By David H. Maister Financially successful companies share a number of characteristics, not the least of which are high standards set by their managers. In Practice What You Preach, David H. Maister spells out what an effective manager must believe, be, and do in order to create financial success for a company.
Maister presents the results of a survey of 139 offices of 29 firms in 15 countries in 15 different lines of business. His findings: The most financially successful businesses do better than the rest on virtually every aspect of employee attitudes. Attitudes drive financial success. But Maister doesn't stop there. He drops responsibility for these attitudes firmly on the shoulders of the managers, whose skills and behavior drive employee attitudes -- and employee attitudes drive financial success.
For two decades, Maister has been a consultant for a broad range of professional-service firms. A former faculty member at the Harvard Business School, he uses statistical explanations of his survey, case studies, and his own conclusions to outline what managers can do to create a culture of achievement.
Maister's book is at once theoretical and practical. Chapter 13 is included below.
The Effects of Office Size
Is there a difference in average responses for different office sizes? Surprisingly, none of the financial measures had significant differences due to variations in office size. Larger offices were not reliably and predictably more profitable (nor faster-growing) than smaller ones.
However, a number of the questions in the employee survey did show statistically significant differences in response by office size, all with strong negative relationships. (The larger the office size, the lower the employee attitudes). As firms get bigger, a number of factors show a significant decrease in the eyes of the staff:
1. Management valuing input.
2. Management listening to people.
3. Management being trusted.
4. Management practicing what they preach.
5. Management being successful in fostering commitment and loyalty.
6. Communication between management and people being very good.
7. People knowing what their office is trying to achieve strategically.
8. Fair and equitable management of the compensation system.
9. Consistently working well as a team.
11. Intolerance for poor performance.
12. Keeping the client informed on business issues.
13. People treating each other with respect.
14. People being encouraged to volunteer new ideas.
15. People having the freedom to make decisions to do their work properly.
16. People expressing their views on issues.
17. High opportunity to move ahead rapidly.
18. People being satisfied with their job.
19. Enthusiasm and morale.
Many of the items on this list were identified in previous chapters as key profit drivers.
It's not just minor things that decline with size, but major issues with significant economic impact. What an indictment of larger offices! Anybody want to grow? How about merging?
The factors that did not have a statistically significant relationship with size were:
Quality and client relationships
Training and development
(These relationships were also negative, but not big enough to be statistically significant.)
This data suggests why size is not correlated with financial performance. While size may well have many marketplace virtues and lend some client-focused competitive advantages, it nevertheless simultaneously creates an organization where it is harder to achieve the employee attitudes that drive financial success. Swings and roundabouts! From "Practice What You Preach - What Managers Must Do to Create a High Achievement Culture" by David H. Maister. Copyright 2001 by David H. Maister. Reprinted with permission of The Free Press, a division of Simon & Schuster Inc.