Analyzing Management Factors on Enterprise Performance

Abstract

A sample of Italian manufacturing companies was selected in order to verify the abilities and effects (relationships) of the management factors human resources, leadership and strategic planning on company performance. The Partial Least Squares (PLS) estimation method was used for analyzing the data collected, where the relationships between the management factors and performance were formalized by a Structural Equation Model (SEM). The analysis of the survey data showed unexpected result regarding the non significant direct relationship between Leadership and Performance. The effect of Leadership is obtained by an indirect relationship through Human Resources. The combination of Leadership and Human Resources has hence been identified as the management factors which have the highest impact on the performance of Italian industrial companies. Another interesting and unexpected result was that there was no significant impact of Strategic Planning on Performance. It seems that the leaders of Italian industrial companies have not understood that good strategic planning is a necessary condition for achieving excellence. So another improvement area is in fact Strategic Planning. This area should have the highest priority of any top management team and the focus should include how to establish a strong relationship between strategic planning and performance. No correlation between strategic planning and performance is a strong indication that something is wrong. It is not enough that Leadership is doing Strategic Planning‐Leadership is also about studying and follow up on results in order to assure impacts on performance. This link seems to be missing in Italian industrial companies