Recent Studies: Better Management Equals Better Financial Results

April 12th, 2010 by

Recent research studies from Cornell University and RainmakerThinking, Inc. point to direct links between how well organizations manage employees and their financial results.

The Cornell study of small businesses (average size of 53 employees) found that companies implementing effective employee management strategies experience 22.1% higher revenue growth, 23.3% higher profit growth and a 66.8% reduction in employee turnover compared to companies that don’t.  Workforce alignment practices in the areas of employee selection, people management, and motivation had the most impact on business results.

The most influential strategies include:

  1. Basing recruitment on organizational fit rather than on just job skills.
  2. Using self-management rather than a controlling management strategy, giving employees greater discretion in how they work.
  3. Creating a family-like environment/community to motivate and retain employees rather than focusing on just pay as a motivator.

The second study, by Bruce Tulgan and RainmakerThinking, Inc. , found that increased supervision and management was the number one most effective business strategy during the economic crisis of 2009.  The findings are based on a study of thousands of managers from organizations in the private, public and nonprofit sectors. You may recognize Bruce Tulgan – he was a keynote speaker at CAI’s 2008 HR Management Conference.

The research found that leaders and managers were likely to pursue at least one of three strategies to survive during 2009:

  1. Cost cutting;
  2. Innovations other than cost-cutting; and/or
  3. Increased supervision and management, including more one-on-one training, direction, and feedback from managers and/or more written tracking of individual performance.

Managers who pursued all three strategies reported having the strongest bottom line financial results in 2009.  The individual strategy that had the biggest impact on results was better management.

Photo Credit: nDevilTV

One Response to “Recent Studies: Better Management Equals Better Financial Results”

  1. [...] This post was mentioned on Twitter by Martin Morgan. Martin Morgan said: Recent studies tell us what we already know – better management leads to better financial results – details http://ow.ly/1ylqk #HR [...]

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