Measuring management

2005

Robert Cressy, Professor of Finance at Cass Business School, has developed a statistical model he claims venture capitalists can use confidently to replace bad or poorly-performing managers.

According to the Daily Telegraph:

The model with a variety of management criteria translated into "value functions" is tuned to provide data for investors about how managers are coping with the pressures of the job and send the all important signal about when new blood is needed.

…. Prof Cressy believes he has broken new ground but some venture capitalists have given his theories a cool reception and prefer to use tried and tested judgments rather than use pt = p(S1,S2,…St-1) as a guide to an investment pay-off.

…. The model produces a series of performance checks geared to the manager's track record. Failure to meet them sends the alarm bells ringing and tells the investor the scientist has not made the grade and needs replacing by a professional manager.

Daily Telegraph | Ineffective managers weeded out by computer

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