British politicians enjoy lecturing their continental European counterparts on the virtues of a deregulated and flexible economy.
But on the subject of what the flexible economy is supposed to deliver, namely superior company performance and productivity, they fall strangely silent.
This is because, measured by output per hour, the UK still lags rather than leads. Recent figures show that in 2004 US workers added 34 percent more value per hour than their UK counterparts, Germans 11 percent more, and the French 25 percent more.
This frustrates and perplexes ministers and their aides, who have spent the last 30 years using the UK as a testbed for a no-alternative economic experiment in the abovementioned flexibility and deregulation, only to find that while the macroeconomic levers they can pull do affect productivity, it's the microeconomic processes inside companies that they can't reach -- at least not directly -- that matter more. It's not the economy: it's management, stupid.
Reinforcement for this view comes from a new report from the London School of Economics' (LSE) Center for Economic Performance, McKinsey & Co and Stanford University entitled "Management Practice and Productivity: Why They Matter," which supports the common-sense notion that the way firms are managed is one of the most important ways of distinguishing between them.
Scoring 4,000 medium-sized European, Asian and US manufacturing companies on the quality of their operations, performance and talent management, the report suggests that, as with productivity, the UK is in the second league for management, behind the top tier of the US, Sweden, Japan and Germany, alongside France, Italy and Poland, and ahead of the dunces of Greece, India and China.
However, these figures conceal some interesting subtexts.
The difference in national averages is largely accounted for by the "tail" of badly run firms -- on the chosen criteria, 8 percent of UK companies fall into this category compared with 2 percent in the US. In India, 20 percent of companies are badly run, yet the best Indian firms are a match for anyone. Multinationals operating in India, for example, are among the best-managed anywhere, with the top 30 percent of Indian firms being better managed than the average in the UK. As the researchers note, combined with low labor costs, this makes them formidable competitors, irrespective of national averages.
Ownership matters, too. Multinationals, particularly US ones, are the best managed everywhere. Interestingly, private-equity-owned firms aren't notably better managed than the UK average and are less well managed than the top tier of national leaders, multinationals and firms under dispersed shareholder ownership. So much for the supposed performance advantages conferred by their governance arrangements.
The researchers argue that the study is good news for companies, "suggesting that they have access to dramatic improvements in performance simply by adopting good practices used elsewhere."
For policymakers, the challenge is harder -- getting the good-practice message across to the poor-performing tail that brings the average down.
But not so fast. In a kind of infinite regression, complementary research in progress under the aegis of the Advanced Institute of Management Research (AIM) hints that "adopting good practices used elsewhere" is anything but simple.
That is because managers are astonishingly bad at assessing their own performance. More than 85 percent of managers in the LSE study believed their company was better managed than the average, and self-assessed scores "have almost no link" with firm performance or the marks awarded by the researchers.
More broadly, the AIM research identifies the context for good practice as critical. Indirect support for that comes from the LSE finding that although there are relative differences in national scores (the UK scores well for people management and less well for operations, for example), "no single dimension provides the key for improved management performance" -- good firms are well managed across all performance aspects. The implication is that a firm can't just import an attractive practice: It has to have the underpinnings in place to support it -- including the awareness that it is needed in the first place.
So when it is said that British managers are notoriously reluctant to adopt promising practices, this is true but not very helpful, tantamount to saying that the UK is not very good at management.
To break out of the circle of inertia, the key seems to be to get managers looking both outward -- as much to customers as to other companies to get an accurate bearing on their real competitive position; and inward -- to develop their own "signature" practices, based on their own values and history, that will distinguish them from others in the eyes of customers.
As with fruit and vegetables, home-grown is best.
When Chinese Communist Party (CCP) leader Xi Jinping (習近平) wakes up one morning and decides that his People’s Liberation Army (PLA) can win a war to conquer Taiwan, that is when his war will begin. To ensure that Xi never gains that confidence it is now necessary for the United States to shed any notions of “forbearance” in arms sales to Taiwan. Largely because they could guarantee military superiority on the Taiwan Strait, US administrations from Jimmy Carter to Barack Obama practiced “forbearance” — pre-emptive limitation of arms sales to Taiwan — in hopes of gaining diplomatic leverage with Beijing. President Ronald
As the US marks one month under the leadership of President Joe Biden, the conversations around Taiwan have shifted. As I discussed in a Taipei Times article (“No more talk of ‘bargaining chips,’” Jan. 30, page 8), with the end of former US president Donald Trump’s administration — and all of the unpredictability associated with it — Taiwan would not have to worry about being used as a “bargaining chip” in some sort of deal with the People’s Republic of China. The talk of Taiwan being used as a bargaining chip never subsided over those four years, but under Biden, those
Chinese Nationalist Party (KMT) Legislator Lin Wei-chou (林為洲) talked about “opposing the Chinese Communist Party [CCP]” in a recent Facebook post, writing that opposing the CCP is not the special reserve of the Democratic Progressive Party (DPP). Not long after, many people within the KMT received a mysterious letter signed “Chinese Nationalist Party Central Committee” containing what looked like a declaration of opposition to, and a call to arms against, the CCP. Unexpectedly, the KMT’s Culture and Communications Committee came forward with a clarification, saying that the letter was not sent by the KMT and telling the public not to believe
The Canadian parliament on Monday passed a motion saying that China’s human rights abuses against the country’s Uighur Muslim population in Xinjiang constitute “genocide.” Canadian Prime Minister Justin Trudeau has so far avoided using the word genocide in regard to Xinjiang, but if he did, it would begin to generate solidarity among G7 nations on the issue — which is something Trudeau has called for. Former US president Donald Trump used the word genocide regarding Xinjiang before leaving office last month, and members of US President Joe Biden’s administration have been pushing for him to make the same declaration, a Reuters report