Business and Management INK

Management Practices: Complementarity is the Key

April 5, 2016 1298

[We’re pleased to welcome Arthur Grimes of Motu Economic and Policy Research and University 16296308759_8149d18c99_zof Auckland. Arthur recently published an article in ILR Review entitled “The ‘Suite’ Smell of Success: Personnel Practices and Firm Performance” with co-author Richard Fabling of Motu Economic and Policy Research.]

Throughout the world, we see firms in the same industry in the same country having very different productivity outcomes. We have long been fascinated in why this is the case, and whether management can do anything to place their firm in the top quartile of performers within their industry.

It turns out that management practices are key to firms’ productivity outcomes. But the key is not a simplistic application of performance pay or any other single management practice to the firm; a holistic approach is required. Recent analysis ILR_72ppiRGB_powerpointbased on longitudinal data for New Zealand firms across all sectors of the economy, shows that having in place a suite of complementary high-performance management practices can raise productivity by over 10% for firms that are in the top quartile of management practices. This is the case for firms in manufacturing, services and other sectors. The suite of management practices includes having processes for staff consultation, clear firm values, performance reviews coupled with performance pay, room for autonomous staff decision-making and staff training opportunities.  What this means for firms is that there are no ‘magic-bullet’ management practices that can be introduced quickly to transform most firms. Management need to introduce a comprehensive suite of management practices if they wish to raise their productivity to be in the top rung of firms.

The abstract from the paper:

The authors use a panel of more than 1,500 New Zealand firms, from a diverse range of industries, to examine how the adoption of human resource management (HRM) practices affects firm performance. The panel is based on managerial responses to mandatory surveys of management practices in 2001 and 2005 administered by the national statistical office, linked to objective longitudinal firm performance data. The authors find that, after controlling for time-invariant firm characteristics and changes in a wide range of business practices and firm developments, a suite of general HRM practices has a positive impact on firm labor and multifactor productivity. Conversely, these practices tend to have no effect on profitability, in part because the adoption of performance pay systems raises average wages in the firm.

You can read “The ‘Suite’ Smell of Success: Personnel Practices and Firm Performance” from ILR Review free for the next two weeks by clicking here. Want to know all about the latest research from ILR ReviewClick here to sign up for e-alerts!

*Meeting image credited to Ministerie van Buitenlandse Zaken (CC)

Business and Management INK puts the spotlight on research published in our more than 100 management and business journals. We feature an inside view of the research that’s being published in top-tier SAGE journals by the authors themselves.

View all posts by Business & Management INK

Related Articles

Boards and Internationalization Speed
Business and Management INK
November 18, 2024

Boards and Internationalization Speed

Read Now
How Managers Can Enhance Trust
Business and Management INK
November 11, 2024

How Managers Can Enhance Trust

Read Now
The Role of Place in Sustainability
Business and Management INK
October 28, 2024

The Role of Place in Sustainability

Read Now
Turning to Glitter in Management Studies – Why We Should Take ‘Unserious’ Glitter Serious to Understand New Management Practices
Business and Management INK
October 24, 2024

Turning to Glitter in Management Studies – Why We Should Take ‘Unserious’ Glitter Serious to Understand New Management Practices

Read Now
Utilizing Academic-Practitioner Partnering for Societal Impact

Utilizing Academic-Practitioner Partnering for Societal Impact

In this article, co-authors Natalie Slawinski, Bruna Brito, Jennifer Brenton, and Wendy Smith reflect on the inspiration behind their research article, “Reflections on deep academic–practitioner partnering for generative societal impact,” published in Strategic Organization.

Read Now
Trippin’ Forward: Management Research and the Development of Psychedelics

Trippin’ Forward: Management Research and the Development of Psychedelics

Charlie Smith reflects on his interest in psychedelic research, the topic of his research article, “Psychedelics, Psychedelic-Assisted Therapy and Employees’ Wellbeing,” published in Journal of Management Inquiry.

Read Now
Using Ethnography to Explore Entrepreneurial Extracurricular Activities

Using Ethnography to Explore Entrepreneurial Extracurricular Activities

Co-authors Birgitte Wraae and Nicolai Nybye reflect on the inspiration behind their research article, “Learning to Be “Me,” “the Team,” and “the Company” Through Entrepreneurial Extracurricular Activities: An Ethnographic Approach,” published in Entrepreneurship Education and Pedagogy.

Read Now
0 0 votes
Article Rating
Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments