Title: Work%20Life%20Balance,%20Management%20Practices%20and%20Productivity%20Nick%20Bloom%20(Stanford%20and%20CEP)%20Toby%20Kretschmer%20(IIM%20and%20CEP)%20John%20Van%20Reenen%20(LSE%20and%20CEP)%20January%202006%20%20Anglo-German%20Foundation,%20ESRC%20and%20AIM%20supported
1Work Life Balance, Management Practices and
ProductivityNick Bloom (Stanford and CEP) Toby
Kretschmer (IIM and CEP)John Van Reenen (LSE and
CEP)January 2006 Anglo-German Foundation,
ESRC and AIM supported
2Background to the research
- Issues of quality of jobs has moved up the
political agenda - Unemployment historically low female
participation high - How to improve work-life balance (WLB)?
- Battle of ideas over European reform
- Chirac neo-libéralisme sauvage - competition
increases productivity at the expense of making
workers miserable at work - Blair WLB increases productivity by better
morale, recruiting talented staff (women
managers). Markets can foster this - CEP Research Program examining the causes (e.g.
competition) and consequences (e.g. productivity)
of management practices - New survey of over 700 firms in UK,US, France and
Germany, developed with McKinsey, on management,
WLB productivity
3Summary of results
- Well managed firms typically have better
work-life balance (WLB) - Tougher competition fosters better management,
but does not seem to harm work-life balance - Improved work-life balance has no significant
association with productivity (after we control
for management quality) - Reject Chirac theory that WLB deteriorates
under globalisation - Reject overly optimistic Win-Win view that WLB
raises productivity - Support Hybrid view that WLB a choice for
firms, and can be combined with low or high
productivity
4Models of Work-life Balance
Correlation of WLB with Chirac Theory Win-Win Theory Evidence
Management Negative Positive ?
Competition Negative Ambiguous ?
Productivity Negative Positive ?
5Data Collected (1)
- 1 hour telephone interview with factory and HR
managers about 750 firms (about 300 in US and
about 150 in UK, France and Germany) - Work Life Balance (WLB) summary measure
- Relative to other companies in your industry how
much does your company emphasise work life
balance? - 5 points scoring scale (1) much less, (2)
slightly less, (3) the same, (4) slightly
more and (5) much more - Significant correlation of this WLB question (see
Table 2) with a wide range of objective WLB
measures - Hours of work (-), holidays (), working from
home allowed (), job switching allowed (),
childcare flexibility (), childcare subsidy ()
and proportion of female managers ()
6Data Collected (2)
- Management practice survey
- Developed with McKinsey
- Double Blind technique
- Scores 18 key management practices, in summary
- Operations (3 questions) problem fixing,
standard Lean manufacturing - Monitoring (5) - tracking, review evaluation,
follow-up etc. - Targets (5) - transparent, stretching,
inter-connected, time horizon, etc - Incentives (5) - promotions, rewards, fix/fire,
retention etc. - One strong factor of good management average
of all
7Data Collected (3)
- Matched to company accounts on employment,
capital, sales, etc - measure productivity (output per unit of input)
- Matched to data from HR Survey on work force
characteristics - Skills, female proportion, hours, number of
competitors etc. - Matched to industry level data from OECD
- Competition, trade
8Results I WLB Management
- WLB strongly correlated with good management (see
table 3) - WLB also positively correlated with
- Size employees happier in larger firms, who are
typically more globalized - Skills ( with a college degree)
- Female proportion
9Good management practices are associated with
better WLB
Source Firm survey, raw data, 525 Firms
10Results II WLB Competition
- Tougher competition increases management scores
(table 4) - .but has no effect on WLB
11COMPETITION IS STRONGLY AND ROBUSTLY ASSOCIATED
WITH BETTER MANAGEMENT PRACTICE
Significance
gt 1
gt 5
Significance of competition, t-stat
gt 10
- Competition Index,
- 19951999
- Import penetration, 19951999
T-stat of management practice competition
regressions Lerner index of a company
1-profit/sales for all companies in the same
industry and country, excluding the company itself
12COMPETITION IS NOT ASSOCIATED WITH WORSE
WORK-LIFE BALANCE
Significance
gt 1
gt 5
Significance of competition, t-stat
gt 10
- Competition Index,
- 19951999
- Import penetration, 19951999
T-stat of management practice competition
regressions Lerner index of a company
1-profit/sales for all companies in the same
industry and country, excluding the company itself
13Results III Productivity and WLB
(Table 5 in paper) (1) (2) (3)
Work-life balance 0.031 (0.015) 0.021 (0.015) 0.015 (0.015)
Management z-score 0.053 (0.021)
Basic controls Yes Yes Yes
Full controls No Yes Yes
Firms 491 491 491
significant at the 5 level Basic controls
labour, capital, materials, country dummies, firm
size and age, listing status, consolidation
fullbasic controls and skills, female,
multinational dummies.
- WLB has a significant positive correlation with
productivity, but... - Coefficient halves after including other factors
and management quality - Coefficient no longer significant
- So no association of WLB and productivity with
full controls
14Models of Work-life Balance
Correlation of WLB with Chirac Theory Win-Win Theory Evidence
Management Negative Positive Positive
Competition Negative Ambiguous Zero
Productivity Negative Positive Zero
15Conclusions
- No support for the Chirac view that WLB are
eroded by competition, Anglo-Saxon management
practices, or high productivity - Win-Win model also receives little support. WLB
do not seem to be associated with higher
productivity - More of a hybrid view WLB a choice. Can be
combined with high or low productivity - Policy response
- WLB may be desirable in themselves but do not
boost productivity - Likely to be costs on firms of government imposed
WLB, especially when imposed in a blanket fashion
(lower profits and possible exit). - More competition good for productivity and not
harmful for WLB