Inbox: Why American management rules the world

After decade of painstaking research, team from Harvard Business School, London School of Economics, McKinsey & Company, and Stanford has systematically surveyed global management and concluded that American firms are, on average, the best managed in the world.
Here are some of the key findings of the World Management Survey:
Well managed firms thrash their poorly managed competitors Organisations with better management massively outperform their disorganised competitors, no matter where they are located.
American firms outperform all others This United States dominates in the manufacturing, retail, and healthcare sectors. Japanese, German and Swedish firms follow closely behind. In contrast, developing countries like Brazil, China, and India lag at the bottom of the management charts. In the middle stand countries like the UK, France, Italy, and Australia, which have reasonable but not brilliant management practices. New Zealand ranks one place below Australia on the survey.
Bottom dwellers drive the rankings down Almost 90 percent of the cross-country differences are driven by the size of the “tail” of really badly managed firms within each country. Countries like the US that excel have hardly any badly managed firms, while those like India have mass of very badly managed firms pulling down their averages.
Every country has some world-class firms Even bottom-ranking India has dozens of firms that use world-class management practices. key finding is that individual companies are not trapped by the national environments in which they operate – there are top performers in all countries surveyed. Conversely, being in world-class environment like the US does not guarantee success.
The secret sauce of management success One of the biggest drivers of these differences is variation in people management. American firms are ruthless at rapidly rewarding and promoting good employees and retraining or firing bad employees. The reasons are threefold.
• The US has tougher levels of competition. Large and open US markets generate the type of rapid management evolution that allows only the best-managed firms to survive.
• Human capital is important. America traditionally gets far more of its population into tertiary education than other nations.
• The US has more flexible labour markets. It is much easier to hire and fire employees.
However, writing in Harvard Business Review blog four of the survey’s researchers say the answer is not for all firms to be more American, but rather to consider some of the practices US firms – and especially multinationals – continually exhibit and implement. “Across all countries, organisations that properly incentivise talented workers, whether through promotion, pay, or other rewards, outperform others. As best practices spread and firms continue to implement these techniques they will narrow the existing gaps, reaping huge growth and profitability gains.”
To benchmark your own organisation and determine where you fall within the ranks of your industry or nation visit http://worldmanagementsurvey.org. M

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