To address this gap, I recently helped formulate the
U.S. Census Bureau’s survey
of management and organizational practices at more than 30,000
manufacturing plants across the country--the first large-scale survey of
management in America. Along with Nick Bloom, Lucia Foster, Ron Jarmin,
Itay Saporta and John Van Reenen, we examined three types of
practices-- performance monitoring; setting targets, and offering
incentives—which we called “
Structured Management.”
Analysis
of the data reveals several striking results about the relationship
between performance goals and improved business. Specifically, setting
business goals and monitoring results are among the practices that
actually yield better business productivity and growth, according to
this comprehensive survey of U.S. management conducted in 2011. The
survey was funded by the National Science Foundation and had
administrative support from the National Bureau of Economic Research and
the MIT Center for Digital Business. It was a joint, academic-U.S.
census bureau collaboration.
My
fellow researchers and I set out to determine whether, and what type of
management practices influence bottom-line business results such as
productivity, output and growth. Based on the responses, we found a
tight link between Structured Management and performance outcomes such
as growth, expenditures and innovation as indicated by R&D and
patent intensity.
Figure 1:
Better Performance is Associated With More Structured Management
While
the survey did not focus exclusively on digital technologies, the
conclusions may partly reflect the increasing adoption of information
technologies, like Enterprise Resource Planning (ERP) systems, which
make data collection and processing much cheaper, easier and more
effective. Structured Management scores for data use have improved the
most, according to the data. Presumably this reflects the growing use of
IT in modern firms.
The study
also highlights the important rise of data-driven decisionmaking, which
the MIT CDB has championed for several years. Most of the rise in
structured management practices, for example, has come among businesses
that have implemented data-driven performance monitoring.
Figure 2:
Average Management Scores Increased between 2005 and 2010,Especially for Data Driven Performance Monitoring
It
was also interesting to note that adoption of structured management
practices has increased between 2005 and 2010, particularly for those
practices involving data collection and analysis. This is consistent
with my earlier research with Lorin Hitt and Heekyung Kim on
Data-Driven Decisionmaking.
Among other key findings:
--
There is a substantial dispersion of management practices across the
establishments. Eighteen percent have adopted at least 75% of these more
structured management practices, while 27% adopted less than 50% of
these.
--There
is a positive correlation between structured management practices and
location, firm size, establishment-level measures of worker education,
and export status.
Going
forward we will continue to analyze the data and explore causality.
Additionally, we may do another survey in 2015 to establish longer-term
data and perhaps will focus on the retail or health-care sector.
Let me know what other ideas you think we should explore.
O/T: I got your Twitter message today, just wanted to say that apart from starting to follow I'd also bought your book on index linked bonds. Best wishes, "Sackerson".
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