Focus on people (not profit) to make profit

March 8, 2010 by Cindy Barnes

Places with happier employees make more money. Any CEO worth his bonus will tell you that it’s all about the people. Well, there’s some old research and now some new research that proves it.

Creating a High Achievement Culture
In 2001, the great David Maister published the results of a research study of 139 offices of 29 firms in 15 countries in 15 different lines of business. His book, “Practice What You Preach: What Managers Must Do to Create a High Achievement Culture”  became a huge global bestseller and it it he demonstrates very clearly that it’s employee attitudes that drive financial results, and not the other way around.

From this premise, Maister went on to develop his Causal Model and we write about this in our value proposition book, which David kindly contributed to. In it, we highlight the importance of employee engagement in bringing your value proposition to the whole organisation.

New study
“CEOs who put stakeholders’ interests ahead of profits generate greater workforce engagement and therefore deliver superior financial results” – so says a survey(1) using data from 520 business organisations in 17 countries. This survey tested the hypothesis that employees develop negative feelings toward their organisation if the CEO’s primary focus is solely on profit maximisation. Perceiving the CEO as autocratic and focused on the short-term, they report being less willing to help the company, which ultimately leads to poorer corporate performance.

So put the command-and-control behaviour away and truly focus on your employees. Develop your employee value proposition which must become embedded in every aspect of your organisation.

Cindy

(1) Mary Sully de Luque of Thunderbird School of Global Management, David A. Waldman of Arizona State University West and Robert J. House of the University of Pennsylvania. Research reported in Harvard Business Review December 2009.

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Tags: David Maister, employee value proposition, profit, value proposition