New study assesses impact of management roles on profitability

A new study carried out by local consultancy firm Result Development looks at the impact that the management, leader and entrepreneur roles have on growing the performance of a businesses. The study, carried out between 2012 and 2013 by Result Development and Mentor’s Search, involved 27 companies (eight multinationals and 19 local companies) and involved 108 managers (27 general managers, 43 top managers and 38 middle managers).
The study aimed to answer questions such as: What is the impact of the manager, leader and entrepreneur roles on the profitability of a business? What are the differences between profitable and less profitable companies? What are the key management competences that influence the performance of a business?
It also looked to offer models and suggestions on: growing management performance, business modeling for benchmark performance, and building sustainable development business strategies.

In order to identify the way management roles and competences differentiate, as evaluated by top managers according to the profitability rate, the study divided participating companies in three profitability groups, according to the net profit rate:

The first group: companies with a profitability margin higher than 1.5 percent.

The second group: companies with a profitability margin between 0.1 and 0.8 percent.

The third group: companies with a profitability margin of less than 0.1 percent or negative.

Answers offered by management of companies with a profitability margin higher than 1.5 percent showed that only a development level of all three roles – manager, leader and entrepreneur – close to 80 percent (very high) has a significant impact on the profitability of the business.