NZIM Future Indicators – Research starts on next Capability Index

When the national debate escalated as the nation’s economic fortunes fell, at least in terms of our sliding OECD performance ranking, the New Zealand Institute of Management made strategic decision to act and find out more about the management capability of its members and New Zealand managers in general. The NZIM Management Capability Index (MCI), released for the first time at the end of last year, was the outcome of that action.
Now, NZIM is back in the market collecting data from managers around the country to compile the Index for second year. The process will be the first measure of progress or slippage against changes over the past 12 months, allowing us to build database and to start tracking trends that will provide invaluable indicators for the future.
NZIM developed the Index because, quite frankly, we did not know much about the long-term effectiveness of New Zealand’s training and development programmes and how they contribute to raising management competency levels.
The problem at the outset was just how to define capability and, in particular management capability. The Concise Oxford Dictionary defines capability as: “ability, power – the condition of being capable; an undeveloped or unused faculty”. In another context, it refers to it as an ability to undertake specific tasks and operations. The problem, therefore, was to agree on how we could measure capability if we could not satisfactorily define it. Some researchers have defined management capability as the skills, knowledge and personal attributes required by manager to effectively perform the functions associated with management in workplace situation.

Key practices
NZIM decided that management capability was demonstrated in business and/or organisation performance and was the result of management leadership and competence in the key management practices that lead to sustainable business performance and business growth. The measurement of management capability must therefore link the application of management skills and abilities (management practice and competencies) to the results achieved and which reflect performance.
As far as we know, no other country yet attempts to measure management capability. But they are interested in doing so and that interest has us talking with other management organisations in America, Australia and number of Asia/Pacific countries.
The primary value of the NZIM MCI for any enterprise that takes part in the evaluation process is firstly in identifying where improvements can be made, and then comparing those results or trends against other organisations, both in New Zealand and internationally. Improving management capability, and through that the performance of the organisation must, ultimately, result in the organisation achieving its true potential.
Since release of the Index, the Government has moved to look more deeply at the issue of management capability and development. It allocated funding in the Budget through the Ministry of Economic Development to improve understanding and support action in the private and public sectors to improve management capability, particularly among the nation’s many small to medium sized enterprises. The funding will be used, in part, for research to develop indicators to assess capability over the longer term including the types and quantity of management skills businesses need.

Government support
The Minister of Economic Development, Jim Anderton, recently said in an article written for an NZIM newsletter, that to become higher value economy New Zealand needs well-educated and adaptable workforce. Raising workplace skills, lifting levels of innovation and investment were, he said, all dependent on management capability.
He then identified three possible issues that impact on management capability. New Zealand’s do-it-yourself culture was, he said, the source of many innovative ideas. But thinking we can do it all ourselves may stop us from seeking specialist advice for up-skilling when needed.
And while there had been steady increase in formal management qualifications and business training over the past decade it can be “fragmented, mixed in quality and lack practical application”. There was, Anderton said, little demand among managers for formal training, particularly in the SME sector.
Thirdly, his experiences in previous life where he managed growing business suggested to him that management transition points are where the risks of poor performance are highest, particularly for businesses starting to export. The problem of firms having to acquire new and often more sophisticated skills when going international had been highlighted to him by many New Zealand managers.
Anderton ended by saying that we simply need to do better. We need to be more pro-active about developing management skills and enterprise. And we need to “unleash the talents and creativity of New Zealanders through partnership with industry if we want to create high-value economy and improve the living standards of New Zealanders”. The Government’s work to improve our management capability is an example of proactive partnership between the State and private sector to improve one crucial area. Anderton was, he said, confident that over time we will see high quality services and advice for businesses and more successful New Zealand economy.
To me this simply emphasises how important it is that senior managers respond to the MCI survey because the outcomes are very important to the economy and the future.
Doug Matheson, who is chairing the NZIM/Asian Association of Management Organisations (AAMO) International Leadership Summit in Auckland on October 7 and 8, will be presenting the latest Index findings at special workshop on the first day.

• NZIM has been very concerned for some time about the ability to link with micro and small businesses to help them with their development needs. Recently we developed new Business Entrepreneurs Programme which provides framework for mentors and business owners to work together in constructive way on the day-to-day needs of the business and the owner. The feedback we are getting from the various groups which we have now set up around New Zealand has been very positive indeed and everyone is saying that it is providing an answer to the question about how best to serve the needs of this important micro and small business sector.
One of the key criteria for the NZIM MCI is visionary and strategic leadership. This is also the focus of our Leadership Summit in October where delegates will hear from some of the world’s best leadership speakers who will take delegates through the themes of the leadership challenge for chief executives, knowledge and learning organisations and emerging trends on the international landscape. I urge you not to miss this wonderful opportunity to hear over two days the best of the best.

David Chapman FNZIM is national chief executive of NZIM.

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