Management: does it really work?
Management is relatively young as a degree-course science, and even younger as an industry. We take it for granted as a crucial driver of efficiency and productivity in modern organisations. But as its effectiveness is so hard to measure, how much of this is based on assumption and received wisdom?
Management: for better or for worse?
There's plenty of qualitative data (case studies and the like) but very little quantitative data about the effect that good management has on an organisation - until now.
Over the last decade the World Management Survey has looked at the performance of more than 10,000 organisations across 20 countries, and measured management practices along three lines: performance monitoring, target setting and incentives.
The results confirmed that good management does indeed have a role in improving performance, and is strongly linked to higher productivity, profitability and growth.
The report estimated that management accounts for roughly a quarter of the 30 per cent productivity gap between the US and Europe.
Good and bad managers
It found that the US, Germany and Japan had the best managed companies, and big multinationals also scored highly. Southern Europe, big emerging markets such as China, India and Brazil didn't do so well, with a 'large tail of very badly run firms'.
The researchers found that publicly owned organisations across all sectors had worse management practices, being weak at using incentives, and with low performers being much less likely to be retrained or moved.
In the private sector, the worst managed firms tended to be those owned and run by their founders or descendants, especially firstborn sons.
It was suggested that one of the reasons management in the UK scored worse than the US was that the UK had many more family-run firms (probably because of certain tax breaks), and that descendants, often firstborn sons, had become CEOs in these firms regardless of their ability.
It found family firms with professional, external CEOs tended to be well managed.
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