Fuchs und Consorten Unternehmensberatung GmbH

08.06.2010

Are family businesses flops?

In the Journal of Economic Perspectives, Volume 24, Number 1, the economists Nicholas Bloom and John Van Reenen publish a report on their study “Why do management practices differ across firms and countries?” The result is: In terms of management, family businesses are almost the worst performers. What is more, the political and legal infrastructures in the countries in which they are located scarcely play any part in this. Focussing on an international market is of much greater significance for successful companies.

The study by Bloom and Reenen is the first to systematically assess the quality of the management. The two scientists derived the influence of management practices on the success of a company by means of an 18-point assessment. According to this managers have the best chances of steering their company towards success – and not just in major corporations – when they have top management methods at their disposal and use these in a focussed way within the company.

Four dimensions were examined: Overall management, monitoring management, objectives management and reward management. The subject of a study carried out by Darrell Rigby, Partner in the Boston office of the management consultants Bain & Company, and his co-author Barbara Bilodeau in 2008, was which management methods managers currently rely on in their “short-term operations” and “long-term actions”. Rigby has been questioning managers throughout the world regularly since 1993 to discover which methods and tools they use and prefer.

An interesting fact is that for the first time the top ten most-used tools include the balanced scorecard, which helps to translate strategic plans into objectives which can be measured and monitored. Its very structured approach promises a certain security of planning even during the crisis. Also included amongst the top ten most popular management methods, and seen as most likely to deliver success: Benchmarking, strategic planning, developing mission statements, customer management, outsourcing, customer segmentation, reengineering, core competences and mergers and acquisitions. Increasing significance over the next few years will be attached to price optimisation models, which predict the way in which a particular price level will influence demand. These involve mathematical models, the aim of which is to increase sales through better pricing structures. These involve not only reducing costs, but also increasing, or at least stabilising, revenues.

Source: Firmen-Management im Vergleich Familienunternehmen sind Flops [Company management, a comparison: Family companies are flops], Author: Christiane Pütter, http://www.cio.de/strategien/2232489/index.html; Neues Ranking Die Top-Management-Methoden der Führungskräfte [New ranking: The top ten management methods used by managers], Author: Lothar Kuhn, http://www.cio.de/strategien/methoden/2214440/index1.html

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