There is now a substantial body of empirical evidence confirming what we probably knew all along – that there is a strong correlation between management capability and organisational performance, as measured by productivity, innovation potential, or return on capital employed. Research conducted by the London School of Economics and a number of Australian Universities in 2009 found a stunning relationship; that a single point increase in the management capability score is associated with an increase in output equivalent to a 56% increase in the labour force or a 44% increase in invested capital.
We believe it is vital for Australian enterprises of all types and sizes to urgently address management capability within their organisations, and in so doing reverse the 10 year decline in Australia’s international ranking. We recognise that addressing enterprise leadership deficiencies is a difficult journey for leaders, but it is leaders who must take the first step, especially those in privately owned SME’s.
The AiGroup Report, ‘Addressing Enterprise Leadership in Australia’, provides a thorough summary of the situation along with recommendations for individual businesses.