Best Management Practices Really Do Boost the Bottom Line

BY Kathy Crosett
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Will a better management style impact the bottom line for your company? Can specific practices make a difference regardless of the industry you operate in or the products and services you offer? Based on the results of a new study, Raffaella Sadun, the Thomas S. Murphy Associate Professor of Business Administration at Harvard Business School, contends that best management practices can be as effective as employing new technology when it comes to generating sales and profits.

Over the course of a decade, Sadun and a team of researchers collected data from over 10,000 companies, globally. The research, in the form of surveys, took into account what happened on ‘shop’ floors, how this information was communicated to management and how management adjusted their targets and processes based on this information. Researchers also assigned scores based on human resources practices ranging from hiring to training to motivation.

Survey results revealed wide variation between highly performing and poorly performing businesses. Researchers linked 30% of the performance variation to management quality. Managers who didn’t put new practices in place and who didn’t hire skilled workers lagged behind. It may seem illogical for managers not to adopt best practices, but in some cases, Sadun points out, doing so may make them fear for their own jobs or worry about a loss of power.

If changes are in order for your organization, Sadun recommends starting with “an honest assessment of where the company currently stands.” As much as possible, this means tabling your emotions and determining exactly what’s happening in your production processes before making any decisions. Failing to make these tough assessments and avoiding putting new processes in place will negatively impact your bottom line.