Such is the conclusion of an extensive McKinsey study done at LSE and reported in this article at the McKinsey Quarterly.

The findings are really interesting. To sum them up: it is now proven that for companies to succeed, they must have good managers at all levels of the company. According to the survey, managers are more important than just about anything else; industry sector, geography and regulatory environment included.

To reach this conclusion, they chose 18 management practices and then evaluated over 700 midsize manufacturing companies in the US, UK, France and Germany.  What they found is that the companies that rated highly also were best performers in other, more traditional business metrics like sales per employee, rate of revenue, market share growth and market capitalization. What it means for managers and companies is that “good management is about methods, style and skills, and not hours clocked on the job.”

But what’s most interesting to me is if you take a look at the 18 practices that were the foundation of the study, they fall into three categories: “shop floor operations (how companies adopt both the letter and the spirit of lean manufacturing”, target setting and performance management  (how companies set goals and reward employees for achieving them), and talent management (covering practices for attracting, developing and retaining valuable employees).”

Essentially, 2 of the 3 levers for business performance are human capital related. This is pretty remarkable stuff. The conclusion here is that the difference between the best performing companies is good management. Good management is defined and realized in large part through performance management and talent management.

Now that’s something.

You can read a longer brief here and the full report here.