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Focusing On Staff Pays Off

April 23, 2012

How can businesses create competitive advantages that are sustainable in the long term? A new doctoral thesis from the University of Gothenburg’s School of Business, Economics and Law addresses this question by looking at a group of unusually prosperous manufacturing companies. Part of the answer is short and simple: Focus on the staff.

In his thesis Företag med framgÃ¥ng — hur resurser kan skapa varaktiga konkurrensfördelar (Prosperous Companies — Resources and Sustained Competitive Advantage), Christian Jansson goes to the bottom with the question of why certain businesses do so remarkably well. He looks for the answer by looking at three medium-sized companies in the manufacturing sector with outstanding profitability or long-term growth.

‘I spent two years inside the companies. Numerous interviews and observations helped me get to know the company culture. I gathered several different perspectives from talking not only to the company managements and staff members but also to customers,’ says Jansson.

The studied companies are located in the city of Alingsås in western Sweden. One of them, Nolans, has been three times as profitable as the industry average for the last 20 years. Only one in 200 companies can show such a successful record.

‘Nolans is known for its great staff benefits. As a result, they have been able to attract and keep the very best workers, and high quality is not possible without them. And when the customers know they can trust the products, the company can charge accordingly. The company also benefits, as having motivated employees who work at a good pace equals high efficiency. It’s all connected,’ says Jansson.

The company also conducts systematic follow-up work where the actual costs associated with each individual order are assessed. This helps the company price the products properly in order to make each order profitable. If a customer does not accept a quoted price, the company will simply not manufacture the product.

‘Successful companies always make sure they use their resources in the right way. What has the biggest effect, though, is to combine several resources in order to create competitive advantages,’ says Jansson, who hopes that his study will inspire other small and medium-sized businesses to learn from the most successful ones.

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