The Americans think they do it better, no surprise there, but would
you be surprised if a European research team concluded that American
firms were the best managed in the world? A group including professors
from the London School of Economics has found that American firms make
more money, grow faster and survive longer. The global survey of
10,000 firms in 20 countries found that whilst all countries had some
world class firms American came out on top not only for the number of
brilliantly managed firms but more significantly for having fewer
badly managed firms.
The finding of the World Management Survey published on the Harvard
Business Review web site on June 13th under the heading Why
American Management Rules the World stated that this excellence
extended across a range of industries including health care.
According to Professor Rebecca Hankes and Professor John van Reenen
of the LSE and other members of the research team the reason for this
“American firms are ruthless at rapidly rewarding and promoting good
employees and retraining or firing bad employees”
They go on to say that the main reason for this is that “It’s much
easier to hirer and firer employees”.
Interestingly even in America some people don’t believe this. Some
comments on the HBR site questioned the research methodology, others
complained that a world survey was not able to compare like with like
whilst others suggested that American firms better performance was
more likely due to access to technology and a highly educated
workforce. This was countered in typically robust language by a
commentator who said if American firms could pay the same wages as
Indian or Chinese firms they would “kick everyone’s arse”.
May be its cultural differences or the fact that I have always worked
in the Public Sector but I found my reaction was to focus on the words
“ruthless”,” rewarding” and “firing”..
To me the report said American firms make more money and grow more
quickly because they are ruthless in the way they firer people and
reckless in the way they reward people. Basically American firms are
target obsessed and bonus driven and we have recent dramatic evidence
of where that leads.
This does not surprise me but it doesn’t fit with my idea of being
well managed or evidence of superior people management skills. This
model of management seems like that in professional football, hugely
inflated transfer fees being equivalent to hiring and promoting,
dropped if your performance dips or you stop scoring but huge bonuses
for winning. And we all know about the massive debt and financial mess
professional football is in.
May be it is because where I come from success is measured by staying
within your given budget yet improving services, whilst being more
efficient. Offering huge bonuses to those who meet targets and firing
those who don’t really doesn’t require much in the way of people
management skills. Motivating staff whose wages have been frozen, who
have been told they must work longer for less and whose prospects of
promotion have disappeared in the management restructuring that
requires some people management skills.
The worry is not that the Americans think they do it better but that
politicians, policy advisers, management consultants and Business
schools in this country believe them.
See People management in a harsh financial climate and
Equipping managers for an uncertain future both published