Companies failing to get management practices right: Study

by L&D31 May 2016
Innovation is a notable casualty in organisations failing to get basic management practices right, according to the Study of Australian Leadership.  

Among these practices include performance monitoring, target setting and the appropriate use of incentives.

The research also shows a positive association between more capable managers and innovation.

Indeed, high performance work practices tend to positively relate to both radical and incremental innovation, according to the analysis.

The report added that a company with high performance work practices ensures workers have the skills they need to do their jobs.

It also ensures employees have the motivation to work effectively, which is achieved through:
  • Performance-based pay
  • Opportunities for internal promotion
  • Effective performance appraisals
  • Development systems
The research found that only 18% of private sector organisations report high levels of radical innovation. Innovation is defined here as experimentation and identifying new products and markets.

The report also showed that the lowest levels of radical innovation are occurring in mining, transport and postal businesses.

Interestingly, public sector organisations were more likely than private sector organisations to have reported high levels of both radical innovation and incremental innovation (improving the efficiency of existing ways of working and expanding existing markets).

“Forget the “lucky country,” if we want to become the “innovation nation,” this study suggests many Australian organisations need a reality check,” said Professor Peter Gahan, Director of the Centre for Workplace Leadership.

“The danger for Australia is that the resources boom, now rapidly evaporating, has obscured the need to invest in the leadership capabilities required to deliver future growth and productivity. 

“We must act to use the levers of leadership to get the basics right, to innovate, improve communications and increase investment in the right training across all levels of management.”

The study also found that:
  • More than 40% of workplaces did not meet their performance targets for return on investment and profitability. 
  • Around one-third of workplaces underperform on their sales target. 
  • Only one third of workplaces display KPIs in a readily accessible and visible place, and one in three do not provide employees with any access to KPIs.
  • Only 34% of workplaces reported that all employees – both managerial and non-managerial – had access to the workplace’s performance targets.
The study is based on interviews with almost 8000 people including CEOs, frontline leaders and employees in more than 2700 organisations.

The survey was undertaken by the Centre for Workplace Leadership (CWL) at the University of Melbourne and funded by the Commonwealth Department of Employment.

L&D Professional also recently reported about the gap between managers’ perceptions of their own leadership skills and the way they are viewed by their workers. 

Related stories:

Australian businesses failing in leadership: Study 

Five things leaders must do to stay relevant 

3 hidden benefits of doubt (and why it’s vital for L&D) 

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