How the MBA can be saved by small firms and apprenticeships

Rather than diluting the status of the MBA, the Apprenticeship Levy could very well provide the impetus for change that saves it.

The Levy - payments made by employers with a paybill over £3 million to fund apprenticeships - has been the target of two principal lines of attack. Most obviously of all, few employers have so far made use of the fund. After the first ten months of the Levy scheme, just 8% had been spent on apprenticeships - leaving a pot of £1.28 billion. Reports suggest a good proportion of employers are prepared to treat the Levy as a tax rather than invest in the admin required to set up and run apprenticeships in their organisation. Funds have to be spent within two years, meaning a high risk of wasted opportunities - and nothing to show for the Government’s overall aim of pushing up levels of training and professional development (and finally improving UK productivity).

The other attack has been on how the Levy has actually been spent, less on entry-level skills, more on higher, degree-level development, including MBAs. Rather than a misuse of funds, a distortion of the original purpose, this is a demonstration of actual employer needs. This is supposed to be what the push for apprenticeships is all about - a financial spur to action, to spend on real training needs and upskilling. Not necessarily lower-level skills, but where businesses are going to see the biggest impact and changes.

So far so good for the MBA. But the real point is that market growth isn’t so much going to come from the Levy payers but smaller firms. In other words, the future for the MBA may well be in a re-invented form, in line with the aims of the Levy, to address gaps in business and management skills in the growing numbers of small and micro businesses.

We have been clear for many years that the traditional market for MBAs - the whole corporate world of careers ladders and hierarchies, the rising stars with their MBAs as a ticket to the top - is now just an anachronism. The early experiences with the Levy have only highlighted employer attitudes and needs, and the actual routes to reaching the core productivity challenge. Because the problem isn’t really among the large employers, those who have traditionally invested in training over many years, but the smaller employers with less incentive and resources to spend on skills development. According to the Confederation of British Industry (CBI), two-thirds of employees work for firms with below average productivity expected for their size or sector; the split between the top and bottom businesses in terms of performance is wider than in other countries. We have a ‘long tail’ of businesses without the core business and management skills needed to secure engagement of employees, drive growth and spark innovation.

At Bradford School of Management our new MBA Apprenticeship runs from this September, and we’re looking at the need to tailor the content and delivery to smaller firms and their needs. Besides the opportunity for taking advantage of the 90% subsidy provided by Government on apprenticeships, there are going to be other ways in which Levy funds are made accessible to small business. Already, 10% of funds accrued by the large employers can be transferred to members of their supply chain to improve the performance of the wider operation, and the CBI has been campaigning for this figure to be increased. The future is there, in the competition between whole supply chains, not individual organisations. There are also the plans for small firms to be able to access the large bank of unspent Levy.

It’s a picture that suggests the real age of the MBA might only just be beginning, and the chance for business schools to be at the heart of a skills transformation in the majority of organisations, not the privileged minority.

Professor Zahir Irani, Executive Dean, Faculty of Management, Law and Social Sciences, University of Bradford.

Professor Irani will be speaking at the Chartered ABS Annual Conference 2018 taking place on 5-6 November 2018 in London. Find out more


One Comment

  1. Chris Warhurst
    Jul 12, 2018

    Consistent survey evidence indicates that skill shortages are much less then popular perception suggests. Of the shortages that do exist, many are at intermediate skill level – one reason why the UK Government is keen to boost apprenticeships, particularly in technical areas. the blog is right to point out that there is a significant Apprenticeship Levy (AL) underspend. An obvious reason for this underspend is a lack of employer demand for apprentices at the volume set by the Government. Boosting the number of apprentices is a supply side initiative that is not underpinned by evidence of employer demand. For example, demand for STEM apprentices over the 2000s was more or less flat, with replacement, not new, demand the concern amongst employers. One suggestion to address the lack of current AL spend is to ‘loosen’ eligibility for AL draw down. One consequence will be that companies – large and small – will rebadge existing training as apprenticeships in order to use their AL more fully. There is a danger that MBA apprenticeships are emerging to ‘help’ absorb that cash and, whilst good for business and management school finances, will do little to address either skill shortages at the intermediate level or, a justified point in the blog, the current management skills deficit. The starting point for exploring this particular deficit should be a review of existing undergraduate and postgraduate management education within UK business and management skill to assess if it is fit for purpose.

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