Indian firms outperform US counterparts: Mckinsey

By IANS

Bangalore : A recent study by global consulting firm McKinsey has found top 25 percent of Indian companies perform better than the average US firms in management practices.


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“Our study shows top 25 percent of Indian companies outperform many US firms in management practices due to the advantage of highly educated workforce and labour arbitrage,” McKinsey principal partner Stephen Dorgan said here Friday at the 15th Quality Summit, organised by the Confederation of Indian Industry (CII).

The study also revealed the best managed Indian firms grow three times more and 80 percent faster to compete and increase its share of pie in the global market.

Making a presentation on “The Mission Link – Connecting Organisational and Financial Performance” to about 800 delegates attending the two-day summit, Dorgan said the findings were the outcome of a study conducted on about 4,000 firms worldwide in the US, Europe and Asia to ascertain the empirical linkages between better organisational and management practices and financial performance.

The study demonstrates the importance of organisational performance, including the management practices firms deploy to improve financial results by increasing labour productivity at the operational level.

“Better managed companies outperform their competitors by investing in people and processes. A robust management practice is imperative to retain competitive edge and sustain growth.

“Though Indian firms have the advantages of skilled manpower and lower labour cost, lower productivity is preventing them from increasing their share of the world trade,” Dorgan noted.

In a parallel session on “Winning Customer Loyalty”, Reliance Lifestyle Chief Executive Officer (CEO) Bijou Kurien said organisational excellence reflected in the ability to attract and retain customers in a dynamic, diverse and competitive market environment.

“It is essential to promote right loyalty schemes for driving incremental purchase. We must differentiate between customers’ frequency and profitability. We need to create a community, which will act as an extension of the brand,” Kurien said.

Hypercity CEO Andrew Levermore, however, said a customer loyalty programme by itself did not create loyalty to make customers come back often or increase buying.

“All-round focus on customers’ requirements, understanding their need and creating an attractive shopping environment will lead to repeat footfalls,” Levermore affirmed.

Asian Productivity Organisation expert Richard Barton said to deliver value to customers and improve productivity, organisations would have to work on all elements involving people and processes.

In a related development, CII and British Standards Institute (BSI) signed an agreement to work jointly for enhancing the standards and best practices of India Inc. The other areas of quality focus will be in food safety standardisation, sustainability and information security management.

“In any business, customer is the king, BSI communication director Frank Post said on the occasion. “Various surveys suggest that reducing customer defections can boost profits by 25-80 percent. A common misconception is standards stifle innovation. It is important to know standards alone do not tell how to manufacture products but ensure quality during the process.

“Standards and best practices encourage organisations to innovate continually, build world class service and exceed customer expectations.”

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