Editorial: Missing Link

There isn’t any credible research available that we know of – either locally or internationally – to establish direct link between management performance and the performance of the New Zealand economy. As NZIM chief executive David Chapman reports in this issue, his Institute is keen to establish something and Management magazine is working with him on the project. In the meantime, on the basis that we feel intuitively there has to be link between individual management capability and the nation’s economic fortunes we decided to take good look at one well-established and reputable measure of corporate performance and see what it tells us.

Economic Value Add (EVA) is not new. But as measure of “real” corporate wealth creation or destruction we don’t see anything else on the horizon that articulates the management performance issues as eloquently or as graphically as EVA. Mark Story spent some time with EVA consultants Stern Stewart and other commentators in an effort to get at least one perspective on how well the leaders of our largest enterprises stack up on at least one important indicator, their ability to create wealth for the businesses they lead. The results are contained in his cover story and they are none too encouraging.

At Management magazine we happen to think that managerial capability – that includes leadership skills, strategic thinking, organisational design and the host of other key disciplines of the management process – has profound impact on the performance of the nation. Logic surely would suggest that if the individual components of the economy, be they private enterprise or public sector, are badly led and performing below par, then the collective outcome must equally be sub-standard. There are times when events beyond the competence or incompetence of managers will conspire to deliver better or worse economic result – in our case jump in world prices for key export commodities – but overall we’d have to say our economy hasn’t performed too well for good many years now. We think that is consequence of management capability. And with an election on the break just as we went to press, we’d hasten to add we include political management as part of that mix.

Good leadership and good management are at the heart of things economic, no matter that some economists deny proof of causal link between individual ability and national performance. We also believe that in time there will be more irrefutable evidence to prove it. In the meantime, we’d like to think we play small part in contributing to an awareness of the need to lift our leadership and management skills – for the good of the economy and everyone who depends on it.

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