MANAGEMENT TRAINING (Hansard, 26 October 1966)

§ Mr. Gerry Fowler (The Wrekin)

Earlier this week we debated at some length the short-term economic problems of the country. I hope that we shall not therefore lose sight of the longer-term problems and the solutions to them, not least the subject about which I wish to talk tonight, the quality of management in British industry and the degree of managerial expertise. We must consider what we can do to improve the quality of British management in the immediate and middle future.

Perhaps I might define a little more closely what exactly it is with which I am dealing tonight. It can be seen clearly enough from the statement in the National Institute Economic Review this year that British prices appear to be higher and initially quoted prices higher still than those of our competitors. Clearly, this is not the way to increase our export markets.

Similarly, an article in the Journal of Management Studies earlier this year suggests that estimated costs should be used only as a reference point in determining selling prices. This is not standard practice in British industry. The lesson is a hard one to learn and at the moment we are all too often trying to sell in the markets of tomorrow on the basis of data of the past. I suggest that production policies should be based on the estimates of future movements of the market, not upon the past, and that only thus can possible future cost levels be determined.

In such techniques we have 30 or 40 years backlog to make up on many of our competitors. The only advantage that we derive from this is that we have thereby gained a chance to develop independently, 1260 for instance, of the techniques developed in the United States. We have a chance to develop independently certain basic techniques and to make new advances because we are untrammelled by the past. One might contrast here the fixed assets of British industry, some of which are left-overs from the Industrial Revolution of the 19th century. It is not so easy for us to change them.

In terms of the training of managers of the future in such techniques, we have been making provision, in recent years. At long last we have two major business schools, the Manchester Business School, opened in 1965, and the London Business School, which is taking its first student this year. The Foundation for Management Education and the University Grants Committee, to some degree, concentrate their money on these two institutions, the Foundation deriving its money from private industry. One might take leave to doubt whether this excessive concentration of funds is wholly desirable. We must beware of starving other institutions of higher education.

In London we have a high-brow course, grounded in the basic academic disciplines, and Manchester is not radically dissimilar. One might hope that when these two schools are running at full capacity they will be producing about 400 top managers per year. The National Economic Development Council calculates that we need about 20,000 managers per year. Clearly many, or most, must come from other areas of the educational system.

There is a multiplicity of provision already in other areas of the higher educational sphere. Much here depends upon what one counts as a management course, but these are 10 universities of the traditional sort running courses in management education and seven former colleges of advanced technology running courses in management education. There are three universities in Scotland too. Then we have the technical colleges, where the number taking the Diploma in Management Studies has risen startlingly from 1,153 in 1961–62 to over 3,200 in 1964–65. They teach too, for the Higher National Certificate and Diploma in Business Studies and for C.N.A.A. degrees in management studies.

1261 In one specific area—and it is perhaps the most vital because this is where we have allowed ourselves to fall furthest behind our competitors—namely, marketing, we are still further behind than we are in management studies in general. How far we have allowed ourselves to fall behind even our European competitors, let alone the United States, can be seen from the fact that the first chair of marketing in Denmark was established in 1925. We are only now establishing our first chair in marketing.

The importance here seems to be that too much attention has been, and is, focused on marginal improvements in the fact Dry, when drastic alterations could be made to improve marketing. Half the cost of a product is often tied up with marketing, design, pricing, packaging, advertising, etc., rather than with purely production costs. It is clear enough from this how important the study of marketing techniques is if we are to sell our products, not only at home, but abroad.

There are now four chairs, at London, Lancaster and two at Manchester. In these schools postgraduate and undergraduate courses are taught, and undergraduate courses are also available at some technical colleges. For the diploma in marketing taught in the technical colleges, the registered number of students jumped from 600 in 1961 to 2,000 in 1966.

My major point is that there is a critical shortage of staff at all levels in the universities, the former colleges of advanced technology and the technical colleges. In this context, I should like to discuss first the sponsorship offered by the Board of Trade to the National Marketing Council, which sent people to Harvard on a course beginning on 5th July this year.

Fifty top-level executives went to the Harvard course. The course was divided in two, with six weeks at Harvard and four weeks on a tour of the United States visiting industrial and other establishments. The cost was about £1,000 per head, of which the Board of Trade provided about £500 per head. That is to say, the course cost us something like £50,000 of foreign exchange, of which £25,000 came from the pockets of the taxpayer.

1262 I should like to know from my hon. Friend the Minister of State, who, I hope, will be able to give me an answer tonight, whether, when funds are so short in this sector, that was the wisest way to spend them. My hon. Friend may well say that the course was essential to train British executives to compete in the American export market and that this was specifically American experience. If that is my hon. Friend's reply, I hope that he will bear in mind what the National Marketing Council itself said. It stated at the time: While many of the cases have American settings, they form problems of universal interest and application. However, there are also many carefully selected cases pertaining to marketing in other areas, especially with regard to Britain, Europe and the Common Market. Thus the course was not specifically aimed at teaching the executives exporting techniques with relevance to the United States market.

Secondly, I should like my hon. Friend to consider whether it might not have been wiser to send potential teachers of marketing to the United States. A one-year course for potential teachers in the United States might have been run as cheaply as £1,000 per head or a little more, which was the cost of the course for each executive. In 1966 we sent about 12 potential teachers to the United States. I suggest that we should be aiming at sending at least 25 each year if we are to fill the vacancies and to staff adequately our technical colleges and colleges of advanced technology in this direction.

One can be sure that a potential teacher sent to the United States and returning here to teach the subject in an institution of higher education would serve the national interest alone and not partly or primarily the competitive interest of his own company.

Further, at this stage in our history, particularly in view of the possibility that our relations with Europe may become closer, perhaps we should be looking a little more closely at the European market. A body called the International Marketing Programme was also running a course this summer, but in England, at Sussex University. It ran it very successfully in 1965 with professors from Harvard and this year the course had a similar pattern, calling in North American professors and having a European 1263 emphasis in terms of the markets at which it was aiming.

The brochure for the course was distributed on 22nd March and it was sent to my right hon. Friend the President of the Board of Trade on 11th March, yet the Harvard course was announced on 23rd March, the day after the brochure for the English course was issued. At that point, recruitment for the Sussex course began to dry up. I would suggest to my hon. Friend that perhaps a subsidy was needed to provide for this course here, not least in view of the fact that some American Government money did help to ensure that the course was eventually run.

It is worth bearing in mind that Slough Technical College, at a rather lower level, this year was also trying to arrange an eight-weeks' course, four weeks in Great Britain and four in the United States, specifically in export marketing in the American market, but here there was no grant from the Board of Trade through the British National Export Council despite the fact that the colleee had sent one of its teachers on a three weeks' course in the United States in order to help him in the running of the course this year.

There are many other domestic courses which might have served as a substitute for the American course, and it was not suprising that The Times on 24th June said: The pending departure of 15 senior executives to Harvard Business School, thanks to a Government grant of £25,000, is a slap in the face that will rankle with these teachers (of marketing) for a long time. … One of the restricting factors in marketing teaching in this country is shortage of money. When Government grants go overseas in this way there is an obvious need for better consultative arrangements between Government departments and teachers. I turn now to the teachers specifically. I have already said that some of the technical colleges are inadequately staffed, and, alas, most of the teachers in technical colleges are not sufficiently highly trained in the skills which they are themselves teaching. We need a crash programme in teaching marketing and management teachers here and in the United States and in Europe, particularly in Switzerland. Here I would suggest that a heavy Government investment is 1264 needed. Without the teachers we cannot make progress.

One further point with regard to teachers, namely, their salaries. This is a constant grouse, perhaps, of people in all disciplines in centres of higher education, but here in particular it is worth noting that present teachers, in short supply as they are, continually receive offers of up to twice the salary they receive in universities from industrial concerns, and, of course, there is a danger here that if they seek additional income from industrial consultancy the real cost to the nation in terms of research not done will be very high indeed.

One further point. We may also, I would suggest, need far more research assistants than can at present be provided from public funds. If successful work is to be done in this field teams of research assistants are needed, not necessarily of graduate level, but people of ordinary national certificate or diploma level; but here one must have funds, because otherwise one knows the department has the choice between a lecturer or a team of research assistants. One cannot have both.

So much, then, for the teachers. Now to come to the other end of the scale, the students. In this field the background of students, especially of postgraduate and post-experience courses, is different from that of those in most academic disciplines in higher education. Let us look, for instance, at acceptances for courses in 1966–67 of one former college of advanced technology. For the marketing course, 69 per cent. of them had a social science background, 4 per cent. an arts background, 37 per cent. a pure science background. That is to say, their academic backgrounds were from all over the spectrum. So one runs into great difficulties.

One university has 27 marketing students this year. Two of them are there on S.S.R.C. grants, one has a Scottish Department of Agriculture grant, three have L.E.A. grants, seven are from overseas, and four are sponsored by United Kingdom companies. Ten are doing the course on their own savings and have no visible means of support because they have not yet found an industrial concern to sponsor them. The cost to each student doing this on his savings is, perhaps, £500 a year. These 1265 are all people of the age range 21 to 34. So £500, in terms of savings, is a considerable amount to ask them to spend to make themselves better managers.

There is a further need for finance not least because we must be providing finance for people who for their first degrees may have gained only lower second or third-class ones. What is just as important is the experience they have subsequently gained.

Finally, I have a word about the organisation of management and marketing studies in this country. We need a general co-ordinating body, especially for the courses at technical colleges, where the standards are mixed, the aims are confused, the status is often low—not necessarily correctly so—and many of the staff are insufficiently trained. We need such a body to set long-term aims and to co-ordinate research. Where teachers are scarce and funds are not as forthcoming as they might be, we cannot afford duplication or triplication of research.

At present the British Institute of Management, the United Kingdom Advisory Council for Education in Management, the Foundation for Management Education, the U.G.C., the National Advisory Council for Training in Industry and many other bodies are interested, and we want one major co-ordinating body.

A further question that arises in this context is whether management training is an allowable expense under the Industrial Training Act, 1964. It arises in this context because the industry training boards vary in practice, and some confusion has arisen in the centres of higher education. The boards might well channel information on die courses they allow through such a co-ordinating body as I have suggested to the universities and technical colleges. Equally, they might channel information about what they would like courses to include.

The "little Neddies" might be of assistance. They could be used to gather information from industry about what research is needed, particularly in marketing and, above all, in industrial marketing as opposed to consumer marketing. It is very difficult to draw up sensible programmes of research when there is ignorance about what the needs of industry are. We could have the "little Neddies" channelling through the 1266 central co-ordinating body to the universities and technical colleges the needs of industry in research. Equally, they might be used to disseminate the results of such research to industry. This would be one way of tying academic research in with the needs of industry, which here are the needs of the nation. We need a coherent development with the necessary funds provided. If we do not do this we shall be jeopardising the future of the British economy.

§ The Minister of State, Department of Education and Science (Mr. Goronwy Roberts)

My hon. Friend the Member for The Wrekin (Mr. Fowler) has special knowledge and experience in this matter, as his speech so clearly proved. In view of the time at my disposal—a very few minutes—I am sure he will forgive me if I try to deal with only a few of the more important points that he has raised, but I can assure him that fullest consideration will be given to all that he has said.

He asked what provision we are making for management education, and emphasised the importance of marketing. In the university sector during the academic year 1965–66 some 26 universities and equivalent 'institutions provided 19 undergraduate courses, 58 postgraduate courses and 66 short post-experience courses, undoubtedly a marked improvement on previous years.

In the further education section, in which my hon. Friend is particularly interested, since the revised postgraduate diploma in management studies was introduced in 1961 there has been a very substantial increase in the number of students enrolled, from 1,153 in 1961 to 3,851 last year. I expect that enrolments this session will top the 4,000 mark.

My hon. Friend also mentioned the two business schools at London and Manchester. Both those schools have made a very encouraging start. I have details here which I will give later to my hon. Friend about the increase in the provision at both schools. Suffice it to say in this connection that, although both have started in temporary premises, they are expanding this year at all levels, and particularly on the lines which my hon. Friend indicated. The London school has 1267 now acquired a permanent site, and no doubt that will set a signal for its further progress.

The numbers at both schools compare very favourably with the numbers forecast in the Normanbrook Report, which presaged the foundation of these two major schools, and that growth could not have been achieved without adequate staff. It is very gratifying that both these important schools have been able to attract staff of very high quality.

Passing to one or two other important points that my hon. Friend raised, he mentioned the question of assisting students financially to attend the British-American course on marketing at Harvard this year. Whatever may be the position in the future—and it is certainly our intention that there should be comprehensive facilities in this country for education in management at all levels in all facets of the subject—the Harvard scheme seemed the most suitable in all the circumstances of last summer. It consisted of a six-week course at the Harvard Business School, followed by a four-week tour of American industrial organisations to study business in action. The course, which was a great success, was intended to generate a greater understanding of marketing skills on both sides of the Atlantic. It was intended to and did provide a nucleus of marketing-oriented top executives and to supplement the efforts of our own business schools and other institutions in carrying out advanced marketing training.

The marketing course held this summer at Sussex University was not a university course, but one run by a non-profit-making organisation, International Marketing Programmes Limited, which used the university facilities as a conference centre on payment of an economic rent. The cost to employers of sending students on the I.M.P. course was less than the cost of sending them to Harvard, even after taking account of Board of Trade subsidies, so its terms were not uncompetitive. But I shall certainly bring to the attention of my right hon. Friend the President of the Board of Trade the points made by my hon. Friend about such courses, and I take particular note of what he has said about the course now being organised by the Slough Technical College.

1268 My hon. Friend rightly stressed the importance of qualified teaching staff for management courses at all levels. There are several different routes by which people can become teachers of business management subjects. There is the normal method by which teachers of all subjects are produced, and my hon. Friend is a distinguished example of the normal route to the teaching of this discipline. In addition, some people with a mixture of academic qualification and business experience have been drawn into the teaching of management subjects. The directors of the two business schools at London and Manchester fall into this category.

In order to encourage a continued flow of recruits from this source, the Foundation for Management Education has established 12 teacher fellowships at universities in this country. These fellowships enable people with experience in business who feel that they have an inclination to teach to spend two years on advanced studies. Another special arrangement which the Foundation has made in this field is the establishment of one-year fellowships in the United States. These are for promising students who intend to return to the United Kingdom to teach in business schools or elsewhere. Since 1964, the Regent Street Polytechnic has been running each term a 10-week full-time course for prospective teachers of management subjects.

I have no time to go into the important question of research and research assistance.

Although diploma work is perhaps the most striking aspect of further education college contribution to management education, it must not be overlooked that in addition to the diploma courses, which are in any event found in about one in five of the colleges offering management courses, the colleges offer a very wide range of management and business courses at other levels, ranging from courses leading to recognised qualifications in foremanship and supervision to those for specialised qualifications in such fields as works and personnel or office management, and of course assistantships of the type which my hon. Friend rightly stressed and described.

Perhaps I might just mention one practical point which my hon. Friend raised. He asked whether management courses 1269 are an allowable expense under the Industrial Training Act of 1964. The answer is that they are, but it is for the individual training boards to decide which courses to accept for grant purposes. Most boards have set up working parties or committees to make recommendations on the training and educational programmes appropriate for management in their industries.

In addition, the Central Training Council has set up a management training and development committee to recommend to the Council what guidance should be given to boards on the training of managers, an occupation which is common to all industrial training boards. This committee, under the chairmanship of Sir Joseph Hunt, has a wide membership representing both sides of industry—the British Institute of Management, the 1270 boards themselves, and also the universities and technical colleges. This overlap of membership between the special committee on the one hand, and the universities and the technical colleges on the other, leads to a correlation of all courses in the educational institutes and also the requirements of the industrial boards.

As I said earlier, I shall certainly bear in mind all the points which have been raised by my hon. Friend. They will be considered most carefully, and indeed I hope to give by letter certain information which I have not found time to give from this Box tonight.