Business 21C - Published by UTS Business

Findings from the Australian Management Practices and Productivity global benchmarking project.

This unique research project for the Department of Innovation, Industry, Science and Research benchmarks management practices in Australian manufacturing firms against the global best. The project was undertaken by a research team from the University of Technology, Sydney, Macquarie Graduate School of Management and the Society of Knowledge Economics, and is part of a world-wide study led by the London School of Economics, Stanford University and McKinsey & Co. The findings suggest that while some of our firms are as good as any in the world, we still have a substantial ‘tail’ of firms that are mediocre, especially in their approach to people management. This is a key differentiating factor between Australia and better performing, more innovative countries. The research also finds that there is a clear link between the quality of management – scored across 18 dimensions of people, performance and operations – and enterprise productivity. Since the late 1990s, Australia’s productivity performance has slipped from being one of the OECD leaders to a laggard. This structural deterioration in our economy was masked in recent years by windfall gains from the commodities boom, which reversed the longstanding decline in our terms of trade and reduced the policy focus on management and productivity.

It is generally acknowledged that Australia has handled the world economic downturn well, overcoming our vulnerability as a small open economy with an effective fiscal stimulus package. However, this study suggests that it may now be appropriate to link these short-term measures to the need to build longer-term competitive advantage through targeted, supportive public policy initiatives. The study demonstrates that a cost-effective way of improving the productivity performance of Australian firms is to promote a transformation in the calibre of the management and leadership of our organisations. This is the key to a more innovative, dynamic and sustainable economy into the future.

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