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THE IMPORTANCE OF SECTORS AND EMPLOYER CHOICE
The research contributes to our understanding of the relationship between employers' product market strategies and skills in three further ways. The first is by highlighting the importance of sectors in shaping employers product market strategies. The second is by highlighting the importance of sectors in influencing employers' utilisation of skills. The third is by exploring the ways in which product market strategies and skills utilisation were related in the case study companies.
With regard to the first of these, the research had started by using the concept of sector as a heuristic device, but it became evident through the analysis that sector-based factors were playing an important part in influencing employer's product market strategies. As illustrated above, this shows how the scope for public policy to shape those product market strategies varies across sectors. For example, efficiency regulation is important in the Utilities sector while branding is important in the Hotel and to a lesser extent in Food and Drink. In the Creative Arts government has other levers it can use through its powers to appoint leaders and specify the conditions under which grants are awarded. The concept of sector therefore has important practical implications here and is of particular importance when considering the scope for public sector influence.
It is also important in helping identify the degree of choice employers have in shaping their product market strategies. This too varies by sector. In the Utilities the regulators exercise a much tighter influence over product market strategies than in other sectors. In Food and Drink the influence of these public levers, in the form of efficiency regulation, has minimal impact on employers behaviour in the product market. Branding is important for some employers but this has only an indirect impact on employers' behaviour in this sector as opposed to the direct impact which efficiency regulation or the powers to appoint organisational leaders and specify the conditions of grants has in other sectors. In some sectors the employers' behaviour is therefore more tightly constrained by public policy levers than in others.
The second area where the concept of sector has practical implications is in the utilisation of skills. Here again, standards regulations were very important in shaping the skill utilisation of the workforce in parts of the Utilities and Financial Services sectors. There employers had to conform to strict regulations which specified the types of skills employers were given and the levels of performance associated with them that are required for certification purposes. In the case of the Utilities this was because of the crucial importance of safety and the implications of this for the health and wellbeing of the workers and general public. In the Food and Drink industry, standards regulation were important for safeguarding the health of the general public. In the Arts these regulations were either absent or had a more limited remit applying only to employee health and safety. However, because these regulations were more extensive in the Utilities sector, employers there had less freedom to determine how they used the skills of their labour force, although they were still in the lead in determining the utilisation of skills and their links with performance.
While the importance of sector differences is emphasised it is important to point out that there are some issues which transcend the sector dimension. Specifically from the case studies, these would include the particular challenges facing small businesses and family-owned businesses.
The third concern is with the links between product market and skill strategies, the central focus of this research. Here the findings point to the crucial role of employer choice in shaping this relationship. As expected the case studies confirm the relationship between the two in general terms. Those companies with higher value-added product market strategies were more likely to make use of the skills of their labour force as a source of competitive advantage in the marketplace. In addition, attempts by companies to move up the value chain were often associated with changes in the ways in which they used the skills of their labour force. This was especially so in the Food and Drink, Hotel and Financial Services industries. But this was not an invariant relationship. For example, there were cases of employers in the Food and Drink sector which produced top of the range beverages and employed a large proportion of relatively unskilled labour as packers. Similarly, in the Hotel sector there was a case of a relatively small hotel which targeted the top end of the market but with little investment in the skills of its staff.
When the two foci of the research are linked up (the factors influencing employers product market strategy and those influencing their utilisation of skills) it shows how the mechanisms involved operate. Product market strategies, with their strong sector variations are shaped by a range of factors, notably the behaviour of competitors but also the actions of public sector agencies. As you move up the value chain, these pressures together with the technology required to deliver the product or service generate pressures on the employers to use their employees as a source of competitive advantage. When this occurs then employers jealously guard control over skill formation as one of their sources of added value. They have to stay in control of skills utilisation, as this is an important part of their competitive edge in the market. Employers in Financial Services, Food and Hotels had greater freedom to manoeuvre than those in the Utilities where scope to change both product market strategies and the utilisation of skills was more limited by the constraints highlighted above. However, whether the employers chose to utilise the skills of their labour force as a source of competitive advantage was their decision. In some instances such as the beverage producer there was no reason that mangers could see why any improvement in employee skills could help them in the market. In another instance, a small meat producer was exploring the possibility of the deskilling of his small workforce because of the shortage of skilled staff, but the employer did not see this as impairing the company's ability to deliver a quality product to the customers.
When they do make a decision to change their business strategy and utilise the skills of the labour force as a source of competitive advantage, as in the case of the distillery, this is not just a question of introducing a few training courses to upskill workers. In this and other cases across the sectors it involved the introduction of high performance management practices, improved communication of business information to staff and changes to the performance reward system for individuals. What does differ between the sectors is the type of high performance practices that are introduced, reflecting the different type of skills that are required to improve performance in the different sectors.
If the process of change in companies over time were examined, it may be that there are crucial decision making points in the evolution of firms where the employer makes a decision to either rely on the skills of the labour force as a source of competitive advantage or to use other means of competing, whether that be through deskilling or relying on new technologies. Which way the decision goes will depend on a whole range of factors, only some of which could be accessed in this research. Clearly one of these is the constraints imposed by regulation of various sorts, another is the availability of skilled labour, another is management's knowledge and mastery of the work practices necessary to generate high levels of skills utilisation and yet another is the culture of firm which is required to generate the trust required to encourage workers to exercise discretionary effort. What public policy can do is increase the pressures on employers to encourage them to explore the possibility of making greater use of the skills of their labour force as a source of competitive advantage. What this research has also revealed is that there are employers who do not seek, and who would not welcome, involvement from the public sector in this regard.
Taken together, these tentative findings suggest that there is no 'silver bullet' for developing the product market strategy and skills utilisation agenda. A 'one size fits all' approach is unsuitable. Rather, using the model within a sectoral approach provides the possibility of a more fruitful way forward.
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