Do your Managers outperform?

A long FT article (linked above from Jan 27) examines the performance of English football teams (think soccer here in the USA). The article makes a good management read. But I will summarize the main points in case you don't have time (it is quite long):

1) 90% of football club performance can be tracked to the players. That is the salary level payed for these "employees", whether it be in Yankee height, or Oakland low, can predict most of the success of the team. Makes sense, more payroll = more talent, and the more you win.

2) That leave 10% for the Manager's (think CEO) effect. Some Managers outperform, while some under-perform, just like in the real economy.

I believe, but will not site, comparable studies exist for competitive business (afterall most pro sports leagues operate in a type of Cartel arrangement). In any event, my conclusions would be:

A) The CEO pays for positions, not individuals. But if your overall pay is average for your industry, you should expect average performance, financially and customer-wise. If you can afford to pay more, then the customer related performance should go up.

B) Then again, a very talented manager can make much more than his/her 10% difference, driving an average crew to outperform it's pay grade by a long shot.

Prescription - Hire good managers, pay-up for staff, or a bit of both. But for success' sake, at least do one of these.

Strategy Revolution

Forbes has published a review of Roger Martin's "Fixing the Game". I consider this a seminal work in the area of leadership and management strategy. I also thought it was an appropriate focus for a return to the blogging sphere.

The review points out fundamental weaknesses in our current financial incentive world. For public companies it's all about managing earnings and expectations.

The best companies have avoided the traps, but they are few. I think mostly of Apple, who's leadership (not just the departed) focuses on the customer, and not on what the customer thinks it needs (no market research here) but rather on what they really want (but just don't know it yet).

Translating this to the private market, the focus needs to be on serving the customer best, and only then will profits follow. Maximizing shareholder value (a term called the "dumbest in the world" by no less a titan than Jack Welch) should not be the driving force. Incentives are OK, but they must be tied to customer related goals as well as profitability.

You small guys trying to do things better, keep the focus on your customer and you will succeed. Just bring in a good financial mind to incentivize the workforce and count the beans.

Excellent tools for small (very small) businesses

Check out this post from the NYT.....