Australia could dramatically lift national productivity by investing in corporate management improvement, a landmark international study of 439 companies commissioned by the federal government has found.
The study reveals there is substantial scope for improvement of management practices by company bosses and huge potential returns to firms. If business is able to lift management performance, it will be a key factor in improving productivity in the economy and can dramatically lift company performance, the study shows.
Management Matters in Australia: Just how productive are we? found a strong association between management practices and a company’s productivity. A single unit increase in scores for management performance – which would place Australia up with the world’s best practice – was found to be equivalent to a 56 per cent increase in labour force or a 44 per cent increase in invested capital. Measures were made in three areas including operations management, performance management and people management.
People management measures included instilling a talent mindset, and rewarding, addressing, promoting, attracting and retaining high performance.
Overall, Australian management practices were rated sixth-best among 16 countries, markedly lagging top performing United States, and also behind Japan, Germany, Canada and Sweden. The implications for government policies are outlined and include greater investment in initiatives to improve management skills, education and professional development as well as more flexible structures.
The study was undertaken by a research team from the University of Technology, Sydney, Macquarie Graduate School of Management and the Society of Knowledge Economics and is part of a worldwide study led by the London School of Economics, Stanford University and McKinsey & Co.