One of my new responsibilities, following recent restructuring at the New Zealand Institute of Management, is to manage our international relationships. It is vital that NZIM is involved with other international organisations. We must have good understanding of what is happening to management worldwide. It helps us develop our research capability and to constantly review the content of the NZIM Management Model.
So, late last year I went to Chennai in Madras, India to represent NZIM at the Asian Association of Management Organisations (AAMO) Council Meeting and the All India Management Association’s (AIMA) Annual Conference.
AAMO was established in the early 1960s and NZIM is one of its eight Founding Members. Given our long-standing relationship with the organisation, AAMO members have high expectations of reasonably strong NZIM contribution. AAMO exists to create an Asia Pacific forum of similar management organisations to enable them to share information and leverage resources. It holds an international conference every three years, hosts website (www.aamo.net), and publishes quarterly magazine, The Asian Management Review.
NZIM has organised two of these regional conferences in 1974 and 2004. Former NZIM chairman Doug Matheson is the Immediate Past President. The next AAMO Conference will be held in Hong Kong in 2010. AAMO creates the opportunity for members to go direct to each other as needed and follow up on opportunities. For example, Malaysia and India have worked with NZIM to implement our Management Capability Index. AAMO now boasts 18 member countries with possible catchment of 26. China is the next likely new member. The Council meets twice year and the next meeting will be in Australia in the next few months.
The two-day conference kicked off with each member country presenting an overview of the state of play of their local economy and brief description of each organisation’s current strategies and initiatives. This alone made the visit worthwhile. Everyone commented on the recession but all countries felt positive that things are beginning to move forward.
Canada, India, and Malaysia have each adopted the use of the NZIM Management Capability Index. “Capability” is critical indicator of management performance because it goes beyond the individual’s skill level to reflect how those skills play out at an organisational level. While management “competency” provides general description of an individual’s ability to perform successfully in particular job or position, “capability” measures the application of management to the total organisation and to the resulting organisational performance that is achieved. It is the result of management leadership and competence in the key management practices that lead to sustainable performance and business growth.
Other factors also influence enterprise performance. For example, the state of the economy, government policy, market competition, inflation, labour market practices and technology changes. But the critical dimension for an organisation is how effectively management applies and practises its competencies to deal with external and internal influences and achieve high levels of business and organisational performance. The MCI helps organisations identify where improvements can be made. It also enables benchmark comparisons with other organisations and countries.
It is effectively based on the chief executive’s or the board’s self-assessment of nine key drivers of management capability. Current performance, including actual results and comparative performance of the organisation, is scored as percentage against defined criteria to create an index of management capability for the organisation. The categories in the index and the weighting given to each are:
Visionary and Strategic Leadership – 15%
Performance Leadership – 10%
People Leadership – 10%
Financial Management – 10%
Organisation Capability – 5%
Technology and Knowledge – 5%
External Relationships – 5%
Innovation – Products and Services – 10%
Results and Comparative Performance – 30%
“Results and Comparative Performance” has the highest weighting because is where the rubber hits the road for the organisation, the board and the management team. NZIM compiles the Index annually for New Zealand organisations and has also used it internally. The results are summarised to provide an overall management capability index for New Zealand. Malaysia, India, and Canada are also using the MCI which creates an opportunity for international benchmarking. Malaysia and India are now extending their use of the Index and hopefully other AAMO members will adopt the Index to create an in-depth Asia Pacific benchmarking session at future triennial conferences.
The discussions around the Triennial Conference were more operational. The group discussed possible conference themes, managing successfully post recession seemed to be most popular.
We visited Addison & Co on day two of the conference. The company is part of Amalgamations Group, one of India’s biggest companies. The factory makes high precision drills and bits. It effectively illustrated the differences between our countries. The factory was well laid out and, from quality management perspective, was hard to fault. Everything was very tidily in its place. But everywhere we went the floor was slippery with machine oil which also hung in the air as fine mist. We couldn’t see any fire sprinklers. Everyone was proud of their work and keen to share information. One worker stumped me with request for my autograph. He thought I was presenter from television’s Discovery Channel.
I attended the two-day AIMA (All India Management Association) Conference after the AAMO Council meeting.
There were 600 delegates and speakers from around the world. Global accounting firm Deloitte was key sponsor of the conference. Though strongly focused on the needs of Indian management the conference theme of “Creating Lasting Value” and its content was relevant to New Zealand. The message was that it is imperative that organisations should focus their energies on building lasting value for customers, investors, employees, and the community at large.
Strategies for doing so were identified. Focusing on long-term plans, sticking to core competencies, investing in people, building strong and lasting brands, and constant innovation were among the key ones.
An outcome was agreement that building lasting value is both the greatest challenge and opportunity facing management in today’s world.
It was recognised that businesses still tend to measure value narrowly in terms of equity, revenues, and bottom line profits, but that lasting value creation extends far beyond the financial statements.
This led to conclusion that we need to select leaders for organisations who are aware that their success with people, both employees and customers, is just as important as achieving financial success.
Delegates acknowledged that it is difficult in the current economic scenario to focus on the long as well as short-term needs of the organisation but, that it is essential that managers do so. Managers who can do this and ensure that their long-term strategies keep the organisation relevant to customers, is cost competitive through focus on efficiency, and is able to align its people with organisational goals and innovation will be the managers of tomorrow.
It was extremely worthwhile going outside of my normal New Zealand context. Membership of AAMO is important for NZIM. It creates an excellent international link and learning opportunity for us in our remote corner of the Pacific.
Kevin Gaunt is CEO of NZIM Northern.
