Dinamiche Industriali

a.a. 2016/17

Lezione 24

Does management

matter?Francesca Lotti

IntroduzioneLe scorse lezioni abbiamo visto che c’è una forte differenza

nella produttività di imprese (e stabilimenti).

CAUSE?

• Proximate factors:– “Hard” technology (e.g. Research & Development)

– Skills (e.g. Expansion of college education)

– Management (a technology & a skill?)

• Some deeper factors “driving” the above– Competition

– Globalization

– Regulations & government policies

– Legal

– Culture2

Introduzione

• L’eterogeneità nei livelli di produttività si correla

con alcune pratiche manageriali

• Pensate all’adozione di alcune pratiche

manageriali come all’adozione di una tecnologia,

non semplicemente agli stili manageriali

• Le pratiche manageriali contribuiscono a

spiegare le differenze nei livelli di TFP tra paesi

– In media il 30% del gap di TFP rispetto agli US è da

ricondursi alle differenti pratiche manageriali

3

Introduzione

4

Introduzione

• Il dibattito è ancora piuttosto aperto, anche perché si pone una questione molto rilevante.

• Come misuriamo la qualità del management?

5

Introduzione

• Domanda: secondo voi, quali sono i pro e

i contro dell’utilizzo dei casi di studio per

studiare la qualità del management?

6

Come misuriamo il management?

• Progetto di ricerca internazionale sul management

• Obiettivo: esaminare le differenze nelle prassi di management in maniera trasversale, sia nelle diverse aziende sia nei diversi paesi.

• Partners: – sede nel Centre for Economic Performance

– London School of Economics

– Stanford University

– Harvard Business School

• interviste molto esaurienti da oltre 20,000 managers in 35 paesi.

7

Come misuriamo il management?

http://worldmanagementsurvey.org/8

9

10

La metodologia

11

L’intervista: primo blocco

12

L’intervista: secondo blocco

13

L’intervista: terzo blocco

14

Example dimensions

evaluated

Quality of targets

Consequence

management

Performance

tracking

People

management

Management

practices

Operations

management

Performance

management

Time horizon of

targets

Measures tracked do not directly

indicate if overall business

objectives are being met.

Tracking is ad hoc

1

Most key performance indicators

are tracked formally. Tracking is

overseen by senior management

3

Performance is continuously

tracked and communicated,

formally and informally, to all

staff, using a range of visual

management tools

5

Dimension scoring criteria

Interconnection

of targets

Interconnection

of targets

Dimension scoring criteria

15

Examples of performance metrics – Heathrow RANK IT!!

16

Examples of performance metrics – Toyota RANK IT!!

17

TO GENERATE THE OVERALL MANAGEMENT SCORE , TAKE THE AVERAGE OF ALL 18

DIMENSIONS MEASURED

Perform-

ance and

target

manage-

ment

Talent

manage-

ment

Lean

shop-floor

operations

Dimensions Score

Overall management

score, on scale of 1–5,

is calculated from

average of all 18

dimensions

1. Introduction of lean manufacturing

2. Degree of lean principles used

3. Documentation and improvement of processes

4. Performance tracking

5. …

2

3

2

3

4

7. Consequence management

8. Quality of targets

9. Target stretch

10. Clarity of goals and measurement

11. …

3

2

3

3

13. Importance of human capital

14. Reward of high performers

15. Rewarding poor performers

16. Promoting high performers

17. …

3

4

3

4

5

18

Score (1): Measures tracked do not indicate directly if overall business objectives are being met. Tracking is an ad-hoc process (certain processes aren’t tracked at all)

(3): Most key performance indicators are tracked formally. Tracking is overseen by senior management.

(5): Performance is continuously tracked and communicated, both formally and informally, to all staff using a range of visual management tools.

(4) Performance tracking

19

Score (1): Top management's main focus is on short term targets .

(3): There are short and long-term goals for all levels of the organization. As they are set independently, they are not necessarily linked to each other

(5): Long term goals are translated into specific short term targets so that short term targets become a "staircase" to reach long term goals

(10) Target time horizon

20

Score (1): Goals are either too easy or impossible to achieve; managers provide low estimates to ensure easy goals

(3): In most areas, top management pushes for aggressive goals based on solid economic rationale. There are a few "sacred cows" that are not held to the same rigorous standard

(5): Goals are genuinely demanding for all divisions. They are grounded in solid, solid economic rationale

(11) Targets are stretching

21

Score (1): Poor performers are rarely removed from their positions

(3): Suspected poor performers stay in a position for a few years before action is taken

(5): We move poor performers out of the company or to less critical roles as soon as a weakness is identified

(15) Removing poor performers

22

Score (1): People are promoted primarily upon the basis of tenure

(3): People are promoted upon the basis of performance

(5): We actively identify, develop and promote our top performers

(16) Promoting high performers

23

Manufacturing

firms with 100

(50)-5000

employees

Scope

Identify formal

universe

Conduct Interviews

Confirm eligible firms

Verify sample is

representative

Defined as manufacturing firms from

ORBIS databases

Confirmed if currently operating with

manufacturing facility in country of focus

Schedule interviews directly

Compare distribution of firms with

eligible universe on key dimensions

Approach

I rispondenti

Focus on manufacturing as easier to measure productivity

(but also for Schools, Hospitals and Retail) 24

25

Dependentvariable Productivity Profits

(ROCE)5yr Salesgrowth

Exit

Estimation OLS OLS OLS Probit

Firm sample All All Quoted All

Management23.3***

1.952***6.738***

-26.2**

Firms 2,927 2,927 2,927 3,161

BETTER PERFORMANCE IS CORRELATED WITH BETTER MANAGEMENT

Notes: OLS Regressions includes controls for country, industry, year, firm-size, firm-age, skills etc.

-10

010

2030

4050

60m

ean

of r

etur

n

1.5 2 2.5 3 3.5 4 4.5

FUTURE STOCK RETURNSMost intriguingly, for an earlier (summer 2004) survey cohort of publicly quoted US firms we find correlated future (2005) stock holding returns

Sto

ck h

oldi

ng r

etur

ns o

ver

2005

(%

)

Management score (to nearest 0.5) assessed in summer 2004

Significant at 1% level

4 29 57 58 49 37 19 # of firms

26

WELL MANAGED FIRMS ALSO APPEAR TO BE MORE ENERGY EFFICIENT

Ene

rgy

use,

log(

KW

H/$

sal

es)

Management

1 point higher management score associated with about 20% less energy use

27Source: Bloom, Genakos, martin and Sadun, NBER WP14 394. Analysis uses Census of production data for UK firms

2.6 2.8 3 3.2 3.4mean of management

USGermanySweden

JapanCanadaFrance

ItalyGreat Britain

AustraliaNorthern Ireland

PolandRepublic of Ireland

PortugalBrazilIndia

ChinaGreece

Management practices across countries

Average Country Management Score

Distinct groups

28

29

0.2

.4.6

.8

1 2 3 4 5management

0.2

.4.6

.8

1 2 3 4 5management

US, manufacturing, mean=3.33 (N=695)

India, manufacturing, mean=2.69 (N=620)

De

nsi

tyD

en

sity

Firm level management score, manufacturing firms 100 to 5000 employees

Management practices across firms (US and India)

29

0.5

10

.51

0.5

10

.51

1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

Australia Brazil Canada China

France Germany Great Britain Greece

India Ireland Italy Japan

Poland Portugal Sweden US

Den

sity

management

US SCORES HIGHLY BECAUSE OF FEW BAD FIRMS

Firm-Level Management Scores

-.4 -.2 0 .2 .4mean of peo_ops

IndiaPolandChina

Republic of IrelandUS

Northern IrelandBrazil

Great BritainCanadaGreece

JapanGermanyPortugal

ItalyAustralia

FranceSweden

COUNTRY LEVEL RELATIVE MANAGEMENT

Relatively better at ‘operations’ management (monitoring, continuous improvement, Lean etc)

Relatively better at ‘people’ management (hiring, firing, pay, promotions etc)

People management (hiring, firing, pay & promotions) – operations (monitoring, continuous improvement and Lean)

Accounting for management across

firms & countries

• Concorrenza

– Livelli di concorrenza più elevata si associano a

miglior management

• Family firms

• Multinationals

• Labor market regulations

• Education

32

0.5

10

.51

0.5

1

1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

Dispersed Shareholders Family, external CEO Family, family CEO

Founder Government Managers

Other Private Equity Private Individuals

OWNERSHIP MATTERS – FIRMS WITH PROFESSIONAL CEOS ARE WAY BETTER RUN THAN FAMILY, FOUNDER OR GOVERNMENT FIRMSDistribution of firm management scores by ownership. Overlaid dashed line is approximate density for dispersed shareholders, the most common US and Canadian ownership type

Average Management Score 33

2.4 2.6 2.8 3 3.2 3.4

USJapan

SwedenGermany

CanadaAustralia

ItalyGreat Britain

FrancePoland

Northern IrelandRepublic of Ireland

IndiaChina

PortugalBrazil

Greece

MULTINATIONALS APPEAR ABLE TO TRANSPORT GOOD MANAGEMENT AROUND THE WORLD

Average Management Score

Foreign multinationals

Domestic firms

COUNTRIES WITH MORE FLEXIBLE LABOUR MARKETS HAVE BE TTER PEOPLE MANAGEMENT SCORES

ChinaFrance

Germany

ROI

Greece

10045 50 55 60 65 70 75 80 85 90 95

Employment flexibility*

0

2.6

2.7

GB2.9

3.0

3.1

3.2

3.3

People Management Practice score

US

0

Sweden

NI**

Portugal

Poland

Japan

Italy

India

2.8

* 100 minus the World Bank ‘Employee rigidity index’** Assumed NI labour productivity same as Great Britain

Source: Data collected from interviews as of September 2008, World Bank; team analysis

Labour market rigidity index* vs people Management Practice score – By country

020

4060

80

1 1.5 2 2.5 3 3.5 4 4.5

EDUCATION IS ALSO STRONGLY LINKED WITH BETTER MANAGEMENT PRACTICES

Management score (rounded to nearest 0.5)

Per

cent

with

a d

egre

e

Non-managers

Managers

Conclusioni

• Le pratiche manageriali contano

• Ci sono metodologie alternative per rilevarle, oltre ai casi di studio

• Queste metodologie ci consentono di fare rilevazioni standardizzate, tra paesi e nel tempo

• Ma soprattutto ci consentono di mettere il relazione le pratiche manageriali alla performance di un’impresa

37