How Best?

Happy Friday,

In every organization, especially those that compete for their survival, the business objective must be maximum performance. Since desks, chairs, and office space don’t do any work, performance is about coaxing it from people. How best?

The default approach is to hire staff, assign them numeric performance targets, and employ managers to monitor and “hold employees accountable” to those targets. Drive the numbers!

The question no one asks but should is whether the ‘drive the numbers’ approach actually delivers the best numbers.

For comparison, I’ll share our firm's 17-year approach and results. The important contextual difference here is we were playing with our own money and were free (and motivated) to question everything without fear of being second-guessed. ECO:LOGIC Engineering:

1. Net profit 50+ % above the industry average every year except the first.

2. One (1) unwanted employee departure (to join a competitor). Not one a year, one total.

3. Zero lawsuits of any kind.

Those numbers felt normal and sustainable at the time.

The two key differences in approach between ECO and other firms are these:

A. No individual utilization targets and no discussion of company financials.

Over time, financial results reflect loyalty, enthusiasm, and excellence. The more of each you can generate, the more exceptional (above average) the financial results. So, a good first principles question would be - does ‘driving the numbers’ increase people's loyalty, enthusiasm, and excellence or reduce it. We judged it would reduce all three, so we set no utilization targets (never even used the word) and never framed anything about the organization in a financial light except project management.

Utilization, workload, and backlog were monitored behind the scenes. Adjustments, when needed, were quietly discussed with those who could affect them. Utilization wasn't a word anyone ever heard, yet as the results attest, it was consistently above, not below average.

B. All ECO leaders sang from the same hymnal, and the chorus was always excellence and self-actualization (see Maslow’s Hierarchy of Human Needs).

We made sure of that. In the battle for hearts and minds, an organization is whatever its local leaders talk about most. The subtext for all of ECO’s leaders was individual and collective excellence. ECO was the vehicle. Placing the highest value on excellence also fueled exceptional loyalty and enthusiasm.

To prosper in a business requires being the best at the business you’re in (Business 1A, Economics 101). Focusing people on anything else is an unwelcome distraction and ultimately counterproductive.

I don’t expect companies reading this to suddenly stop pounding on utilization—there's too much personal risk to even suggest it. I simply want you to know that there is a better way, a virtuous cycle that can produce substantially better results, greater compensation, and more fulfilling careers for all. Some of you will start your own enterprise one of these days. You can and should expect to do better than the current status quo. Save this email.

And have a great weekend!

Dave

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Written by me, not ChatGPT, with speed assist and blunder avoidance by Grammarly.