1. 1 The role of management practices in closing the productivity gap Ideas Factory Meeting AIM 23/24 October, 2006

2. 2 Our Team Uwe Aickelin, Peer Olaf-Siebers -Nottingham- Guiliana Battisti, Alfonsina Iona -Aston- Xiaolan Fu (and new Research Assistant) -Oxford- Chris Clegg, Helen Celia -Leeds- [ OR/ Modelling, Economics, Statistics, Organisational Psychology]

3. 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 a Simulation model and a Multi-level model of relevant variables, and use them to understand and predict the importance of practices Generate ideas on good practice for productivity improvements

4. 4 Workplan (version 23.10.06) Stage 1: Literature Review 1/01/06 - 30/06/06 “The Role of Management Practices in Closing the Productivity Gap” Stage 2: Examine existing databases (WERS, CIS..) 01/01/06 - 30/06/06 Stage 3: Identify service sector 01/01/06 - 31/03/06 (Retail Sector) Stage 4:Review modelling approaches 01/01/06 –31/12/06 (Completed and selected Agent-based Modelling and Simulation, DEA and MLM)

5. 5 Workplan (contd.) Stage 5: Develop first draft multi-level model (from related literature) for national survey, 01/01/06 – 30/09/06 (Has been done) Stage 6: Undertake 4 comparative case studies in a national department store (S and N branches) 01/03/06 – 30/11/06 (Work still underway – finish date extended) Stage 7: Undertake 2 case studies in USA 01/07/06 – 30/03/07 (initial scoping work finished – access to be pursued after completion of the current case study work) Stage 8 ……….. 15

6. 6 Stage 2: Examine databases Community Innovation Survey (CIS) 2005 Workplace Employment Relations Survey (WERS) 2004 The WERS 2004 is based on a stratified random sample of establishments Industry codes and financial data will become available in Spring 2007 We have plan to visit ONS micro-computer lab

7. 7 Stage 3: Identify Service Sector Retail Sector

8. 8 Stage 4: Review different modeling approaches 1.Review of the literature to evaluate modelling techniques 2. Chosen techniques: –For Case Study: Agent Based Modelling and Simulation (for understanding system behaviour) and DEA (for comparing relative efficiencies of different scenarios) –For Survey: MLM and other econometrics tools 3. Chosen modelling platform: –For Case Study: AnyLogic (Multi Paradigm Simulation Environment) –For Survey: not decided yet

9. 9 Stage 5: Management practices and productivity: a conceptual multi- level model Firm Management Technology Skills Other character. (Executive pay, (R&D (Labor (Size, Age, CEO monitoring, patents) quality, ownership, List B) Lists A and/or C) Industries Regions CompetitionTech opportunityTurnover(industrial List E) Market size (eg.GDPPC)Labor market devp.Clusters(regional List D) Dept ADept BDept CDept D EKLELKLKEEK L Performance pay, Business re-engineering, Outsourcing, Supply chain partnering, ICT, List A Performance pay, Team working, Empowerment, Communic, Flexibility, Devp, TQM, JIT, V.M, List C Inputs: Labour, Capital, Land Perfor- mance: Productivity Turnover Profit Dept. performance

10. 10 Stage 6: Undertake 4 comparative case studies Aim: 1.Understand why one department (branch) performs better/worse than another. 2. Inform the identification of retail management practices and other influential factors for both the nationally representative survey and simulation model. So far we have obtained a range of internal management information (comparative performance) e.g. staff attitudes survey, customer service assessments, sales data, transactional data, selling space, headcount. Own data collection now fully complete: 1.Participant observations –Two weeks working at each location, to understand the company through direct experience this has facilitated the identification of some initial similarities and differences within the same department between different locations (N vs S) 2.Interviews –40 interviews complete, approximately 20% of employees in the departments of interest across the two locations. Work is now underway to evaluate the largely qualitative (with some quantitative) content, for both the case study organisation.

11. 11 Stage 7: Undertake case studies in national USA department store Seeking access to equivalent US store Company: identified a suitable comparator organisation - long-established brand famed for superior customer service i.e. not low price Branch location: department store branches tend to hold a lot of autonomy, hence we need to identify the 3 most comparable store locations to approach (out of 156 US stores in 27 states) Environmental factors: city size, store location,etc

12. 12 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 Incorporat variables from different levels of analysis Approach: From simple to complex … Build ABMS toy models to get a feeling for model design Develop first department models, considering a single management practice that is non controversial and simple to implement “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.”

13. 13 Stage 9: Develop first draft simulation of 2 Departments in Sheffield and test on its Staff (01/06/06 – 30/05/07) First draft of conceptual model and model components has been developed (in form of state charts) Model data has been collected during the case studies

14. 14 Stage 10: Sampling frame we will focus on branches only for the cases-study & on firms for the survey. RetailEmployment Size Division 520-45-910-1920-4950-99100-249250+TOTAL 52126,0455,8801,5854751408010534,320 52222,6404,9501,4204907030 29,640 5232,9751,9306452505030255,895 52465,90516,9305,4601,99541027028091,240 5253,6554801153010504,290 52611,5101,09032512045253513,145 5274,150715155350005,055 TOTAL =136,88031,9759,7053,395725440475183,585

15. 15 Answered Issues Survey will be conducted at firm level Case Studies conducted at departmental and branch level. Link between Survey-Case studies-Simulation model via management practices used. Case study in the US Our set of management practices (under revision) seems to be more robust and more exhausting than those used in the extant studies The multi-level model to be revised over time

16. 16 What next? Fully analyse case study interview data, then produce final report and presentation for the organisation involved and for our project Continue to develop simulation model Continue to develop multi-level model to guide the Survey Gain access to US retail organisation Focus on survey level of analysis and content

17. 17 Observations Whole team meets every month, rotating location Working well together -- we get on well Expect to remain on schedule