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Why American firms are best managed firms?
By SiliconIndia | Monday, 20 June, 2011
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Bangalore:American firms are the best managed firms in the world. This was concluded based on a decade-long survey done by a group of European researchers from Harvard Business School, London School of Economics, McKinsey & Company, and Stanford. They developed a tool to calculate management practices across operational management, monitoring, targets, and people management. They have systematically surveyed global management through this method.
The survey was done in over 10,000 firms in 20 countries. Each dimension was scored on a range of practices to produce an overall management score, which in turn, helped the researchers in creating the first global database of Management practices.
Here are the findings of the survey:
â¢Well-managed firms massively outperform the other poorly managed competitors. They make more money, grow faster, have far higher stock market values and survive for longer.
â¢American firms are the best, they outperform all others dominating mainly in the manufacturing, retail and healthcare sectors.
â¢Bottom dwellers drive the rankings down. Countries like India have low average scores because they have a huge number of very badly managed firms pulling down their averages.
â¢Every country has some world-class firms, even India which is in the bottom most rank has lots of firms that use world-class management practices.
The main reason why American Management is the best in the world is mostly because of the variation in people management. American firms rapidly reward and promote good employees and retrain or fire the bad ones. There are three reasons for this:
1.The U.S. has large and open markets in which they produce rapid management progress and this allows the survival of only the best-managed firms.
2.Human capital plays a major role too. The U.S. gets far more people into college than most other nations.
3.The U.S. has flexible labor markets making the hiring and firing of employees much easier.
If the other bottom-ranking firms want to reach the top of the ranking, then they need to consider some of the practices that U.S. firms constantly display and implement. Organizations that give proper incentives to deserving and talented workers, maybe through promotion, pay, or other rewards always outperform the others. Implementing these techniques will make the existing gaps narrower bringing in huge growth and profitability gains.
The survey was done in over 10,000 firms in 20 countries. Each dimension was scored on a range of practices to produce an overall management score, which in turn, helped the researchers in creating the first global database of Management practices.
Here are the findings of the survey:
â¢Well-managed firms massively outperform the other poorly managed competitors. They make more money, grow faster, have far higher stock market values and survive for longer.
â¢American firms are the best, they outperform all others dominating mainly in the manufacturing, retail and healthcare sectors.
â¢Bottom dwellers drive the rankings down. Countries like India have low average scores because they have a huge number of very badly managed firms pulling down their averages.
â¢Every country has some world-class firms, even India which is in the bottom most rank has lots of firms that use world-class management practices.
The main reason why American Management is the best in the world is mostly because of the variation in people management. American firms rapidly reward and promote good employees and retrain or fire the bad ones. There are three reasons for this:
1.The U.S. has large and open markets in which they produce rapid management progress and this allows the survival of only the best-managed firms.
2.Human capital plays a major role too. The U.S. gets far more people into college than most other nations.
3.The U.S. has flexible labor markets making the hiring and firing of employees much easier.
If the other bottom-ranking firms want to reach the top of the ranking, then they need to consider some of the practices that U.S. firms constantly display and implement. Organizations that give proper incentives to deserving and talented workers, maybe through promotion, pay, or other rewards always outperform the others. Implementing these techniques will make the existing gaps narrower bringing in huge growth and profitability gains.
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