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Employment Growth Companies in Birmingham

Published: April 2000

Rather than analysing the local economy using traditional sectoral analysis this Topic Report segments organisations in the local economy into different categories based upon employment growth. This allows the job generating capacity of the local economy to be examined - highlighting the extent to which the City's portfolio of companies are able to generate extra jobs.

Once these categories have been identified it is then possible to use business analysis techniques to examine the internal strengths and weaknesses of the companies in these different groups. This information can then be used to promote the development of employment growth companies, thereby increasing the proportion of growth companies in the local economy and conversely to mitigate against declining, job losing, companies.

Part One - Economic Analysis

The sample of 13,000 companies drawn from the Birmingham Company Information System database, can be classified into 4 categories:

• Fast Employment Growth Companies;
• Rising Employment Companies;
• Stable Employment Companies; and
• Declining Employment Companies.

Key Finding

• Fast Employment Growth Companies represented only 9% of all companies, they created 92% of all new jobs between 1995 and 1998, an extra 49,242 jobs. Increasing the proportion of these companies in the local economy would dramatically improve the level of employment.
• Manufacturing, business services and retail sectors are "hot sectors" in terms of their propensity to act as incubators for fast employment growth companies.
• Stable Employment Companies account for 65% of total employment but do not increase the stock of jobs in the local economy. Although they are key stakeholders, as an important source of job opportunities, finding ways to encourage growth amongst these companies would dramatically improve employment in the local economy.
• It is important to nurture large companies because their exit from the local economy would have a dramatic impact on the job creation and retention process.
• The degree of job creation and job destruction found in the manufacturing sector makes it stand out as a dynamic sector. Fast Employment Growth Companies in this sector are applying new technologies to old induustreis and creating many jobs in the process.

Part Two - Business Analysis

Overall, the Fast Employment Growth Company has a competitive edge:

• in the ability to 'manage change'.
• in the use of benchmarking and quality standards to improve quality standards.
• in it's commitment to staff development and human resource management.
• in the use of IT equipment for strategic purposes.

No one factor stands out as determining the employment growth potential of a company, rather it is the cumulative effect of marginal yet distinct advantages. This leads to the basic same conclusion that 'you can do anything, anywhere, as long as you do it well'.

Key Finding

• A higher level of strategic planning is often a necessary contributary factor required to encourage employment growth.
• The majority of Fast Employment Growth Companies have a positive attitude to external business support.
• 48% of Fast Employment Growth Companies are registered or working towards ISO 9001. Considerably higher than stable and declining companies.
• Fast Employment Growth Companies plan twice the level of training provision compared to other companies.
• The Fast Employment Growth Company has more scope to finance business and employment expansion using its internal resources.

Part Three - The Next Steps

This section highlights some of the key policy implications of this research and highlights some areas for future research.