en News Single View - WHU – Otto Beisheim School of Management
Wednesday, 13. February 2013

How effective is excellent management?

Good management improves the performance of any company. But are established, traditional methods like the “The Principles of Scientific Management”, introduced in 1911 by Taylor, still valid today?

Several thousand companies were tested upon three fundamental management methods most scientific approaches have in common: Support of long-term goals through strict performance indicators, adequate incentive system for employees, and verification of control mechanisms to identify room for improvement.

Numerous evaluation initiatives of industry firms in cooperation with consulting agencies and banks showed the same result: Through intervention of management into production processes, enormous efficiency improvements can be noticed. For example, the impact of the three management practices goals, performance incentives and control was shown on a 5-point-scale. An upwards movement on this scale effectuated a rise in production of about 23 per cent in the examined firms. Moreover, these firms exhibited a growth of annual revenue of 1.4 per cent and an increase in market capitalization of up to 14 per cent.

Despite the clearly positive influence of good management methods, awareness of such is often vanishingly low. Although almost 80 per cent of the evaluated forms featured management practices above average, in reality most managers overestimate in their self-assessment. However, companies do not only have to recognize the essential meaning of their management quality. They rather have to also verify continuously if improvements have to be made. Namely, most often these measures do not bring success right away. Yet from a long-term perspective, excellent management seems to be the only possibility to maintain sustainable growth and innovation.

You can find the full article in edition January 2013 of the Harvard Business Manager or on www.harvardbusinessmanager.de