NZIM – MANAGEMENT STRATEGIES : The Management Imperative: Time to step up

New Zealand must “transform” both its level of management competency and the Kiwi workplace. Whatever other spin is put on the findings of the recently released, government-sponsored research report entitled “Management Matters in New Zealand”, that conclusion is at the heart of the matter.
It is an important and tricky issue to resolve. Resolution isn’t made any easier by the fact that New Zealand’s economy is in large measure dominated by small, family firms which are, when it comes to measuring management competency scores, “consistent” underperformers.
The survey, for instance, recommends that “family firms should make long-term commitment to fostering management performance and capability and ensuring that key management positions are filled by merit and talent”. That, for plethora of everyday reasons, may be too much to hope for.
Still, Economic Development Minister Gerry Brownlee’s recent announcement on changes to government-subsidised training and development services, aimed particularly at small businesses, suggests an intention to act on the study’s findings. Under the changes, businesses eligible for training and development subsidies will get them directly through voucher system rather than funding by third-party training providers and, there will be move from full to partial subsidies for training and development services.
The 29 ‘Biz Information’ walk-in centres set up under Labour will be closed over the next six months. According to the Minister, the services they provide will continue in other forms. “Businesses can apply for up-skilling vouchers which they can spend with service providers that best meet their needs,” he said in announcing the shift. Other initiatives are likely to be announced in coming weeks.
The study, while it focused on the manufacturing sector, is important for all New Zealand. It is the first piece of substantial research into measuring the relationship between better management and enhanced economic performance generally. Treasury has consistently played down the importance of the relationship, stance that has often impacted policies that shape the business environment and encourage spending on management development.
This survey says quite emphatically that: “We know that better management is associated with enhanced productivity performance at the enterprise and industry level.” What they don’t know are the drivers that lead to the adoption of best practice management.
The findings don’t reveal much about Kiwi management that hasn’t already been identified. The mediocrity of our management is consistently highlighted by the New Zealand Institute of Management’s own Management Capability Index. When other countries, such as India, Malaysia and Canada use the Index to measure their management capability, they outperform New Zealand on most measures. The Index also shows that, when Kiwi managers self rate their performance they acknowledge that they don’t perform up to their potential.
New Zealand, like every other nation, now faces troubled and turbulent times. The management conundrum needs resolution as part of coordinated and sustained programme to have us meet the obvious challenges ahead and simultaneously exploit the quite unique advantages the nation has including our benign climate, relatively clean environment, energy and resource riches, agricultural and scientific knowhow, capacity for innovation and abundant water to name but few. These riches cannot be exploited without wise leadership to develop the strategies and skilful management to execute the plan.
According to the survey, multinational corporations (MNCs) “clearly outperform” domestic firms. solid 70 percent of firms interviewed with below average management performance are domestic enterprises. And management performance seems to be linked to ownership structure. Publicly owned firms exhibit superior management performance compared to other types of companies in New Zealand including privately and family-owned firms and cooperatives, according to the research. On the other hand, family and founder (managed) firms account for 79 percent of New Zealand’s most poorly managed businesses.
If, as the report suggests, superior management is directly linked to higher productivity performance, then the calibre of Kiwi management is pivotal to improving organisational performance and innovation and “driving national economic prosperity”. It is, in other words, time for “both government and industry: to reflect on what needs to be done, including the scope for well-thought out policy initiatives” that need to be implemented.
Sadly, New Zealand managers have an unjustifiably high opinion of themselves. One of the not-surprising but potentially debilitating truths to be uncovered by the research, is that Kiwi managers don’t consider management improvement high priority.
Managers were asked to self-assess their firm’s management performance based on how they perceived the calibre of the firm’s management overall. They were asked to exclude their own personal contribution when evaluating their firm. “Managers consistently over-rate their firms’ management performance,” said the researchers. And their self-assessed scores of how they saw their firm performing did not align well with the firm’s management score as assessed though the interview scoring grid.
Mind you, the researchers found similar trend in other countries where they have conducted the same research. It suggests, however, that managers are unaware of their firm’s actual management performance and so don’t focus on benchmarking against global best practice or other firms in their sector. Managers consequently operate in the dark and are unable to recognise areas for improvement. Improving managers’ self-awareness would, they conclude, help drive improvements in management performance.
So what are the implications of all this?
The study suggests that instilling effective management practices and promoting high-performance workplace culture would not only build the sustainable competitive advantage of New Zealand business enterprise but also boost national prosperity. It has, for the first time, provided an internationally comparable measurement of management performance for New Zealand manufacturing firms, though there is little that many of the conclusions reached and conditions uncovered would be true of most New Zealand’s other economic sectors.
The findings can be used to inform policy aimed at lifting organisational performance and hopefully will be.
The key drivers of good management practice are firm size, firm ownership, education and skills, the presence of multinationals and labour market structures.
The big imponderable is Kiwi enterprise attitude. Governments, through better informed policy initiatives, can help shape the business environment, but- the ball and New Zealand’s economic future is now very much in the business leadership’s court. Business leaders, and boards in particular, must seize the initiative and understand that investment in management development is the key to their future prosperity, in some cases even their survival, and the health of the economy generally.
“Management Matters” was commissioned by the Ministry of Economic Development, in conjunction with Treasury, the Department of Labour, and New Zealand Trade and Enterprise. The University of Technology Sydney (UTS) was engaged to review Kiwi manufacturing firms’ management practices using study methodology developed by the London School of Economics and global consultancy McKinsey & Co.
For earlier analysis go to NZ Management June 2010, www.management.co.nz.