Investors in People is warning British business leaders to prioritise employee development if they are to meet their own ambitious business goals.

The call follows research to mark IIP week, which shows that while three-quarters of managers say staff development is the key to improving their businesses productivity, just one-in-three put this ahead of all other priorities such as new technology and machinery, knowledge of competitors and research and development

The research also showed that business leaders have ambitious predictions for their own business growth. The 700 senior managers surveyed by the Future Foundation anticipated an average productivity increase within their own organisations of 23% in the next five years.

This impressive level of optimism, if applied across Britain, would equate to an increase in output of £257.5bn by 2009.

However the same managers were much more pessimistic when asked to consider the country as a whole.

Ruth Spellman, chief executive of Investors in People, said that many senior managers still misunderstood the importance of developing their staff.

“It seems that senior managers still see productivity as someone else’s problem, which is disturbing and potentially damaging, not just to their organisations but to Britain as a whole,” she said.

Only one in five believed that British organisations focused enough on improving productivity, most (55%) forecasted that productivity would continue to lag behind that of international competitors.

Furthermore, 56% thought substandard management skills were a major contributory factor in these productivity problems.

Spellman warned that senior managers needed to take a realistic view of their own organisations.

“Failing to apply a critical eye to their own organisations means senior managers risk undermining their ability to deliver the growth they are predicting,” she said.

“Britain’s boardrooms must take action now to prioritise employee development in the face of other demands if they are to achieve their business goals and help the country rise to its productivity challenge.”

Key findings:
* Over 70% of senior managers believe their workforce is highly productive and that they are currently getting the most from their employees.

* Increasing productivity and developing employees in order to achieve it are an even higher priority among medium and large organisations.

* Senior managers in London and the South East are more likely to believe that the keys to increasing workforce productivity lie in more effective use of employee talents and helping employees to achieve an appropriate work-life balance.

* Development of employees was ranked the highest priority for increasing productivity across the finance, education and construction sectors.

* In contrast, the health and retail sectors don’t value human capital as highly. Senior managers in the retail sector are more likely to believe that knowledge of competitors will help increase productivity while senior managers in the health sector favour innovation (i.e. new technology and machinery).