The McKinsey Quarterly
The McKinsey Quarterly Chart Focus Newsletter
September 2007 | Member Edition

Management practices that work

What makes companies perform well? To find this holy grail of management studies, a McKinsey team analyzed upward of 100,000 questionnaires to uncover the practices of 400 business units in 230 companies around the world. The team eventually arrived at one winning combination: clear roles for employees (accountability), a compelling vision of change (direction), and an environment that encourages openness, trust, and challenge (culture). Nothing else came close in improving organizational performance.

What’s more, the study found that organizational and financial performance correlate directly. An analysis of a global energy group’s production facilities, for example, suggested that for a facility of typical size and margins, better organizational performance had a payoff of $25 million to $30 million.


 
To learn more about management practices that work—and those that, surprisingly, don’t—read “Managing your organization by the evidence” (2006 Number 3). (Premium)


Also of Interest
When organization isn’t enough
2006 Number 1
Struggling companies that restructure may find that shaking up functions, product groups, or geographies is distracting at a time when more pressing business issues demand attention. (Premium)

The link between management and productivity
Web exclusive, February 2006
Government policy and the sectors where businesses compete can influence their productivity and financial results, but management decisions have more impact. (Premium) 		Building the healthy corporation
2005 Number 3
Many companies become obsessed with their short-term financial results and therefore can’t manage themselves in a balanced way for the longer term.

How good management raises productivity
2002 Number 4
Companies often lobby for tax breaks on capital investments to boost productivity, but three management techniques would achieve the same result at no cost to the state.


Did you miss last month’s Chart Focus?
When to exit a failing venture
Businesspeople, no less than others, suffer from cognitive biases that can undermine their objectivity—particularly in potentially career-destroying decisions to exit foundering businesses or cancel struggling projects.