The role of management practices in closing the productivity gap

1. The role of management practices in closing the productivity gap Ideas Factory Meeting AIM 10/11 July, 2006

2. Our Team • Uwe Aickelin, Peer Olaf-Siebers, (Adrian Adewunmi ) Nottingham • Guiliana Battisti, Alfonsina Iona Aston • Chris Clegg, Helen Celia, (Adriano Peixoto) Sheffield/ Leeds • Xiaolan Fu, (Raphael de Hoyos) Cambridge/ Oxford • OR/ modelling, economics, statistics, organisational psychology

3. Our Objectives • Assess the role of management practices in the productivity gap in selected parts of the service sector in the UK • Identify key aspects of management activity for productivity • Develop multi-level models of relevant variables, and use them to understand and predict practice • Generate ideas on good practice for productivity improvements

4. Workplan (version 07.06.06) Stage 1: Review literature (All) 01/01/06 - 30/06/06 Stage 2: Examine existing databases (A) 01/01/06 - 30/06/06 Stage 3: Identify service sector (All) 01/01/06 - 31/03/06 Stage 4: Review difft. modelling approaches (N) 01/01/06 – 31/12/06 Stage 5: Develop first draft multi-level model(from theories and literatures) for use in national survey (C, A & S) 01/01/06 – 30/09/06

5. Workplan (contd.) Stage 6: Undertake 4 comparative case studies in John Lewis (in Sheffield and Nottingham) (S & N) 01/03/06 – 30/09/06 Stage 7: Undertake 2 case studies in USA (in Nordstrom?) (S & N) 01/07/06 – 30/03/07 Stage 8: Develop second draft multi-level model (informed by case studies) (C, A & S) 01/01/07 – 30/06/07 Stage 9: Develop first draft simulation of 2 departments in John Lewis Sheffield and test on JL staff (N & S) 01/06/06 – 30/05/07

6. Workplan (contd.) Stage 10: Operationalise variables in model for survey and develop sampling frame (S, C & A) 01/04/07 – 30/09/07 Stage 11: Collect data in large scale national survey (using agency) (C, S & A) 01/10/07 – 31/12/07 Stage 12: Develop and test second draft simulation model in John Lewis (N & S) 01/06/07 – 31/12/07 Stage 13: Analyse data from national survey and refine multi-level model (C, A & S) 01/01/08 – 30/06/08

7. Workplan (contd.) Stage 14: Analyse results of simulation work and refine simulation model (N) 01/01/08 – 30/06/08 Stage 15: Identify lessons learned and practical implications (All) 01/07/08 – 31/12/08

8. Stage 1: Literature review • 600 articles reviewed • Identified by keyword searches of the EBSCO database • Plus snowballing technique • Second iteration includes retail-specific practices e.g. marketing, and advertising • Outputs -- review paper -- publishable? -- part of Ideas Factory review? -- draft paper on international comparisons over time (led by Adriano Peixoto) -- inputs to other stages

9. Stage 2: Examine databases • Workplace Employment Relations Survey (WERS) 2004 • Representative sample, focused on workplace, managers, employees, representatives • Financial performance data not yet available, but will be at ONS (Alfonsina will visit) • Industry codes and financial data will become available in Spring 2007 • Current data limited to extent of use of practices • Later we plan to try to model links between practices and firm performance within retail • Community Innovation Survey (CIS) 2005 -- less useful

10. Stage 4: Review different modelling approaches • For simulation, identified use of intelligent agents • Coupled with DEA, to compare relative efficiencies of different models • Peer completed training course on how to use our chosen software platform for agent-based simulation -- AnyLogic -- see www.xjtek.com/ for demos • Modelling of survey data to be decided following design of model/ survey

11. Stage 5: Develop first draft MLM National size of markets Regional disposable income Sectoral level of competition Firm management practices Branch staff skills Department working practices Performance sales/ FTE, ROCE • plan to develop outline framework • then select & operationalise variables for survey • deadline = 30/09/07

12. Stage 6: Undertake 4 comparative case studies • Excellent working relationship with national department store • Aiming to find out -- why one department performs better/worse than another; why one branch performs better/worse than another • Obtained range of internal management information (comparative performance) • 2 started -- Audio/ TV and Womenswear in Sheffield (12 days of participant observation thus far) • 2 starting soon -- same departments in Nottingham • Currently developing interview schedules • Expect case studies to inform survey and simulation • Seeking access to equivalent US store (Nordstrom) -- Stage 7

13. Stage 8: First draft simulation Ambition: • Develop a simulation model that helps to understand and predict the impact of different management practices on retail store productivity • Incorporating variables from different levels of analysis Commonly used modelling approaches within related areas? • Most frequently used technique for understanding: ABMS • Most frequently used technique for comparing relative efficiency: DEA “ABMS is used to study how micro level processes affect macro level outcome; macro behaviour is not simulated, it emerges from the micro decisions of the individual agents.” “DEA is a useful tool for comparing several alternatives when multiple performance measures are important.”

14. Example

15. Customer Agent State Chart

16. Stage 10: Sampling frame

17. Observations • Whole team meets every month, rotating location • Other meetings as necessary • Working well together -- we get on well • Working to revised workplan • Expect to remain on schedule

18. Issues • Staggered start, staggered finish? • Single final report or separate? • Xiaolan moving to Oxford and recruiting new RA • Chris and Helen moving to Leeds

19. What next? • Complete comparative case studies • Gain access to US case studies • Continue to develop simulation model • Continue to develop multi-level model • Focus on survey level of analysis and content • Off-workplan -- e.g., Curry’s, PC World