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 ) Stage 1: Review literature (All) 01/01/ /06/06 Stage 2: Examine existing databases (A) 01/01/ /06/06 Stage 3: Identify service sector (All) 01/01/ /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 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 Workplan (contd.)

7 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) 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 for demoswww.xjtek.com/ Modelling of survey data to be decided following design of model/ survey

11 Stage 5: Develop first draft MLM Nationalsize of markets Regionaldisposable income Sectorallevel of competition Firmmanagement practices Branchstaff skills Departmentworking practices Performancesales/ 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 RetailEmployment Size Division TOTAL 52126,0455,8801, , ,6404,9501, , ,9751, , ,90516,9305,4601, , , , ,5101, , , ,055 TOTAL =136,88031,9759,7053, ,585

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