The Effectiveness of Top Management Groups in Manufacturing Organisations

We test whether demographic characteristics and team processes in top management teams predict the subsequent productivity and profitability of their companies in 42 UK manufacturing organisations. The results suggest that there are independent effects of both demographic characteristics and team processes. Team member mean educational level and team tenure both predict the subsequent productivity and profitability of the companies positively, while age diversity in the team is a negative predictor of company performance. Team processes (clarity of and commitment to objectives, participation, task orientation, and support for innovation) predict (positively) company performance. Only mean educational level, of the demographic variables, also predicts team processes, suggesting that the effects of demographic variables on company performance are not strongly mediated by team processes. The implications of these findings for the composition and development of top management teams are discussed. This paper was produced as part of the Centre’s Labour Markets Programme The Effectiveness of Top Management Groups in Manufacturing Organisations Michael West, Malcolm Patterson, Jeremy Dawson