Good management is a technology too

When productivity is discussed, the conversation often turns quickly to machines, software and, now, AI. Yet some of the most consistent evidence points somewhere less glamorous: to how companies set targets, review performance, and develop and reward their people.

What the research found

The economists Nicholas Bloom and John Van Reenen spent years measuring management practices in thousands of medium-sized manufacturers across countries. Their work, published in 2007, found that better-managed firms were more productive and profitable, and that every country had a long tail of firms with weak practices. Among other factors, they linked weaker management to family firms that pass leadership automatically to the eldest son, a practice they found more common in France and the United Kingdom than in the United States or Germany.

The UK's Office for National Statistics later measured the same kind of practices across British firms. In its first results it found that a 0.1 higher management score was associated with about 9.6 per cent higher productivity. Its 2024 release showed average scores improving, from 0.49 in 2020 to 0.55 in 2023, with smaller firms still behind larger ones.

This matters because the UK's productivity gap is well known. In the ONS's final international comparison for 2021, output per hour worked in the UK was around 15 to 16 per cent lower than in Germany and France.

Practical, not theoretical

Good management in this sense is not about grand strategy. It is a handful of habits: a few clear targets that people understand, a regular look at the numbers, problems fixed at their cause, and people who are trained, given feedback and promoted on merit. None of these require a large budget. All of them make any new technology work better.

That is also why we are cautious about technology projects that start before the basics are in place. Software built on an unclear process usually makes the confusion faster. Clear roles and simple measures, by contrast, make even modest tools effective.

Asking for help

Owners of smaller firms often carry everything themselves. Research by the UK organisation Be the Business found that leaders who regularly seek outside advice report noticeably higher business performance. A fresh pair of eyes is not a sign of weakness. It is a sensible management practice in its own right.

Published 1 October 2026 · © 2026 Habsburg Digital Ltd