David presented findings from his latest book, Practice What You Preach, which explores statistically the relationship between employee attitudes and financial performance in 139 professional service offices worldwide.

Session Moderator: Thank you for joining us today in the AccountingWEB Workshop. We are pleased to welcome David Maister today.

David Maister is widely acknowledged as one of the world’s leading authorities on the management of professional service firms. For two decades he has advised firms around the world in a broad spectrum of professions, covering all strategic and managerial issues.

I would like to take a moment to thank TAG International for sponsoring and making Mr. Maister’s workshop possible today.

Mr. Maister will present the findings of his latest book, Practice What You Preach: What Managers Must Do to Create a High-Achievement Culture, available today for purchase on the AccountingWEB site, which explores statistically the relationship between employee attitudes and financial performance in 139 professional service offices worldwide.

Firms were found to make significantly greater profits and faster growth where employees agreed with the following nine statements:

1. The quality of the professionals in our office is as high as can be expected.

   Welcome, David, the floor is yours!

   David Maister: Thanks. Does anyone have a quick reaction to that list?

   Look at number eight. It’s insultingly obvious. Why doesn’t everyone do this?

   Becky Dowd: Good question!

   Richard Stinson: Tight time budgets might be a reason number eight is not followed.

   Stephen MacNeil: Demands on time and trying to control time in a contract for fear that we cannot bill it.

   David Maister: In other words, quality will be compromised if we can’t bill it?

   Stephen MacNeil: Seems to be the direction I’ve seen lately.

   Session Moderator: Number seven is a good topic.

   David Maister: What number seven means is do you have the guts to fire a big-billing partner who treats people in the firm with a lack of respect?

   Todd MacDonald: Short of firing him, what can be done?

   David Maister: Counsel him or her, and make clear that your firm has non-negotiable standards. It’s a question of whether or not you have any ironclad principles, except for cash. What I’ve proven (not just my opinion) is that those who have the guts to have standards make more money 

   Becky Dowd: Seems obvious to me. How can we as nonpartners get our partners to act on these principles?

   David Maister: Nonpartners can’t change partners. Change firms. Life’s too short to work for idiots without principles.

   Session Moderator: David, why don’t you cover the nine areas one by one for us?

   David Maister: OK, moderator. First, client satisfaction. Everyone preaches it, but the question is do you have a system that forces you never to compromise? For example, how many of you give clients an unconditional satisfaction guarantee?

   Stephen MacNeil: Not here.

   David Maister: The world is filled with well-intentioned people who know what to do, but get stampeded by short-term expediency.

   2. We have no room for those who put their personal agenda ahead of the interests of the clients or the office.

   Todd MacDonald: Is this ego stuff?

   Session Moderator: Sounds like it to me…

   David Maister: We’ve all got egos. It’s about what the ironclad standards are that your firm chooses to compete on, and therefore never compromises.

   Notice it doesn’t say we are “sorta” team players. It says we fire individualists who don’t work well in teams. Teamwork is profitable, but only if you don’t compromise. Reactions?

   Becky Dowd: I agree!

   Session Moderator: Compromise what?

   J. Fisher: Compromise is good—it prevents arguments.

   Stephen MacNeil: Not everyone functions well in a team setting…do we fire those who excel in their own way?

   J. Fisher: But not being a “team player” can promote arguments and resentment.

   David Maister: There’s less resentment if everyone knows the rules. Do you have a “rights and obligations of every firm member” statement that lays out what your nonnegotiable standards of behavior are? The message of the study is that it doesn’t have to be teamwork. The message is that you get the commercial benefits of what you absolutely always do (and are), not what you try to be if it’s convenient.

   J. Fisher: I see.

   Session Moderator: Are you talking about a mission statement?

   David Maister: No, it’s not a mission statement if people are allowed to transgress it, even slightly. I’ll repeat my language. It’s about our values, our nonnegotiable minimum standards of behavior that define who we are and what form of excellence we are going to deliver to the market, not aim at. Deliver. Every time.

   Stephen MacNeil: My experience is that those standards, especially for the partner group, are situational.

   David Maister: Yeah, that’s the point. The world is so full of wimps that standards are “situational.” But notice, I’m absolutely not making moral statements; I’m saying I can now prove with data that firms that uncompromisingly enforce high standards make more money.

   Session Moderator: What about number three? Those who contribute the most to the overall success of the office are the most highly rewarded.

   J. Fisher: Positive reinforcement?

   David Maister: It’s not positive reinforcement in the sense of “Do this and I’ll pay you” That’s treating people like prostitutes. It’s about being a firm defined by common views of what it takes to be a full professional.

   Stephen MacNeil: Is contribution limited to being a rainmaker?

   David Maister: No. That’s 19th century thinking, and that’s the point. Too many accounting firms run on the principle that if you bring in lots of cash as a rainmaker, you’re not held to the same high standards of supervision, respect or bringing out the best in people. I’ve found that it’s false financial logic to let 800-pound gorillas get away with not meeting other standards. You make less money if you do that.

   Let me go down a different tack. I’ve learned that you don’t make money by chasing money. You make it by exciting and enthusing your people to reach for high standards. That takes a manger who is a net creator of excitement and energy.

   Stephen MacNeil: The money will follow?

   David Maister: Financially successful offices outperformed the rest on all 74 employee attitude questions! Here are some where they most outperformed the rest:

   • Enthusiasm and morale around here has never been higher.
   • Management of our office is successful in fostering commitment and loyalty.
   • People are more dedicated here than in most other organizations.

• Management operates in accordance with the firm’s overall philosophy and values: they practice what they preach.

  Any reactions?

  Stephen MacNeil: Do you provide a list of these successful companies so that I can forward my resume?

  J. Fisher: It is key to operate in the philosophy of your firm!

  David Maister: It’s like this. My nieces and nephews come to me and say, “Uncle David, you used to be a professor. How do I do well in college?” And the answer is, “Go to class and do the homework.” And they say, “That’s no fun!” 

  Richard Stinson: I agree on all points. How do you instill that fire and enthusiasm in the leaders who have been successful in spite of themselves?

  David Maister: Instilling fire depends on whether or not people want to go anywhere. I’m absolutely not saying you have to do this rubbish. I’m simply saying that if you do, you’ll succeed more. It’s simply a question of how much ambition you’ve really got. Are you really ready to get on the diet, or (like me) are you happy to stay a little chubby? But you must not evade the truth about what it really takes to win.

  The case studies reveal what an effective manager must be: Development of people precedes and has a greater priority than profits. Someone of high integrity. Sensitive to personal issues.
  A good communicator and listener.

  I’ve got a long list, but the key message is that it’s not about systems or processes, according to my data. The people are winning because of the character of the manager, who has the skill to enforce high standards with diplomacy and tact. Success is not about policies, it’s about personalities. Who knew?

  Most firms choose the wrong managers for all the wrong reasons. We appoint the business getter, the commercially minded, the founder, the most senior. None of these is relevant. The question is can he or she manage? Can he or she excite and enthuse others (senior and junior) to reach for high standards? It’s not a logical skill, it’s an emotional skill.

  Stephen MacNeil: Is it a generational thing? I mean, did you find that there was a certain age bracket—that maybe through their life experiences they had a more effective approach?

  David Maister: No, my star examples are of all ages. It’s about whether or not people have principles of excellence they believe in and the courage to stick to them through thick and thin. The courage is the key point. You can’t get the benefits of a strategy unless you stick to it, even when you are tempted to depart from your standards for cash. That’s what having a strategy is about, and it’s about character and courage, not age.

  Remember, we’re talking about sticking to very boring, familiar stuff: client focus, teamwork, respect, fair pay, supervise the darn client work. This is not new. It’s devastatingly old. Yet so many people seem to lack the guts to do it.

  Becky Dowd: Did you find out why people lack the guts—it seems like common sense to me?

  Karen Deal: Sense is not a common thing, for sure.

  David Maister: Look, I’m not trying to beat people up. This all includes me. Of course it’s common sense. It’s just like my problem with losing weight. I go to my doctor and say, “How do I do it?” and he says, “Eat less, exercise more.” And I say, “But that takes discipline.” “Yeah,” he says. “It’s your choice. Just don’t think you can get the benefits without doing the work.”

  Karen Deal: How true!

  Session Moderator: David, I would like to know more about the required learning and development

  David Maister: Required learning and development mean that everyone must be learning new skills, so that three years from now they will be able to handle significantly bigger responsibilities, more challenging assignments and more complex clients. This should apply to everyone from age 21 to 71, from the managing partner to the newest secretary. If you’re still doing what you knew how to do three years ago, you’re becoming obsolescent.

  Session Moderator: How do smaller firms address this issue with small training budgets?

  William Colangeli: In my small office, one thing we do is learn from each other.

  Session Moderator: Cross-learning can be very helpful in smaller firms. Use the existing talent you have. Great!

  David Maister: It’s got absolutely nothing to do with training or training budgets. It’s about how you staff and supervise jobs. Think back on your own career. When did you learn the most and build skills fastest? When a senior person gave you a chance, gave you significant responsibility, supervised you and coached. That’s all it entails, except that it’s incredibly rare in many accounting firms. Partners are too worried about their own billable targets to delegate any of them to juniors, and they are allowed not to supervise well if they are not in the mood.

  Karen Deal: So many younger people today think that things will come their way just because…they are in for a rude awakening. Sometimes it is easier to just do it yourself. Good employees are hard to find.

  David Maister: In the past we relied on the younger people to be self-starting. What my study says is that great managers don’t give people the choice. You either learn and grow or you’re out. Fast.

  Becky Dowd: Can you create a learning organization even if the owners (shareholders/partners) do not endorse it?

  David Maister: No, you can’t do anything that the owners and shareholders and partners don’t endorse. That’s another big lesson. You can’t fake it, and you can’t get other people to live up to standards you don’t live up to yourself. Pass if you want to, that’s OK. Just don’t preach what you don’t practice. You’ll be seen (immediately) as the liar and hypocrite you are.

  Karen Deal: Great answer, David.

  Session Moderator: David, let’s discuss “We invest a significant amount of time in things that will pay off in the future” a bit more.

  David Maister: All the “invest significant time” one means is that if the staff see the partners focusing on the long run, tying to build for the future, they will be more likely to join in and participate with enthusiasm. If they see the leadership managing to meet only quarterly targets, compromising left, right and center, they’ll go into compliance mode and you’ll get less out of them. Again, not morality, simple logic. Where the leaders are clearly building, you make more money through extra commitment. Your choice.

  Session Moderator: You mentioned that employee satisfaction is caused by high standards, coaching and empowerment. Please share some examples with us.

  David Maister: This really is simple, and applies to all of us. You gotta believe, really, really believe in what you do if you want people to follow you. You gotta be clear about it. If you don’t want to try that hard, Godspeed. But if you post a mission statement or a strategy or a set of values that you clearly don’t live up to, you lose twice. First, you lose the commercial benefits of that standard, and you also lose a lot of credibility. Why should anyone listen to your next statement of strategy when you so visibly didn’t live up to your last one? You lose all influence over those who work with and for you.

  Session Moderator: We’re coming close to the end of the presentation, David; what should we expect from your new book?

  David Maister: In brief (more details in the book) it turns out that the highest employee satisfaction doesn’t come from “be nice to people” places. You find the highest employee satisfaction (and retention) in places that do what we’ve been discussing: creating a place that people are proud to belong to, no tolerating passengers, being both demanding and helpful in ensuring that everyone’s got a career, not just a job. Excellence is not for the fainthearted. It’s like the marines. We’re tough, and we care for each other, and don’t join us unless you really want to try and also to live by an unvarying code.

  Session Moderator: Great. Thanks.

  David Maister: The book contains two things. First, the evidence that this is data-driven, not my opinions. Second, and more important, nine in-depth real case studies (names disguised) of people who are actually doing all this and reaping the rewards. It can be done.

  Session Moderator: Thank you for joining us today. We would like to thank both Mr. Maister and TAG International for making this presentation possible.

  Session Moderator: Are there any final questions for Mr. Maister?

  David Maister: Bye, everyone. Thanks for coming. Keep the faith!