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 - PowerPoint PPT Presentation

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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

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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


1
Work 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
2
Background 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

3
Summary 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

4
Models of Work-life Balance
Correlation of WLB with Chirac Theory Win-Win Theory Evidence
Management Negative Positive ?
Competition Negative Ambiguous ?
Productivity Negative Positive ?
5
Data 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 ()

6
Data 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

7
Data 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

8
Results 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

9
Good management practices are associated with
better WLB
Source Firm survey, raw data, 525 Firms
10
Results II WLB Competition
  • Tougher competition increases management scores
    (table 4)
  • .but has no effect on WLB

11
COMPETITION 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
  • Number of competitors

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
12
COMPETITION 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
  • Number of competitors

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
13
Results 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

14
Models 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
15
Conclusions
  • 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
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