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 success is
“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 by www.russellhouse.co.uk