EXECUTIVE SUMMARY
This research seeks to obtain a better understanding of some of the factors that shape employers' product market strategies and the specific role that public policy may play in that process. It also seeks to improve our understanding of how firms utilise skills in the context of their overall competitive strategy and the factors which determine whether or not employers seek to use the skills of their labour force as a source of competitive advantage.
The report is based on 32 detailed case studies with employers in five key sectors - Creative, Performing Arts & Heritage, Energy & Utilities, Financial Services, Food & Drink and Hotels. As such, the conclusions and key findings are tentative.
There are five key findings from the research:
- Changes in market conditions are the major influence in inducing change in firms' product market strategies and in their utilisation of their workforce's skills. Faced with changed conditions, some firms will continue on their existing path. Others may change - some through competing in higher value-added activities, although some may also deskill, especially where there are severe cost pressures. This emphasises that employers are in the lead.
- Skills were found to play a variable part in companies' competitive strategies. In some instances, the utilisation of employee skills is key to the company's competitive advantage in the market. In other instances the skills of the labour force are more marginal to the company's competitive strategy. Where they play a key part then employers see the maintenance of their control of skill formation as crucial and of necessity see themselves as in the lead on skills issues. This is especially important when considering some employers who are content with their existing arrangements and processes.
- The link between product market strategies and skills utilisation is also variable. Skills are a derived demand, driven by the firm's product market and competitive strategies but not in a straightforward manner as employers have a degree of choice as how they use the skills of their employee for business objectives. In addition, there are other factors such as technology, the influence of trade unions and management practices which play an important role in skills utilisation in the workplace.
- Sector differences are important in shaping firms product market strategies and the ways in which they utilise skills. These sector differences are also important in providing a range of different levers for public policy both in influencing firms' product market strategies and utilisation of skills.
- There are a range of areas where government can influence the firm's product market strategy. These include factors such as regulatory efficiency, legislative standards and the development of criteria for compliance for awards or grading systems. There is also the opportunity to influence product market strategy through 'branding' initiatives and through facilitating collaboration between employers around their common requirements. In two of the sectors examined, there was also a role for more direct action.
Therefore, the research suggests, albeit tentatively, that:
- In any attempt to influence a firm's product market strategy, there is no 'silver bullet' - no single approach which will always work. Instead, this analysis suggests a sectoral approach, involving employers and recognising the relative importance of public sector levers shows more promise.