Employee Attitudes Affect a Company's Financial Success

Employment Relations Today Autumn 2001 17

Employee Attitudes Affect a Company’s Financial Success

David H. Maister is aleading authority on themanagement of professionalservice firms. For twodecades he has advisedfirms around the world in abroad spectrum ofprofessions, covering allstrategic and managerialissues. A former professor atHarvard Business School,he is the author of the best-selling books Managing theProfessional Service Firm(1993), TrueProfessionalism (1997), and,with Charles H. Green andRobert M. Galford, TheTrusted Advisor (2000), allpublished by Free Press.This article is excerpted withpermission from his mostrecent book, Practice WhatYou Preach (Free Press,2001). He may be reachedvia his Web site atwww.davidmaister.com.

© 2001 by David H. Maister. Reprinted by permission of The Free Press,a division of Simon & Schuster, Inc.

EMPLOYEE ATTITUDES AFFECT ACOMPANY’S FINANCIAL SUCCESS

David H. Maister

Together with many consultants and authors, I have longargued that if you (first) energize and excite your people,they will serve your clients or customers well, and you will

(then) make lots of money. In a recent study, I set out to see whetherI could provide evidence of these propositions. Surveying 5,589people in 139 offices of 29 firms in 15 countries in 15 different linesof business, I asked a simple question: can employee attitudes beshown to be measurably correlated with financial success?

The answer, as my study shows, is an unequivocal “Yes!” Themost financially successful businesses in my database do betterthan the rest on virtually every aspect of employee attitudes, andthose that do best on employee attitudes are measurably moreprofitable. What is even more powerful, I was able to show thatattitudes drive financial results, and not (predominantly) the otherway round.

SURVEYThe survey results and conclusions are detailed along with case

studies in Practice What You Preach (Free Press, 2001), on which thisarticle is based. The businesses covered in the survey includeadvertising, public relations, brand-identity consulting, health-care consulting, direct mail, Internet (Web) marketing, promotion,public-affairs consulting, employee communications, and manyothers. Firm sizes range from 1 to 24 offices. The individual officesranged in size from 10 to 351 employees. The word employee in thissurvey covered everyone working in the firm, from top to bottom.There is a great deal of diversity of businesses in the database, frompremium-fee consulting operations to low-fee, high-volume, ex-ecution-intensive businesses, and from businesses with mostlyjunior employees to those staffed almost entirely with senior-level

David H. Maister

18 Autumn 2001 Employment Relations Today

counselors. Some of these businesses have ongoing relationshipsthat last for decades, whereas others have to compete every timefor every individual project. Some are large, global operations,and others are tiny, regional operations working far from majorfinancial centers or other big cities. Many national differences arecovered in the database as well. As a result of all this diversity, anylessons we can glean that seem to apply across all these businesseshave a good chance of being lessons that should be taken seriouslyby businesses not explicitly included here. That is my hypothesis,but you be the judge.

Four measures of financial performance were obtained foreach of the 139 offices in this study:

• Two-year percentage growth in revenues;• Two-year percentage growth in profit;• Profit margin; and• Profit per employee.

These were then combined into a single financial perfor-mance score by averaging each office’s performance on all fourmeasures, giving equal weight to all four measures, and con-structing a financial performance index. The employee surveywas a series of 74 statements with which the respondents wereinvited to agree or disagree. Using a technique known as factoranalysis, we clustered the statements into nine (statistically)related groups or factors:

1. quality and client relationships2. training and development3. coaching4. commitment, enthusiasm, and respect5. high standards6. long-term orientation7. empowerment8. fair compensation9. employee satisfaction

The employee responses for each factor are shown in Exhibit1, using the following scale:

6 = strongly agree; 5 = agree; 4 = somewhat agree; 3 = some-what disagree; 2 = disagree; 1 = strongly disagree.

What is immediately apparent is that the factors that relate toclient relations are ranked highest, whereas issues related to man-aging people were consistently ranked as being done least well,across offices, across different businesses, and across the world.

The employee surveywas a series of 74statements with whichthe respondents wereinvited to agree ordisagree.



Are you surprised by this? I am not. Although all companies (inevery industry) acknowledge their obligations to their three con-stituencies of clients, shareholders, and employees, employees arealmost always the third priority on this list. There is, of course, atroubling paradox here. Many businesses, including professionalfirms, have nothing to sell except their people. Surely it would bea matter of simple logic (or simple self-preservation) for such firmsto excel at energizing their people! But, of course, they don’t.

If managing means reaching out to energize, challenge, exhort,inspire, and enthuse individuals on a real-time basis, then littlemanaging takes place inside most firms. Instead, what passes formanagement in these businesses is a system of strict financialcontrols, with periodic general meetings to listen to the latestinspirational speech and unfold the latest branding slogan ormission-statement poster. This represents a combination of tightadministration and weak attempts at visionary leadership. Evenwhen done well, neither of these is managing.

Further, when selecting people to become managers, firms tendto focus on “business skills” (business development or financialmanagement) rather than people skills. The ability to energize others(i.e., manage) is rarely a primary criterion for choosing managers.

Perhaps the most important questions that follow from thisare: Does all this matter? Is it of any consequence that the people-related questions were ranked lowest? Should you care if youroffice’s employees give low marks to the levels of commitment,enthusiasm, and respect? The answer to all of these questions, asthe study showed, is Yes, all of this matters a great deal.

Scores for Each Factor (Question Group)

Factor (Question Group) Average Employee Response

Quality and Client Relationships 4.7Empowerment 4.7High Standards 4.3Coaching 4.2Employee Satisfaction 4.2Long-Term Orientation 4.0Commitment, Enthusiasm,and Respect 3.8Fair Compensation 3.7Training and Development 3.5

Exhibit 1

David H. Maister


HOW SUCCESSFUL OFFICES DID ITTo begin my analysis, I identified the 20 percent of the offices

that did best on the financial performance index. I then com-pared how these offices performed on the individual surveystatements relative to the other, less financially successful of-fices. The most striking finding is that the most financiallysuccessful offices did better at virtually everything. In 69 out of 74survey items, their average was significantly higher than the restof the offices, and in the 5 remaining items, it was also higher, butnot significantly so.

The first group of statements contains the seven behaviorslisted below. All seven of these behaviors (one-third of the top 20things that the most successful offices do better than the rest) haveto do with individual managers, rather than corporate policies:

1. Management listens.2. Management values input.3. Management is trusted.4. Managers are good coaches.5. Management communication is good.6. Management practices what it preaches.7. People treat others with respect.

These may look like simple accomplishments because thewords are so familiar. But it turns out not to be so simple to getyour employees to believe that you listen, communicate well, treatpeople with respect, and value input. It is also not so simple to getyour employees to agree that they trust you or to think you are aneffective coach.

The next item is particularly fascinating. Financially successfuloffices do disproportionately well in having their staff believe that“Management practices what it preaches.” Note that this saysnothing about what it is that management actually preaches. Thefinancial benefit comes from the simple fact of being believableand consistent.

That this should be so is, in retrospect, not so surprising.Imagine the opposite, that people think that management does notpractice what it preaches. This clearly means that managementhas lost credibility, and this, I have observed, leads quickly to lossof influence. Employees would begin to ask, “Why should Ibelieve your latest mission statement, articulation of values, orvisionary strategy when you have consistently failed to live up tostatements, articulations, and strategies in the past?”

Why do so many businesses fail to meet this test? In part, it isbecause many managers believe that they are demonstrating

The most strikingfinding is that themost financiallysuccessful offices didbetter at virtuallyeverything.



leadership and creating motivation and energy by announcing avision, a mission, or new strategy, something the firm plans to aimat and be, someday. However, leadership does not lie in theannouncement of a mission, a vision, or a strategy, but in the day-in, day-out operation of the business in accordance with what wasannounced. What is exciting and motivating is seeing evidencethat we actually are on the journey to something we can believe in.It is the evidence (the practicing), not the vision (the preaching),that is energizing. Be careful what you preach; your people willexpect you to live up to it, and if you do not, you will be worse offthan when you started!

The next set of statements in the top 20 survey items in whichthe most financially successful offices most outperformed theothers are the following:

8. Be the best not the biggest.9. Management gets the best work out of everybody.10. We have high standards for performance.11. Quality of the professionals is high.12. High levels of client service, tolerate nothing else.13. People do whatever it takes.

The above statements are clearly about having high standards,which we shall see is a prerequisite for making superior profits.Again, notice the challenge. It is not enough that managementpreach its commitment to high standards, but that they convincethe staff that, in the real world of daily operations, this is, in fact,how the office runs. In other words, management does not com-promise the standards for expediency purposes. These are notstatements about achieving competence. Notice the language:Management gets the best work out of everybody. We toleratenothing less than high client service. People do whatever it takes.There is a powerful and meaningful gap between competence andexcellence, and the most successful offices exploit that gap. Theyset and enforce high standards, and their employees can see it. Thisproduces profit in two ways: First, there is a direct market andfinancial benefit when you achieve high quality. Second, themotivating and energizing effect of working in such an environ-ment leads each person to achieve more.

The next two items in our top survey responses (see below) areclear: successful offices convince their people that they care aboutthe long term.

14. We discuss strategic objectives, not just the financial goals.15. We invest in the future.

Be careful what youpreach; your peoplewill expect you to liveup to it, and if you donot, you will be worseoff than when youstarted!

David H. Maister


These are simple statements, and one is tempted to move on.But note that these are not trivial accomplishments. If you askmost employees whether the business is being run with the futurein mind, or whether it is being run on a short-term, quarter-to-quarter basis, you will get the second answer more often than youget the first. The impact on performance should be clear.

According to my data, financially successful operations alsoensure that their people feel that:

16. The compensation system is fair.17. Those who contribute the most are rewarded.

It is worthwhile noting that these are two separate issues, involvingprocess and content. The issue of perceived compensation fairness hasas much to do with the performance evaluation and a compensation-setting process as it does with the actual dollar decisions. What thesuperstar offices seem to do incredibly well is to run a compensationprocess that everyone understands and perceives as fair.

So what do these categories of skilled managers, high standards,long-term thinking, and fair pay lead to? Here are the rest of the top20 items that financially superior offices do better than the rest:

18. Enthusiasm and morale have never been higher.19. Management is successful in fostering commitment and

loyalty.20. People are dedicated.

The most successful offices have measurably more enthusias-tic, committed, and dedicated people. And if you can’t makemoney from that, you don’t deserve to be in business!

It is worth noting (and stressing) that, in absolute terms,“enthusiasm and morale” ranked the lowest among all the items.We can now answer one part of our earlier question: do employeeattitudes matter? Well, we don’t yet have “proof,” but it is morethan a little suggestive that “enthusiasm and morale” (least welldone overall) was the single topic on which the financially suc-cessful offices most outperformed the rest!

CORRELATIONS WITH FINANCIAL PERFORMANCEIn the previous analysis, we compared the best with the rest,

the most financially successful offices with the rest of the database.The limitation of this approach is that it doesn’t tell us much aboutwhat happens if you are not yet a superstar but do make improve-ments from, say, weak to average on important things. We need toknow whether improving on a statement like “We have an uncom-

“Enthusiasm andmorale” was thesingle topic on whichthe financiallysuccessful officesmost outperformedthe rest!



promising determination to achieve excellence in all that we do”is associated with improved financial performance across theentire range of performance, high to low.

The answer is yes, an uncompromising determination to achieveexcellence is associated with improvement across the entire range ofperformance. So much so, in fact, that fully 23 percent of all thevariations in financial performance (across geography, lines of busi-ness, size of firm) can be explained by the employees’ responses to thisone item. That’s high! Think of it this way. If the only thing you knewabout an office was its response to this one question, knowing nothingabout what business it was in, its size, or its country of operation, youwould still be about one-quarter, or 23 percent, of the way to being ableto understand its financial results. That is quite a long way!

Eighty-five percent of the survey items displayed a statisticallysignificant (positive) correlation with the financial performance ofthe office. The 20 items most highly correlated with financialperformance are listed below. The first eight strike a similartheme, one that we saw in our first, more simple analysis. All areabout the achievement (and enforcement) of high standards:

1. We have an uncompromising determination to achieveexcellence in everything we do.

2. We have a real commitment to high-quality work, andtolerate nothing less.

3. We have a real commitment to high levels of client service,and tolerate nothing else.

4. The quality of service delivered to clients by my group isconsistently high.

5. The quality of work performed for clients by my group isconsistently high.

6. In this office we set and enforce very high standards forperformance.

7. Management gets the best work out of everybody in theoffice.

8. The quality of the professionals in our office is as high as canbe expected.

Every firm preaches this stuff, but the data shows that if youremployees agree that you actually practice these policies, you willmake more money. True excellence wins.

The second group of statements that are highly correlated withfinancial performance all have to do with client relationships:

9. We keep the client informed on issues affecting theirbusiness.

If the only thing youknew about an officewas its response tothis one question …you would still beabout one-quarter, or23 percent, of the wayto being able tounderstand its financialresults.

David H. Maister


10. We make our clients feel as if they’re important to us.11. Client satisfaction is a top priority at our firm.12. We listen well to what the client has to say.

Notice how much of this relates to quality and client relation-ships. Remember, the findings are not that people managementalone is important. Conventional wisdom is right in saying thatgreat client service gets results. (We have just seen some proof.)However, we are also seeing (and will see more) that quality andgreat client service are themselves products of other things.

Next, we again see the importance of pay schemes:

13. Those who contribute the most to the overall success of theoffice are the most highly rewarded.

Notice that this doesn’t suggest what the pay scheme shouldbe. The determining factor is just whether the people think itrewards the right people. (This is another example of practicingwhat you preach. It says the dollars are, in fact, flowing inaccordance with the commonly understood performance criteria.There are no surprises and no disconnects.)

Next comes another item we have already seen—the impor-tance of a long-term orientation:

14. We maintain a balance between short- and long-term goals.

15. The emphasis in our office is on long-term success, rather than short-term results.

16. We invest a significant amount of time in things that will pay off in the future.

17. The actions of our firm are consistent with our strategic objectives and mission statement.

Finally, we see high correlations for the following consequences:

18. Our team is effective at achieving our desired results.19. I am committed to this firm as a career opportunity.20. There are real opportunities here for meaningful career and

professional advancement.

The themes are pretty clear, aren’t they? Enforcing high stan-dards, including quality and uncompromising client service, ap-pear to have the strongest relationship with the overall financialproficiency of the office. Nothing is so profitable as quality workand service.

Nothing is soprofitable as qualitywork and service.



THE PREDICTIVE PACKAGEThe next step in the analysis was to stop looking at the survey

items one at a time and start looking at them as an interrelatedpackage. I now asked, “What package of questions are the bestpredictors of financial performance?”

A technique known as stepwise regression analysis was used.From the 74 survey statements, nine key statements were identi-fied that (together) “explain” over 50 percent of all variations inprofit performance, in spite of big differences of country, size ofpractice, leverage, and line of business. The nine key statementsare the following:

1. Client satisfaction is a top priority at our firm.2. We have no room for those who put their individual

interests ahead of the interests of the clients or the office.3. Those who contribute the most to the overall success of the

office are the most highly rewarded.4. Management gets the best work out of everybody in the

office.5. Around here you are required, not just encouraged, to

learn and develop new skills.6. We invest a significant amount of time in things that will

pay off in the future.7. People within our office always treat others with respect.8. The quality of supervision on client projects is uniformly

high.9. The quality of the professionals in our office is as high as

can be expected.

When given a choice between hard and soft questions (“Weare team players” versus “We have no room for those who puttheir individual interests first”), the statistical technique consis-tently picked the harder, tougher version as being more predic-tive of profits.

A moment’s reflection should immediately show why thiswould be so. The soft version of “We are kinda, sorta teamplayers” is less likely to produce financial results than a statementthat says “Absolutely we are team players; we don’t accept any-thing else.” In essence, we are talking about the difference be-tween what you believe in (“please try”) and what you actuallyexecute (“we enforce this”). When it comes to making money, it isdisciplined execution that counts, and good, thorough executionrequires strong statements about the way the business is to be run.

These nine items are a generalization of what “explains”differences in financial performance across all the offices and the

When given a choicebetween hard and softquestions … thestatistical techniqueconsistently pickedthe harder, tougherversion as beingmore predictive ofprofits.

David H. Maister


entire range of performance. They represent a “best bet” as towhat to focus on to improve profits and growth. They are not,however, the “only” way to do it. Remember, as I reportedearlier, the top 20 percent of offices (financially) did better atvirtually everything. The nine items reported here still representa great place to get started.

THE PATH TO PERFORMANCEThe final statistical approach I used is known as structural

equation modeling. Correlation calculations check to see whethertwo things tend, on average, to move together (like height andweight.) However, structural equation modeling checks to seewhether one (say, extra height) can be said to cause the other (extraweight). If causality can be found, it estimates how much of weightchange can be said to be caused by differences in height.

The technique is complex, so rather than use the 74 questions,I restricted attention to the nine factors listed in Exhibit 1, whichare the result of combining the scores of a number of individualquestions. According to the table shown here, a one-point increase(e.g., going from an office average of “somewhat agree” to “agree”)on quality and client relationships (in the eyes of staff) the averageoffice would more than double its financial performance!

Exhibit 2 shows a summary table of what a one-point increasein each of the factors (with causal links) would cause in financialperformance (if all the other things stay the same.)

Effect of Factor Improvement on FinancialPerformance

Quality and Client Relationships 104Employee Satisfaction 42High Standards 40Coaching 17Enthusiasm, Commitment,and Respect 14Empowerment 10Fair Compensation 10Long-term Orientation 10

Exhibit 2

Factor Percentage improvement infinancial performanceCAUSED by a one-pointincrease in the factor score



What is the significance of the fact that the training anddevelopment factor is not here? It absolutely doesn’t mean thattraining is unimportant. It means we could not prove causalitywith the (tough) level of statistical certainty required by thetechnique employed. Training is influential, since it is correlatedwith many things. But by itself, it has few direct, independentconsequences. If you tried to improve an office through trainingalone, it would probably have little impact. Training and devel-opment can be part of the solution, but they are not the solutionin themselves. It doesn’t say don’t do training; it says, don’t dotraining only.

LessonsA major finding of my study was that success was less a

property of whole firms, and more about the abilities of theindividual managers running individual operating units. I presentin the book Practice What You Preach nine in-depth case studies,wherein I interviewed both the managers and (more importantly)the staff in the most successful operations in my database, whoachieved not only the highest financial performance, but did so byobtaining stellar scores from their employees on the factors dis-cussed above. Here are the lessons they gave (their views, notmine). The main conclusions are divided into three groups: whatmanagers must be, what managers must believe, and what man-agers must do.

What an Effective Manager Must BeThe people in our successful offices were both articulate and

precise about what the individual manager needed to be. Notice,not “do,” but “be.” The list was long, but here are some highlights.Remember, these are the words that the employees in the mostsuccessful businesses used to describe their managers:

• Even-keeled and even-tempered.• Articulate about what he or she stands for.• Disciplined about standards.• Honorable.• A good listener and communicator.• A role model.• Comfortable with allowing other people to get credit.• Good at reading people’s character and skill level.• Sensitive to personal issues.• Smart, but human.• Someone of high integrity.• Unquestionably honest.

Success was less aproperty of wholefirms, and more aboutthe abilities of theindividual managersrunning individualoperating units.

David H. Maister


How many businesses use these criteria as primary indicatorsin selecting and appraising managers? How much of being aneffective manager is about inherent character?

What Managers Must BelieveManagers of the successful firms I looked at believe, and

convince their people that they believe, in the following:

• Chasing money is not what makes you money.• Good people management leads to longevity, which leads

to client trust, which leads to more business.• You must have a real concern for people as individuals,

who they are and what they want.• Development of people precedes and has a greater priority

than profits.• Ethics have to be the bedrock that you start from.• Success is about character, respect, integrity, trust, honesty,

empowerment, confidence, loyalty, and keeping promises.• It takes emotional courage to be a good and improving

manager.• It is not just about the work; it is about relationships.• You must live up to your values everyday.• You must ensure everyone has fun doing what they do.• People must not only trust management, but also trust each

other.• It is the combination of fun and discipline that gets the job

done.• To manage well, one’s interest in people needs to be above

average.• You can sustain a culture only if you have developed

managers who share your values.• Your agenda as a manager is to create a great place to work,

rather than work at making your own meteor rise.

Do your people believe that you believe this? Ask them!

What Managers Must DoIn addition to what you must be and believe, some very concrete

advice in my case studies was given about what individualmanagers must do. Do your people think you do these things?

• Act as if not trying is the only sin.• Act as if you wanted everyone to succeed.• Actively help people with their personal development.• Allow people to learn from their mistakes without retribution.

Development ofpeople precedes andhas a greater prioritythan profits.



• Allow people to speak out no matter what their roles.• Always do what you say you are going to do.• Always put focus on the other person.• Believe in, and keep the faith with, what you are doing.• Do what is right, in the long term, for clients and for your

employees.• Do your own photocopying, when necessary. Wash your

own cup.• Don’t be “separate and distinct” from your people.• Never talk down to anyone.• Put yourself in the employees’ shoes and know what they

are going through.• Give credit where credit is due.• Have an open-door policy at all levels for personal or work

questions.• Manage people in the way that works for each individual,

not just how you like to manage.• You don’t have to be a chameleon, just adaptable.• Take work seriously, but don’t take yourself seriously.• Work the halls and know all the employees. Spend at least

one-third of your day doing this.• Let people know you as a human being, not just as their

manager.• Act on the principle that all effective management is one on

one.

INTOLERANCEAs hard as it is to live up to the personal standards already

outlined, there is, in fact, a harder task for the manager. He or shemust ensure that everyone else behaves appropriately. This takes alot of courage. It means counseling, cajoling, confronting, moni-toring, critiquing, energizing, and convincing other people in theorganization, especially other senior people.

One way or another, according to our shining success offices,it is the manager’s job to ensure the following:

• An attitude of “We don’t care how it happened, let’s just getit fixed.”

• All employees form relationships with client members atthe equivalent level.

• Continual career development for everyone.• Diplomacy, courtesy, professionalism, no superficiality.• Everyone must be a team player.• Everyone must be approachable.• Everyone must be self-motivated.

Manage people inthe way that works foreach individual, notjust how you like tomanage.

David H. Maister


• Everyone must develop leadership skills.• Everyone must learn new skills continuously.• Everyone must respect their colleagues and be cordial.• Everyone’s voice must be appreciated and heard.• If someone doesn’t manage their team well, put a hold on

their salary, deny them additional responsibility, and ifthat doesn’t work, fire them.

• Make sure everyone knows they must be reliable. If youtake something on, then you must deliver.

• Talent is no excuse for bad behavior.

A notable fact about both the survey and the case studies is thenumber of times words like “require,” “insist,” “demand,” “non-negotiable,” and “enforce” appear. What successful operationsare doing is not innovative stuff. However, what is innovative isthe fact that they are executing familiar things to very highstandards. They are intolerant places, that is, they respond quicklyto any and every instance of noncompliance with standards.

THE COURAGE TO MANAGEMany people believe that you can rely on reward systems to

encourage the implementation of strategy. This is rarely true.Take, for example, the strategy of excellence in managing people,an approach to doing business that is ardently preached in mostfirms and rarely enforced. “Well, we pay attention to it, it’s one ofour key strategies,” one of my clients said. “We reward thosepeople who do it well.” “And what do you do to those people whodon’t do it well?” I asked. “We just don’t reward them,” he replied.“In other words, you allow them to carry on as before?” I com-mented. “Well, yes,” he said. “In other words, they don’t have todo it, if they don’t want to?” I queried. “I suppose not,” he said.“Then how many do it?” I asked. “A few,” he admitted. “So you’renot achieving firm-wide excellence in this area?” I concluded.“Not really, I suppose,” he said.

The lesson is clear. To make something happen, it is notenough to reward those who choose to participate. You musttackle those who do not. As long as it is optional (even if re-warded), it isn’t going to be done at the level at which thecommercial benefits will kick in. “Are you really saying that I needto speak with all those who aren’t doing it?” he asked. “Only if youwant the benefits of your declared strategy,” I replied.

“I’m not suggesting that you play boss, cop, Attila the Hun, ordictator. Go remind them of why you chose that strategy. Helpthem. Encourage them. Give them some tools to make it easier. Settargets for small improvements that will at least get them on the

To make somethinghappen, it is notenough to rewardthose who choose toparticipate. You musttackle those who donot.



virtuous path. But whatever you do, don’t ignore them or leavethem alone. It’s not a standard in your firm if there’s no conse-quences for noncompliance.” “But it would take an enormousamount of emotional energy to do all that,” he said. “Welcome tothe wonderful world of managing,” I said.

Many managers believe that they add their greatest value inensuring that a strategy (or vision, or mission, or direction) isdeveloped. However, this is patently false. The greatest valueof a leader is in ensuring that the strategy is implemented. Thisis revealed by the very origin of the word “manage,” whichderives from Old French and, literally translated, means “theholder of horses.” The manager’s key role is to ensure that allthe horses are moving in the agreed-on direction at approxi-mately the same pace.

Over the years, I have been trusted to see the strategic plansof many direct competitors. Remarkably, they are almost al-ways identical. Everyone figures out correctly which clientsectors are growing, which services are in rising demand, andwhich dimensions of competition (client service, innovation,etc.) the clients are looking for. The strategy documents are thesame not because people are being dumb, but for precisely theopposite reason: Everyone is smart! Everyone knows whatneeds to be done.

If this is so, then what is competition really all about? In myexperience, it is about who can best get done the (obvious) thingsthat need to get done. And this, in turn, is determined by thefollowing set of closely related concepts:

• Energy• Drive• Enthusiasm• Excitement• Passion• Ambition

Where these exist, the discipline can be found to engage indiligent execution and thereby outperform the competition. Therole of the manager, then, is to be a net creator of enthusiasm,excitement, passion, and ambition. Alas, all too often, managersare net destroyers of excitement. If all they ever talk about isfinances (“How are your billings? What is happening to receiv-ables?”), it can be deadening to the spirit. This doesn’t mean theydon’t need to talk about these things. They do. However, theymust not talk only about these things. Financial discipline is thebedrock of business success. It is not all of it.

Alas, all too often,managers are netdestroyers ofexcitement.

David H. Maister


It is the manager’s job not only to manage financials, but alsoto inspire, cajole, exhort, nag, support, critique, praise, encour-age, confront, and comfort as individual people (and groups ofpeople) struggle to live their work lives according to new stan-dards, i.e., the strategy. Of all the qualities required of managers,the most essential is courage—the courage to actually manageand enforce the standards that are preached. Managers musthave the courage to maintain a long-term focus, to have thecourage of the convictions they espouse, and the courage tointervene personally whenever there are departures from thevalues and vision that create excellence.

If the manager doesn’t have the courage to tackle the indi-vidual who is not behaving in accordance with the strategy, thenall the other people will quickly realize that the new strategy is notsomething you have to do. They will quickly cease striving tocomply. And thus the benefits of the strategy will never beattained. The single question remains: “What is the managergoing to do about noncompliance?” Hundreds, if not thousands,of eyes are watching closely to see if the announced strategies arereal or are discretionary.

Afraid to intervene, many managers wait until the problemsbecome serious. Until they have to deal with them. It is, after all,emotionally easier to deal with problems only when you must.This is, however, insufficient. Managing is not about dealing withproblems once they have become unavoidable. Rather, managingis about surfacing issues and dealing with them before they becomeproblems. To make a new strategy work, the manager needs todemonstrate, visibly, that he or she is prepared to be intolerantabout departures from the strategy.

It is often said that only two things motivate people: fear andgreed. Yet there has been very little reference to either of thosethings in this book [Maister’s Practice What You Preach, from whichthis article is excerpted]. The best managers make use of a thirdmotivating force, the glamorous dream. They are able to convincetheir colleagues that life could indeed be significantly better, thatgreater accomplishment is possible, and that, yes, they can do it.

Great managers give their people the confidence that, indi-vidually and collectively, great(er) success, fulfillment, accom-plishment, and profits are, indeed, attainable. They give them thecourage to try. If managers are often demanding, they must alsobe supportive. They must manage with a style that sends thesignal, “Come on, you can do it, I will help you!”

While the first part of this (“Come on . . .”) is common enough,the second two, personal encouragement and personal support,are often absent in the styles of many managers. Again, it is

They must managewith a style that sendsthe signal, “Come on,you can do it, I willhelp you!”



necessary to notice that doing this kind of one-on-one manage-ment (the only form of management worthy of the name) takes notonly skill, but also the courage to actually do it.

Just as management involves a delicate balance betweenbeing supportive and being demanding, it also requires a style ofinsistent patience. Patience that “Rome doesn’t get built in aday,” and insistence that “We are building Rome.” To find thecourage to keep trying to attain new levels of performance,people must believe in their hearts that the manager actuallydoes believe what he or she says about the firm’s standards,mission, vision, and strategies.

People must believe that the manager has the courage tobelieve in something and, more importantly, the guts to stickwith it. There is no greater condemnation of a manager than tosay that he or she is expedient, and no greater commendationthan to say that he or she truly lives and acts in accordance withwhat he or she preaches. �

Documents

Employee Attitudes Affect a Company's Financial Success