Many businesses are leaner than ever, yet highly effective management is required to compete in today’s world. It is imperative that effective management and management practices are consistent throughout your organization.
Without consistency in management, underperformance will be the norm.
It doesn’t have to be this way, however. Many companies today are producing strong profits on flat revenues. They have found ways to increase efficiencies and create positive momentum.
How do they do it? You can bet that it involves engaging employees at every level of the organization. Let’s look at one example of how this works.
Teach every employee to be a stakeholder
Recently I facilitated a quarterly operational planning meeting with a long-term client. This is a company that produced record profits on flat revenues during the recession.
Operationally, this organization is really dialed in. They’ve got a fun corporate culture, they work hard, and most, if not all employees, understand how their contributions affect the company’s financial performance.
Not coincidentally, a characteristic of their corporate culture is to educate talented employees about how the business works and creates a profit. In other words, they teach people how business works whether they are managers or not.
The leadership team works hard to create an employee team that is aware of the connection between individual actions and attitudes, and the company’s financial results. They are very effective. Let me give you an example: a technical engineer was participating in the Quarterly Operational Planning Meeting for the first time. We were reviewing results for each profit center (and each department within each profit center). When we evaluated the technical support team’s performance, this engineer spontaneously took the floor and shared, with the leadership team, her thoughts on turning technical support into a profit center while maintaining the primary focus of providing a superior customer experience.
This engineer (a non-manager) knew her department’s performance numbers (key performance measures). She knew how their KPM’s affected subscription renewal rates. She knew how renewal rates affected revenue, and she knew the gross profit generated for every dollar of revenue.
In short, she understood the operational/financial connection between how quickly her department answered the phone, addressed the customer’s issue, and how that affected revenue and gross profit. To top that, she presented a viable proposal for retaining high customer satisfaction and maintenance renewal rates while creating a new profit center for the company.
This is the new normal
Look around you. Can you picture this happening in your organization? If not, then it’s time to change.
The good news is that this can be the new normal in your organization. What’s needed is to shake loose the apathy that’s typical in so many companies.
Change the way you manage and educate people to help them connect the operational and financial dots. Help them see how their contributions affect the bottom line.
Remember, there is an undeniable connection between a well-managed company and profitable growth.