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14 July 2005

Business leaders are calling for Inverstors In People to recognise small firms

Reference number: PPO 14/7



Small business leaders have called for the Investors in People (IiP) scheme to be made for relevant to small firms.


The Federation of Small Businesses in Wales said that the first challenge was to make small company managers aware of IiP.


Then they said that among those who had heard of it, the next challenge that IiP faces is the widespread misconception that only large businesses can achieve it.


FSB Welsh Policy Unit chair, Roland Sherwood, said: “Since its inception in 1991, IiP has been central to government attempts to increase the skill level of the UK workforce.


“During those 12 years, more than 34,000 organisations, representing around 27 per cent of the UK workforce, have been assessed as achieving the necessary standards in training and development.


“However, while the laurel logo has become a familiar sight in reception areas and recruitment advertising, IiP has failed to achieve significant penetration in certain key sectors.


“Although around 90 per cent of UK companies employ fewer than 50 staff, only about half of IiP accredited organisations are of that size.


“The Government is planning to make IiP as prevalent in the small business sector as it already is in blue chip companies and large public sector organisations.


“But the first challenge it faces is making small company managers aware of IiP. And even among those who have heard of it, IiP faces the widespread misconception that only large businesses can achieve it,” he said.


In response to this lack of awareness and understanding, IiP has been running a major marketing initiative, including newspaper and radio adverts and direct mail packs.


This has contributed towards an increase in the number of SMEs with the accreditation from 25,710 in May 2002 to 29,756 in May 2003. However, lack of awareness is not the sole reason for low take-up in the small business sector.


FSB spokesman Russell Lawson said: “Research has discovered three main reasons why those small companies who are aware of IiP choose not to go for accreditation. Firstly, many managers are concerned that the process will be too time-consuming. Although the process is not so mired in paperwork as it was before the year 2000, it is still one that requires considerable time and effort.


“Secondly, small firms are also concerned about the financial cost of the accreditation process. Achieving the standard costs firms with between 10 and 49 employees an average of £4,352 – not an insignificant sum for companies of that size.


“And finally, it is questionable that most small firms that gain the standard reap benefits that outweigh the costs.


“Many expect that the IiP logo will be a useful marketing tool and so they invest their precious time and money into gaining it, only to discover that it has little value in marketing terms.


“Others believe that the process will enable them to align their training activities with their company objectives. Many of them subsequently complain to us that their training has actually become aligned with IiP’s objectives.


We have no doubt that IiP can be very useful for some organisations, but I would advise every small company to think very carefully before making the investment in time and money.


“With this in mind, we would also strongly oppose any attempts by Government to make IiP a pre-contract or tendering condition with public-funded contracts, including local authorities or other intermediaries.


“Widespread use of this dominant position would discredit the scheme and favour big businesses at the expense of small businesses.


“Most crucially, the arbiters of whether or not a company is successfully investing in its people ought not to be the Government, but rather the competent staff, satisfied customers, and enriched shareholders of that company,” he said.