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Introduction

1. The Skills Utilisation Leadership Group charged us - the Skills Utilisation Action Group - with examining how to increase the numbers of employers in the private, public and third sectors in Scotland who engage in activities to improve the effective use of skills in the workplace. Our detailed remit and membership is at Annex A.

2. Engaging in skills utilisation will involve a significant change in attitudes and workplace practices for many employers. This is a long-term challenge that requires urgent attention. 'Skills issues' have long been synonymous with issues about the quality of the learning system. It will not be easy to refocus attention also on to what happens in the workplace. That said, by increasing awareness of the issue and better supporting organisations to implement changes in the workplace, we believe that we can begin to increase the number of employers co-creating with their employees workplace environments that make better use of skills.

3. To achieve this aim, we have identified three objectives:

1. to increase awareness of the relevance and benefits of skills utilisation to organisations and of the range of workplace practices that may improve skills utilisation in their types of workplace;

2. to help organisations implement workplace change to improve the utilisation of skills; and

3. to better support key delivery agencies and stakeholders to deliver objectives 1 and 2.

4. In this report we (a) outline the actions we will take and (b) make recommendations to the Leadership Group on further specific actions that should, in our collective view, be taken, to achieve these objectives.

5. Accompanying this report is our draft communications plan for the Leadership Group ¹. As we outline below, an effective communications plan to reach employers is in our view pivotal to the success of this endeavour. It should be considered very much as the start of an on-going process of communications, the messages of which will evolve over time as we learn more about what to communicate and how.

Financial implications

6. Other than the following, we do not consider that this report or the draft communications action plan have significant financial implications:

• meeting any significant increase in demand for organisational support services would have financial implications for the delivery agencies concerned;
• we do not consider that the establishment of a cross-sectoral network would have any significant initial cost implications, though it will have some resource implications, particularly for the Scottish Government as the proposed interim leader of the network. Any future funding requirements would depend on how the network's work develops; and
• while we do not consider that communications action plan would have any significant initial cost implications, any future funding requirements would depend on how the plan develops.

Summary of Key Recommended Areas for Action

7. In Annex B we map our remit to our high level actions and recommendations.

Roles and Responsibilities of Key Delivery Agencies and Stakeholders

8. The Leadership Group invited us to identify clear roles and responsibilities for each agent or stakeholder involved. We have identified in Annex C the specific roles and responsibilities of key delivery agencies and stakeholders in encouraging employer engagement in effective skills utilisation. Each of them also has a role, so far as is appropriate to their function, to promote and support the delivery of better workplace practices to enable effective skills utilisation.

OBJECTIVE ONE - INCREASE AWARENESS

Draft Communications Action Plan - Influencing the Influencers

Remit

9. The Leadership Group asked us to consider the audiences the Leadership Group should be seeking to influence and how those audiences are segmented, addressing barriers to understanding among the different groups and any constraints under which they are operating. We were invited to prepare a draft communications action plan.

Consideration

10. An effective communication plan is in our view pivotal to encouraging employer engagement in effective skills utilisation. Our draft plan outlines how to encourage those who influence employers to integrate messages about skills utilisation with their wider communications about improving productivity, competiveness and creating better jobs.

11. The Leadership Group approved the concept of a medium term project to identify which organisational strategies to implement effective skills utilisation best work in particular circumstances. Knowing more about what workplace practices work, when and why will help address some barriers to understanding and some of the constraints employers are under. The draft communications plan includes the dissemination of the findings of this research.

Recommendation

12. We recommend the Leadership Group adopts our accompanying draft communications action plan to begin to increase awareness of the relevance and benefits of skills utilisation to organisations and of the range of workplace practices that may improve skills utilisation in their workplace.

Public Sector Leading by Example

Remit

13. The Leadership Group invited us to consider how the public sector as an exemplar can increase demand for more effective skills utilisation.

Consideration

14. In encouraging employer engagement in effective skills utilisation, we believe it is important that the public sector leads by example in committing to take corporate action to improve skills utilisation, otherwise its messages to organisations in the private and third sectors will lack credibility. It is particularly important in our view that those public sector organisations with key roles in encouraging others of the benefits of skills utilisation 'walk the walk' themselves.

15. By backing their talk with action, this will not only be likely to lead to improvements in the delivery and efficiency of public services, their experiences may also provide useful assistance to other public sector organisations wishing to implement their own strategies to improve skills utilisation. We recommend in paragraph 57 the establishment of a cross-sectoral network, which would among other things, help those members taking action to improve skills utilisation in their own organisations to learn from each other on an on-going basis.

16. While we do not consider that the Scottish Government or any public sector delivery organisation could claim at this stage to be an exemplar in the delivery of effective skills utilisation, they have a leading role in committing and implementing measures aimed at becoming exemplary workplaces.

Actions

17. The Scottish Government will:

• audit its present position:
• analyse the recent results from its staff survey about staff skills and how they are used in the organisation; and
• participate in the Government Skills Survey looking at the range and depth of skills across the UK Civil Service, the skills gaps , how we might work with within the UK Civil Service to meet these skills gaps and how best we use existing skills. This survey will report in the summer 2009;
• confirm skills utilisation as a key action within its new skills and learning plan, which will be published shortly; and
• convene a representative working group to consider skills utilisation in the Scottish Government as part of its corporate skills and learning plan.

18. Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland and the Scottish Funding Council similarly commit to consider skills utilisation issues as part of their wider corporate strategies and implement necessary workplace changes.

19. The Convention of Scottish Local Authorities ( COSLA) has written to councils in Scotland inviting them to express an interest in taking a lead on implementing corporate skills utilisation strategies, which a number of councils have done. COSLA will propose that the National Local Government Workforce Strategy Task Group consider skills utilisation as part of its work.

20. NHS Education for Scotland will integrate skills utilisation in its corporate plan for 2009/2010 and develop the existing workforce across the range of clinical and support workforce groups using a combination of skills development and skills utilisation.

Public Procurement and External Scrutiny

Remit

21. There are also more direct ways to encourage some employers to engage in skills utilisation . The Leadership Group highlighted " public procurement" and " inspection and quality improvement strategies of the public sector" as two such examples that could drive demand for skills utilisation. We therefore considered the role public procurement and external scrutiny can play. (More information about our consideration of these issues is at Annex D).

External Scrutiny

Consideration

22. We considered the extent to which external scrutiny might be better deployed to encourage more effective skills utilisation. In doing so, we recognised that following the 2006-07 Crerar Review ³, the Scottish Government is seeking to reduce external scrutiny and to replace this, where appropriate, with a robust system of self-evaluation.

23. We acknowledge that the primary responsibility for improvement clearly lies with the organisation providing the service. However, models of self-evaluation and improvement, while more prevalent in Scotland, are not yet embedded across all of our public bodies. There is therefore a need to continue to drive this improvement for the time being, as these new frameworks develop.

Recommendations

24. We recommend that all public service self-evaluation frameworks encompass effective skills utilisation.

25. We recommend that external scrutiny bodies ensure, so far as is consistent with their functions and other aims underpinning their scrutiny regimes (including the importance of proportionate and risk-based scrutiny), that their frameworks allow scrutinised bodies to demonstrate that they are delivering ' leadership and management in the workplace that enables meaningful and appropriate encouragement, opportunity and support for staff to use their skills effectively'.

Public Procurement

Consideration

26. There is a legislative hurdle that would appear to prevent the inclusion of conditions to require effective skills utilisation in other types of contracts. That hurdle is that effective skills utilisation must be directly related to the subject matter of a particular contract . Contracts also need to include quantifiable and achievable outcomes ⁴. That said, we would like to test these propositions.

Action

27. Skills Development Scotland will actively consider for each contract it tenders over a 6 month period whether conditions to encourage effective skills utilisation could in principle be directly related, including whether it would have been appropriate to ask tenderers to explain how they measure the effectiveness of their leadership and management practice. The agency will report back its findings to the Leadership Group.

Recommendation

28. We recommend that public bodies in Scotland consider whether, where appropriate, their procurement processes contribute to effective skills utilisation within their organisations.

OBJECTIVE TWO - HELP ORGANISATIONS IMPLEMENT WORKPLACE CHANGE

Progressive and Innovative Leadership and Management

Remit

29. The Leadership Group highlighted " leadership campaigns" as an example of a means to drive demand for skills utilisation. The Group also invited us consider how to improve the opportunities for middle management to lead improvement activity and the development of a cross-sectoral network for leaders - and innovators - of the future. The Leadership Group also asked us to address barriers to understanding among different groups and any constraints under which they are operating (see paragraph 9).

Consideration

30. The quality of leadership and management is in our view an important constraint - and potentially a key enabler - to employer engagement in skills utilisation activities. Leadership is a key influencer on the strategies of firms and other organisations, which drive their demand for skills. As the Skills Utilisation Literature Review outlines, leadership and management are also main factors that facilitate workplace change (the other being employee trust and motivation ⁵). More than that, improved leadership and management is also the result of better workplace practices.

Actions

31. We outline below, why we consider further work should be taken on this subject-matter. However, that is not to say that we cannot report some important actions that will be taken:

• Scottish Enterprise will implement a revised Leadership Development policy (2009-2012); and
• the Alliance of Sector Skills Councils will scope out a collaborative approach to developing management and leadership skills across sectors. Early work is to begin on this in summer 2009.

Provision of an enhanced service to business will be at five different levels to reflect the differing needs of the business community and Scottish Enterprise's role to support economic growth. Service delivery will be an appropriate mix of Self Service, One to Many, and One to One support.

Recommendations

32. We recommend that skills utilisation is embedded in mainstream leadership and management development programmes.

33. We were aware at the outset that considering leadership and management would be a difficult task, not least because of the inherent complexity of the topic, the historic difficulties in encouraging employer interest in it and the fragmented nature of the delivery of support. We sought initially to map the current landscape with the aim of identifying gaps in provision and where improvements could be made. We learned from this work that to do justice to the subject-matter would require more time and more specialist input than we were able to devote to it. To give this policy area the further attention we consider it deserves, we recommend that the Scottish Government review how best to encourage progressive and innovative leadership and management in workplaces in Scotland. Such a review should supplement the work currently being scoped by the UK Commission for Employment and Skills to ensure investment in the development of high quality leadership and management skills.

Organisational Development Support Services

Remit

34. The Leadership Group highlighted "encouraging the adoption of ambitious organisational strategies" as an example of a means to drive demand for skills utilisation. We considered how organisational development support services, which among other things, encourage the adoption of these strategies, can best drive such demand.

Consideration

35. We considered the delivery model of the Scottish Manufacturing Advisory Services ( SMAS) to explore if any lessons could be learned about the delivery of support services to improve skills utilisation. Delivered in Scotland since 2005, SMAS is targeted at SMEs in the manufacturing sector. The SMAS model seeks to encourage "companies to see the potential for increased competitiveness and productivity" and is focussed on the improvement of production and business processes. SMAS has five areas of intervention - initial contact, manufacturing review, awareness and training events, intervention project support and signposting and referral.

36. We considered whether the should be a dedicated skills utilisation service in Scotland along the lines of SMAS. Such a service would enable the development of a centre of expertise that would have a clearly defined and identifiable mission. That said, the market for a skills utilisation service is on a entirely different scale and significantly more diffuse. There are, for example, 10,000 manufacturing companies in Scotland and SMAS has to date aimed to penetrate the market by 7% per annum. The establishment of a dedicated service might be perceived as signalling skills utilisation as an issue requiring separate attention, which we believe would be counter-productive at this time. We consider that we would have greater impact if the issue is factored in to the whole gamut of organisational support - and it is not seen as an issue separate from other issues about making organisations more ambitious and productive.

37. Mapped against an example of a four level delivery model, the table in Annex E shows the existing range of services and programmes that are currently provided by Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland and some key organisations that can help organisations adopt effective skills utilisation practices . We are aware that some of the services and programmes may change in the near future. We also acknowledge that there is a wide range of tools and approaches available for improving the quality of performance of organisations which have direct relevance to skills utilisation. The increased take-up of these tools and approaches will help deliver on this agenda and should be encouraged.

38. We do not consider that a dedicated skills utilisation service is necessary. A similar level of service could be delivered with the integration of skills utilisation support with the existing suite of business support services and better alignment of these services. Unlike with the establishment of a new service, this could be done without any organisational upheaval, which we believe is an important consideration, given the level of change that some key delivery agencies are undertaking at present.

39. While we do not consider that the availability of such public support necessarily guarantees success, we believe that integrated services such as these have the potential to contribute to the adoption of better workplace practices that enable effective skills utilisation.

Recommendations

40. We recommend that support for skills utilisation should be integrated with the existing suite of organisational development support services in Scotland. Like the SMAS model, we recommend differentiated levels of service based on the differing needs of organisations. We recommend better alignment of organisational development support services⁶.

Actions

41. The following specific actions will be taken to embed support for skills utilisation in organisational development support services. Strong partnership working will be a key element of these activities.

42. Skills utilisation will be integrated within the following key services being developed by SDS:

• understanding skills utilisation issues in the articulation of industry skills needs matched to more relevant learning programmes and career advice through Skills Gateways in partnership with Sector Skills Councils and GES Key Sectors employers (Spring 2010);
• a refreshed Partnership Action for Continuing Employment service will be introduced (by Spring 2009);
• integrating skills utilisation messages and matching these with new forms of learning and advice support through the Scottish Employer Service (summer 2010);
• integrating skills utilisation messages and tools on My Learning Space - the SDS web-based resource for skills and learning information. (By summer 2010);
• developing and disseminating key messages to support staff in providing advice to individuals and businesses; and
• co-creating new solutions to improve skills development for the workforce through Skills for Growth (by autumn 2010).

43. Scottish Enterprise will develop a detailed Skills Utilisation Action Plan by autumn 2009 The plan will identify key tasks to support skills utilisation through its services and is likely to include :

• improving Scottish Enterprise web content to integrate messages about effective skills utilisation (2009-2010);
• reviewing and revising its Organisational Development services to ensure they are fit for purpose and reflect the skills utilisation theme (2009 ongoing);
• reviewing its broader range of products and services to identify where they support skills utilisation and may require updating (2009 ongoing);
• increasing participation in workforce development seminars, Leadership programmes, business mentoring and Strategic Training Needs Analysis (2009-2012);
• incorporating skills utilisation within staff Continuing Professional Development for customer facing staff (autumn 2009); and
• developing key messages to support staff in their dealings with companies (autumn 2009).

44. Highlands and Islands Enterprise will be looking to embed the key principles of skills utilisation within all the products and services it offers.

45. Highlands and Islands Enterprise will develop a series of Virtual Conferences to enable businesses to respond effectively to the key issues for business survival through the current recession. These Masterclasses will be delivered through Learningworks, the agency's online skills advisory service. All the keynote speakers will promote good practice techniques in the concept of skills utilisation.

46. Scottish Enterprise has responsibility for two component parts of the business gateway National Framework, namely web content and the national enquiry service. The Scottish Enterprise Skills Utilisation Action Plan will identify actions required in these areas to ensure promotion of skills utilisation.

47. The PACE partnership will explore how best to reflect skills utilisation messages and support in the delivery of PACE services.

48. Background to these actions is at Annex F.

Financial implications

49. Meeting any significant increase in demand for organisational support services would have financial implications for the delivery agencies concerned.

Tying Business Support Services to Improvement in Skills Utilisation

Remit

50. The Leadership Group highlighted "business support assistance potentially being tied to improvement in skills utilisation, i.e. investment assistance" as an example of a means to drive demand for skills utilisation.

Consideration

51. Improving workplace practices to deliver effective skills utilisation is particularly important to organisations in these challenging economic circumstances. Making the best use of skills is a clear-headed necessary strategy that will help organisations better weather the recession and plan for recovery.

52. That said, we consider it would be particularly difficult in such economic conditions to demand effective skills utilisation as a condition for public support especially when it is also not clear what organisations would have to demonstrate in order to qualify. There are two approaches that could be taken - to specify a level of skills utilisation that has to be met or specify particular workplace practices. However, there is no agreed measurement of skills utilisation nor is there any consensus on what those practices should be.

53. Policy for investment assistance will transfer from the Scottish Government to Scottish Enterprise later this year. It may be appropriate to consider if skills utilisation as part of the grant approval process at some point in the future.

Recommendation

54. We recommend that this is not the time to impose skills utilisation conditions on business support assistance.

OBJECTIVE THREE - BETTER SUPPORT KEY DELIVERY AGENCIES AND OTHER STAKEHOLDERS

Skills Utilisation Cross-Sectoral Communications and Learning Network

Remit

55. The Leadership Group asked us to increase the number of employers in Scotland engaged in improving the skills utilisation of their workforce.

Consideration

56. We consider that the key delivery agencies and other stakeholders should be better supported to help them achieve the twin objectives of increasing employer awareness of skills utilisation and helping organisations implement workplace change. This can best be achieved by delivery agencies and stakeholders working together and supporting each other.

Recommendations

57. We recommend the establishment of skills utilisation cross-sectoral communications and learning network. The roles of the network would be to help:

• key delivery agencies and other stakeholders exchange information and learn from each other about how best to communicate about skills utilisation, both in terms of the messages and the best forms of delivery of those messages;
• share knowledge and experience across sectors and to help identify better working practices that have wider effective application beyond a particular sector;
• relevant organisations to learn from each other as they plan and implement their own corporate skills utilisation strategies; and
• align organisational development services and to help ensure that they are utilised to maximum effect by the key delivery organisations and stakeholders.

58. We recommend that the network is led by the Scottish Government on an interim basis. We recommend it comprises sector lead organisations, Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland and Alliance of Sector Skills Councils. In addition, we recommend that the following organisations should be invited to join: the Scottish Funding Council, the Scottish Trades Union Congress, the Chartered Institute of Personnel and Development the UK Commission for Employment and Skills, the Institute of Directors and the two private sector leaders - Microsoft and BT Scotland⁷. The proposed members of the network are at Annex G.

59. Given the numbers of organisations that support organisations in different sectors, we recommend identifying sector leads. That said, we recommend that while for some sectors identifying a single lead organisation may be relatively straight-forward, for others there may need to be more than one. Building on discussions at the Leadership Group, we recommend that Scottish Enterprise, Highlands and Islands Enterprise and Skills Development Scotland jointly identify at least one lead organisation for the following sectors:

• creative industries (including digital content and technologies);

• energy;
• financial and business services;
• food and drink (including agriculture & fisheries);
• life sciences (including biotechnology and translational medicine);
• tourism;
• construction;
• universities;
• local government;
• health; and
• third sector.

60. The role of sector lead organisations would be to communicate integrated messages about skills utilisation to employers in their sectors (differentiated where appropriate to reflect market positioning, geography and size of organisation and taking into account equalities issues). Scottish Enterprise, Highlands and Islands Enterprise Skills Development Scotland and the Alliance of Sector Skills Councils would have specific responsibility for the communication of cross-sectoral issues, such as the use of ICT systems and other technologies and common issues affecting small and medium-sized enterprises. We expect the network to work closely with others such as the ICT Forum ⁸. The are clear synergies between the work of the network and of the Forum: better skills utilisation can lead to better ICT exploitation and better use of ICT is an enabler of better skills utilisation.

Financial implications

61. We do not consider that the establishment of a cross-sectoral network would have any significant initial cost implications, though it will have some resource implications, particularly for the Scottish Government as the interim leader of the network. Any future funding requirements would depend on how the network's work develops.

Skills Utilisation Action Group
May 2009

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