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Revealed: The importance of leadership and management in workforce productivity

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Evidence is emerging that shows leadership and management practice have a significant effect on organisation-level productivity no matter the business size, sector or country.

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Evidence is emerging that shows leadership and management practice have a significant effect on organisation-level productivity no matter the business size, sector or country.

A series of studies highlighted that management and leadership practices are correlated with organisational performance.

However, improving management performance was blocked by a lack of understanding of what good practice looked like and an inability to accurately self-assess the quality of existing organisational management and leadership.

Thus, the need to give greater attention to benchmarking internal practices and discovering improvements was the main recommendation.

The report suggested making comparisons with other organisations and networking with higher-performing firms could uncover areas for development.


Prioritise reforms

More intricate changes such as work organisation innovation and high-performance working practices should generally be undertaken once identifiable management practices have been tackled, the authors added.

A consortium of researchers, led by the Institute for Employment Studies (IES) and economic development consultant SQW, conducted the series of in-depth studies.

For UK-based employers seeking to understand the nation’s so-called productivity puzzle, the results are concerning.

The reports found UK was only mid-level in terms of management and leadership capability. While the very best UK organisations were as good as the best elsewhere, but the UK had relatively fewer organisations with very good management practices and relatively more with poorer practices.

This means there is clear potential for improvement in management as a route back to improved organisational performance and productivity.

CBI: Senior leaders must take responsibility for supporting line managers


Building for the future

The authors added that in the future, management and leadership capability would be more important for organisational performance than before.

Several points were raised in which this could be implemented. These included:

  • Increasing internationalisation of firm ownership and growing globalisation are likely to drive improvements in management and leadership capability in global firms.
  • Management and leadership skills are generally lower in emerging nations, so carefully choosing supply chain partners from these countries will be essential.
  • Managing remotely as workers become more flexible in time and location will need better communication skills, processes and improved management practices to maintain quality and productivity.
  • Improving management practices is correlated with improving performance and therefore suggests that there is all to play for; shifting management capability should be an important aim for all organisations
  • Trust in workers will become increasingly important as work becomes more complex with the devolvement of responsibilities and greater reliance on workforce skills and capabilities.


In response to these challenges the authors noted that organisations should do everything they could to attract and appoint the best managers and leaders.

This required effective succession management and development of future leaders, strong recruitment and selection processes along with being an employer of choice, ensure retention of the best people as there is some evidence that tenure may be associated with effectiveness, and management of leadership and management performance.

Finally, the report highlighted the importance of softer management skills such as clear communication and offering appropriate support and training where necessary, while corporate culture was also a key deciding factor on how some practices were implemented.

Comparing workforces: Measuring employee productivity and motivation around the world

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