How Managers Deliver Business Performance
Only now are there some glimmers of growth, albeit from a low base. Where will the growth in future business performance come from? Over the last year, the Centre for Business Performance at Cranfield School of Management has engaged in a study to look at how managers deliver business performance. Spurred on by our previous work into the people drivers of business performance, we wanted to find out more about exactly how middle and junior management affect the bottom line.
Recently, many organisations have invested less in people development, with much of what has been spent focused on the essentials. Increasingly we hear people asking "What are the returns?" and "How do we justify this when we are cutting everything else?" To answer these, we must understand the link between management development and the performance of the business.
Answering Two Fundamental Questions
So we are faced with two fundamental questions:
- Where is the evidence that developing our managers makes a difference?
- What are the factors that ensure we get the most out of our managers and the best return on our investment in their development?
Spanning 12 months, the Centre for Business Performance studied the practice of management development in seven organisations, and tested the impact of management development on business performance in a wider setting through using a survey and published accounts from Companies’ House. The UK standards body Investors in People sponsored the research, which resulted in us getting useable responses from over 400 commercial organisations.
The study showed how management development delivers better business performance, in terms of service levels, quality and customer satisfaction. Companies with better business performance were more profitable, having better sales margins; so management development has a clear link to the bottom line. In particular we found that: -
- Better managerial performance directly results in better business performance leading to increased profitability
- Having a good HR framework, such as those recognised by Investors in People, positive influences managerial capability, the organisational learning culture, the effectiveness of management development and creates a high performing context in the organisation.
- Developing this environment helps create and deliver better management performance
How Management Development Delivers
People Skills and Self-Awareness
What we found was that good management development enhances how managers manage people; develop the ability to coordinate and plan; use sound social skills and interaction; effectively represent the people who work for them. The case studies showed that much of this capability comes from managers being self-aware, being able to understand aspects of their own personality and management style and how this affects the people they are working with. The exemplars we visited showed just how committed the organisations were to the development of good management, with development programmes, coaching, mentoring and job roles all being used to develop their management team and take it to the next level.
Having clear goals is essential to delivering high levels of business performance. This is not only at the personal level of understanding what the individual is supposed to achieve, but at the wider level of people really understanding how their work contributes to the success of the organisation. Managers have an extremely important role to play in this process. They are the conduit for cascading down the objectives, but also for feeding back insight and learning. In difficult times it is important to have clear direction, but it is equally important to have rapid and accurate feedback on what is working and where things are not delivering what was expected.
A Strong Business Case for Development
The study combined our insights from the case studies with the evidence collected in our survey, then linking the individual company survey responses to Companies’ House published financial data. This made clear the strong case for continuing the planned development of managers, even when money is tight.
For further information on the research report, see: http://www.som.cranfield.ac.uk/som/p1052/Research/Research-Centres/Centre-For-Business-Performance.
Mike Bourne is a Professor of Business Performance in the Centre for Business Performance. Monica Franco-Santos is a Senior Research Fellow.