3/14/2007

Practice What You Preach

Ever since I started studying in the U.S.A the same topic has been coming up a couple of times now: Developing a mindset that will make you financially successful in life. Next to individuals trying to live the American dream there is a growing interest in what factors influence employee attitudes, especially the kind that stimulates financial success. In a book excerpt of ‘Practice What You Preach’, by David H. Maister, it is explained how important it is to be able to create a culture that supports the drive for success. His research has shown that as companies get bigger a lot of the key profit drivers such as valuing input, listening, trust, practicing what you preach, etc suffer and loose ground in the companies culture.
Even though this research did not include any financial performance data it seems obvious that the bigger the organization the harder it is to achieve the employee attitudes that drive success.

http://www.businessweek.com/smallbiz/content/nov2001/sb20011109_069.htm

7 comments:

Patrick said...

I have read a lot of books and articles concerning employee motivation. Not a single one said money was the key motivator of workers. What really drives workers are the things Joseph said, "valuing input, listening, trust, practicing what you preach, etc." While it is hard in any size of organization to motivate your employees and keep them happy and working towards your company's goals, employees are largley the key to success in many organizations. Good workers help cut costs, increase efficiency, make customers happy and etc, which all ultimately lead to financial success of the company. Workers who hate their jobs or their employers are not good workers and will not benefit the company. Therefore, don't you think it would be worthwhile, for any size of organization, to instill these practices into their culture to please their employees? I sure think it would be.

Jada said...

Money doesn't buy happiness. I don't think it buys productive workers either. No amount of money thrown at a bad worker will turn them into a productive worker. However, a worker that likes his or her job and feels like they are a valued member of the company will be a productive worker. Productive workers increase efficiency. Incentive pay is a great way to benefit the productive workers and reward their good behavior by paying them for extra work done, reduced reject parts produced, lower customer service complaints and other critera as determined by individual businesses.

Sebastian said...

I agree with what has been said. It makes me think of the book 'Good to Great' by Jim Collins. Collins speaks of “getting the right people on the bus.” A company’s culture will become a great culture if the right people are hired for the right jobs. Once a company reaches a certain point, it can be difficult to find and/or maintain the right people to work for you. It seems to be a fact that the larger a company gets, the less control it has over many aspects of the business. This includes the hiring of employees. This is especially true when a business does not have market power. The more competitive the market is, the more difficult it may be to stop employees from jumping from company to company.

Dr. Tufte said...

-1 on Joseph for a poorly formatted link.

If I can attach some economics to this: why does it seem like we have diseconomies of scale in the "drive for success". I don't have an answer, but I think it is probably just as important as diseconomies of scale in something more mundane, like production.

Patrick: the books you are reading are wrong. There is essentially zero evidence that employees are motivated by anything other than compensation. This isn't for lack of looking: managers and psychologists have been measuring these things for almost 100 years, and they have found almost nothing else makes a difference. That is a dirty little secret in managerial economics, because the discussion gets really boring if all we can say is "pay works, and nothing else does". It's just not sexy enough to sell pop management books.

Jada actually starts out agreeing with Patrick, and then arguing that incentive pay is important.

Matthew said...

Dr. Tufte said that all the management books that preach that money doesn't motivate are wrong. While I agree that money is a huge motivator, I disagree that it is everything. Other factors definitely come into play. Look at all the people who volunteer. Their motivations may all be different, but their motivations are not monetary. I, personally, have not accepted higher-paying jobs because a lower-paying job was either more fulfilling and meaningful, more ethical, or I felt more appreciated there.

William said...

Dr. Tufte,
I do not believe that money is necessarily the only driver. Compensation is not everything. Look at the Hawthorne effect. A lot has to do with the culture and the people that work there. If I had to work somewhere unethical it wouldn't matter how much I got paid I would not work there plain and simple.

Money isn't everything in life there are a lot more important things, like your values and morals.

Dr. Tufte said...

Ooh ... Hawthorne Effect ... cool addition to the mix.

I'm going to plead guilty here to supporting the party line: economists have been looking for these effects forever, and they are very weak when they are there at all.