CMI calls for new breed of long-term managers

“We neglect the importance of sustainable growth in the long-term in favour of cutting costs to deliver profits in the short term… managers are not given the space to take risks or be innovative [and] as a result the UK falls short in the leadership stakes.”

From the evidence the commission identified three key areas of management to develop to take management into 2020 – purpose, people and potential – they surveyed 2,000 managers to discovered how they rated British business on these subjects.

On purpose, which defined the social benefit of an organisation, the commission said that companies need to identify “long-term aims beyond just making money or hitting targets”. However it discovered just 37pc of respondents said their chief executive is rewarded for delivering value to all stakeholders, rather than solely on meeting narrow financial targets.

In the people section, which looked at how managers are prepared for leadership responsibilities, they found that UK companies tend to fail in their training of how to manage people, with 71pc saying they could improve.

More than half – 57pc – of those surveyed said they do not do enough to attract the next generation into business, meaning that potential goes ignored with youngsters who could be future leaders not being invited into business while they are studying when vital future relationships could be established.

On a combined rating of all three categories British companies scored an average of 5.9 out of 10. On purpose they were stronger at 6.8, but worse at people with a score of 5.8 and scored just 5.2 on potential.

Ann Francke, CMI chief executive, warned that companies that do not embrace the principles will find themselves struggling in the future.

“By 2025 Generation Y and the Millennials will make up 75pc of there workforce and they have different expectations, they won’t work for companies that don’t have a social purpose,” she said. “We’re already seeing a growing reluctance to work in the City as a result of the financial crisis.”

She added that the crisis was caused by “greed” but the response to try to reign this in was harming the UK’s economy over the longer term.

“More than half – 52pc – of FTSE100 chief executives have a background in accountancy or financial management, up from 3pc cent in 2008,” Ms Francke added. “They are too steeped in cost management, we need to look beyond the numbers.”

However it will be difficult for the leaders from different backgrounds to break through to end this dominance because of a “network effect” in the City.

“Look at the cool response in the City to a product visionary such as Christopher Bailey being promoted to head Burberry,” she said. “He was crucial to Burberry’s growth and the response was ‘He’s not a numbers guy’.”

However, the CMI is optimistic that the initiatives suggested in the report will be adopted.

“We’re at a tipping point,” said Ms Francke. “Business leaders are now willing to talk about the concepts of purpose, inclusiveness and culture while five years ago such things were dismissed at fluffly nonsense that had no place in the boardroom.”

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