Quantifying Management Practice
When we began this research project in 2001 we believed that the way a firm is managed has a strong effect on its perform - ance. We also believed that this effect might be stronger than many of the other factors that determine whether a business succeeds – national culture, market conditions and regulation for example. To examine this hypothesis we developed a tool to assess overall management practice and compare it with company performance. Our earlier studies involved more than 700 me - dium sized manufacturing firms in the US, the UK, France and Germany. These earlier studies did indeed show a strong rela - tionship between management practice and firm productivity and delivered some powerful insights for governments and cor - porations alike. But they also left many questions unanswered. In the latest round of research, we have applied the same methodology to more than 4,000 companies in the US, Asia and Europe.We stuck with medium sized firms because it is much more straightforward to investigate the link between plant level management practice, and corporate productivity. We chose manufacturers because of the importance of operational man - agement to overall performance. To assess management practice we conducted “double blind” interviews. The plant managers we interviewed did not know our scoring methodology and our interviewers knew nothing about the performance of the organizations they were inter - viewing. Our interviews covered 18 topics in three broad areas: shop floor operations; performance management; and talent management. Interviewers gave the firms a score from one to five, depending on how well they performed according to pre-determined scoring criteria for each
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