Good management = less energy use

Here’s an intriguing finding from a new working paper:  Companies that use modern management best practices tend to also use less energy. A team of researchers from Stanford, the London School of Economics and Cambridge University studied a sample of mid-sized manufacturing companies in the U.K. The researchers surveyed plant managers about 18 management practices, ranging from process improvement procedures to methods for attracting and retaining workers.  The research team then matched those responses to information from a U.K. business census about firms’ output and energy usage.  The authors’ conclusion? “Better managed firms are less energy intensive…. We demonstrate that the best managed firms are not only more productive, but also more effficient consumers of energy.”

One possible explanation? One of the best practices the researchers asked about was adoption of “lean” manufacturing methods — and lean manufacturing focuses on reducing waste of materials and energy. If so, the authors note, improving management processes at manufacturing companies could help lower greenhouse gas emissions.

However, the authors caution that their data doesn’t demonstrate causality between modern management practices and lower energy use – and some other factor could be at work. For example, they note, it could be that some companies hire management consultants who both improve management methods and reduce energy consumption.