SAST Wingees

Practice what you preach by David Maister

Just finished reading this book by David Maister. Those that are familiar with my rating scale – it falls under the Insightful rating category. Maister has surveyed over 29 firms having 139 offices operating in the USA (68%), the other 32% in Belgium, Brazil, Canada, China, England, France, Germany, Hongkong, Ireland, Italy, Japan, Mexico, Netherlands, Scotland and Spain.

All these firms are owned by a publicly-held marketing communications company. Survey respondents numbered 5,589. You may all know that Maister is an expert in the services industry. So his study target is appropriate. Then he proceeds to pick the top performing firms and offices and interviews the top management, middle management and the line employees.

The results show what we have come to expect from top performing firms – focus on the customer, alignment across the organization, empowerment, management cares, teamwork etc.

One interesting insight (chap 15) – the views of the younger staff are a better predictor of financial success thant that of older employees.

In my view, chapter nine is the one that provides some great insights. Maister uses a statistical technique called structural equation modeling to tie all the predictors of financial performance together (reminiscent of system dynamics). Everyone knows that quality & client satisfaction drives financial peformance but Maister provides a dramatic quantification of this tie-in.

He proves with his data that a one unit increase in quality & client satisfaction ( he has used a 6 point scale in his survey instrument) would cause a 104.12 point increase in the financial performance index. On a percentage basis this works out to a whopping 104.12% increase (or double the financial performance). He goes on further to show that a 1 point raise in Employee satisfaction (on the same 6point scale) can improve financial performance by 42.06 percent.

In a similar way he measures the impact quantitatively on financial performance for [impact figure in brackets]

High standards (40%), Coaching (16.98%), Commitment, enthusiasm, and respect (13.92%), Empowerment(10.47%), Fair Compensation(9.98%) and Long Term Orientation (9.28%).

These are the factors, according to Maister, that have the most impact on financial performance. Again, all of us intuitively know that these factors have an impact, but quantifying the impact Maister moves these from mere gut feeling into the realm of clear evidence.

Well done David. Overall, it is an excellent book that everyone in the services industry should read.

BTW, Maister writes an interesting blog as well. Check it out.

Flashback:

1. I had covered Maister’s Laws of Service Businesses a while ago.