Practice What You Preach: What Managers Must Do to Create a High Achievement Culture

Citation

van Dolen, W. (2003), "Practice What You Preach: What Managers Must Do to Create a High Achievement Culture", International Journal of Service Industry Management, Vol. 14 No. 3, pp. 364-369. https://doi.org/10.1108/09564230310478873

The key message of Practice What You Preach by David Maister is: firms that are perceived by their employees to practice what they preach are more financially successful than their competitors. In his book, Maister provides empirical evidence for the long argued sequence: If you energize your people, they serve your clients well, and you will make lots of money. What Maister preaches relates strongly to the idea of the service profit chain proposed by Heskett, Sasser and Schlesinger. Also Kotter and Heskett (1992) in Corporate Culture and Performance arrive at similar conclusions. As the author states in his introduction: “Most of the findings confirm what other writers (and I) have been advocating for years. What's new here is that this study presents substantial evidence.” (p. 3).

In the book, Maister presents a worldwide survey of 139 offices in 29 professional service firms in 15 countries across the world, in 15 different settings within the marketing communications business. The central question in his survey: Are employees’ attitudes correlated with financial success? The answer to this question is “yes”. Furthermore, he shows that employee attitudes cause improvement in financial performance. In addition to the survey, Maister conducted in‐depth interviews with managers and employees of the firms surveyed. From these interviews, he concludes that the success of firms is not based on the systems of the firm, but is determined by the character and skills of the individual manager.

The book, which aims at providing proof to practicing managers that financial rewards come from living up to the standards that they preach, is build around the evidence. By presenting readers results one at a time it builds up from the simplest to the most complex, finally leading to lessons of the evidence that managers can help increase firm growth and profitability. Although the discussion of the results of the survey forms a substantial part, the core of the book is the interviews with managers who got the best results in the survey. The survey and the interviews together determine the overall structure of the book. That is, interspersed with the quantitative chapters are case studies of the offices that performed best, both in financial terms and on the attitudes of the employees.

The book consists of 25 chapters. In addition there are seven appendices, which contain all statistical details and presentations. After setting the stage with an introduction (including a description of the database) and an explanation of how to use the book, the book proceeds with chapter 1. This chapter describes the survey. It presents the four measures of financial performance, which were combined into a single financial performance score:

1. 1.

   two‐year percentage growth in revenues;

2. 2.

   two‐year percentage growth in profit;

3. 3.

   profit margin; and

4. 4.

   profit per employee.

Furthermore, it describes the employee survey: 74 questions on a six‐point scale ranging from agree to disagree. Factor analysis grouped these individual questions into nine related factors:

1. 1.

   quality and client relationships;

2. 2.

   training and development;

3. 3.

   coaching;

4. 4.

   commitment, enthusiasm and respect;

5. 5.

   high standards;

6. 6.

   long‐term orientation;

7. 7.

   empowerment;

8. 8.

   fair compensation; and

9. 9.

   employee satisfaction.

In addition, Maister provides average scores on the survey and concludes that client‐related goals are rated highest, while issues to do with managing people were ranked as being done least well.

Chapter 2 describes the first case study about one of the most financially successful offices among all the offices in the database. The structure of this chapter is clear (as for all other case study chapters). First, it presents the aspects of the survey on which the office most exceeded. Second, we read an interview with the office head about what the firm does to create their financial success. Next given are the results of interviews with (several) groups of mid‐level professionals at the office. Finally, Maister summarizes the lesson of the case study. In total, the book presents nine case studies (Chapters 4, 6, 8, 10, 12, 14, 16, 18). These case descriptions provide very practical tools that managers could implement in their organization: have lunch together, create fun‐stuff like book clubs and theme‐decorated meetings without ignoring discipline, appoint a culture cop or ombudsmen to keep management honest on the ideals it espouses, and many more insights are given by the managers and employees of these successful firms.

Although the cases do provide anecdotal evidence and underscore to the ideas the author discusses in the quantitative chapters, a weakness of the case selection is that the cases only describe success stories. From the data of the survey it becomes clear that there are less successful stories as well. Describing some of these cases would make the lessons that we can learn from the cases more diverse. A consequence of presenting only interviews, anecdotes, stories and personal experiences of these ‘superstar managers’ (as Maister calls them), is that after reading four or five cases, the reader got the message and the rest of the cases do not provide the growing cumulative impact as Maister hopes to create.

In chapter 3, Maister identifies the 20 percent of the offices that did best on the financial performance index and compared how these offices performed on the individual survey questions relative to less financially successful offices. The key conclusion: the most financially successful offices did significantly better at virtually everything (at 69 out of 74 questions). With respect to the factors, the top three for these offices are:

1. 1.

   commitment, enthusiasm, and respect;

2. 2.

   fair compensation; and

3. 3.

   long‐term orientation.

In chapter 5, Maister examines the correlation coefficients between the financial performance index and each question (and each factor). Nearly all questions (as well as all factors) show a significant correlation with financial performance. The highest scores involved the questions related to enforcing high standards and quality and client service. From the factors, quality and client relationships, fair compensation and long‐term orientation have the highest correlations with financial proficiency. Next, as Maister states, we have to find out what successful offices are actually doing to produce high‐quality work and service.

In chapter 7, Maister looks at all questions simultaneously and analyzes which set of questions best predicts financial performance, “the predictive package”. Maister presents a set of nine questions, and than discusses each question separately. Although the set of questions which is presented, does provide extra insight in the question what predicts a firm's financial performance, by this time, the reader feels a strong need for an overview. Fortunately, this overview is given in chapter 9, which, to my opinion, forms the core of the book. In this chapter Maister uses structural equation modeling to ask which factors can be said to cause financial performance. Maister presents a causal model and this figure shows that (p. 84):

• •

  Financial performance is driven by quality and client relationships.

• •

  Quality and client relationships are driven by employee satisfaction.

• •

  Employee satisfaction is driven by high standards, coaching and empowerment.

• •

  High standards are driven by fair compensation and commitment, enthusiasm and respect.

• •

  Coaching is driven by long‐term orientation and commitment, enthusiasm and respect.

• •

  Empowerment is driven by long‐term orientation.

In the last quantitative chapters, Maister extends to scope of the book by exploring the impact of office size, age, and line of business on the results, thereby describing new and interesting insights. First, chapter 11 concludes that individual office effects are stronger than firm effects. Firms do differ at the firm‐wide level, but not predominantly on the key profit drivers. So, differences in culture, management practices and values mostly rest at the level of the individual office, not the firm. As Maister suggests this might be caused by the fact that firms lack enforcement of what they say they believe in.

Chapter 13 shows that no effects of office size with respect to the financial measures were found. However, a number of questions show that the larger the office size, the lower the employee attitudes with respect to:

• •

  empowerment;

• •

  commitment, enthusiasm, and respect;

• •

  fair compensation;

• •

  long‐term orientation; and

• •

  employee satisfaction.

From chapter 15 Maister concludes that the views of the younger staff predict financial success better than do the attitudes of the older employees. In other words, what the 20‐ and 30‐year‐olds tell about the standards of the firm's culture has measurable, statistical influence on the firm's financial performance.

Chapter 17 provides additional comparisons and concludes that there are only a few international differences in employee attitudes. Therefore, Maister concludes that the things that employees are energized by like fair compensation, respect, and teamwork, may be less culture specific than we sometimes think. Furthermore, the chapter shows that the financial performance index was not correlated with the line of business. However, all nine factors differ significantly based on the type of business involved. Finally, it is concluded that the degree of leverage plays a relatively insignificant role in the financial performance of individual offices. As a side step, chapter 19 describes Maister's business manager list of special points of interest that stuck out of her mind after the case study interviews.

The latter portion of the book, chapter 20 to 23, summarizes lessons: what the reader can learn from the survey and the case studies. Together with chapter 7 and 9, these chapters summarize the most important statistical and case study evidence. As you may notice in the description of the lesson chapters, many, many lessons can be learned. Chapter 20 describes the lessons for the manager. It describes:

• •

  what managers must believe;

• •

  what managers must be;

• •

  what managers must do; and

• •

  other things expected from management.

Chapter 21 describes the lessons for creating the success culture. It explains the things the manager should be intolerant to, what the manager must require, and how to create a community. Chapter 22 summarizes the lessons with respect to how to develop people. The chapter lists recommendations made by employees in general and for creating an energizing workplace in particular. Furthermore, the chapter describes suggestions on appreciation and other non‐financial rewards as well as on how to create fun. Finally, chapter 23 describes lessons on other topics, like hiring, training, reward systems, and dealing with clients.

It is very valuable that the lessons describe concrete suggestions. After reading them, the manager knows what to do. On the other hand, it is much and it might be that managers get lost in the three pages describing more than 430 lessons! The book ends with a chapter that stresses that you should focus on clients and employees. Maister concludes that the very way that a firm excels at pleasing clients is to excel at exciting the firm's employees. People development is business development and the firm got to be able to be superb at both to achieve superior financial performance. Finally, the courage to manage is important, as described in chapter 25. What makes good managers so impressive is not what they are doing but the fact that they are doing it. The most successful offices do not preach standards that are different, the individual managers who run those offices just live up to those standards.

Overall, the main benefit of Pratice What You Preach,is that it provides managers with a very readable “how to succeed” manual, with convincing evidence and suggestions for definitive actions. It is not only a description of what to do as a manager, but also how to do it. This combination makes the book very appealing to practitioners.

The book is built around the evidence, from the survey and from the case studies, and this forms the essence of the book. Although this evidence is thorough and convincing throughout the book, the dataset of the study also raises some questions. For example, it is not clear why offices with fewer than ten people and employees earning less than 25,000 dollars per year are excluded from the data set. Furthermore, it is a drawback that only marketing communications businesses are included in the study and settings like accounting, law and financial services are not covered. Although Maister acknowledges this and makes a case for the diversity of the dataset, this restriction is a limitation. In addition, Maister does not give insight in how the questionnaire was developed. Was it based on existing research or did Maister develop the questionnaire himself?

Notwithstanding the above, the book is unreservedly recommended to practitioners. The message of Maister to managers is clear and convincingly demonstrated: Do not preach new things, but practice what you preach.