial implementation of these may not result in significant performance gains (OECD/ILO, 2017[5]).
Various factors matter directly or indirectly for skills use and the adoption of HPWP, including external factors such as the general economic context, local or regional skills landscapes, and the broader value chain or clusters (OECD/ILO, 2017[5]). In light of these external factors, COVID‑19 is likely to have a strong impact on skills use, workplaces and the implementation of HPWP. It could provide a number of opportunities, for instance, by stimulating the adoption of flexibility in workplaces by requiring the adoption and expansion of teleworking for employees to reduce their exposure to the virus. This will also create momentum to further enhance the adoption of practices related to flexibility; for example, employees’ performance while teleworking could likely be improved through enhanced work autonomy and employee engagement. However, the COVID‑19 economic shock will also likely result in businesses trying to cut costs, including by potentially laying off employees and reducing wages, which would complicate the workplace transformation through limited available funding and reduced employee engagement.
This chapter puts skills use and the transformation of workplaces at the centre of achieving wider objectives such as boosting productivity, stimulating innovation and raising competitiveness. It also provides policy solutions tailored to the specific context of Northern Ireland in light of the challenges linked to the COVID‑19 pandemic.
Northern Ireland’s practices and performance in transforming workplaces to make better use of skills
Current practices to transform workplaces to make better use of skills
To stimulate skills use and workplace transformation, a broad range of policies needs to be considered for industry, innovation, economic development, and human and social capital. Policies affecting workplaces can be very diverse due to the variety in types of HPWP, as well as due to the many external factors that affect workplace performance, including management capabilities, employee engagement, and the social and economic context (e.g. economic structure and broader value chain) (OECD/ILO, 2017[5]).
Relevant strategies in Northern Ireland for skills use and workplace practices
Northern Ireland is already taking steps to respond to skills challenges, and these actions are directly and indirectly affecting the use of skills in workplaces. Skills utilisation is already described in various strategies, including in Success through Skills – Transforming Futures in the context of raising productivity (Department for Employment and Learning, 2011[8]). This strategy aimed to “work with local businesses, in particular small and medium-sized enterprises (SMEs), to encourage them to better utilise the skills of their workforce”, and also highlighted the importance of management and leadership skills. These ambitions, however, were not supported by strategic goals, nor was it a main challenge or theme for action.
Other major strategies in Northern Ireland address skills utilisation and workplace practices more indirectly. In 2017, a draft proposal for an industrial strategy for Northern Ireland was published, entitled Economy 2030 (Department for the Economy, 2017[9]). Albeit not yet formally approved, the document sets out a vision and economic priorities up to 2030, with various pillars of its growth framework indirectly affecting skills use, including “accelerating innovation and research”, “enhancing education, skills and employability”, and “driving inclusive, sustainable growth”. However, the strategy does not (or only marginally) address measures directly affecting skills utilisation and workplace transformation. Unlike the previous Economic Strategy from 2012, management and leadership capabilities are also not discussed (Northern Ireland Executive, 2012[10]). The government of Northern Ireland did approve an Innovation Strategy in 2014, which sets out long-term strategic goals and medium-term targets for the period 2014‑25 (Northern Ireland Executive, 2014[11]). Many of the actions indirectly affect skills use and workplace practices, and the general direction is considered to be largely consistent with Economy 2030 (Skilling, 2019[1]).
There are a number of other strategies targeting specific regions, sectors or topics that also have the potential to transform workplaces and raise skills use. For example, a Mid Ulster Skills Action Plan 2018-2021 (Mid Ulster District Council, 2018[12]) includes actions to raise support for technological change and automation in businesses. Likewise, the Invest Northern Ireland (Invest NI) Business Strategy 2017‑2021 sets out its plan to provide broad support to businesses in Northern Ireland (InvestNI, 2017[13]).
Relevant government departments and organisations
Because of the wide range of policy fields affecting skills utilisation and workplace practices, Northern Ireland should aim to involve many of the nine departments in the devolved Northern Ireland Government in the development of relevant policies. The Department for the Economy (DfE) has arguably the largest responsibility in this context, with its work on higher education, further education and a broad portfolio of programmes for both citizens and employers (e.g. Assured Skills, Skills to Succeed, Training Programmes, and Apprenticeships). Other departments with relevant responsibilities for skills use and workplace practices include: the Department of Education (DE) (e.g. implementing education policy); the Department for Communities (DfC) (e.g. helping job seekers back into employment); the Department of Agriculture, Environment and Rural Affairs (DAERA) (e.g. developing education and skills policy in its policy areas); the Department of Finance (DoF) (e.g. setting the budgets); and the Department of Health (e.g. workforce development in the health sector).
As part of DfE, the regional business development agency Invest NI has a major role in providing support to businesses, for example by helping new and existing businesses to compete internationally, and by attracting new investment to Northern Ireland. It runs a large number of programmes that affect workplaces, including a series of training programmes for managers and employees (e.g. a suite of leadership development programmes, Skills for Growth Programme, Skills Advancement Programme), programmes to support business growth (e.g. Mentoring Scheme, Accelerating Growth Programme), and programmes that raise innovation (e.g. Innovation Vouchers, Collaborative Growth programmes). Other public organisations also actively support businesses. For instance, Innovate UK (part of UK Research and Innovation) provides funding to business for research and development (R&D) opportunities, and InterTradeIreland helps small businesses by offering practical cross-border business funding, intelligence and contacts.
Relevant business, employer and employee organisations
Broad involvement of the business community is of great importance to the successful implementation of any policy measure affecting workplaces. The Northern Ireland Chamber of Commerce and Industry is a network for all businesses in Northern Ireland, with 1 200 members representing over 100 000 employees, and activities ranging from business support to networking opportunities. In addition, Enterprise Northern Ireland represents 28 Local Enterprise Agencies and helps entrepreneurs to set up, grow and develop their businesses with diverse programmes and events. Northern Ireland also has several bodies, often at the regional or sectoral level, that bring together government and stakeholders to discuss skills challenges. A good example is the Mid Ulster Skills Forum, which is a partnership between local businesses, colleges, universities, enterprise agencies, sectoral organisations, departments and the council. Furthermore, a number of UK and international employer and business organisations run relevant programmes and are actively engaged in the Northern Ireland business community. Key players are the Confederation of British Industry (CBI), the Federation of Small Businesses (FSB), Chartered Institute of Personnel and Development (CIPD) Northern Ireland, and the Institute of Directors (IoD).
Employee representative organisations should also be considered in the development of policies for skills use and workplace practices. An example is the Irish Congress of Trade Unions (ICTU), which is the umbrella organisation for trade unions on the island of Ireland, with the Northern Ireland Committee representing 34 trade unions with over 215 000 members. For interaction between employees and their employer, the Labour Relations Agency exists to promote the improvement of employment relations.
Performance in transforming workplaces to make better use of skills
The use of skills in workplaces
At first glance, Northern Ireland appears to perform rather well in using workers’ skills in the workplace (OECD, 2016[6]). For instance, while literacy skills of adults are comparable with the OECD average, the intensity of the use of reading and writing skills in workplaces is comparatively high and above the average. While the numeracy skills of adults are on average relatively weak in Northern Ireland, the use of these skills is still comparable with the OECD average. Moreover, Northern Ireland stands out in the use of problem-solving skills and the use of skills for social interaction, such as advising, influencing or teaching people. However, there is still room to further enhance the use of skills in Northern Ireland’s workplaces, because many employees are not yet using their skills to their full potential. The intensity of skills use is still far below that of top-performing countries such as Australia, New Zealand and Norway, and below that of England (UK), especially for the use of writing and problem-solving skills.
The finding that skills use can be enhanced is supported by the views of employers (Department for Education, 2017[14]). In Northern Ireland, 37% of employers report skills under-utilisation in their business, as expressed by having employees with both qualifications and skills that are more advanced than required for their current job. This share is slightly above the UK average (see Figure 4.2, Panel A) (Department for Education, 2017[14]), and compared with most EU countries, skills under-utilisation is already high in the UK (Cedefop, 2019[15]). The under-utilisation of skills has also risen quickly in Northern Ireland: between 2015 and 2017, the share increased 9 percentage points (Department for Education, 2017[14]).
Many of the employers that report skills under-utilisation also report shortages in various types of skills (as discussed in Chapter 2). In fact, skills under-utilisation is even more prevalent in businesses that indicate having skills gaps as well as outstanding vacancies (Department for Education, 2017[14]). It is undoubtedly important to address skills shortages by looking outside the firm, but the data show that there is still considerable potential to better use the skills already available within the firm.
On average, and almost by definition, the larger the share of highly educated employees in a firm, the more often skills are under-utilised (Department for Education, 2017[14]). However, a number of sectors with large shares of highly skilled employees manage to use the skills of employees particularly well. The information and communication sector stands out since it has the smallest share of skills under-utilisation (21%) across sectors. This share is much lower than in the rest of the UK (30%) (see Figure 4.2, Panel B). On the other hand, skills under-utilisation is highest in the healthcare and social work sectors, with more than half of employers reporting skills under-utilisation, compared to 40% of employers across the UK.
Figure 4.2. Share of establishments reporting skills under-utilisation in Northern Ireland and other UK countries, 2015/17
Source: Department for Education (2017[14]), UK Employer Skills Survey (ESS) 2017, https://www.gov.uk/government/collections/uk-employer-skills-survey-2017.
The adoption of workplace practices
Northern Ireland could strengthen the adoption of HPWP to drive skills use. Some 20% of jobs are characterised by high levels of HPWP, compared with 26% across OECD countries (2016[6]). 6% of employers are classified as high-performance workplaces – defined as adopting at least 14 out of 21 HPWP measured in the Employer Skills Survey – compared with 9% across the UK (Department for Education, 2017[14]). These shares hide large differences in the adoption of different practices since HPWP capture a diverse range of practices, including flexibility and autonomy in the workplace, teamwork and information sharing, training and development, and benefits, career progression and performance management (see Annex 4.A).
Northern Ireland stands out through its comparatively weak adoption of workplace flexibility and autonomy practices. While teleworking practices will likely become more common during the COVID‑19 pandemic, Northern Ireland is behind all other UK countries in terms of the share of employees benefitting from working from home, with only 36% of employers giving employees access to teleworking to a large extent in 2017 (40% across the UK) (see Figure 4.3, Panel A) (Department for Education, 2017[14]; CIPD, 2019[16]). Moreover, a comparatively small share of employers indicates that they give employees discretion over how they do their work (43% vs. 47% in the UK) (Department for Education, 2017[14]). Compared with other OECD countries, Northern Ireland is also near the bottom of the rankings for high levels of autonomy in the sequencing of tasks, how they work, and the speed of their work [calculations based on PIAAC (OECD, 2019[7])]. The structure of the economy does not appear to have a strong effect on the overall low adoption of flexibility and autonomy in workplaces. In fact, especially in skilled occupations and semi-skilled white-collar occupations – where work flexibility is typically most prevalent – the adoption of working time flexibility is low in Northern Ireland.
The performance of Northern Ireland is mixed with respect to the adoption of teamwork and information sharing in workplaces. Employees who co-operate with co-workers to some or a very high extent are using their skills more intensively than employees who do not co-operate with co-workers (OECD, 2016[6]). However, in Northern Ireland, practices that promote teamwork are less prevalent than in other UK countries. For example, 38% of employers have teams of employees working on a specific project, compared with 42% of employers across the UK (see Figure 4.3, Panel B) (Department for Education, 2017[14]). However, the Survey of Adult Skills (PIAAC) results suggest better performance – the share of workers who regularly co-operate with co-workers and who share work-related information in Northern Ireland is slightly above OECD averages [calculations based on PIAAC (OECD, 2019[7])].
Figure 4.3. Adoption of different types of HPWP in Northern Ireland and other UK countries, 2017
Source: Department for Education (2017[14]), UK Employer Skills Survey (ESS) 2017, https://www.gov.uk/government/collections/uk-employer-skills-survey-2017.
As discussed in Chapter 3, giving employees the opportunity to participate in training and other forms of learning is highly beneficial for firms (e.g. resulting in higher productivity growth), but participation in training and learning by employees in Northern Ireland is comparable to, or below, the UK average (see Figure 4.3, Panel C), with large differences between regions and firms of different sizes (see Chapter 3). There are also indications that employers in Northern Ireland could give training needs of their employees a higher priority. Northern Ireland is behind all other UK countries in terms of adopting training plans for employees and dedicating specific budgets for training expenditure (Department for Education, 2017[14]).
Of all the different types of HPWP, Northern Ireland is lagging behind the most in practices related to benefits, career progression and performance management (see Figure 4.3, Panel D). A number of studies provide evidence of the positive effects of incentive pay on skills use and productivity (Bloom et al., 2010[17]). In Northern Ireland, however, only 25% of employers give bonuses to employees based on the performance of the company, compared with 38% across the UK, and pay based on an individual’s performance is common in only 24% of businesses (32% across the UK) (Department for Education, 2017[14]). Northern Ireland also appears to lag behind other parts of the UK in the adoption of practices to track and promote strong employee performance. Some 43% of employers have an annual performance review in place for all staff, a share far below the 53% across the UK, and only a small share of employers create business plans for employees with objectives at the beginning of the year (49% vs. 56% across the UK). Moreover, formal and informal processes to identify high potential or talented individuals are relatively uncommon – 34% of employers have such processes, compared with 45% across the UK.
Other factors that drive skills use
Despite strong improvements in economic and labour market performance in recent years, which might temporarily be offset by the COVID‑19 economic shock, skills under-utilisation is partly driven by comparatively low demand for skills in the labour market. This is exemplified by the many workers who are more likely to find themselves stuck in relatively low paid jobs than other UK countries. A large share of employees have no opportunities to move to higher-paid jobs – for 21% of staff working in roles for which they have excess skills or qualifications; the reason is that there are no jobs available at a higher level (Gunson, Murray and Williamson, 2018[2]). To some extent, the combination of comparatively low average skills of employees, low skills demand by businesses, and limited inclination to raise skills levels or use, results in a self-reinforcing cycle, which is often referred to as a low skills equilibrium, in Northern Ireland (Flynn, 2017[4]).
Northern Ireland is still characterised by some large sectors with low value-added (e.g. agriculture, industry, public administration) which, on average, are not using the skills of workers as effectively as more high value-added sectors (e.g. scientific and professional, financial and insurance). There is a range of knowledge-based sectors, including information technology (IT), software and medical devices, but despite improvements, as a share of the total economy, these sectors are still relatively small (Skilling, 2019[1]). There are many low value-added, service-oriented businesses and, as a result, productivity is almost 20% below the UK average (Office for National Statistics, 2019[18]).
Increasing the innovative capacity of businesses could be a viable way to strengthen skills use and the adoption of HPWP, and could be an important driver for a more productive and competitive economy (OECD/ILO, 2017[5]). However, innovation in businesses in Northern Ireland is still comparatively weak. Between 2014 and 2016, 39% of businesses were considered to be innovation active, which is far below the UK average of 49% and all other UK countries (UK Government, 2018[19]). Low innovation expenditure supports this finding – despite an increase of GBP 794 million in total R&D expenditure in 2018 (NISRA, 2019[20]), R&D expenditure is still comparatively low relative to the size of Northern Ireland’s gross domestic product (GDP) (1.5% vs. 1.7% in the UK and 2.3% across OECD countries, in 2016) (OECD, 2019[21]).
Conversely, the adoption of HPWP (especially learning and training) also has the potential to drive innovation. For example, SMEs that adopt a “learning organisation” form – i.e. high levels of self-planning of tasks by employees, teamwork, knowledge exchange, on-the-job training and employee performance incentives – are more likely than other SMEs to develop new products/services, processes, and to introduce new innovations (Lorenz and Potter, 2019[22]). For Northern Ireland and other parts of the UK this could be particularly relevant, since innovation policy has been relatively top-down and science-driven. Northern Ireland could potentially benefit from more focus on bottom-up innovation in workplaces, such as in Scandinavia and other Northern European countries, where innovation policies tend to target also the quality of working life and workplace innovation (Keep, 2016[23]).
To some extent, the comparatively weak performance in skills utilisation, adoption of HPWP, productivity and innovation can be explained by Northern Ireland’s SME-driven economy. Larger firms tend to make better use of skills than employees of smaller firms, partly because of better management on average (McKinsey and Company, 2009[24]), a dedicated human resources (HR) function, and better capacity, skills, and knowledge for innovation and new technical processes (OECD/ILO, 2017[5]). In Northern Ireland, SMEs account for 75% of all private-sector employment, compared with 60% in the UK as a whole (Ulster University Business School and Ulster University SME Centre, 2015[25]), and the majority of SMEs are very small – almost nine out of ten SMEs have fewer than ten employees (ONS, 2019[26]). Moreover, regional differences in businesses and their performance are profound in Northern Ireland. For instance, the share of SMEs with fewer than ten employees ranges from 67% in Belfast to 81% in the North. Belfast stands out positively in terms of productivity and projected gains from automation in terms of employment growth due to its large information and communications technology (ICT) and professional services sectors (Johnston et al., 2019[27]).
Helping businesses grow could help support the better use of skills, but the continued growth of businesses is a challenge. Northern Ireland successfully increased entrepreneurial activity in recent years – it performs very well in initial scaling of start-ups, and the share of start-ups surviving and reaching GBP 1 million turnover within three years is nearly 40% higher than in England (ONS, 2018[28]; Hart et al., 2019[29]). However, after that initial period of growth, progress stalls. Despite improvements, Northern Ireland still has a relatively low share of SMEs able to scale up to GBP 3 million turnover within three years (ERC, 2019[30]). Moreover, high-growth businesses do not scale as significantly as in other parts of the UK. While the share of businesses with high-growth rates increased in recent years, it is much lower than shares before the financial crisis a decade ago (Department for the Economy, 2020[31]). These challenges are exacerbated by uncertainty related to the economic shock following the COVID‑19 pandemic and the UK’s exit from the EU. A study by the Northern Ireland Chamber of Commerce and Industry (2019[32]) showed that over half their members scaled back, or put on hold, growth plans following the vote to leave the EU.
Opportunities to transform workplaces to make better use of skills
In the context of various persistent challenges and potential opportunities and threats linked to megatrends, the UK’s exit from the EU, and COVID‑19, Northern Ireland should transform workplaces and make better use of employees’ skills to stimulate productivity growth, raise levels of innovation, and support growth of firms, especially SMEs, in all sectors and regions across Northern Ireland. Building on Northern Ireland’s strong economic and social performance in recent years, as well as the many successful existing programmes, there are a number of opportunities to improve performance in workplaces.
This chapter describes three opportunities that would support this transformation. The selection is based on input from literature, desk research, discussions with the Northern Ireland Project Team, discussions in workshops in Belfast, Derry/Londonderry, Dungannon, group discussions and several related meetings. As a result, the following opportunities are considered to be the most relevant for the specific context in Northern Ireland. The selected opportunities are:
1. Strengthening management and leadership capabilities.
2. Developing engaging and empowering workplaces.
3. Strengthening support structures for businesses.
Opportunity 1: Strengthening management and leadership capabilities
Strong leadership and management capabilities can drive organisational change to optimise the use of skills and the adoption of HPWP. Strong and effective leadership and management have many benefits for businesses – they are associated with higher levels of employee engagement, willingness to invest effort in work, innovation in the workplace, a higher likeliness of adopting HPWP and higher productivity (Marchese et al., 2019[33]; Bloom et al., 2019[34]; UKCES, 2014[35]). However, in Northern Ireland, like in other UK countries, weak leadership and management are increasingly considered to be one of the main constraints on business performance, especially for SMEs (BIS, 2015[36]). This opportunity describes how management and leadership capabilities in both micro and small businesses (i.e. business owners and entrepreneurs) and larger businesses (i.e. middle and high-level management staff) could be enhanced to improve skills use and workplace performance.
For stakeholders and government representatives, weak leadership and management in many businesses were considered the most important factors for increasing skills utilisation and workplace performance. Recommendations for management and leadership were consistently ranked as the most important (OECD, 2019[37]) (see Annex B on pre-workshop outcomes). Workshop participants expressed an overall need for a top-down approach to workplace transformation, with leadership and management at the heart of company and business growth.
There are a number of studies that point to Northern Ireland’s challenges for leadership and management capabilities. There is evidence of weak adoption and low quality of management practices (e.g. employee performance measurement) (McKinsey and Company, 2009[24]; Department for Education, 2017[14]), and a large share of firms are not relying on professional management – it ranks 44th among 145 countries worldwide (the UK ranks 9th and Ireland 12th) (see Figure 4.4) (EAG, 2013[38]). Moreover, various rounds of the World Management Survey show that the average quality of management in Northern Ireland’s businesses is among the lowest among European countries, together with Ireland, Greece, Poland, Portugal and Spain (Centre for Economic Performance, 2015[39]; Bloom and Reenen, 2010[40]).
Figure 4.4. Reliance on professional management in OECD countries, 2011-12
Notes: The score is based on who holds the senior management position, ranging from 1 ("usually relatives or friends without regard to merit") to 7 ("mostly professional managers chosen for merit and qualifications"), 2011-12 weighted average.
Source: World Economic Forum (2013[41]), The Global Competitiveness Report, 2012-13, http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf; EAG (2013[38]), Competitiveness Index for Northern Ireland, https://eagni.com/wp-content/uploads/2015/06/Competitiveness-Index-for-Northern-Ireland-2013.pdf.
Entrepreneurship and leadership skills, in particular, are associated with strong management performance, and smaller businesses (5-19 employees) especially benefit from strong skills sets of managers (BIS, 2015[36]). While managers’ skills in Northern Ireland are substantially higher than average skill levels in the population, the skills are below the OECD averages for managers, with particularly weak performance in numeracy [calculations based on PIAAC (OECD, 2019[7])]. Management and leadership skills are currently also in short supply in the labour market, with 49% of employers indicating that these skills are difficult to find (Department for Education, 2017[14]). This trend is expected to deepen, given an expected increase in demand for managerial occupations (Ulster University Economic Policy Centre, 2019[42]).
In addition to skills, the overall attitudes and working culture in businesses affect the adoption of good management practices. Skills under-utilisation, as well as the factors that drive skills use (e.g. low levels of innovation and growth), are largely the result of a culture in Northern Ireland that does not promote these dynamics. Stakeholders emphasised a culture of risk aversion among managers and leaders. An aversion to failure is considered to be very acute, with employers not accepting that some innovation will fail, and thereby stalling growth of firms. This view is supported by data – concerning entrepreneurship, 46.1% of adults in Northern Ireland indicate that the fear of failure prevents them from starting a business, despite having good opportunities, compared with 40.3% in the UK (Hart et al., 2019[29]).
The relatively large share of SMEs drives down average management and leadership capability in Northern Ireland since larger firms tend to have higher quality management (McKinsey and Company, 2009[24]). However, management performance in smaller local firms appears to be weak compared to similar firms in other countries. The difference in management quality between foreign multinationals and domestic firms is also large in Northern Ireland (Bloom and Reenen, 2010[40]). Participants in workshops expressed the view that for many small, family-owned SMEs, management capabilities are simply not a priority, and that they often “speak a different language”. Research suggests that resistance to change and limited flexibility to adapt is present in many family-owned businesses (PWC, 2014[43]), and that these businesses generally have weaker management capabilities than firms owned by dispersed shareholders.
Making management and leadership capabilities a priority for Northern Ireland
The issue of managerial performance is well recognised in Northern Ireland, and improving this performance has been a policy priority for some years. Many initiatives in the past had positive outcomes, and it is important to consider and build on these successes. A good example is Northern Ireland’s last strategy for leadership and management, Leading to Success, from 2007 (see Box 4.1), which resulted in a number of management and leadership training programmes (Department for Employment and Learning, 2007[44]). Evaluations showed that the Leading to Success strategy managed to help the development of effective people management practices (Department for Employment and Learning, 2015[45]).
More recent efforts to raise the profile of management and leadership challenges did not, however, always meet the objectives and expectations. The latest Success through Skills strategy (2011[8]) emphasised the significant managerial weaknesses in the occupational structure of the economy and proposed various actions, including the establishment of an integrated framework for management and leadership and measures for SMEs to take up management training. In addition, the Economic Strategy 2012 (2012[10]) proposed measures to raise management practices. However, based on conversations with government representatives and available information, these proposed actions were only partially implemented.
Overall government support for leadership and management programmes decreased in recent years, partly due to a period of austerity measures. A variety of departments, as well as organisations such as Invest NI, have many measures in place to support managers, but stakeholders indicated that the reach, funding and overall support has fallen. Monitoring reports of the Economic Strategy do present some progress, including the introduction of a Leadership and Management Skills Assessment in 2013, but use of these initiatives appears to be limited (Northern Ireland Executive, 2014[46]).
To reverse the trend of weak managerial and leadership performance and declining support, and to gain momentum for action, the OECD supports the development of a renewed strategy that sets out the vision to strengthen leadership and management. A new strategy could help to raise awareness of the challenge, provide a co-ordinated approach, and set out direction for action. There is broad support for this in Northern Ireland – stakeholders and government representatives indicated that the development of a new strategy for leadership and management capabilities is very important to raise skills utilisation (OECD, 2019[37]) (see Annex B for pre-workshop survey outcomes). It could be included in the upcoming Northern Ireland Skills Strategy, as part of a broad set of proposed policy directions, and/or part of a new separate strategy specific to leadership and management. This should result in clarity for all involved of the direction, definition, objectives, and actions to strengthen management and leadership capabilities.
Given the perception of limited impact of previous strategies on management and leadership, stakeholders stressed the need to enforce actionable objectives and to strengthen the implementation of the strategy. To ensure this, a number of factors should be considered. Co-ordination and alignment with other strategies (e.g. economic or innovation strategies) are important to avoid any duplication or contradiction in objectives and actions, and the strategy must be supported by adequate funding. Furthermore, broad, early and extensive engagement of all levels of government and all relevant stakeholders (especially employers) is also essential for the successful development and execution of such a strategy. Stakeholders advised that a business ownership approach, such as in England, is not well developed in Northern Ireland, and potentially, a partnership with businesses (e.g. through a Charter – see Opportunity 2), supported by a central skills needs advisory body (see Chapter 5) that also addresses management and leadership capabilities, could contribute to better engagement of employers. A local approach could also help to maximise impact and help to target some of the local SMEs most in need of action, for example by local campaigns and activities, supported by the regional skills hubs (as discussed in Chapter 5), as well as Local Councils, Strategic Employment Services, and local business networks and employer groups.
Finally, outcomes of the strategy should be evaluated and monitored. Northern Ireland should pursue a stronger focus on outcomes in strategic planning, with a crucial role for evidence-based policy and performance measurement and support (OECD, 2016[47]). Northern Ireland’s planning documents often include targets that are broad measures of success, and they are often outputs rather than outcomes of performance. Performance indicators that are understood and supported by all stakeholders would support implementation, and strengthen the monitoring and evaluation of the strategy.
Box 4.1. Relevant national example: Northern Ireland’s management and leadership strategy
Leading to Success: Management and Leadership Development Strategy and Implementation Plan (2007)
Based on a discussion paper developed by the Management and Leadership Network, which brought together representatives from private, public and community and voluntary sectors, and public consultations, Northern Ireland launched this comprehensive Management and Leadership Strategy in 2007. Recognising deficiencies in management and leadership capabilities as a significant challenge, the strategy set out a vision, 16 key actions with milestones, as well as a programme for implementation, across four themes: 1) understanding demand; 2) improving skills levels; 3) improving the quality and relevance of provision; and 4) tackling the barriers to involvement and investment. Subsequently, a suite of management development programmes was launched. A review of these management development programmes was completed in 2011, and it showed that the Department for Employment and Learning’s investment helped to secure a legacy of more effective people management practices.
Source: Department for Employment and Learning (2007[44]), “Leading to Success: Management and Leadership Development Strategy and Implementation Plan”.
Recommendation for making management and leadership capabilities a priority for Northern Ireland
3.1. Develop a new strategy for management and leadership capabilities to raise awareness of the challenge, provide a co-ordinated approach and set out a direction for action. The Northern Ireland Government (DfE, DfC, DoF and DE in particular), relevant business support organisations (especially Invest NI) and other stakeholders should make management and leadership capabilities a higher policy priority and create momentum for action. A new strategy could help to provide clarity on the direction, definition, objectives, and actions to be undertaken to strengthen leadership and management. The strategy must have actionable objectives, potentially based on other recommendations in this chapter, and a strong framework for implementation. To increase the impact of implementation, the government of Northern Ireland should ensure strong co-ordination and alignment with other strategies; a local approach with the involvement of regional skills hubs (as discussed in Chapter 5); engagement of all levels of government and all relevant stakeholders (in particular employers through business and employer organisations) through the central bodies proposed in Chapter 5; and better evaluation and monitoring through the inclusion of outcome-based performance indicators.
Developing the right skills and attitudes for managers and leaders of the future
Technological innovations, globalisation, demographic change and climate change will all have a large impact on the types of jobs and workplaces of the future. This transition requires management and leadership to have the right skills and attitudes to optimally benefit from the expected changes and to make their businesses flourish. To ensure that future managers and leaders have the right skills and attitudes, a long-term approach is needed, with interventions across the life course.
Managers and leaders should have diverse skills sets, with leadership and entrepreneurship skills, in particular, being strongly associated with good management practice and business performance (BIS, 2015[36]; OECD, 2015[48]). Relevant skills include the ability to build teams, motivate, communicate, mentor, think strategically, assess risk and engage in entrepreneurial activities (OECD, 2011[49]; OECD, 2010[50]). For future success, however, raising leadership and entrepreneurship skills of managers and leaders alone will not suffice. Increasingly, there is the realisation that different managerial and leadership skills will be needed. For instance, concepts such as management 4.0 (i.e. management in the fourth industrial revolution) are becoming more relevant. Stakeholders emphasised that strategic leadership skills are increasingly important at the highest level in firms (CMI, 2019[51]). Northern Ireland should assess what management and leadership skills are needed for future workplaces, include them in the proposed strategy on management and leadership, and ensure that education and training respond to these skills demands.
In addition to developing the right skills, managers and leaders should also have the right attitudes to secure long-term sustainable growth and innovation in Northern Ireland businesses. As mentioned, many stakeholders emphasised a culture of risk aversion among managers and leaders, and stakeholders emphasised that in many businesses, especially local SMEs, there is no motivation or drive to grow. Changing these attitudes and behaviours would require a cultural change, and the government could play a role in stimulating this. The government of Northern Ireland acknowledges this, and a “cultural change” to shift attitudes and behaviours towards collaboration and openness in the use of new ideas, innovation and risk-taking, is already proposed in the Innovation Strategy (Northern Ireland Executive, 2014[11]).
To ensure that adults have the skills and attitudes to support innovation and growth (e.g. by becoming less risk-averse), it is essential to start early in life to develop the right skills and to build a foundation for future learning (OECD, 2019[3]). As also discussed in Chapter 3, building strong foundations in the early years will support a lifetime of learning, where learning at every stage of the lifecycle builds on learning outcomes and experiences from previous stages.
Entrepreneurship education especially could benefit the development of skills and attitudes for managers and leaders. Teaching entrepreneurial skills in the education system could be a viable option to strengthen management, leadership and entrepreneurship, possibly helping to change a culture of risk aversion (Department for Education, 2017[14]). There is evidence of a strong correlation between perceived entrepreneurial skills and total early-stage entrepreneurial activity (OECD, 2011[49])), as well as positive effects on job creation, economic success and innovation (OECD, 2015[48]). As a result, entrepreneurship education has become a key policy objective in many OECD countries and particularly Nordic countries (see Box 4.2) (European Commission, EACEA and Eurydice, 2016[52]). Entrepreneurship education is particularly effective in developing these skills when it involves more experiential learning, where students work on specific tasks linked to real business challenges. Likewise, it could help address the shortages in soft skills needed in the labour market (as discussed in Chapter 2). Among stakeholders in Northern Ireland, there was strong support for expanding entrepreneurship education.
Northern Ireland was among the first countries to pioneer entrepreneurship education strategies in 2003, and while the strategy was discontinued in 2005, there are still a number of good programmes in Northern Ireland (European Commission, EACEA and Eurydice, 2016[52]). Many of these programmes are organised by not-for-profit businesses and the enterprise charity Young Enterprise Northern Ireland (see Box 4.2). Funded by the Northern Ireland Government, Young Enterprise Northern Ireland organises the programme Business Beginnings, which is in the curricula for primary and secondary education, and gives pupils a business experience by setting up and running their own company.
There is, however, significant room to strengthen entrepreneurship education in Northern Ireland. There are indications that only a comparatively small share of young people participate in some form of entrepreneurship education – across the UK, 15% of adults indicate having taken part in a course or activity at school related to entrepreneurship, which is the lowest share among all OECD-EU countries (European Commission, EACEA and Eurydice, 2016[52]). The 2014 Innovation Strategy acknowledges the benefits of entrepreneurship education, and planned to examine ways of increasing support offered to young people to engage in entrepreneurial activities (Northern Ireland Executive, 2014[11]). However, the strategy did not include specific actions on how to achieve this objective and, based on conversations with stakeholders, there appears to be no recent lift in the uptake of entrepreneurship education.
Box 4.2. Relevant national and international examples: Entrepreneurship education programmes and strategies
Entrepreneurship education strategies: Examples from Estonia and Finland
In Estonia, the 2010 strategy for entrepreneurship education, “Be Enterprising!”, aims to raise awareness of entrepreneurship education, train teachers, provide teaching materials and allocate resources. Concrete actions include awareness-raising activities via events and social networks, the development of materials and instructions for courses and an evaluation system. The strategy includes a map of entrepreneurial learning outcomes and focuses on integrating these into curricula. Entrepreneurship education is explicitly referred to in the curricula as a general skill, is a cross-curricular objective at various levels, and is taught in optional and compulsory subjects.
Finland issued its Guidelines for Entrepreneurship Education strategy in 2009. The strategy is supported by a network of 19 regional entrepreneurship education resource centres and aims to support a more entrepreneurial culture, active citizenship and business start-ups. The centres emphasise networking, support and training for, and with, teachers. Strategy actions have led to large scale projects such as Me & My City, which engages with a high share of school learners. The strategy places emphasis on economic growth, innovation and youth start-ups, highlighting the comparatively low rate of start-ups among under-35s in Finland.
Entrepreneurship education providers: An example from Northern Ireland
Young Enterprise provides children and young people with specially tailored business education programmes and experiences that help them in their educational choices, careers and life. In Northern Ireland, programmes reach over 90 000 children and young people every year and are supported by 700 business volunteers. Young Enterprise has programmes for primary education (e.g. Business Beginning, which allows young people get real business experience by setting up and running their own company), post-primary (e.g. programmes with interactive business challenges, working alongside business people from their local community) and in colleges and universities (e.g. Young Enterprise Start Up Programme, which offers practical, real-world experience in developing and running their own venture). Impact evaluations showed that programmes helped to raise young people’s career aspirations, helped students to better understand the world of work, raised employability skills as well as problem-solving, resilience and self-esteem.
Source: Young Enterprise Northern Ireland (2020[53]), “Young Enterprise Northern Ireland”, https://yeni.co.uk/; European Commission, EACEA and Eurydice (2016[52]), Entrepreneurship Education at School in Europe, http://dx.doi.org/10.2797/301610.
Recommendation for developing the right skills and attitudes for managers and leaders of the future
3.2. Expand entrepreneurship education and the development of other soft skills needed in the labour market in school curricula. To strengthen management, leadership and entrepreneurship, change a culture of risk aversion, and develop soft skills needed in the labour market, the government of Northern Ireland should start early with developing the right management and leadership skills and attitudes. To this end, DfE, DE and the Council for the Curriculum, Examinations and Assessment (CCEA) should aim to expand entrepreneurship education by building on existing good programmes, especially Young Enterprise Northern Ireland. They should make this a policy priority by including entrepreneurship education in the proposed strategy for management and leadership (see Recommendation 3.1), raise the profile of entrepreneurship education in curricula, and adopt more experiential learning methods, including more internship and work placements. They should assess what management and leadership skills are needed in future workplaces in Northern Ireland, and ensure that the education system responds to these skills demands.
Raising the motivation to participate in lifelong learning for current managers and leaders
In addition to starting early with developing the right skills and attitudes, managers and leaders need to continue learning throughout life to increase overall skill levels and to adapt to changing skills requirements over time. In Northern Ireland, there is not yet a broadly shared culture of learning among managers and leaders. In 2017, 62% of managers participated in training, a share comparable with the other UK countries (Department for Education, 2017[14]). However, this share hides large differences between regions (59% in southern and western regions vs. 66% in Belfast and northern regions), small and large businesses (59% in businesses with 5-24 employees vs. 78% in businesses with 100‑249 employees) and sectors (from 55% in construction to 74% in education) (see Figure 4.5).
Figure 4.5. Managers participating in training in the last 12 months in Northern Ireland (UK), 2017
Source: Department for Education (2017[14]), UK Employer Skills Survey (ESS) 2017, https://www.gov.uk/government/collections/uk-employer-skills-survey-2017.
Businesses also invest comparatively little in leadership and management training (BIS, 2015[36]), and the adoption of practices that support management training could be enhanced. For example, businesses with training budgets and training plans have a participation rate of 65% among managers, compared with 47% for businesses without them. However, only 30% of businesses have a training budget (37% in the UK), and 45% of businesses have a training plan (48% in the UK) (Department for Education, 2017[14]).
At first glance, there appears to be no shortage in the supply of training and education opportunities for managers and leaders in Northern Ireland. There are a number of well-reputed programmes such as the Leadership Programmes, Operational Excellence, and Non-Executive Director programme by Invest NI, the Entry to Management Programme by DfE, and a wide offer at universities and other institutes (see overview in Table 4.1). There is a large variety of training providers for managers, often in collaboration with, or supported by, DfE (Envision, 2016[54]).
Table 4.1. Leadership and management programmes available in Northern Ireland
Note: Please note that this is not a complete list, but only highlights the main programmes with a strong focus on management and leadership capacity in Northern Ireland.
The rather low participation rates in training appear to be largely driven by low motivation. For eight out of ten managers in Northern Ireland who did not participate in education or training, the reason was that they did not want to participate, compared with seven out of ten managers across OECD countries [calculations based on PIAAC (OECD, 2019[7])]. To increase motivation to participate and create a culture of learning for managers in Northern Ireland, soft regulations (i.e. non-binding persuasive policy intervention) are most effective (Alasoini, 2016[55]), including developing awareness-raising campaigns and making information on learning opportunities accessible.
A targeted new campaign on the benefits of strong management and leadership training could help raise awareness and could be a relevant first step (see Box 4.3 for a UK example). Many managers and leaders are still not aware that investment in training has large benefits for businesses, despite sufficient evidence that it pays off – for example, organisations with low performance on average invest 36% less on developing management and leadership skills than organisations with strong performance (CMI, 2012[56]).
Stakeholders expressed overall strong support for a new campaign, but some showed concern about the ability of campaigns to reach the businesses most in need, (e.g. small, local businesses). It is important that this new campaign actively targets these groups, which could be achieved by applying a proactive and local approach. To this end, outreach campaigns to local business networks and employer groups, potentially co-ordinated by the new regional skills hubs (see Chapter 5), supported by online campaigns (e.g. via social media) could be effective. Involvement of other organisations with local business networks could also contribute to its success, including the Northern Ireland Chamber of Commerce and Industry, Regional Offices of Invest NI, Local Enterprise Agencies of Enterprise Northern Ireland, DfC and bodies such as the Mid Ulster Skills Forum.
Stakeholders also expressed support for sharing success stories through awards and events to highlight businesses that have a strong culture of lifelong learning for managers. Campaigns in the form of contests for best-performing companies are considered effective in bringing public attention to workplace practices, encouraging companies to rethink their activities and helping to change organisational culture. There are many good examples of firms being active in learning, and it would be beneficial to raise the profile of these businesses. There are already a number of competitions in Northern Ireland, with awards for entrepreneurship (e.g. the Northern Ireland Enterprise Awards by Enterprise Northern Ireland), small businesses (e.g. Celebrating Small Business Awards by the Federation of Small Businesses), human resources management (e.g. NI Awards by CIPD), innovation (e.g. Innovation Founder Award by Catalyst), employers (e.g. Investors in People Awards) and many more. However, none of these competitions target management and leadership capabilities specifically.
A new campaign should be supported by, or linked to, the effective dissemination of information on management and leadership programmes. Current available information for managers and leaders could be improved in Northern Ireland. For many businesses, especially the ones outside the scope of Invest NI programmes, management and leadership development provision appears to be too fragmented and is perceived to be confusing (Envision, 2016[54]). There are many programmes and sources for information available to managers and leaders, and it can be difficult to navigate through these options, resulting in a lack of clarity about the relevance and benefits of courses for businesses. The Success through Skills strategy (2011[8]) tried to address this issue to some extent, by proposing the Integrated Framework for Management and Leadership, which could have improved clarity about provision and ensured a better connection between SMEs and training, but this framework was never fully implemented.
To improve access to information on management and leadership programmes, a central location with all learning and training programmes (e.g. providers, provision levels and options, delivery models, costs and duration and outcomes) could be beneficial for many managers and leaders (Envision, 2016[54]). This could also potentially include reviews to give managers and leaders the option to share their experiences with the programmes. There are already several websites in Northern Ireland that could be considered central portals for businesses. Nibusinessinfo.co.uk is the main website for business advice and support, and it hosts a tool (the “business support finder”) to help businesses find necessary support (Invest NI, 2020[57]). While the tool provides extensive information on many support programmes, it is not possible to select training and skills programmes specifically for managers and leaders, and it does not include programmes that are not publicly funded. Moreover, there are some indications that the overview of business support programmes is not completely up-to-date. The Invest NI website also provides an overview of programmes, but this does not include programmes for non-Invest NI customers. Moreover, there are indications that both websites are not regularly consulted by employers – for advice or help on skills and training-related issues: about 1% of employers indicated having used nibusinessinfo.co.uk, and 4% used the Invest NI website in 2016 (Department for Education, 2017[58]).
Given the importance of management and leadership capabilities and the clear lack of clarity on provision, especially for the smallest businesses, the OECD believes that a separate webpage on either nibusinessinfo.co.uk or the Invest NI website, with centralised information on learning and training programmes for managers and leaders, could be beneficial for Northern Ireland.
Box 4.3. Relevant national example: Raising awareness by stimulating a national conversation
Management 4.0: An example from the UK
Launched in 2019, Management 4.0 by the Chartered Management Institute (CMI) is a national conversation about the skills the next generation of managers and leaders will need in a workplace and world transformed.
With a national conversation, the campaign hoped to better understand what the Fourth Industrial Revolution will mean for the management profession, and what new skills and knowledge need to be taught both existing and future leaders. The campaign identified six main areas: technology; society; patterns of work; business; leadership; and lifelong learning. Separate discussion papers on each of these areas were published one by one. As part of the campaign, CMI will be undertaking research and hosting events over the year and partnering with a number of organisations to develop clear, robust recommendations for government, employers, managers and leaders to ensure they are well-prepared for the future.
Source: CMI (2019[51]), “Management 4.0: Developing the next generation of managers and leaders”, https://www.managers.org.uk/campaigns/management-40.
Recommendations for raising the motivation to participate in lifelong learning for current managers and leaders
3.3. Launch a new campaign to highlight the importance of management and leadership capabilities, emphasising its benefits and promoting strong performers, and targeted to small businesses. To support the implementation of the strategy for management and leadership (see Recommendation 3.1), the government of Northern Ireland, with a leading role for DfE, should launch a new campaign on strong management and leadership. This campaign should apply a proactive and local approach to target small businesses, supported by launching targeted online campaigns (e.g. via social media), co-ordinated by the regional skills hubs (see Chapter 5), and with an emphasis on sharing success stories and awards (e.g. giving a higher profile to business champions). The campaign should mobilise many relevant stakeholders, including the Northern Ireland Chamber of Commerce and Industry, Regional Offices of Invest NI, and Local Enterprise Agencies from Enterprise Northern Ireland.
3.4. Centralise all information on management and leadership programmes in one location within nibusinessinfo.co.uk or the Invest NI website. To complement the campaign on management and leadership (see Recommendation 3.3), and to reduce confusion about the current provision and relevance and benefits of available programmes, DfE and Invest NI should create a central location with all relevant information on management and leadership development provision. This should be part of, or hosted by, either nibusinessinfo.co.uk or the Invest NI website, and could comprise information on providers, provision levels and options, delivery models, costs and duration, and outcomes. The information should be easy to navigate, well-promoted, regularly updated, the only website that combines this information and linked to other websites with businesses support. Potentially, it could also include reviews of programmes to give managers and leaders the option to share their experiences.
Minimising barriers to participate in lifelong learning for managers and leaders
To develop a culture of lifelong learning for managers and leaders, Northern Ireland should aim to strengthen training and learning opportunities. In addition to raising awareness and the motivation to benefit from these opportunities, this would also require addressing a number of other barriers that restrict uptake.
The most important barriers to participation in training for managers and leaders are related to the time and location of the offered training. For two out of five managers who did not participate in training, the reason was that they were too busy at work. For one out of five managers, the reason was that courses were being offered at an inconvenient place or time [calculations based on PIAAC (OECD, 2019[7])]. To make training more accessible for managers, Northern Ireland should aim to have a flexible training offer. However, as shown in Table 4.1, there are already various short, part-time and online management and leadership courses available in Northern Ireland (e.g. by the Institute of Leadership and Management (ILM), the Open University, the Centre for Flexible Education by the Ulster University and more). In Chapter 3, flexibility of the training offer is discussed in detail, and the potential of expanding short-term modular and blended learning, especially in further education (FE) colleges, is highlighted. For managers, especially in SMEs, this could be relevant, as well as the promotion of online training (see Box 4.4).
Employers and stakeholders consulted during the project also indicated that for many businesses, in particular for micro and small businesses, the cost of training is one of the main barriers to participation. Management and leadership programmes generally still come at a significant cost, and as explained in Chapter 3, a lack of funding for training is a challenge for many businesses (Department for Education, 2017[14]). The smallest businesses, in particular, do not have funding available for training. For example, only 18% of businesses with 2-4 employees have a training budget, compared with 78% of businesses with 100-249 employees (Department for Education, 2017[14]). There are good examples of funding sources that could be used by managers and leaders (e.g. the Skills Growth Programme and Skills Advancement Grant by Invest NI, and the Skills Focus programme by DfE). However, stakeholders advised that this support is inadequate, especially for small businesses. These businesses sometimes do not meet the required criteria for these funding opportunities, are not aware that they exist, or lack the capacity to apply for them. There is also a UK-wide tax deduction available for costs related to education and training, but there appears to be a lack of clarity about its use for management and leadership training – review is case-by-case, and applicants need to prove that the training is linked to their current work.
To address these financial barriers, different options could be considered. First, the government could assign management and leadership training a higher priority and, ideally, raise the overall budgets for support measures, especially ones targeted at the smallest businesses. As part of the last strategy for leadership and management Leading to Success (Department for Employment and Learning, 2007[44]), sustainable funding of approximately GBP 2-3 million per year was available for management and leadership programmes, but this budget has decreased in recent years. Second, Northern Ireland should ensure that funding is allocated to the most effective programmes with the highest impact. To optimise the output of government investment in management and leadership programmes, funding should target the groups most in need, should be distributed efficiently and effectively and deadweight losses should be avoided (e.g. where employers willing to invest in training regardless of support, still benefit from support programmes). Responding to these challenges, an impact analysis of all existing measures could be a good starting point, as well as strong monitoring and evaluating of programme outcomes. Based on discussions with stakeholders, potential outcomes of this impact analysis could be to consolidate funding measures and to introduce a subsidy for management and leadership targeted at small businesses.
An additional barrier to participation in management and leadership programmes for some businesses is the absence of relevant training programmes, or not being able to enrol in them. Programmes are generally tailored to a specific type of business, and many programmes appear to focus on start-ups and support for entrepreneurs (e.g. the Exploring Enterprise Programme by Enterprise Northern Ireland), innovative SMEs with an international focus (e.g. Invest NI Leadership Development Programmes), or the director level (e.g. programmes by the IoD). There are only a few programmes that target micro and small enterprises (Envision, 2016[54]). While acknowledging the success of many management and leadership programmes, stakeholders suggested that a large group of businesses outside the scope of these programmes is not well served; i.e. primarily locally operating, small businesses. For many of these businesses, opportunities are partly limited because they do not meet the requirements for some programmes. For example, to become an Invest NI customer, a firm needs a turnover of GBP 250 000 per annum within five years, and have at least 25% of sales outside of Northern Ireland.
To address this gap in provision, Northern Ireland should consider introducing new management and leadership programmes targeted at small businesses; expanding the supply of existing programmes for these businesses; or expanding the scope of existing programmes by revising the criteria for participation. There are a number of organisations that do provide management support to micro-enterprises (e.g. Enterprise Causeway), but their overall impact remains limited. There was an initiative in the past that aimed to address this issue – the proposed programme for Leadership and Management Development in Northern Ireland Micro-businesses – but it was never fully implemented (see Box 4.4) (BIS, 2012[59]).
Box 4.4. Relevant national and international examples: Flexible and targeted management and leadership programmes for SMEs
Online management programmes: An example from Poland
The Polish Agency for Enterprise Development (PARP) has a number of online programmes for managers. For instance, PARP introduced the PARP Academy, which is an e-learning platform that offers 50 free online training sessions tailored to the needs of the SME sector. The sessions are in four thematic areas related to setting up and running a business. Since 2006, over 180 000 participants have benefited from PARP Academy training.
Leadership programme targeted to small businesses: An example from the UK
Responding to a lack of trusted training provision targeted at SME business managers, the UK committed up to GBP 11 million to create a Small Business Leadership Programme in 2019. The programme looks to provide management training to 2 000 small business leaders in its first year and aims to scale up to reach 10 000 beneficiaries by 2025. This programme is intended to be flexible and focused on the specific issues facing SME managers, building on existing training programmes (e.g. Be the Business’ “Productivity through People”). The programme will be part of a package of measures aiming to assist businesses in improving their productivity (e.g. strengthening local networks for business improvement, getting businesses signed up to mentoring programmes, etc.).
Leadership programme targeted to small businesses: An example from Northern Ireland
In 2012, the Department for Employment and Learning planned to launch the programme Leadership and Management Development in Northern Ireland Micro-businesses. Recognising that it is difficult for micro-businesses to invest in management and leadership development, this programme aimed to develop new delivery models for management and leadership development in micro-businesses. There is, however, no evidence that this programme has been fully implemented. According to DfE representatives, funding was the main barrier for its implementation.
Source: OECD (2019[60]), OECD Skills Strategy Poland: Assessment and Recommendations, https://dx.doi.org/10.1787/b377fbcc-en; UK Government (2019[61]), Business Productivity Review, https://www.gov.uk/government/consultations/business-productivity-review-call-for-evidence; BIS (2012[59]), “Leadership and management in the UK: The key to sustainable growth”, http://www.hm-treasury.gov.uk/ukecon_growth_index.htm.
Recommendations for minimising barriers to participate in lifelong learning for managers and leaders
3.5. Raise financial support and allocate funding efficiently to reduce financial barriers to participation in management and leadership programmes. The government of Northern Ireland (especially DoF, DfE and DE), should give management and leadership training a higher priority and, ideally, raise the overall budgets for support measures, especially ones targeted at small businesses. The government of Northern Ireland should also ensure that funding is allocated to the most effective programmes, i.e. targeting the groups most in need, distributed efficiently and effectively and avoiding deadweight losses. As part of the development of the strategy for management and leadership (see Recommendation 3.1), an impact analysis of all existing measures, and effective monitoring and evaluating of programmes, could be a good starting point. Northern Ireland could consider consolidating these funding measures and introducing a subsidy for management and leadership programmes targeted at small businesses.
3.6. Ensure sufficient provision of management and leadership programmes for micro and small businesses by introducing new programmes or expanding existing ones. Responding to the gap in management and leadership development provision for micro and small businesses, and as part of the renewed strategy for management and leadership (see Recommendation 3.1), DfE and business support organisations (e.g. Invest NI) should consider introducing a new management and leadership programme targeted at micro and small businesses (e.g. by implementing the programme for Leadership and Management Development in Northern Ireland Micro-businesses that was planned back in 2012); expanding the supply of existing programmes for these businesses; or expanding the scope of existing programmes by revising the criteria for participation (e.g. Invest NI turnover and export requirements). The impact analysis of programmes (see Recommendation 3.5) could be a good starting point for making decisions on how to expand provision for micro and small businesses. This could be linked to the establishment of a centralised support initiative or strand of programmes targeted at micro and small businesses (see Recommendation 3.14).
Opportunity 2: Developing engaging and empowering workplaces
In addition to management and leadership, the skills and attitudes of the workforce need to be considered when transforming workplaces to better use skills in workplaces and reduce skills under-utilisation. Without the buy-in and support of employees, the adoption of HPWP could be more difficult to achieve (OECD/ILO, 2017[5]). An empowered workforce, which is motivated to develop and optimally use skills, and is willing to actively contribute to the success of businesses, could play an important role in workplace transformations by driving innovation and growth from the bottom up. Northern Ireland could benefit from having a stronger focus on workplaces in their innovation and economic policies, and this should entail policies to develop an engaged and motivated workforce.
Employee engagement is considered one of the main determinants of skills use and productivity, and evidence shows that employees with high levels of engagement achieve higher individual performance objectives. Engaged employees also display higher organisational and citizenship behaviours, more proactive innovative behaviour, lower staff turnover, lower absenteeism levels, and report higher job satisfaction and personal well-being (UKCES, 2014[35]; OECD/ILO, 2017[5]). Stakeholders acknowledge the relevance of employee engagement and ranked it among the top issues to raise skills utilisation.
Employee empowerment and engagement could be enhanced in Northern Ireland. One of the driving forces behind skills under-utilisation in Northern Ireland is a working culture where employees are not motivated to grow and move up in organisations. The most important reason given by employees for being in a position that does not require the full use of their skills sets is that they are not interested in taking on a higher level role (Gunson, Murray and Williamson, 2018[2]). As a result, the career progression rate, measuring the share of employees moving from a low-skilled position to a middle or high-skilled position, is very low, at 2.5%, compared with a 6% UK average (see Figure 4.6). Workers tend to stay in their position in Northern Ireland, with 51% of employees holding the same job for ten years or more, compared with 36% of employees across the UK (CIPD, 2019[16]). Stakeholders advised that many employees still expect to have a job for life and that they are not motivated to work on developing their career. To some extent, the low motivation to progress in workplaces is also linked to the overall culture of risk aversion, as discussed in Opportunity 1.
Figure 4.6. Progression rates between skill levels for UK regions, 2013-17
Note: Denominator is all workers in low-skilled occupations in the first quarter of each wave. January–June 2013 to July–December 2017.
Source: Institute for Public Policy Research (IPPR) Scotland calculations using ONS (2018[62]), “Two-quarter Longitudinal Dataset”, Labour Force Survey, various quarters.
Job satisfaction could be an important motivation for employees since it is positively associated with better employee performance, skills use and productivity. However, in Northern Ireland, a significant share of employees is not satisfied with their job, with 43% of workers indicating unhappiness in their current roles (Investors in People, 2017[63]). Workers in Northern Ireland are also comparatively dissatisfied with pay – 41% agree they are “appropriately” paid, compared with the UK average of 45% – and they are least likely of UK countries to report a good relationship with their line manager/supervisor (71% report this is good overall, compared with a 76% UK average) (CIPD, 2019[16]).
Raising engagement and empowerment of employees in the business sector
To empower employees, raise their engagement and improve their low motivation to take on higher-level roles more in line with their skills and qualifications, businesses in Northern Ireland should raise the adoption of HPWP, especially the ones related to benefits, career progression and performance measurement. For Northern Ireland, this is particularly challenging, given that the economy is characterised by SMEs, which often lack resources, capacity and a dedicated human resources (HR) function (OECD/ILO, 2017[5]).
Northern Ireland should strengthen workplace practices that promote and support flexibility and mobility in businesses. To ensure that employees can move to a job better matched with their skills set, businesses should aim for a certain level of flexibility and mobility, making it easier for employees to move within the organisation. In addition to upward mobility, the allocation of skills could also be improved through horizontal mobility within the organisation. This way, the worker moves to a job at a comparable level, but that is better matched with his/her skills set. Various workplace practices could support this horizontal and vertical mobility in organisations. For instance, job shadowing, where an employee can spend time learning through watching others perform a job, is an effective way to learn about different jobs. Moreover, stretch assignments, where the employee performs tasks beyond existing expertise, and supervision of employees over time, are known to have a positive impact on unleashing the potential of employees. However, only 22% of businesses in Northern Ireland indicate having adopted work shadowing, stretch assignments or supervision over time (Department for Education, 2017[14]).
Employees could also be motivated through a range of other HR practices and people management approaches. However, compared to other UK countries, Northern Ireland is showing comparatively weak performance in the adoption of many types of these practices. For example, only 9% of businesses have a formal process in place to identify high potential or talented individuals (as opposed to 15% across the UK); 49% of employers set employees’ objectives at the beginning of the year (vs. 56% across the UK); and 43% have an annual performance review in place for all staff (compared with 53% across the UK) (Department for Education, 2017[14]). Workers in Northern Ireland are also not very likely to say that their job offers good opportunities to develop their skills (31% vs. 25% UK average) or careers (46% vs. 41% UK average (CIPD, 2019[16]).
Providing financial incentives, such as individual and group performance-based bonuses, could also help to empower employees. However, as discussed in the performance section, compared to other parts of the UK, most types of pay and incentive schemes are relatively uncommon in Northern Ireland and are most often applied only in the largest businesses (Department for Education, 2017[14]). Incentives could also be effective when targeting managers and leaders – for example, managers’ rewards could be linked to their performance on people management, ideally assessing performance for specific objectives and measured by key performance indicators (KPIs) (CBI, 2019[64]).
Ensuring that employees are involved in company decisions regarding workplace transformation and the values and purpose of the organisation, also has the potential to boost employee engagement (OECD/ILO, 2017[5]; CBI, 2019[64]). Employees in Northern Ireland do feel more involved and informed than employees in other parts of the UK, 42% report that their managers are good at listening to their ideas and suggestions, compared with 37% in the UK (CIPD, 2019[16]). Stakeholders, however, did express support for expanding the adoption of staff engagement groups. These groups of employees could participate in discussions on specific organisational topics, potentially across areas and all tiers and grades.
Strengthening the adoption of all these workplace practices requires a broader cultural change. Employers should aim for so-called “high-road strategies”, where employees and their skills are viewed as an integral part of a business’ competitive advantage, rather than “low-road” strategies, where labour is considered a commodity and a cost to be minimised (OECD/ILO, 2017[5]). This could have the potential to raise the engagement and motivation of employees to contribute to the success of the business, invest in skills development (including by inspiring leadership, as also discussed in Chapter 3) and effectively use skills.
Raising awareness of the relevance of empowering and engaging the workforce could stimulate such a broader cultural change among managers and leaders, especially in the smallest businesses. To this end, the benefits of valuing and encouraging staff for business performance and growth could be emphasised in campaigns (OECD/ILO, 2017[5]). There are already a number of relevant campaigns in Northern Ireland for HR practices and people management. Most notably, Investors in People (IIP) is an accredited standard for people management, with yearly awards in Northern Ireland. Moreover, the National Training Awards recognise and celebrate IIP accredited organisations that have delivered outstanding organisational benefits by directly linking employee training needs to business needs. The CIPD also has the yearly NI Awards, which recognises organisations for their contribution to HR and People Management. The proposed campaign on management and leadership (Recommendation 3.3.) could emphasise and acknowledge the relevance of these awards, campaigns and accreditations.
The effective dissemination and centralisation of information could also contribute to greater awareness of the need to empower and engage the workforce, and could help managers and leaders with the implementation of relevant workplace practices. Information on workplace practices should be concrete, applicable and relatable, including by showing examples of good and bad practices. Nibusinessinfo.co.uk (Invest NI, 2020[57]) already includes extensive, practical guides on how to engage employees and how to increase staff performance, and there is a long list of case studies organised by different categories. However, as mentioned, more could be done to promote the use of nibusinessinfo.co.uk, since it appears to have a low-intensity take-up among businesses (Department for Education, 2017[58]).
Northern Ireland could also raise awareness of employee engagement and empowerment by introducing a charter or pledges for businesses, where individual businesses or employer organisations formally endorse principles concerning employees and their working conditions. In Scotland (United Kingdom), for instance, the Scottish Business Pledge (see Box 4.5) gives businesses the incentive to improve workplace and job quality by signing up to a number of pledges linked to fairness, equality and sustainable employment. In Wales (United Kingdom), a Fair Work Commission recently recommended introducing a Fair Work Wales standard, with the condition that public money could only be spent on organisations that fulfil, or are working towards fulfilling, the commission’s definition of fair work (Fair Work Commission, 2019[65]). Led by DfE, the Northern Ireland Statistics and Research Agency (NISRA) is currently developing a “Better Jobs Index”, which will be a new set of government indicators, with measures on earnings quality and job security. Findings based on this index, as well as principles underlying the index, could serve as a basis for such a charter or pledge.
Northern Ireland could also consider introducing stronger incentives to adopt these HR practices and to strengthen people management, including by raising the profile of various quality marks such as IIP. Only 15% of firms are accredited with the IIP standard and this concerns mainly the largest businesses – 49% of businesses with over 100 employees are accredited, compared with 10% of businesses with 2‑4 employees (Department for Education, 2017[14]). To afford accreditations such as IIP a more prominent role, the Northern Ireland Government could consider making these accreditations a requirement for receiving support; an idea supported by many stakeholders. For example, Invest NI could include accreditation on their list of requirements to become an Invest NI customer. To avoid this requirement becoming an additional barrier to support programmes for micro and small businesses, it should primarily target the larger businesses that generally do have the resources, capacity and dedicated HR function that allows them to adopt strong HR and people management practices.
Employee representative structures could further strengthen employee engagement as they play an important role in influencing firms’ investment in staff. For example, data from the Survey of Adult Skills (PIAAC) show that institutions with strong collective bargaining and unionisation are associated with higher utilisation of workers’ skills in the workplace (OECD/ILO, 2017[5]). Northern Ireland could enhance these structures: 40% of businesses have a formal procedure in place for employee consultation, compared with 42% on average around the UK, and 48% in Scotland (Department for Education, 2017[14]). However, there is a widely shared belief that a system with strong social partnership and tripartite decision making, as exists elsewhere in Europe, would not work in the Northern Ireland and UK context (see also Chapter 5). This is despite there being some good examples in, for example, Scotland (Keep, 2016[23]). While formal employee representative structures will not receive much support in Northern Ireland, there might be an opportunity to expand the role of organisations that aim to strengthen employee‑employer relations. Some stakeholders and government representatives suggested that the Labour Relations Agency, which already plays an important role in strengthening employment relations, could potentially expand their activities to create better working cultures.
Box 4.5. Relevant international examples: Programmes to raise employee empowerment
A pledge of businesses: An example from Scotland
In Scotland, employers can sign up for the Scottish Business Pledge, which is a values-led partnership between government and business that is based on boosting productivity and competitiveness through fairness, equality and sustainable employment. A commitment is voluntary and free to make. Employers need to meet the three core elements of paying the real living wage, only using zero-hours contracts in appropriate ways, and taking action to address the gap in pay between genders. In addition, employers are asked to commit to achieving five of seven additional pledge elements over time, including, for instance, workforce engagement. As of January 2020, 722 businesses signed up to the pledge, accounting for over 127 225 jobs (5.1% of all jobs in Scotland).
Workplace development programmes: An example from Finland
The Finnish programmes TYKE (1996-2003) and TYKES (2004-10) aimed to promote the introduction of organisational innovations, contributing to improvements in workplace productivity and the quality of working life through tailored and demand-based activities. More than 1 800 projects were funded, involving nearly 350 000 employees and some EUR 106 million of public funding. The most common areas of focus for the development projects were work processes, the organisation of work and the development of HR management and supervisory work. Project implementation was in close co‑operation between management and employees, and external experts were involved in each project. A majority of managers and staff expressed that the projects had positive impacts on the operational performance of the workplace and quality of work. The programmes were especially successful in raising public awareness of the importance of workplace change and innovation; in boosting development activity among a large group of workplaces including SMEs; and more generally in strengthening expertise in workplace development and research on working life among universities, research institutes and other R&D organisations.
Source: Scottish Government (2020[66]), “Scottish Business Pledge”, https://scottishbusinesspledge.scot/; Lorenz, E. and J. Potter (2019[22]), “Workplace organisation and innovation in small and medium-sized enterprises", https://dx.doi.org/10.1787/11732c0c-en.
Recommendations for raising engagement and empowerment of employees in the business sector
3.7. Promote a business culture where employers value and encourage employees by raising awareness of relevant workplace practices and the benefits of an empowered and engaged workforce. DfE and related business support organisations (including Invest NI) should raise awareness among managers and leaders about the benefits of empowering and engaging the workforce (e.g. productivity, motivation, job satisfaction), by highlighting it in the proposed strategy and campaign on management and leadership capabilities (Recommendations 3.1 and 3.3). Like the broader campaign, it should be targeted at small businesses through a local approach, and emphasise the promotion of business champions. Moreover, the campaign should highlight the benefits and raise the profile of existing accreditations, such as IIP. The campaign should also be accompanied by the dissemination of practical information and tools to facilitate the implementation of relevant HR practices and people management (e.g. work shadowing, stretch assignments, supervision over time, career progression plans, talent development, performance review, performance-based salaries). To this end, the government and business support organisations should raise the profile of guides and examples presented on nibusinessinfo.co.uk, including by promoting it in the management and leadership campaign.
3.8. Introduce a charter or business pledge where employers formally endorse principles concerning employees and their working conditions. The Northern Ireland Government, with a leading role for DfE, and/or related business support organisations could consider introducing a charter or pledge for employee engagement and empowerment, where businesses and organisations formally endorse a number of principles concerning employees and their working conditions (e.g. supporting progressive workforce engagement, pay a living wage, etc.). The charter and/or pledge could be on a voluntary basis and for individual businesses (e.g. a pledge based on the Scottish Business Pledge), where the pledge functions as a quality mark. Alternatively, the charter or pledge could target organisations that work with businesses (e.g. business or employer organisations) to endorse principles related to employees in all their activities.
3.9. Make quality marks (e.g. Investors in People [IIP]) a condition for medium- and larger sized businesses to benefit from business support programmes. The Northern Ireland Government and related business support organisations could consider raising the profile of various quality marks, and/or the proposed charter or business pledge (Recommendation 3.8), by making it a condition for benefiting from business support programmes. To avoid it becoming an additional barrier to support programmes for micro and small businesses, it should primarily target the larger businesses that generally do have the resources, capacity and dedicated HR function that allows them to adopt strong HR and people management practices. For instance, Invest NI could potentially add IIP accreditation to their list of requirements for becoming a customer with Invest NI. Beyond raising awareness (as proposed in Recommendations 3.7 and 3.8), this would create a stronger incentive for businesses to adopt HR and people management practices that benefit employee engagement and empowerment.
Raising engagement and empowerment of civil servants
Northern Ireland should ensure that the Northern Ireland Civil Service (NICS) is at the forefront of employee engagement and empowerment. To that end, the NICS should aim to become a leader in the adoption of new technologies and workplace practices. Increased adoption of these workplace practices could improve the effectiveness, quality and efficiency of government, which could make the public sector a catalyst for innovation. Furthermore, strong workplace practices in the public sector could display strong leadership and strategic direction and could set a good example to the business sector. In the context of a comparatively large public sector (25% of output, compared with 17% in the UK in 2017 (OECD, 2019[67])), the benefits of engagement and empowerment of civil servants are especially important for Northern Ireland. Stakeholders, many of whom were from government organisations, generally showed very strong support for recommendations on the role of the public sector and skills use.
There are indications that much could be done to improve employee engagement and empowerment in the NICS. Skills under-utilisation is particularly high in public administration – 44% indicate having workers with both qualifications and skills more advanced than required, compared with 37% across all sectors. This could be driven by overall low morale among civil servants and a lack of confidence in leadership in the public sector (OECD, 2016[47]). An Employee Engagement Index in the yearly NICS People Survey – ranging from 0% “strongly disagreeing” to 100% for “strongly agreeing” with a range of underlying statements – aims to quantify and summarise these sentiments. While the Employee Engagement Index (EEI) increased in recent years, from 46% in 2009 to 51% in 2018, this score is much lower than the 62% found in the UK civil service (see Figure 4.7) (NISRA, 2019[68]; Cabinet Office, 2018[69]). In the NICS, a comparatively small share of employees feels strong attachment to their department, and not many civil servants feel inspired by their department to do their best work.
In related engagement themes, there are large differences in performance. Civil servants are highly interested in their work (82%), they feel challenged (74%), and they are, on average, positive about their manager (64%) and their team (72%). However, the NICS scores particularly low in themes related to pay and benefits (35%), leadership and managing change (33%) and learning and development (44%). Worryingly, only a small share indicates that there are opportunities to develop their career in the department (35% compared with 48% in the UK Civil Service). Differences exist between departments, but general trends appear to be similar. A few government organisations stand out in comparatively strong performance, including Invest NI, which scores comparably with the UK Civil Service (OECD, 2016[47]).The public sector is also not yet a leader in the adoption of new technologies and workplace practices. For instance, while the use of ICT skills in the public sector is comparable with the OECD average, it is far lower than in ICT, financial and professional sectors [calculations based on PIAAC (OECD, 2019[7])].
Figure 4.7. Employee Engagement Index and engagement themes for the Northern Ireland Civil Service, 2018
Scores ranging from 0% (“strongly disagree”) to 100% (“strongly agree”)
Note: The Employee Engagement Index and engagement themes are based on the weighted average of a number of underlying questions.
Source: NISRA (2019[68]), NICS People Survey 2018, https://www.finance-ni.gov.uk/publications/nics-people-survey-results; Cabinet Office (2018[69]), Civil Service People Survey 2018, https://www.gov.uk/government/publications/civil-service-people-survey-2018-results.
The government of Northern Ireland acknowledges the challenges related to employee engagement and empowerment in the NICS, as well as the weak adoption of technology, and recent years have seen a number of strategies aimed at addressing these issues. In the Innovation Strategy, as part of the dimension on “cultural change”, the strategy proposed to move towards a more innovative and open public sector by developing a new public sector reform programme (Northern Ireland Executive, 2014[11]). A number of actions are proposed, including the appointment of “Innovation Champions” within government, greater use of partnerships and secondments, and innovation and creativity as part of training programmes.
The NICS also has an ambitious NICS People Strategy for 2018-2021 (NICS, 2018[70]), which, after centralising HR functions in 2017, presented a shared view of the people priorities across the NICS under four themes: 1) a “well-led NICS”, including targeted actions to support managers and leaders; 2) an “outcome-focused NICS”, including actions on how the NICS engages with staff and their contribution to the delivery of outcomes; 3) a “high-performing NICS”, including actions on new and flexible ways of working, strategic workforce planning and recruitment and vacancy management; and 4) an “inclusive NICS”, including actions to drive balance and inclusion.
There are other examples of Northern Ireland’s efforts to raise the performance of its civil service. In 2014, the NICS launched a new competency framework, and its implementation in all NICS departments and agencies could help to ensure all civil servants are managed under the same overall expectations, which should reduce barriers to staff mobility (OECD, 2016[47]). There are also examples of strong innovation and excellence in the NICS – for example, the Enterprise Shared Services (ESS) initiative, which delivers whole-of-government services for finance, HR, property, and ICT needs across the NICS. This is considered good practice for its customer-centric service delivery and value-added services, showing a culture of continuous improvement and innovation as well as value marketing (Mingay and Kost, 2015[71]).
However, Northern Ireland could do more still to raise overall performance through better engagement and the empowerment of its civil servants (see Box 4.6 for international examples of actions to raise performance of civil servants). To improve performance of the NICS in the context of workplace practices and conditions, the OECD made a number of recommendations in 2016 (OECD, 2016[47]), and several recommendations are still relevant, especially in the context of empowering and engaging civil servants. First, the NICS could strengthen a management and leadership culture that values employee engagement and empowerment. A cultural change is needed, and the NICS could achieve this by strengthening overall leadership development, including by reviewing training programmes to ensure that programmes focus on the development of the “right” skills for this cultural change (e.g. soft skills, team building, monitoring and evaluation), and by encouraging mobility across the public sector (e.g. by encouraging secondments). Second, the NICS could empower employees by putting more emphasis on skills development (e.g. through peer-to-peer learning, work shadowing, external training, etc.) and by giving them more autonomy to make decisions and to structure work, so as to increase performance and innovation.
Furthermore, both the Innovation Strategy and the NICS People Strategy for 2018-2021 address many of the challenges for the NICS, and effectively implementing the proposed actions would be highly beneficial in raising employee engagement and empowerment. To support this process, Northern Ireland could consider strengthening implementation by including measurable outcome-based targets that are understood and supported by all stakeholders, and which could enhance monitoring and evaluation of the strategies. The NICS People Strategy 2018-2021 includes a long list of broad actions, and while it does mention the relevance of monitoring and evaluating, it does not provide details on how to achieve this. To support implementation, Northern Ireland could consider setting specific targets, potentially based on indicators included in the NICS People Survey (e.g. increase the Employee Engagement Index x% by 2021). The Innovation Strategy already emphasises measuring progress through a number of indicators, but none of them is directly linked to the actions described to bring about a cultural change.
Box 4.6. Relevant international example: Using strategic HRM to drive public sector innovation
Raising public sector innovation: Examples from Australia and Belgium
In Australia, the Awards of Excellence in Public Sector Management reinforces the message that excellence in management and innovation are consistent with each other and that innovation needs to be a central consideration of everyday public management. The award included innovation as a key component of all the excellence awards (a main criterion is “innovation in the design and/or delivery of the products, services and processes”) and there is a separate innovation award.
In Belgium, the Innovation Learning Network aims to coach innovative projects and to create an environment where civil servants can help and learn from each other. The learning network operates at the moment in 14 government organisations, with 20 projects and about 50 civil servants. Participants are encouraged to become better at understanding the goals of government and society, recognising restrictive patterns, co-creation with stakeholders, multidisciplinary working, following trends and more.
Source: OECD (2016[47]), Northern Ireland (United Kingdom): Implementing Joined-up Governance for a Common Purpose, http://dx.doi.org/10.1787/9789264260016-en.
Recommendation for raising engagement and empowerment of civil servants
3.10. Develop a NICS management and leadership culture that supports employee engagement, by strengthening management training, enhancing internal mobility and adopting HPWP. To strengthen employee engagement and empowerment in the NICS, a cultural change is needed. To stimulate this, the government of Northern Ireland should make the training of managers and leaders in the civil service a higher priority. The NICS should review existing training programmes to ensure that they focus on the development of the “right” skills sets for this cultural change (e.g. soft skills, team building, monitoring and evaluation). The NICS should also encourage mobility across the public sector, including by promoting secondment opportunities. To stimulate the cultural change, Northern Ireland should put more emphasis on adopting HPWP, such as training and learning on the job, work flexibility and autonomy.
3.11. Strengthen the implementation of proposed actions in the Innovation Strategy and NICS People Strategy 2018-21, by raising their granularity and including outcome-based targets. To raise the engagement and empowerment of civil servants, Northern Ireland should build on the many proposed actions for the civil service in both the Innovation Strategy (e.g. introducing “Innovation Champions” in the NICS) and the NICS People Strategy 2018-21 (e.g. improve performance management systems and guidance in the NICS), by strengthening their implementation. The government of Northern Ireland could consider raising granularity of some of the actions and include measurable outcome-based targets to enhance monitoring and evaluation of the strategies. For example, to support implementation, Northern Ireland could consider setting specific targets with related actions, potentially based on indicators included in the NICS People Survey (e.g. increase the Employee Engagement Index x% by 2021).
Opportunity 3: Strengthening support structures for businesses
Northern Ireland should aim to move towards more high value-added activities, and enable sustainable long-term growth through the better performance of firms of all sizes and in all regions. To achieve this objective, better skills utilisation through a transformation of workplaces is essential, supported by strong management and leadership and an engaged, empowered workforce (as discussed in Opportunities 1 and 2). However, to optimise the impact of these and other efforts, Northern Ireland should ensure that the overall support structures for businesses are effective and efficient.
Better skills utilisation and workplace transformation require a pro-active approach by governments. The government needs to help and incentivise businesses by providing effective and efficient support for strengthening workplace practices, competitiveness, innovation and growth realisation. This is particularly relevant for SMEs, which often lack the resources and know-how to improve workplace performance (OECD/ILO, 2017[5]). SMEs also require more support since they are typically more dependent on their local business ecosystem, and due to their internal constraints, they are more vulnerable to market failures, policy inefficiencies and inconsistencies (OECD, 2018[72]). As a result, effective and efficient support structures for businesses will be even more important in the context of an economic shock following the COVID‑19 pandemic.
Providing targeted support to businesses
The government of Northern Ireland directly or indirectly runs or finances a long list of business support programmes in different forms, from financial assistance to expert advice, and targeting different groups of businesses, from start-ups to large, international businesses (see overview in Table 4.2). To address Northern Ireland’s economic growth, innovation and productivity challenges, and to complement the support measures discussed in previous opportunities, this section will assess business support from a broader perspective, including its organisation and structures.
Various governmental and non-governmental organisations run business support programmes, including Invest NI (e.g. Collaborative Growth Programme, Innovation Vouchers), DfE (e.g. InnovateUS), Enterprise Northern Ireland (e.g. Exploring Enterprise Programme), InterTradeIreland (e.g. Trade Accelerator Vouchers), Innovate UK (e.g. funding for innovation), Northern Ireland Chamber of Commerce and Industry (e.g. NI Chamber International Hub), Enterprise Europe Network (e.g. Innovate to Grow), Catalyst (e.g. Springboard) and many district councils run initiatives for businesses at the local level. Despite the generous offer of business support programmes, Northern Ireland could further enhance its support for businesses in a number of ways.
Table 4.2. Business support programmes for growth, productivity and innovation in Northern Ireland
Note: Please note that this is not a complete list, but only highlights the main programmes related to support for business growth and innovation in Northern Ireland.
Expanding mentoring and coaching programmes could help raise the overall impact of business support. To ensure that business support programmes have the highest impact, they must be targeted and tailored (OECD, 2018[73]). Different types of businesses (e.g. by firm size, age, stage of development and sector) require different types of support. While larger businesses could benefit most from more tailored and specialist advice, the smallest businesses could benefit most from getting the basics right, including management best practice and the adoption of new low-risk technologies (OECD, 2018[73]). Mentoring and coaching programmes are by their nature targeted and tailored and are often most successful in changing organisational practices (OECD/ILO, 2017[5]). Invest NI has already launched a mentoring scheme that provides a business mentor to help improve the capability and growth of businesses, and other organisations also provide mentoring and coaching opportunities. However, based on consultations with stakeholders, there appears strong support for expanding the scope of existing mentoring and coaching programmes, especially for SMEs (OECD, 2019[37]; Johnston et al., 2019[27]).
Businesses also should be made aware of the relevance and benefits of mentoring and coaching programmes, for instance, by highlighting it in the proposed campaign targeted at managers and leaders (see Recommendation 3.3). Furthermore, to enhance the uptake from businesses in these programmes, participation could be made obligatory for businesses that receive financial support for growth or innovation from the government (see Box 4.7 for international examples). However, to avoid it becoming a barrier to benefitting from support programmes for smaller businesses, these requirements should mainly target larger businesses. Northern Ireland could also consider providing opportunities to match businesses with each other to stimulate business-to-business mentoring and coaching.To increase the effectiveness of support measures, a differentiated approach could be beneficial (OECD, 2018[73]). A challenge for Northern Ireland, like most countries, is that many of the businesses that tend to actively demand support and advice are generally the businesses that already perform comparatively well in terms of growth and productivity. Stakeholders emphasised that the businesses that could benefit most from support, e.g. small businesses with low growth and low productivity, are not participating sufficiently. A differentiated approach could help to overcome this issue and ensure targeted and relevant support for businesses. With a differentiated approach, Northern Ireland could reserve the most intensive and specialised support for the most ambitious, larger, high-growth businesses, and offer more widespread and basic support to smaller, low-growth businesses. This would ensure that the larger, high-growth businesses receive the relevant support they need, and it would make basic support more accessible for smaller, low-growth businesses that often lack motivation and face difficulties in finding support.
Such a differentiated approach could be strengthened in Northern Ireland. Invest NI is often considered to have a focus on businesses that already show strong performance – a point largely reinforced by Invest NI’s requirements to become a customer: turnover of GBP 250 000 per annum within five years, and at least 25% of sales outside of Northern Ireland. Stakeholders expressed different views on the focus of Invest NI: while some considered the focus of Invest NI on strong performing businesses to be too narrow, others stated that their programmes were accessible for most businesses (including through its regional offices). There is, however, consensus among stakeholders that many micro and small businesses, especially the ones with low-growth and low-productivity, do face barriers in receiving relevant support.
Many micro and small businesses are not benefitting from support programmes because they are not aware of them, or they do not understand the application procedures and benefits. For example, support programmes for automation and innovation (e.g. Innovation Vouchers, and Grants for Research and Development) are considered to be not well understood by many businesses (Johnston et al., 2019[27]). Informing businesses about the many programmes that are available, as well as showing them the benefits, and assisting them with applications by providing practical and accessible guidelines and toolkits, could be a first step to improve clarity. Nibusinessinfo.co.uk, as the main platform for business information, already does this to a large extent, with its integrated “business support finder”. However, as discussed above, the use of this portal is very limited, and Northern Ireland should raise the visibility and overall profile of nibusinessinfo.co.uk. In addition, awareness of business support programmes could also be raised by including business support for growth and innovation in the proposed campaign on management practices targeted at managers and leaders in businesses (Recommendation 3.3). The new regional skills hubs (see Chapter 5) could also play a crucial role in helping small businesses find relevant support.
Northern Ireland could also consider launching digital business diagnostic tools, possibly integrated into nibusinessinfo.co.uk, to assist micro and small businesses in identifying and raising awareness of relevant programmes (OECD, 2018[73]). These tools are an increasingly common way to support SMEs (see Box 4.7 for an international example), and they are especially suitable for providing basic business advice. They could be either generic tools aimed at benchmarking SME productivity and competitiveness or more focused tools on specific areas (e.g. innovation). Innovate NI, an online platform as part of the new Innovation Accreditation Programme by Invest NI, already has an assessment tool as a first step to get a new innovation accreditation. This could be considered a good example and might inspire the development of additional tools, potentially with a broader scope.
Micro and small businesses also face barriers in receiving relevant support because of an under-supply of programmes targeted at this group. Some micro and small businesses cannot find relevant programmes or are not able to participate in programmes because they do not meet the necessary requirements (e.g. Invest NI requirements). Like the gap in management and leadership development provision for micro and small businesses (as discussed in Opportunity 1), and despite some good examples (e.g. some district councils have support programmes that specifically target non-Invest NI customers), the supply of support programmes for growth and innovation targeted at micro and small businesses could be strengthened.
A new, overarching initiative for (or new strand of) micro and small business support, which would centralise and co-ordinate support for micro and small businesses, could be beneficial for Northern Ireland. This would allow support to be better targeted and better aligned with challenges for micro and small businesses, and could also address the gap in management and leadership provision. Moreover, such an initiative could provide targeted measures to address the challenge of continuous growth for businesses in Northern Ireland, as discussed in the performance section. It could help provide business owners with a long-term perspective on their business and present them with a continuous and clear growth pathway.
Such an initiative or strand of micro and small business support could be absorbed by an existing organisation or a new organisation, or implemented by multiple organisations and co-ordinated by a central body. Stakeholders advised that there is no clear agency with responsibility for businesses that are too small to engage with Invest NI, unlike, for instance, in the Republic of Ireland (see Box 4.7). There might be an opportunity to fill this gap by raising the exposure and scope of existing organisations (e.g. Invest NI or Enterprise Northern Ireland). However, for several stakeholders, that would not be considered sufficient, and they proposed the establishment of a new skills body to sit alongside Invest NI as a focal point for micro and small business support and development.
Box 4.7. Relevant international examples: Mentoring, diagnostic tools and growth pathways
Promoting and incentivising mentoring programmes: Examples from the UK and the Republic of Ireland
“Be the Business” is an independent charity with the aim of building a movement of large and small businesses that want to improve their performance and share their experiences to help others do the same. Be the Business provides inspiration, practical tools and free resources for businesses to identify opportunities for improvement and develop proven approaches to boost their productivity through expert analysis and advice from the business community. The UK Department for Business, Energy and Industrial Strategy (BEIS) and HM Treasury are currently challenging the UK’s leading businesses to sign up to the Be the Business “Mentoring for Growth” programme, which is fully funded and has senior-level mentors who share their experience, sector expertise and best practice with SMEs.
Accelerate Ireland also provides a good example of a strong support programme for growth and innovation that links measures to funding. Accelerate is an integrated learning and mentor programme for small businesses that aims to provide them with the leadership, management, business skills and knowledge to achieve sustainability and growth. Participation in this programme has become compulsory for businesses to receive funding from the Enterprise Ireland Competitive Start Fund.
Digital business diagnostic tools: Examples from Singapore
In Singapore, there are a number of online assessment tools for businesses. For instance, the Holistic Industry Productivity Scorecard (HIPS) Calculator (Singapore Business Federation) helps SMEs to understand their performance across ten indicators and shows how they compare to SMEs in other percentiles of the firm distribution. The Scorecard links to further support provided by the Singaporean Government after the diagnostic. Furthermore, the Singapore Smart Industry Readiness Index (Singapore Economic Development Board) scores SMEs against eight criteria across three dimensions (process, technology, organisation). The resulting performance profile helps SMEs to prioritise and implement improvement in smart industry readiness. Finally, the self-assessment tool 2SHERPA focuses on supporting SMEs that aim to internationalise. The tool highlights strengths and weaknesses in the SME’s export capability and potential.
Creating growth pathways: An example from the Republic of Ireland
In the Republic of Ireland, there is a clear division in support for small business, primarily by the Local Enterprise Offices (LEOs), and larger businesses with export potential, primarily by Enterprise Ireland. The result is that the LEOs Offices support micro and small businesses until they progress to establishing a relationship with Enterprise Ireland, resulting in a continuous pathway of support. This is also facilitated by Skillnet, which helps small businesses identify training needs and access training. While the system is considered effective in creating pathways, a risk is that some traditional SMEs fall between support from both organisations.
Source: Be the Business (2020[74]), “Be the Business”, https://www.bethebusiness.com/; OECD (2018[73]), Leveraging Business Development Services for SME Productivity Growth: International Experience and Implications for United Kingdom Policy, http://www.oecd.org/industry/smes/Final%20Draft%20Report_V11.pdf; OECD (2019[75]), SME and Entrepreneurship Policy in Ireland, https://dx.doi.org/10.1787/e726f46d-en.
Recommendations for supporting businesses by providing targeted support
3.12. Raise the impact of business-to-business mentoring and coaching, in particular for SMEs, by promoting and incentivising businesses to participate. Business-to-business mentoring and coaching are effective in changing workplace practices, especially for SMEs. The government of Northern Ireland, with a leading role for DfE, and government organisations that support business (most notably Invest NI), should build on and perhaps expand good existing programmes, such as the Mentoring Scheme by Invest NI, and highlight the importance of mentoring and coaching in the proposed strategy and campaign on strong management and leadership (Recommendations 3.1 and 3.3). To enhance the uptake of SMEs in these programmes, Northern Ireland could incentivise businesses to participate, for instance by challenging businesses to sign up to these programmes and by providing opportunities to match businesses with each other to stimulate business-to-business mentoring and coaching.
3.13. Improve information on business support programmes for growth and innovation, especially for micro and small businesses, including by raising the profile of nibusinessinfo.co.uk and launching diagnostic tools. The government of Northern Ireland, especially DfE, and related business support organisations, should effectively inform businesses about the many available programmes, and assist them with applications by providing practical and accessible guidelines and toolkits, including by raising the visibility and use of nibusinessinfo.co.uk (as also proposed in Recommendation 3.7). Northern Ireland, with a crucial role for Invest NI, could also consider launching new diagnostic tools and/or expanding the use of existing ones (e.g. the Assessment Tool as part of the Invest NI Innovation Accreditation Programme), ideally integrated into nibusinessinfo.co.uk, to assist SMEs to identify relevant programmes, and to raise their awareness of these programmes. Finally, new regional skills hubs (see Chapter 5) could play a crucial role in informing the smallest businesses about relevant support programmes, and Northern Ireland could include business support for growth and innovation in the proposed campaign on leadership and management capabilities (Recommendation 3.3).
3.14. Launch an overarching new initiative for micro and small business support, which centralises and co-ordinates all support programmes for growth, innovation, and management and leadership (see Recommendation 3.6). To strengthen the supply of support programmes for growth and innovation targeted at micro and small businesses, the government of Northern Ireland (especially DfE), with involvement from all relevant organisations (including Invest NI, Enterprise Northern Ireland, employer networks and organisations, regional skills hubs), should launch an overarching initiative or strand of business support to better target and align business support for micro and small businesses. It could also address the challenge of continuous and clear pathways for growth and the gap in management and leadership provision for micro and small businesses (Recommendation 3.6).
Expanding networking and increasing collaboration and knowledge spillovers between businesses
Evidence suggests that approaches that leverage employer networks or collaboration at the sectoral level are cost-efficient and more effective at catalysing change in workplaces than centralised approaches (OECD/ILO, 2017[5]). These collaborative structures can take a number of forms, ranging from informal networking to formal networks with a central hub organisation and membership structure, fees and formal governance arrangements. This section will focus on three types of collaboration that could be considered most relevant for Northern Ireland: 1) informal networking; 2) collaboration in business clusters; and 3) knowledge spillovers between businesses (see Box 4.8 for relevant international examples).
Informal networking could be particularly relevant to engage businesses in Northern Ireland. Sharing business advice between managers through peer-to-peer learning or mentoring could be highly effective, especially for SMEs (OECD, 2018[73]). For small businesses, informal connections and local networking with established and trusted relationships could help create a learning culture for businesses. Managers of small businesses often tend to rely on information from trusted types of connections – for example, SME managers often cite their accountants as the most popular source of business advice (OECD, 2018[73]).
There are already many initiatives that support informal networking between businesses at the local level. Effectively all businesses support organisations described in this chapter facilitate networking to different degrees. For instance, the Northern Ireland Chamber of Commerce and Industry provides many networking opportunities with over 60 events per year. Networking is also a key part of activities by Invest NI, CBI, FSB, CIPD, the IoD, and Enterprise Northern Ireland. At the local level, business-led networks and district councils also provide many networking opportunities. An overview of all networking events in Northern Ireland is available at nibusinessinfo.co.uk through the “Events Finder”. The 2007 Management and Leadership Strategy of Northern Ireland also already emphasised the relevance of peer‑to-peer learning and it included a proposal to establish new local business networks to increase the penetration of management development (Department for Employment and Learning, 2007[44]).
Northern Ireland could further improve the impact of collaborative networks. A main challenge here is the comparatively weak culture of collaboration among small businesses. Like most countries, the businesses most in need of enhanced adoption of HPWP are not the firms most actively participating in collaborative initiatives. Under-represented and disadvantaged groups of businesses typically have more limited networks, often because they rely on friends and family who typically face similar disadvantages (OECD/European Commission, 2015[76]). Continued promotion of networking is critical to ensure that these under-represented groups participate, including by supporting the development of active networks for smaller businesses, and to promote linkages of these networks with networks for larger businesses. To raise participation in networks, Northern Ireland could also consider introducing incentives (e.g. by linking networks with training and access to financing), making them more accessible (e.g. by supporting easily accessible online networks), or by making them more effective (e.g. by ensuring clear and tangible benefits, a high degree of interaction and a sense of ownership) (OECD/European Commission, 2015[76]).
The second type of business collaboration is business clusters, which could be considered more formal support networks where businesses are interconnected, often in the same sector, and with a strong geographic concentration. For Northern Ireland, these could be especially relevant. First, regional differences create the need for a local approach to business support, and megatrends are likely to further deepen differences between regions (e.g. automation and technological developments are expected to benefit in particular sectors over-represented in Belfast) (Johnston et al., 2019[27]). Clusters embody the local approach needed to respond to these challenges. Second, stakeholders in the project emphasised that business support for specific or prioritised sectors could help overcome constraints in overall resources available, and clusters policy would allow for differentiation and targeted support to specific sectors where it could have the highest impact. Third, evidence from small, advanced economies shows that strategic clusters are effective in generating strong returns on innovation and that identifying target clusters is central to the strategic integration of skills and innovation policy (Skilling, 2019[1]).
Northern Ireland does not have a formal cluster policy at the moment, but there is an increasing number of initiatives that stimulate activity between businesses and other organisations (Hetherington, Magennis and Victor, 2019[77]). For instance, many programmes run by Invest NI have a strong focus on collaborative working (e.g. the Competence Centres, the Collaborative Growth Programme, Knowledge Transfer Partnerships, and Innovation Vouchers) and as part of the Belfast Regional City Deal, various projects have been launched with a strong emphasis on partnerships and networks (e.g. the Advanced Manufacturing Innovation Centre). Stakeholders emphasised that in the absence of a formal cluster policy, there is strong support for them, and many natural clusters or sectoral concentrations of businesses already exist; for example ICT and professional sectors in Belfast, and manufacturing of machinery in Mid Ulster. These collaborative initiatives and strong overall support for clusters, create momentum for efforts to strengthen business clusters in Northern Ireland. Both the draft Industrial Strategy Economy 2030 and the Innovation Strategy already emphasise the importance of strategic priority clusters to generate strong returns. Northern Ireland should ensure that this will be followed by specific actions, increased granularity and better external communication and engagement (Skilling, 2019[1]).
The government of Northern Ireland should lever the existing initiatives and networks, and enhance their impact by consolidating support. Cluster policy in Northern Ireland should not be a stand-alone intervention, but it should be fully integrated with other business-related policies and programmes (Hetherington, Magennis and Victor, 2019[77]). Given the overlap with other policy areas, clusters need to embody an inclusive approach that promotes synergies, including the application of a triple, quadruple or quintuple innovation helix framework for the interactions between industry, university, government, public and the environment. Moreover, the identification of strategic priority clusters could help increase the impact of innovation policies. Both Economy 2030 and the Innovation Strategy identify priority clusters, but while there is overlap in the selected sectors, they are not fully aligned (Skilling, 2019[1]).
Improving the governance and organisation of clusters could enhance their impact. Northern Ireland should, in particular, encourage the establishment of cluster management organisations (CMO), which could function as catalysts for collaboration, raise trust in the cluster, create stability, and could function as an intermediary between top-down government support for the cluster policy and bottom-up collaboration with businesses (Hetherington, Magennis and Victor, 2019[77]). Activities could include, among others, match-making services for businesses in the cluster, knowledge exchange, promotion of the cluster and region, acquisition of funding for participants and accessing HR/skills development. To strengthen the governance of clusters, information, and the sharing of knowledge are crucial for success. To raise the number of participating businesses, it would be highly relevant to clearly communicate the benefits of collaboration and clusters. Nibusinessinfo.co.uk (Invest NI, 2020[57]) already provides businesses with practical information on clusters and their benefits, but this information could be expanded.
The final type of collaboration between businesses is knowledge spillovers, in particular between large, often international, businesses and the small, local businesses in Northern Ireland. As a small, advanced economy, Northern Ireland is highly dependent on external pressures and investment, and Northern Ireland successfully manages to attract foreign direct investment (FDI). In recent years, Northern Ireland was the UK region with the largest increases in FDI projects, especially from the United States and the Republic of Ireland (EY, 2019[78]). FDI has a large effect on the Northern Ireland economy, with around 25% of employment estimated to come from businesses owned outside the country, but not all businesses benefit from this. Northern Ireland could likely make better use of international, large businesses to benefit small, local businesses (Skilling, 2019[1]).
Given the right conditions, small businesses could learn from larger businesses, which, as shown in the assessment, generally perform better in skills utilisation, the adoption of HPWP, management capabilities, and employee engagement and empowerment. In Northern Ireland, differences in, for example, management quality between foreign multinationals and domestic firms, are especially large (Bloom and Reenen, 2010[40]). Knowledge spillovers resulting from more collaboration between international, large businesses and small, local businesses could have the potential to raise innovation capacity and performance. In many countries, knowledge spillovers are an important driver of management quality, and the arrival of large new entrants in a country generally help to increase the average management performance of existing businesses (Bloom et al., 2019[34]). These spillovers appear in different forms, including direct knowledge transfers through partnerships, opportunities to observe and learn the technologies of foreign firms and movement in the labour market (Alfaro and Chen, 2013[79]).
Knowledge spillovers are particularly effective when they happen within the value chain. This could, for instance, happen in projects with shared domestic and foreign ownership, through interactions between foreign businesses and local suppliers in upstream sectors (Javorcik, 2004[80]). For Northern Ireland, such an approach could be especially relevant given that it would help to overcome the lack of trust and fear of losing intellectual property to competitors, which are among the main barriers to collaboration for businesses (Hetherington, Magennis and Victor, 2019[77]). Stakeholders expressed support for measures to enhance these types of knowledge spillovers within the value chain of businesses. This could involve actions that would incentivise both large and small businesses to participate in this type of collaboration. For example, within the supply chain, mentoring and coaching of managers of small and local suppliers by the large international firm could be introduced as a condition for receiving business support (for instance, by Invest NI). These types of collaborations would help the development of local business sectors and would make Northern Ireland less vulnerable to changes in FDI.
Box 4.8. Relevant international examples: Networks, clusters and knowledge spillovers
Leadership development and networking: An example from Scotland
Entrepreneurial Scotland is a member network and leadership development organisation that provides opportunities for like-minded, ambitious individuals to share experiences and develop their leadership skills. The network offers different development programmes that build on the network. For instance, eVolve is a two-year, fully sponsored programme for growth and scaling of businesses through coaching and peer mentoring.
Raising innovation in SMEs through a cluster approach: An example from Norway
The Cluster Innovation Programme by the Norway Innovation Agency is an example of an initiative that has driven an increase in demand for business advice by SMEs, by building a strong national brand for advice, combined with active outreach to SMEs. The initiative identifies SMEs in six key clusters (e.g. bio-economy, clean energy and creative industries) and offers them subsidised business advice and mentoring as part of the programme, which is provided by other actors in their cluster, including other firms, research institutes and higher education institutions. Its intended outcome is to help SMEs start or accelerate change processes that will renew their products, services, processes and business models. Some 2 700 companies are currently supported in 30 clusters. A key success factor of the programme is that regional clusters with a relevant technology base in one of the selected focus areas of the programme are invited to apply for the support through an open call.
Matching SMEs with larger businesses: An example from Japan
In Japan, SME Support Japan, a government-run organisation overseen by the Ministry of Economy, Trade and Industry, promotes SMEs in Japan and abroad. SME Support Japan runs the initiative J‑Good Tech, an online business matching site that connects SMEs with larger domestic and foreign companies. The overall aim is to support the creation of strategic partnerships between businesses and facilitate the exchange of information and ideas. The service is free to use, and companies are screened before they are listed on the site. Currently, 18 100 companies in Japan and abroad use the service, resulting in hundreds of SMEs and large companies exchanging ideas and collaborating on products.
Source: Entrepreneurial Scotland (2020[81]), “Entrepreneurial Scotland”, https://www.entrepreneurialscotland.com/; OECD (2018[73]), Leveraging Business Development Services for SME Productivity Growth: International Experience and Implications for United Kingdom Policy, http://www.oecd.org/industry/smes/Final%20Draft%20Report_V11.pdf; J-Good Tech (2019[82]), “J-Good Tech”, https://jgoodtech.jp/pub/ja/.
Recommendations for supporting businesses by expanding networking, collaboration and knowledge spillovers between businesses
3.15. Promote peer-to-peer learning for small businesses by increasing their participation in informal business networks. Organisations that run business networks, including the Northern Ireland Chamber of Commerce and Industry, Invest NI, and Enterprise Northern Ireland should aim to increase the participation of under-represented groups, especially small and locally operating businesses, in their business networks. These organisations could consider enhancing the promotion of their networks by introducing active outreach campaigns (potentially linked to the proposed campaign on management and leadership, Recommendation 3.3) through which the benefits are clearly communicated. Moreover, they could raise the impact of the networks by ensuring a high degree of interaction in networks, introducing measures to promote participation in networks (e.g. by linking networks with training and access to financing), developing clearly defined objectives for these networks, supporting the use of online networks, and designing networks in a way that ensures ownership by the members to build trust in the network.
3.16. Strengthen business clusters, by leveraging existing networks, consolidating support, identifying strategic priority clusters and strengthening their governance. The government of Northern Ireland, with a leading role for DfE, should build on the cluster policy in the strategy Economy 2030 and the Innovation Strategy, by selecting specific actions, increasing granularity and improving external communication and engagement. To increase the impact of clusters, Northern Ireland should ensure that cluster policies are not a stand-alone intervention, but are fully integrated with other business-related policies and programmes (including the discussed management and leadership programmes and proposed initiative for micro and small business support, Recommendation 3.14). Furthermore, Northern Ireland should ensure it has a consistent list of strategic priority clusters, instead of different partially overlapping lists; encourage the establishment of cluster management organisations (CMO) to raise trust in the clusters; and create stability and function as a catalyst for collaboration. Finally, Northern Ireland should more actively communicate the benefits of collaboration and clusters, including through expanding information on nibusinessinfo.co.uk.
3.17. Raise the benefits of FDI by facilitating and incentivising knowledge spillovers between large, foreign-owned businesses and small, local businesses. Building on the success in attracting FDI, the government of Northern Ireland, and in particular Invest NI, should aim to spread the benefits more widely by facilitating and incentivising knowledge spillovers between foreign‑owned businesses and small, local businesses. In particular, the government of Northern Ireland should promote projects with shared domestic and foreign ownership and thereby expand interactions within the value chain, between foreign businesses and local suppliers. Northern Ireland could consider incentivising businesses to participate in this type of collaboration, by making mentoring and coaching of the managers of local suppliers a condition for large international businesses to benefit from government support.
Overview and discussion of recommendations
This chapter discussed how better skills utilisation could help Northern Ireland further improve the performance of its workers and businesses, with benefits for both its society and economy. Better skills use could help seize opportunities in the context of megatrends and uncertainty related to the UK’s exit from the EU and the economic shock following the COVID‑19 pandemic, as it will boost productivity, stimulate innovation and raise competitiveness. Public policy makers can work with employers to help create the conditions, or provide direct support, for strengthening skills use in workplaces. For Northern Ireland, it would be key to transform workplaces to make even better use of its workforce’s skills.
Three opportunities have been selected to support this transformation:
1. Strengthening management and leadership capabilities.
2. Developing engaging and empowering workplaces.
3. Strengthening support structures for businesses.
The chapter presented a total of 17 recommendations to transform workplaces to make better use of skills. This selection is based on input from literature, desk research, discussions with the Northern Ireland Project Team, and broad engagement with a large variety of stakeholders, including two workshops in Belfast, two meetings in Derry/Londonderry, a meeting in Dungannon and various related meetings and group discussions.
The OECD recommends strengthening management and leadership capabilities by developing a renewed strategy for management and leadership in Northern Ireland (Recommendation 3.1) to set out a direction and highlight the actions that need to be taken to improve performance (3.2, 3.4‑3.6). To raise the profile of this strategy, Northern Ireland should launch an overarching campaign targeting managers and leaders to drive an overall cultural change. This campaign could help to raise awareness of the benefits of strong management and leadership (3.3), the need to empower and engage the workforce (3.7), and the relevance of business-to-business mentoring and coaching (3.12). The effective dissemination of information is key to support management quality in businesses, and to this end, the OECD recommends centralising all information on management and leadership programmes (3.4), raising visibility and use of information on nibusinessinfo.co.uk (3.7) and introducing and/or expanding diagnostic tools (3.13). These measures could be complemented by stronger incentives for businesses to adopt desirable workplace practices. For instance, a charter approach or business pledge could help promote practices that raise employee engagement and empowerment (3.8), and quality marks (e.g. IIP) and mentoring programmes could potentially be linked to support measures (3.9 and 3.17).
Northern Ireland should build on many good existing initiatives and actions. For instance, the Innovation Strategy and draft industrial strategy Economy 2030 already described many relevant actions, and Northern Ireland should ensure their successful implementation. This is especially relevant in the context of developing the right skills in the education system (3.2), ensuring an efficient and effective NICS (3.11), and the development of clusters (3.16). Northern Ireland should also aim to better utilise and promote existing information portals, most notably nibusinessinfo.co.uk (3.7 and 3.13).
Given indications of the limited provision of support for micro and small businesses, it is recommended to launch a new overarching initiative for micro and small business support to centralise and co-ordinate support programmes for growth and innovation (3.14), which could also include new management and leadership programmes for micro and small businesses (3.6). Moreover, to transform workplaces, Northern Ireland could put more emphasis on collaboration between businesses to drive innovation and growth, and raise the performance of workplaces. For instance, Northern Ireland could increase the participation of small businesses in informal business networks to strengthen peer-to-peer learning (3.15), strengthen business clusters (3.16) and facilitate and incentivise knowledge spillovers between large, foreign-owned businesses and small, local businesses (3.17).
Based on discussions with the Northern Ireland Project Team, three recommendations have been selected that could be considered to have the highest priority based on potential impact, relevance in the current Northern Ireland context, as well as the overall support for implementation. To transform workplaces to make better use of skills, the OECD recommends that Northern Ireland:
Develop a new strategy for management and leadership capabilities to raise awareness of the challenge, provide a co-ordinated approach and set out a direction for action (Recommendation 3.1).
Ensure sufficient provision of management and leadership programmes for micro and small businesses by introducing new programmes or expanding existing ones (Recommendation 3.6).
Improve information on business support programmes for growth and innovation, especially for micro and small businesses, including by raising the profile of nibusinessinfo.co.uk and launching diagnostic tools (Recommendation 3.13).
Table 4.3. High-level overview of recommendations to transform workplaces to make better use of skills in Northern Ireland
Note: DfE is the Department for the Economy; DfC is the Department for Communities; DoF is the Department of Finance; DE is the Department of Education; CCEA is the Council for the Curriculum, Examinations and Assessment; Invest NI is Invest Northern Ireland; HPWP is high‑performance workplace practices.
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Annex 4.A. Definitions and measurement of skills use and workplace practices
Skills use
The OECD Skills Strategy Framework (OECD, 2019[3]) and its pillar on “using skills effectively” describes skills utilisation in both the labour market (also referred to as “activation”) and in workplaces. This chapter solely addressed the latter interpretation of skills use because it is less intensively covered in other studies and is very relevant for productivity, demographic and innovation challenges in Northern Ireland.
The Survey of Adult Skills (PIAAC) is one of the main sources used to analyse the use of information‑processing skills in workplaces, including reading, writing, numeracy, information and communication technology (ICT) and problem solving. The approach used in the Survey of Adult Skills (PIAAC) follows the job requirements approach (JRA), whereby the survey enquires about the frequency with which tasks relevant to each skill are carried out. For example, the survey measures the frequency (from 1 “never carried out” to 5 “carried out every day”) for ICT-related tasks such as the use of email, spreadsheets and programming languages, which result in a composite variable for the use of ICT skills. To assess the “effectiveness” of skills use, these frequency indicators need to be analysed in combination with the actual skill levels. The method has some limitations, including that: 1) these measures are developed on self-reported data, and could be affected by workers’ skills and perceptions; and 2) the measures are based on task frequency and thereby may not capture the full list and complexity of tasks for skill types (OECD, 2016[6]).
High-performance workplace practices (HPWP)
Despite considerable literature on HPWP, there is no consensus on the exact definition (UKCES, 2009[83]; Posthuma et al., 2013[84]). There is not a universal list of HPWP that can be applied to any organisation since their effect can depend heavily on organisational context. Organisations should implement a system of practices that complement and reinforce each other and fit the specific organisation. A number of authors have tried to identify specific practices and different categories of HPWP, for example, Posthuma et al. (2013[84]) and Sung and Ashton (2006[85]). A definition of HPWP has been developed based on the analysis of Survey of Adult Skills (PIAAC) data (OECD, 2016[6]). These taxonomies differ in both depth and breadth.
This chapter applies a pragmatic approach, where broad categories of workplace practices are selected based on existing taxonomies and driven by available data on underlying indicators. The following broad categories of HPWP have been selected:
Flexibility and autonomy includes flexibility in working time and tasks, involvement in setting tasks, planning activities and applying own ideas.
Teamwork and information sharing includes receiving support from colleagues, working in a team, and sharing work-related information with colleagues.
Training and development includes participation in continuing vocational training and on-the-job training.
Benefits, career progression and performance management includes bonuses, career advancement, performance appraisal and competency profiles.