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Just how capable are New Zealand managers?

For Immediate Release
November 4, 2003

Just how capable are New Zealand managers?
The New Zealand Institute of Management’s global research initiative

The New Zealand Institute of Management has created the NZIM Management Capability Index. In management research terms it is a world first. It could become a global executive performance benchmark. Other countries, including Singapore, Australia, USA and United Kingdom have already indicated interest in adopting the methodology. And the first set of research findings were released today and are based on a survey of 403 chief executives and managing directors from around the country.

The Index suggests that New Zealand managers are performing at only two thirds of their potential. So when it comes to measuring Kiwi managers’ capability “there is considerable opportunity for improvement”, says Doug Matheson, NZIM’s immediate past national chairman and architect of the Index.

NZIM is working on plans to help New Zealand enterprise lift its management performance. Like the Chartered Institute of Management (CIM) in Britain, NZIM believes that improved individual management capability is the best way to lift a country’s total economic performance. The British Government has got behind a CIM initiative to raise management standards in the UK.

NZIM decided to establish a capability index and create a yardstick against which to measure progress once its management skills programme gets started. “We need to know where we stand,” says Mr Matheson. “It is difficult to make a point without compelling evidence to support the case. This research will also help us identify the best ways forward and simultaneously help organisations identify their management weak spots and chart their future progress.”

Until now no other country currently has measured management capability. The United States-based Baldrige Performance Excellence programme is the most used international performance measurement system, but it doesn’t measure management practice and competence or management capability. And while organisations such as IMD International and the World Economic Forum survey and rank countries in terms of their economic environment, these surveys do not focus on individual managers.

Because this is the first time management capability has been measured there are no trends to consider or compare the findings with. NZIM’s Index is based on eight major drivers of management capability. “These drivers deliver profitable business growth, or the equivalent in non-commercial organisations,” says Mr Matheson.
The drivers, and the weightings they are given in compiling the Index include:

1. Visionary and strategic leadership with a weighting of 15%
2. Performance leadership (10%)
3. People leadership (10%)
4. Financial management (10%)
5. Organisation capability (5%)
6. Technology and knowledge (5%)
7. External relations (5%)
8. Innovation – products and services (10%)

A ninth collective category, ‘results and comparative performance’, gets a 30% weighting.
New Zealand managers rank their ‘financial management’ capability highest at 74.42 on a scale of 100. The ‘organisation capability’ rates lowest at 62.63.
In descending order after ‘financial management’ the Index ranks ‘external relationships’ 72.79; ‘performance leadership’ 69.11; ‘application of technology and knowledge’ 67.15; ‘visionary and strategic leadership’ 65.27; ‘people leadership’ 64.94; ‘innovation – products and services’ 63.69; ‘results and comparative performance’ 63.75 and last ‘organisation capability’. These rankings give an overall capability index of 66.23. This positions New Zealand organizations in terms of the scale just above “being practised across most of the organization most of the time” but below” being practised consistently across the organization with improvements being made” and well below the top of the scale which says “fully practised throughout the organization. Continually refined and improved as “the way things are done around here”.

“The overall assessment of ‘results and comparative performance’ is low at 63.75 percent of potential,” says Matheson. “Clearly organisations are not reaching their potential.”

NZIM believes the Index will help organisations benchmark themselves against other New Zealand enterprises. As other countries adopt the Index it will be possible to create an international comparison and benchmark.


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