Latest release

Management and Organisational Capabilities of Australian Business methodology

Reference period
2015-16
Released
25/08/2017
Next release Unknown
First release

Explanatory notes

Introduction

1 This release presents detailed findings on the management and organisational capabilities of Australian business, as collected by the 2015-16 Business Characteristics Survey Management Capabilities Module (MCM).The design and processes for the survey were based on the Business Characteristics Survey (BCS) and it was collected as a separate module of the BCS.

2 The 2015-16 release of the MCM is the inaugural collection; and produces baseline data on management and organisational capabilities of Australian businesses. It presents statistics on a selection of topics including: Key Performance Indicators; use of data in decision making; strategic plans; skills; supply chain; environmental management; and demographic information related to the Principal Manager.

Statistical units used

3 The Economics Unit Model is used by the ABS to determine the structure of Australian businesses and other organisations. The model consists of:

The Enterprise Group (EG)
Legal Entities (LEs)
Type of Activity Units (TAUs)
Location Units

4 Businesses contributing to the estimates in this publication are sourced from the ABS Business Register (ABSBR), and are selected at either the Australian Business Number (ABN) unit or the Type of Activity Unit (TAU) level, as described below.

5 In the MCM, the statistical unit used to represent the majority of businesses, and for which statistics are reported, is the ABN unit. The ABN unit is the business unit which has registered for an ABN, and thus appears on the ATO administered Australian Business Register (ABR). These units are suitable for ABS statistical needs when the business is simple in structure, and are generally referred to as the non-profiled population. In these instances, one ABN equates to one statistical unit.

6 For more significant and diverse businesses where the ABN unit is not suitable for ABS statistical needs, the ABS maintains its own unit structure through direct contact with the business, and the statistical unit used is the TAU. A TAU comprises one or more business entities, sub-entities or branches of a business entity within an Enterprise Group that can report production and employment activities. When a minimum set of data items is available, a TAU is created which covers all the operations within an industry subdivision (and the TAU is classified to the relevant subdivision of the Australian and New Zealand Standard Industrial Classification (ANZSIC)). These units are generally referred to as the profiled population.

Classification of units

7 ANZSIC is used to classify the industry in which the TAU or ABN has productive activity. Further information on this classification can be found in Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (Revision 2.0) (cat. no. 1292.0).

8 SISCA provides a framework for dividing the Australian economy into institutional sectors. Further information on this classification can be found in Standard Economic Sector Classifications of Australia (SESCA), 2008 (Version 1.1) (cat. no. 1218.0).

Scope and coverage

9 The scope of the estimates in this publication consists of all employing business entities in the Australian economy, except for:

SISCA 3000 General government
SISCA 6000 Rest of the world
ANZSIC06 Division O Public administration and safety
ANZSIC06 Division P Education and training
ANZSIC06 Groups 624 (Financial asset investing) and 633 (Superannuation funds)
ANZSIC06 Groups 954 (Religious services) and 955 (Civic, professional and other interest group services)
ANZSIC06 Subdivision 96 Private households employing staff

10 The frame for the MCM is a subset of the ABSBR and includes employing businesses only. These are defined as those businesses which register for the ATO's Pay As You Go Withholding (PAYGW) scheme. It is not unusual for some of these 'employing businesses' to have zero employment at various times during the reporting period. The frame is updated quarterly to take account of new businesses, businesses which have ceased employing, changes in employment levels, changes in industry and other general business changes. Businesses which have ceased employing are identified when the ATO cancels their ABN and/or PAYGW registration. In addition, businesses with less than 50 employees, which did not remit under the PAYGW scheme in each of the previous five quarters, are removed from the frame. The estimates in this publication include an allowance for the time it takes a newly registered business to be included in the survey frame.

Survey methodology

11 Collection of data included in this release was undertaken based on a random sample of approximately 14,500 businesses via online forms or mail-out questionnaires. The sample was stratified by industry and an employment-based size indicator. All businesses on the ABSBR identified as having 300 or more employees were included in the sample. The 2015-16 MCM was despatched from late October 2016.

12 The sample design of the 2015-16 MCM does not include state or territory as part of stratification design.

Reference period

13 The reference period for all of the management capabilities items included in the 2015-16 Management Capabilities Module, is during the year ended 30 June 2016.

Output classifications

14 For output purposes, businesses are classified to employment size ranges based on data reported in the survey. For industry output, the classification is drawn from information held about the business on the ABSBR. Innovation status is derived from the information collected from the businesses.

Availability of state/territory outputs

15 As indicated in Explanatory Note 12, the sample is designed to produce efficient estimates for industry and employment size, therefore it does not provide quality estimates for states/territories and these are not available.

Most recent related releases

16 The most recent issues of ABS releases related to the Business Characteristics Survey are:

Selected Characteristics of Australian Business (cat. no 8167.0)
Business Use of Information Technology (cat. no. 8129.0)
Summary of IT Use and Innovation in Australian Business (cat. no. 8166.0)
Innovation in Australian Business (cat. no. 8158.0)

Rounding and other adjustments

17 Estimates of proportions have been calculated using unrounded figures, but are shown in the tables rounded to one tenth of a percentage point. Where figures have been rounded, discrepancies may occur between the sum of the component items and the total. Figures presented in the commentary have been rounded to the whole percentage.

Acknowledgment

18 The collection and publication of management and organisational capabilities statistics is fully funded by the Department of Industry, Innovation and Science (DIIS).

Technical note - data quality

Introduction

1 When interpreting the results of a survey, it is important to take into account factors that may affect the reliability of the estimates. Estimates in this publication are subject to both non-sampling and sampling errors.

Non-sampling errors

2 Non-sampling errors may arise as a result of errors in the reporting, recording or processing of the data and can occur even if there is a complete enumeration of the population. These errors can be introduced through inadequacies in the questionnaire, treatment of non-response, inaccurate reporting by respondents, errors in the application of survey procedures, incorrect recording of answers and errors in data capture and processing.

3 The extent to which non-sampling error affects the results of the survey is difficult to measure. Every effort is made to reduce non-sampling error by careful design and testing of the questionnaire, efficient operating procedures and systems, and the use of appropriate methodology.

4 The approach to quality assurance for the MCM aims to make the best use of Australian Bureau of Statistics (ABS) resources to meet user prioritised requirements - both in terms of data quality and timing of release. The approach specifies the level and degree to which each data item is quality assured, noting that only some of the total output from the MCM is able to be quality assured to the highest standards. Different priorities are assigned to groups of data items.

5 The 2015-16 MCM had a response rate of 92%.

Sampling error

6 The difference between estimates obtained from a sample of businesses, and the estimates that would have been produced if the information had been obtained from all businesses, is called sampling error. The expected magnitude of the sampling error associated with any estimate can be estimated from the sample results. One measure of sampling error is given by the standard error (SE), which indicates the degree to which an estimate may vary from the value, that would have been obtained from a full enumeration (the 'true' figure). There are about two chances in three that a sample estimate differs from the true value by less than one standard error, and about nineteen chances in twenty that the difference will be less than two standard errors.

7 The following is an example of the use of standard error on the total proportion of businesses with a written strategic plan or policy in place. As presented in this release, the estimated proportion of businesses with a written strategic plan or policy in place was 10.3%. The standard error of this estimate was 0.45%. There would be approximately two chances in three that a full enumeration would have given a figure in the range 9.85% to 10.75%, and 19 chances in 20 that it would be in the range of 9.4% to 11.2%.

8 In this publication, indications of sampling variability are measured by relative standard errors (RSEs). The relative standard error is a useful measure in that it provides an immediate indication of the percentage errors likely to have occurred due to sampling, and thus avoids the need to refer to the size of the estimate. Relative standard errors are shown in the Relative Standard Error table in this section. RSEs for all statistics included in this release (including data cube content) are available upon request.

9 To annotate proportion estimates, a value of 50% has been used in the calculation of RSE rather than the estimated proportion from the survey data. This avoids inconsistencies between the way very low and very high proportions are annotated. Relative standard errors for estimates in this publication have been calculated using the actual standard error and the survey estimate (referred to as x) in the following manner: RSE%(x) = (SE(x)*100)/50.

10 Using the previous example, the standard error for the estimated proportion of businesses with a written strategic plan was 0.45%. Multiplied by 100 and then divided by 50 gives an RSE calculated on this basis of 0.91%. It is these figures that appear in Table 1 below.

11 For estimates of proportion the symbol '^' means that the estimate from full enumeration could lie more than a decile away so the estimate should be used with caution. For example a proportion estimate of 30% annotated with '^' means the full enumeration value could lie beyond the range 20% to 40%. The symbol '*' means the estimate from full enumeration could lie more than a quartile away and is subject to sampling variability too high for most practical purposes. A proportion estimate of 30% annotated with '*' means the full enumeration value could lie beyond the range 5% to 55%. Proportion estimates annotated with the symbol '**' have a sampling error that causes the estimates to be considered too unreliable for general use.

Table 1: Relative standard errors, strategic plan or policy in place(a), by employment size(b), 2015-16

  0-4 persons5-19 persons20-199 persons200 or more personsTotal
  %%%%%
All businesses     
 No strategic plan
2.56
3.69
5.37
6.21
1.84
 Yes, and described in a written document
1.05
2.36
4.18
7.85
0.91
 Yes, but not a written plan or policy
2.39
3.34
5.11
5.77
1.80
a. A strategic plan or policy is the plan implemented by a business to achieve its goals. It may include specific goals and decision-making on investment, allocation of resources and revenue generation.
b. Proportions are of all businesses in each output category.

Glossary

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Data

Facts and statistics collected together for reference or analysis. Data can be in both qualitative and quantitative forms. Data can come from a range of different sources, for example, Intellectual Property (IP), sales figures, customer feedback surveys and demographics.

Demand forecasting

Predicting future demand for a product. Predicting of probable demand for a product or a service on the basis of the past events and prevailing trends in the present. Examples include market research and expectation surveys.

Environmental management activities

The processes undertaken by businesses in the management of the interaction and impact businesses have on the natural environment. For example, recycling programs and waste audits.

Innovation

An innovation is the introduction of a new or significantly improved good or service; operational process; organisational/managerial process; or marketing method.

Innovative activity

Innovative activity includes any work that was intended to, or did, result in the introduction of an innovation.

Innovation-active businesses

Businesses that had undertaken any innovative activity during the reference period including: introduction of any type of innovation; and/or the development or introduction either still in progress or abandoned.

Non innovation-active businesses

Businesses that, during the reference period, did not undertake any innovative activity.

Key Performance Indicators

A form of measure used to cover a range of subjects, for example, financial measures such as income and expense levels, production targets, inventory amounts, delivery time, energy consumption and quality measures.

Manager

Managers are defined as someone who has employees directly reporting to them, and with whom they meet on a regular basis, and whose pay and promotion they may be involved with.

Predictive analysis

The use of statistical models that provide forecasts in areas such as demand, production or human resources.

Principal Manager

The most senior person who is responsible for making decisions related to the strategic direction of the business. Examples include Chief Executive Officer (CEO), business owner, principal shareholder, Chief Operating Officer (COO), executive chairperson, company principal and president.

Strategic plan

A strategic plan or policy is the plan implemented by a business to achieve its goals. It may include specific goals and decision-making on investment, allocation of resources and revenue generation.

Supply chain

Supply chain refers to business processes involved in getting a good or service from the supplier to the customer. Within a supply chain there are flows of money, labour, information and materials between a supplier and customers. Examples of terms used to describe processes within the supply chain include; logistics, distribution, sourcing, production processes, purchasing and supply.

Quality declaration

Institutional environment

The statistics presented in this release are compiled from the 2015-16, Management Capabilities Module (MCM). The MCM aims to provide high quality information relating to the management practices of businesses. Included are statistics on a selection of topics including: Key Performance Indicators; use of data in decision making; strategic plans; skills; supply chain; environmental management; and demographic information related to the Principal Manager. The MCM is conducted under the authority of the Census and Statistics Act 1905.

For information on the institutional environment of the Australian Bureau of Statistics (ABS), including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.

Relevance

This release presents key indicators on information relating to the management practices of Australian businesses.

The inaugural Management Capabilities Module, 2015-16 (MCM) was fully funded by the Department of Industry, Innovation and Science (DIIS).

As there were no historical systems or data available for the survey, the Management Capabilities data were collected as part of the Integrated Business Characteristics Strategy (IBCS) suite of surveys. While the design and processes were based on the Business Characteristics Survey (BCS), the Management Capabilities Module had its own tailored survey instruments. The content of the survey instruments were developed in partnership with DIIS and the University of Technology Sydney (UTS).

Timeliness

The reference period for all of the characteristic items included in the 2015-16 MCM is during the year ended 30 June 2016.

The 2015-16 MCM forms were despatched to businesses from late October 2016. The release was published within 14 months of the end of the reference period.

Accuracy

The ABS aims to produce high quality data from its industry collections, while minimising the reporting burden on businesses. To achieve this, extensive effort is put into survey and questionnaire design, collection procedures and processing.

The approach to quality assurance for the MCM aims to make the best use of ABS resources to meet user prioritised requirements, both in terms of data quality and timing of release. The approach specifies the level and degree to which each data item is quality assured, noting that only some of the total output from the MCM is able to be quality assured to the highest standards. Different priorities are assigned to groups of data items.

The 2015-16 MCM had a response rate of 92%.

In this publication, indications of sampling variability are measured by relative standard errors (RSEs). The relative standard error is a useful measure in that it provides an immediate indication of the percentage errors likely to have occurred due to sampling, and thus avoids the need to refer to the size of the estimate. To annotate proportion estimates, a value of 50% has been used in the calculation of RSE rather than the estimated proportion from the survey data. This avoids inconsistencies between the way very low and very high proportions are annotated. Relative standard errors for estimates in this publication have been calculated using the actual standard error and the survey estimate (referred to as x) in the following manner: RSE%(x) = (SE(x)*100)/50.

For more information about the sampling errors, please refer to the Technical Note for this release.

Coherence

There are established international frameworks or reporting models for the collection of use of IT and innovation data (i.e. the Organisation for Economic Co-operation and Development (OECD) model questionnaire and Oslo Manual respectively). The application of these in ABS collections is in the context of the Australian situation and, for some elements, it is not appropriate to adhere to the international framework, although they are used, where possible, in the MCM.

The System of National Accounts and the Australian Accounting Standards are used for directly collected or administrative data as appropriate. The survey uses Standard Question Wording (which are used in most ABS economic business-based collections) to collect standard financial data items. A core set of characteristics questions have been developed.

Interpretability

Further information on the technical aspects (including item definitions) associated with the statistics from the MCM can be found in the Explanatory Notes and Glossary associated with this release.

Accessibility

Outputs from the 2015-16 MCM are available in the following electronic release and associated data cubes:

Management and Organisational Capabilities of Australian Business (cat. no. 8172.0), released 25 August 2017.

This is available free of charge from the ABS website.

Abbreviations

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ABNAustralian Business Number
ABRAustralian Business Register
ABSAustralian Bureau of Statistics
ABSBRAustralian Bureau of Statistics Business Register
ANZSICAustralian and New Zealand Standard Industrial Classification
ATOAustralian Taxation Office
BCSBusiness Characteristics Survey
CEOChief Executive Officer
COOChief Operating Officer
DIISDepartment of Industry, Innovation and Science
EGEnterprise Group
IBCSIntegrated Business Characteristics Strategy
IPIntellectual Property
KPIsKey Performance Indicators
LELegal Entity
MCMManagement Capabilities Module
OECDOrganisation for Economic Co-operation and Development
PAYGWPay-as-you-go withholding
RSERelative Standard Error
SEStandard Error
SESCAStandard Economic Sector Classification of Australia
SISCAStandard Institutional Sector Classification of Australia
TAUType of Activity Unit
UTSUniversity of Technology Sydney