I was recently asked by the facilitator of a local Business Practice Organization to make a presentation to their group about what types of information do companies share with their managers and employees such as sales, margin, and profit. Even more specifically, what types of tools can be used to communicate this information throughout the organization?
Many private companies don’t share their financial information with their managers and employees for fear that employees may demand more in compensation as the bottom line increases. If this is a concern, a two tier approach can overcome this issue. Provide a full open approach with your management team, but segregate the bottom line profit from your employees. Even if a company does not provide bottom line results to all employees, many Key Performance Indicators (KPI’s) can be used to keep employees informed and vested in business operations.
It is my contention that an open book policy can help overcome complacency within an organization if it is executed on a regular monthly basis. Providing the management team and employees with a better understanding of the business can help lead to a feeling of ownership and potentially spark an influx of out of the box ideas that can lead to an increase in efficiencies and thus profits. Empowering people with knowledge and holding them accountable can have a dramatic impact on profitability.
CDH’s Executive Focus is an excellent solution for helping your business make the move to open book management. Executive Focus is a visualization tool that provides transparency within the organization and empowers people with knowledge by helping them have a better understanding of all departments within the business. How do we do this?
- We develop a custom set of business metrics that represent your organization’s function as a whole.
- We focus on Key Performance Indicators (KPI’s) that clearly reflect efficiencies and value add capabilities.
- We facilitate monthly management team meetings to highlight and discuss the trends and relationships in your results to drive a culture of continuous improvement.
Shown on a chart below is one of my favorite Executive Focus KPI’s…the Profitability Curve. We incorporate this keystone metric into all of our monthly reviews. It is my belief that everyone in the organization should be cognizant of the monthly sales needed for their company to break even.
If you would like to learn more about the CDH Executive Focus process please contact Matt Wirth, Senior Manager ([email protected] or 262-784-4040).