Why are good managers such a rare species?

September 4, 2013 4:57 pm

Why are good managers such a rare species?

Review by Stefan Stern

Becoming a better boss: Why good management is so difficult, by Julian Birkinshaw, Wiley, RRP£18.99

How likely is it that you would recommend your line manager to a colleague as someone they should work for in the future? This is the question that senior executives at the Swiss pharmaceutical company Roche started asking in staff surveys three years ago. The idea was to spot which managers were really good at building engaged, higher performing teams. It is not just about the feelgood factor. According to a Wharton business school study, money invested in America’s 100 “best companies to work for” over a 25-year period would have generated returns 3.5 per cent a year higher than those achieved by the average fund manager.But in his new book, Julian Birkinshaw, a professor at London Business School, notes that really good, effective management is both very difficult and very rare. “There is a proven ‘better way’ of managing, one that involves putting people first and creating an environment in which they can do their best work,” he writes. “However, very few companies have implemented it because it is difficult to do, requires long-term investment, and makes investors nervous.”

There are no simple management rules that apply in all situations. Context – and timing – matter. And, Birkinshaw adds: “What is defined as good or bad management depends on the personality or working style of the employee.”

Consider the former RBS boss Fred Goodwin and Apple’s Steve Jobs. They had quite similar personalities. Birkinshaw has a bit of fun presenting a series of quotes and asking us to decide whether they refer to Goodwin or Jobs.

Viz: “Very often, when told of a new idea, he will immediately attack it and say it is worthless, even stupid, and that it was a waste of time to work on it.”

And: “He had a very impressive intellect … People were intimidated from speaking their own mind because they feared his reaction.”

How did you do? The first quote is about Jobs, the second Goodwin.

Good management, Birkinshaw argues, must involve understanding who your employees are. “All employees have a way of making sense of the things that they do and why they do them, and it is much easier to get things done when you reinforce, rather than challenge, this sense of identity,” he says.

Yet, he notes, “many aspects of good management involve going against our natural instincts”. Too often, we lack the self-control to resist our need for control and “our bias for self-aggrandisement”. We fail to acknowledge that management is about “them”, not about “us”.

“Interim managers are often more effective than permanent ones,” Birkinshaw writes. “This is in large part because they see their job as enabling others, rather than making themselves indispensable.”

This thoughtful, nuanced book advises managers to see the world through the eyes of the employee. Not out of sentimentality, but for practical reasons. The author has some powerful supporting witnesses. Vineet Nayar, former chief executive of the Indian IT services firm HCL, puts it bluntly: “Value is created by employees in their relationship with customers. So management’s job is to serve the employees.”

And sometimes managers just have to set staff free. The former director of retail at the Bank of New Zealand, Chris Bayliss, tells Birkinshaw about being shocked to see employees putting up a children’s party banner in a branch, which was completely against the rules. “I just stood there with my eyes open, thinking, well, the customers don’t seem to mind, the staff are on fire, and they’re converting it into sales. So who’s right, and who’s wrong?”

Management: it is complicated.

The writer is a visiting professor in management at Cass Business School

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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