Build Your People, Customers Will Come
Are employee attitudes correlated with a company's financial success?
You would expect many of today's management theorists to respond with an energetic, "Yes!" But author David Maister, a successful management advisor, best-selling author, and a former professor at Harvard Business School, goes further: In a new book called Practice What You Preach, he proves it.
Maister conducted a worldwide survey of 139 offices in 29 service firms spread throughout 15 countries in 15 types of business.
In each survey, Maister asked a long series of questions, then calculated his results using a computer program that narrowed down his data into a framework from which he could retrieve some salient points.
Less Employee Morale, Less Profits
As Maister demonstrates, not only does employee commitment and dedication create positive financial repercussions, but companies with less employee morale and enthusiasm make less money than those that promote worker loyalty. Every company talks about building clients and teamwork, and developing employees and high standards, but now the companies that do so can say that Maister has proven their hunches to be correct. His work shows these things affect the bottom line with positive financial rewards.
How does a simple survey provide so much objective data? It all started with a look at the full financial information of 96 of the offices he studied. This includes the companies' two-year percentage growths in revenues and profits, the profit margins and the profits per employee. Seventy-four questions were then asked, and the results were analyzed to generate nine work factors.
Maister not only crunched company profit numbers and employee responses, but he also conducted extensive interviews with workers and the managers who guide them. From all the ear-bending and fat-chewing, he found that companies cannot rely on simply putting systems in place that give lip service to progressive employee programs. He concludes that service firms must implement these programs with managers who work using the lessons they teach.
Putting Clients Before Employees
What did the 5,589 respondents say their offices did best? Quality and client relationships, as well as autonomy or empowerment received the highest ratings, and high standards and coaching came in closely behind. In other words, the aspects of work that apply to clients rated highest, while issues to do with managing people came in with the lowest marks. Maister concludes that this information merely points to the fact that service firms are first dedicated to their clients, then shareholders, and then employees. He writes that since service firms sell nothing except their own people, such firms should "excel at energizing their people," but do not.
What Success Managers Do Better
When looking at the top 20 percent of the financially successful companies, Maister found that they did better than the rest on almost every factor. His results showed that the behavior of managers played the biggest role in their companies' success. His survey revealed that managers at these firms:
- Value input,
- Are trusted,
- Are good coaches,
- Communicate well,
- Practice what they preach, and
- Treat others with respect.
According to Maister, the results of his study indicate that if an average office substantially increases its performance on the staff's rating of quality and client relationships, "this would cause a doubling of its financial performance!" (Note that Maister includes his structural equation modeling methodology here to help readers see that he is not making unsubstantiated generalizations.)
Inspiring Those You Manage
How can managers successfully inspire those whom they manage? First, Maister writes, "Success comes not from specific tactics but from the mind-set, worldview or belief system that lies behind them." This means that managers can preach a philosophy, but unless their workers believe that they believe in it, they will not be as successful.
Maister's informative book includes many pages of statements in which managers at successful firms believe. One such nugget of wisdom: "First, you must build your people, and the rest will come."