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The UK government acknowledges a persistent productivity gap between the UK and international competitors. Research suggests that skills are only one aspect of performance and that good management and the motivation and morale of individuals also play a key role. This report reviews the latest research evidence and investigates the ways that skills embed within a broader model of workforce capability to influence business performance. It considers why policy makers are concerned about skills and explores the evidence for the potential role of skills in raising the performance levels of individuals, companies, sectors and the broader economy. The implications for policy are considered and questions for further research are proposed. The authors propose a model of human capability within organisations reflecting both the development and deployment of capability from both an individual and organisational perspective. Skills are one key element of this model but need to be seen in context.