Regression and cluster analysis of scores; the important features of talent management

A study, published in the McKinsey Quarterly, 2007 No. 1 at 6, analyzes survey data to determine what factors make a difference in effective procurement organizations. The survey of 202 companies employed regression and cluster analysis of the scores, and then used those scores to divide the companies into low, moderate and high performers. A further analysis of the relationship between each company’s procurement score and its overall financial performance revealed that three talent dimensions accounted for a disproportionate share of the top performers’ edge.

A bar chart shows eight best-practice factors in procurement, and gives a percentage for how much the factor contributes to performance improvement. For example, “purchasing capabilities/talent management” accounted for 25 percent. The second talent factor, called “mind-sets and aspirations,” accounted for 16 percent. The article concludes: “[c]reating a high performing procurement organization starts with managing people, not processes.”

I’m wandering far afield, those few readers who make it this far might murmur, but the others miss several important points. First, talent management in law departments is almost certainly as crucial as in procurement groups. Second, the methodology put to work by McKinsey would apply as well as to researching many kinds of law department management issues (See my post of July 4, 2006 on empirical law department research; Oct. 23, 2005 about the dearth of academic, empirical research; and Aug. 1, 2006 on natural experiments.). And third, the progress of law department management is hobbled because data-based research on practices and their efficacy is rarely compiled, let alone published.

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