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What is Management Capability?
Management capability stems from an individual's competences and embraces sound processes, practices and structure. This, in turn, results in the improvement in management capability of an organisation, which directly influences the country's capability for long term economic and growth performance.
It is important to understand that management capability is much more than management competencies. While competencies are general descriptions of the abilities necessary to perform successfully in a particular job or position, capability is the degree to which management uses its skills, abilities and competencies to achieve results. In examining capability, we are moving up a level beyond competencies.
Management capability is demonstrated in business / organisational performance, and is the result of management leadership and competence in the key management practices that lead to sustainable business performance and business growth.
Of course, there are other factors beyond management that also influence business / organisational performance i.e. government policy, inflation, labour market, etc. Management capability is the ability to deliver performance by applying your competencies in the environment you face, with the resources you have, engaging the challenges you face - in achieving with the organisation what you have to want to achieve.
The important aspect of capability is how effectively management applies and practises its competencies to deal with external and internal influences to achieve the highest levels of business / organisational performance.
When the environment gets real tough, the highly capable managers win through and deliver in spite of it. The best managers are those capable of applying their competencies in different environments, in challenging environments, and producing superior results. They are capable of overcoming the environment and growing their organisations. We all have skills, abilities, personal attributes and competencies. But can we apply them to deliver superior business performance in the organisation we lead?
So, capability is the ability to deliver performance by applying your competencies in the environment, situation, with the resources you have, engaging the challenges you face - in achieving with the organisation what you want to achieve.
The measurement of management capability must therefore link the application of management skills and abilities to the results achieved by the business or organisation.
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"... how effectively management applies and practices its competencies to deal with external and internal threats and opportunities, to develop and motivate employees to innovate and achieve the highest levels of performance - that is management capability."
- Doug Matheson, author of MCI, past president of AAMO, past chairman of NZIM.
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What is the Management Capability Index (MCI)?
The MCI converts the evaluation of management performance into an index. The index then is a useful indicator of how capable, or inadequate, one CEO, organisation, group, sector or even country is against the criteria. Thus, the MCI enables useful comparison or benchmarking between individual CEOs, organisations, sectors or even countries.
The MCI is based on the following eight major drivers of management capability that deliver profitable business growth, plus actual results and comparative performance to create an index of management capability. The weighting of the nine categories indicating their degree of importance in the final index are as follows:
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Category |
Weightage |
| 1 |
Visionary & Strategic Leadership |
15% |
| 2 |
Performance Leadership |
10% |
| 3 |
People Leadership |
10% |
| 4 |
Financial Management |
10% |
| 5 |
Organisation Capability |
5% |
| 6 |
Application of Technology & Knowledge |
5% |
| 7 |
External Relationships |
5% |
| 8 |
Innovation - Products & Services |
10% |
| 9 |
Results & Comparative Performance |
30% |
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Total |
100% |
For each of the nine categories that make up the MCI, CEOs / Managing Directors / General Managers assess what they consider to be their organisation's current position.
In 2008, an additional category on `Integrity & Corporate Governance' was included in the index.
Objectives of the MCI
- To ascertain AAMO member organisations' management capability index.
- Enable Organisation & Regional comparison.
- Useful comparison between organisations, sectors and even countries.
- Benchmarking for improvement.
We invite interested parties to sponsor the Malaysian MCI 2012.
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