Effective management practices are closely related to higher productivity and output in New Zealand manufacturing firms, according to an international comparative study released today.

The study of 152 medium and large New Zealand manufacturing firms benchmarks New Zealand management practices against 16 other countries, including Australia, Britain, Canada and the United States, and was led by the London School of Economics and McKinsey & Co.

The results show a strong relationship between New Zealand management practices and various firm performance indicators, particularly the profit per employee, firm sales and number of employees.

Management practices in New Zealand are ‘middling to average’ by global standards according to the study.  It shows that, while New Zealand managers in manufacturing firms perform well on operational and performance management, they are relatively weak on people management, particularly when it comes to attracting and retaining talent and managing poor performers.

Economic Development Ministry Acting Deputy Secretary Michael Bird said “This study demonstrates a strong link between effective management practices and various firm performance indicators.  The message for New Zealand firms is clear:  improving management practices impacts positively on the firm’s bottom line.

“This report allows us to look at ourselves compared to other countries for the first time.  It also clearly identifies management practices that New Zealand firms can improve.”

Michael Bird said that the Ministry was working closely with Business New Zealand, the New Zealand Institute of Management, and NZ Trade and Enterprise to help firms learn more about the research, and encourage firms to focus on improving their management practices.

The study, commissioned by the Ministries of Economic Development, Labour and The Treasury, as well as New Zealand Trade and Enterprise, was undertaken by University of Technology Sydney (UTS).  UTS also did an equivalent study in Australia.

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