Many of the UK's 100-plus business schools are not performing at the highest level and are providing insufficient training on leadership development, according to a report into the demand for and supply of managers and leaders in the UK, published today.

The report identifies a list of flaws in the management education offered by business schools and says that while there are some "star performers", they are in the minority. The report blames limited resources and constraints on salary levels and staffing. It states that these issues must be dealt with if the UK's management education is to be improved.

The Council for Excellence in Management and Leadership report looks at the issue of high-quality management and leadership skills.

"If we want to compete internationally we have to raise our game; we have no choice," says Sir Martin Sorrell, chief executive of WPP Group and a member of Ceml. "What we have is very good but there are a number of fundamental things that have to be done in order to compete on an increasingly competitive world stage."

The Ceml report says that UK business schools need to strengthen several aspects of their performance; they must think globally, be willing to forge new and varied alliances, must monitor and evaluate the learning they offer and make a stronger business case for investment in mangement education.

"In other words," says the report, "to succeed in future, the UK business schools need to practise all the things they preach about leadership. They need to show that those who teach leadership can also do it."

According to the report, UK schools competing in global markets feel small and poorly endowed compared with their US peers. If the clock could be put back, says Ceml, it might have been better to have a smaller number of larger, better resourced UK schools. But given the current situation, it favours relying on market forces to persuade the schools to collaborate both with each other in the UK and overseas, as well as with different kinds of providers of management education.

However, Ceml warns there is a considerable risk that UK schools will move too slowly to keep pace with developments worldwide.

The report accepts that the UK's business schools represent a large teaching resource, offer wide and flexible access, have rigour and a research base and can offer high quality. Moreover UK schools, it says, could be more international than their US counterparts because they are better placed to look to Europe and Asia, as well as the US. The report suggests that this potential strength should be developed.

"Positioning the business schools geographically or functionally gives a competitive advantage," adds Sir Martin.

Employers are clear about their needs when buying executive training from business schools, says the report. They want a service tailored to each corporate customer, rather than a repackaging of modules. They want an international perspective and a holistic approach - the integration of leadership skills with business knowledge. The report says these items "present formidable challenges to UK business schools. Only a small number . . . are within shooting distance of being players in this market at all."

The schools, though going in the right direction, are moving too slowly and lack real innovation. The report points out that the Open University has a long record of innovation and has readily incorporated new modes of delivery, such as e-learning. But in general, says Ceml, companies have been far more willing to tackle new methods of learning than universities. Even young business school faculty members are adopting conventional approaches to teaching.

Ceml proposes a range of recommendations to lift the standard of management education in the UK.

Business schools should include the development of leadership skills on the MBA programme, should try to develop a better understanding of employers' and customers' needs and should involve employers as partners in the development of more effective ways of teaching management and leadership.

The report suggests business schools should also move further and faster in aligning their corporate executive development offerings with business needs, possibly developing a national forum between leading employers and business school deans.

When tackling the issue of faculty, the report proposes that all business schools should be allowed to pay market rates for their staff and also offer a variety of contracts.

In addition, academics should be allowed a specific amount of consultancy earnings each year to increase salaries, as well as having practical experience of working with industry, a practice common in the world's best business schools.

Universities should limit the extent to which business schools are expected to cross-subsidise the rest of the university and the report suggests that those business schools that teach solely at the graduate level - Cranfield and Manchester Business School, for example - should be made fully autonomous institutions.

The report concludes by saying that while the business school sector is not a failing one, "it could make a much greater contribution to the quality of management and leadership in the UK".

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