How High Is Your Return on Management? (HBR OnPoint Enhanced Edition) [DOWNLOAD: PDF] (Digital)

by Robert L. Simons (Author), Antonio Davila (Author)

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Product Description
This is an enhanced edition of the HBR article 98110, originally published in January/February 1998. HBR OnPoint Articles save you time by enhancing an original Harvard Business Review article with an overview that draws out the main points and an annotated bibliography that points you to related resources. This enables you to scan, absorb, and share the management insights with others. The classic business ratios for measuring performance--return on equity, return on assets, and return on sales, to name a few--may be useful. But none is designed specifically to reflect how well a company implements its strategy. Enter return on management (ROM), a new ratio that gauges the payback from a company's scarcest resource: managers' time and energy. Unlike other business ratios, ROM is a rough estimate, not an exact percentage. Still, it is expressed like other business ratios by an equation in which the output is maximized by a high numerator and a low denominator: Knowing which organizational factors conspire against or work to maximize an organization's productive energy will help managers calculate a rough measure for this equation. Harvard Business School Professor Robert Simons and HBS doctoral student Antonio Davila offer five "acid tests" to help managers measure their company's ROM.

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• File Size: 926 KB
• Digital: 14 pages
• Publisher: Harvard Business Review (March 3, 2009)
• Average Customer Review: 5.0 out of 5 stars See all reviews (1 customer review)
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9 of 10 people found the following review helpful:

5.0 out of 5 stars Stop wasting valuable managerial time and energy!, October 27, 2001

By	Gerard Kroese (The Netherlands) - See all my reviews (REAL NAME)

Robert Simons is Professor of Business Administration. Antonio Davila was doctoral candidate at HBS when this article was publised, he is now (2001) Assistant Professor of Accounting at Stanford Graduate Business School. This article was published in the January-February 1998 issue of Harvard Business Review.

"Why is it that a large percentage of the most reasonable, analysis-driven, implementable strategies never make it from concept to reality? The answer lies with managers themselves - or more specifically, with how managers direct their energy." Managerial energy is an organization's most important and most scarce resource, but the modern business world which is full of opportunities and breakthroughs makes managers struggle for time and attention. This results in misdirected or diffused managerial energy. The authors introduce a new business ratio, which they call return on management (= equation productive organizational energy released divided by management time and attention invested). This business ratio is not a quantitative formula but a qualitative one and its output is directional. In order to measure your organization's ROM the authors introduce five acid tests/questions. These questions are complemented with a discussion of ROM's allies and enemies. What we must realize is that return on management is a function of managerial focus and communication, and should result is better use of managerial time and energy.

I do like this article. It is in line with Kaplan and Norton's Balanced Scorecard articles, by introducing and measuring non-financial measurements. (Surprise, surprise, the authors have written a book together with Robert Kaplan in 1999.) But I can also recognize some influences of William Oncken and Donald Wass's 1974-Harvard Business Review classic (Management Time: Who's Got the Monkey?). The article is well written, clear, and uses great, practical examples. The main message is: Stop wasting valuable managerial time and energy on unimportant issues! I would recommend this article to (senior) management and MBA-students. The article is written in simple US-English.