North Wales Management School - Wrexham University

How does management affect organisational performance?

Posted on: March 19, 2024
Successful team leader (manager, CEO, market leader) and another business leading concepts. Standing out from the crowd.

Good management is a cornerstone of organisational performance and long-term success.

Research by Gartner found that leadership and management effectiveness is the most frequent top HR priority for businesses, closely followed by organisational and change management. And the two are inseparably linked: as today’s work environment changes and evolves, so too must management styles and approaches if businesses are to remain competitive and relevant.

What are the organisational benefits of effective management?

The best management practices enable businesses to operate more efficiently, achieve their goals and objectives, ensure team members feel valued, allocate resources effectively, and improve overall performance and profitability. They also help to:

  • foster a positive work environment and organisational culture
  • increase employee engagement, motivation and productivity
  • attract the best talent
  • boost competitive advantage
  • facilitate effective communication
  • improve employee retention
  • strengthen a company’s bottom line.

If you’re interested in the overall performance of your organisation – including how to increase it – it’s vital to examine the role of management.

How can you assess if an organisation is well managed?

In order to maximise the output of an individual, team or business – and ultimately work towards a shared organisational vision – it’s crucial to get management right. While it can be hard to objectively assess whether a business is benefitting from its management, there are some tell-tale signs and characteristics to look for that can offer insight.

For instance, if employees choose to stay long-term – and retention is high year after year – it’s likely that the company is doing something right. This could mean they treat staff well, offer fair compensation or support professional development. Related to this, another indicative aspect is how employees at management level view their jobs. Do they speak highly of it? Are they fulfilled? Is there a positive atmosphere? All can signal how the business is being managed more broadly. Businesses that encourage innovative ideas, suggestions and feedback – from employees across the organisation – value their employees and are interested in growing and improving how they operate.

While key performance indicators (KPIs) are undoubtedly important, an overt focus on vanity metrics may well indicate bad management. Management that gets bogged down in insignificant details, and fails to measure professional development initiatives, total team contributions, customer experience, or industry impact, might just be losing their way.

What areas of an organisation are most impacted by management?

The short answer? All of them. The way a business is managed – as well as the decisions made at management-level – have a significant effect on what happens across the rest of the organisation, at every level.

Here are four of the most critical areas in which management affects organisational performance:

  • Strategy. Leadership and management sets the overall direction of the company, and is responsible for strategy development and implementation. If the direction is weak – or the plan to get there is flawed – then an organisation will find it impossible to achieve its overarching ambitions, and business could stagnate or decline. Setting goals and developing strategy provides an organisational roadmap; it should be realistic and carefully thought-out, taking into account any strengths and weaknesses associated with the business.
  • Organisational structure. The way the business is set up can impact both business and team performance. This includes how different parts of the business are arranged and, critically, how they interact with one another. Harvard Business Review states the importance of adopting team-based structures over hierarchical layers, noting that it increases the speed of accurate information flow, offers greater flexibility, creates transparency, reduces organisational ‘politics’ and encourages teamwork and collaboration. On the flipside, badly designed structures lead to inefficiencies, confusion and siloed working.
  • Processes. How work is undertaken – including how information is exchanged, projects are assigned and managed, and decisions are made – are all business processed that contribute to wider performance. Good processes lead to efficiency and good performance, bad processes to inefficiency and wasted efforts.
  • People. It’s often said that an organisation’s employees are its most valuable asset. Hiring the right people for the right roles, and managing them in the right way, is pivotal in meeting an organisation’s goals. Employee performance is intrinsically linked to how employees are managed and motivated, and should be a key concern for management. Establishing effective performance management systems – that not only help employees in their roles but align with their individual needs, goals and aspirations – are essential.

Effective people management is fundamental to achieving business objectives – so let’s look at this in more detail.

What are some examples of good management practices that increase employee productivity?

Possessing a highly developed skill set is one thing, but the nuances of management – whether you’re a CEO or a team leader – mean that knowing how and when to use different tools is equally important. A large part of this is understanding how to manage and support employees to achieve their full potential.

Indeed lists some practical methods to support employee management and performance.

  • Be aware of strengths and weaknesses.
  • Tailor management to individual learning styles.
  • Listen to and connect with employees.
  • Anticipate growth and professional development needs.
  • Show appreciation and recognise achievements.
  • Pursue and share knowledge.
  • Hone communication skills.
  • Undertake meaningful performance management appraisals and performance reviews.
  • Provide team members with the necessary skills, knowledge and support, such as mentoring or specialist training.
  • Know how and when to delegate responsibilities.
  • Create a consistent culture.

Are you ready to drive meaningful change and high performance in your organisation? 

Set yourself apart from the competition – and lead the way in terms of leadership and management – with North Wales Management School’s online MBA programme. If you’re an ambitious, capable self-starter, this is the course for you.

Gain the skills to manage complex, global businesses in sustainable, ethical and transformative ways, on a highly flexible, 100%-online course that offers expert guidance and innovative learning activities. You’ll develop sought-after knowledge, skills and behaviours that are applicable across all industries, as you master the core aspects of business leadership and practice that help achieve organisational goals. Explore topics including strategic marketing, business intelligence, project management. change and innovation, human resource management, finance, change leadership and much more, on a programme that fits around your lifestyle and commitments.