Management Practices in the UK

In their exhaustive study of patterns of management and productivity among companies in seventeen countries, Bloom and Van Reenen (Why Do Management Practices Differ across Firms and Countries,) found that UK managers fell into the middle of pack with respect to “overall management”.  When considering management practices and styles among UK emerging companies it is useful to understand the broader context of management practices throughout the country regardless of type and size of firm.  In an earlier study of management practices in hundreds of manufacturing companies in France, Germany, the UK and US, Bloom and Van Reenen, working with other colleagues (Management Practices across Firms and Nations), found that UK productivity lagged behind the US and that 10% – 15% of the gap could be attributed to differences in management practices between the two countries and that UK firms included in the survey had the widest variation in management practices among the four countries including the highest proportion of “poorly managed” companies. The researchers noted that the relatively poor performance of UK management in relation to the other three surveyed countries was somewhat puzzling given that the UK had moderately high levels of competition and low levels of regulations, two factors that the researchers argued were important drivers of good management practices.

Bloom, Van Reenen and their colleagues did a follow up study in the Autumn/Winter of 2009 and 2010 (Constraints on Developing UK Management Practices) with many of the same UK companies that they had previously surveyed to identify any intervening changes in management practices and found that management practices appeared reasonably persistent over time (i.e., the well-managed firms in 2006 tended to also be the well-managed firms in 2009) and that management quality appeared to have improved among the firms as a group, particularly with respect to adoption and implementation of “lean operations”.  The researchers observed that the improvement in management practices was greatest in situation where the company faced increased product market competition or had upgraded its skills and that companies also performed better when managerial turnover had occurred, a finding that the researchers suggested might indicate that companies were making managerial changes to bring in people capable of implementing better management practices.  The researchers also touched on constraints to improving management practices in the UK and cited, in order, an inadequate supply of managerial human capital, inadequate worker skills and informational barriers (i.e., “not knowing what changes to make”).



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