Do you know your margins? The very important Gross Profit Margin = (Net Sales – Cost of Goods Sold)/ Net Sales Cash is the lifeblood of a business. It needs to be worried about. You should know your margins and a good set of management accounts will yield all the ratios you need to manage the business.
Continue readingCategory Archives: Employee engagement
Tribal Loyalty
Do many of your employees worry about how they will get their next drink or square meal? In the developed world we take our physical sustenance for granted. “An army marches on its stomach” is usually attributed to Napoleon Bonaparte. The need to keep the troops fed and watered to maintain a fighting spirit is a long-known fact. Lord Nelson ate after his sailors. The US Marines feed their Officers after the men. It’s a symbol of servant leadership.
Continue readingDoes employee engagement lead to more reward?
Let’s boil employee engagement down to the basics. Engagement relates to the psychological contract between employer and employee. Fundamentally it moves away from the idea of “economic man (or woman)” which even economists now recognise fails to predict much of human behaviour. Instead of a “you chop a hundred logs I pay you one pound” contract, the form is that “both parties will make their best endeavours for the other”, to do their best in a business setting. Some organisations operate a hair trigger “fail and be fired” policy while others regard moving someone on to greener pastures as a catastrophic failure of organisational culture. The model we promote is “tribal”. If someone has worked successfully for years and now needs leniency for a time you give it. If the tribe’s shepherd has kept everyone supplied with mutton for years but now has a performance issue, bear with it. He or she may well bounce back more committed than ever, as they don’t want to let their tribe down.
Continue readingDistributed Intelligence
In 1999, work started on MEMS (Micro-Electromechanical Systems) at the University of California, Berkley. The aim was to produce a sensing, computing and communicating system in a one cubic millimetre size. These dust motes, dubbed Smart Dust, could be scattered or carried in the air forming a sensor web covering a wide area. The project closed in 2001 having reached a mote size of a few cubic millimetres. Certainly, there was a lot of R&D activity in the next size up – the insect size. So, the next time you take a swipe at a Bluebottle fly remember it may just be doing a TV audience survey! The distributed intelligence idea is interesting though. Henry Ford is attributed with the complaint that whenever he hired a pair of hands, he got a brain too. Of course, these days we recognise that you cannot run a successful organisation without using all the brains you employ.
Continue readingInspirational leadership
How is it possible to be an inspirational leader when you are team leading in a 9 to 5 rule bound environment? Not many of us work in dramatic situations that give rise to stirring calls to action. Shakespeare’s Henry V puts it well: “Once more unto the breach, dear friends, once more, Or close the wall up with our English dead.” Stirring stuff indeed: however, I suspect only adrenalin junkies would find this acceptable all day long!
Continue readingThe Law Of Unintended Consequences
We all know about Suggestion Boxes. Good schemes pay good rewards to people who suggest actions which produce substantial results. But, during my research, the productivity data, before and after the Suggestion Scheme, showed a steadily reducing performance! Instead of everyone being expected to suggest improvements, the scheme classified people according to their grade. Obviously, you could not expect ‘those’ people to be helpful unless they were paid! The net result was fewer improvements and steadily declining productivity, and therefore margins and profitability.
Continue readingCompound disinterest
One of the difficulties of thinking is that we all tend to drop into the ruts of previous thought patterns. The deeper the rut the more difficult it is to think outside that rut. To escape the rut, it is useful to think in terms of analogies: to take an idea or method and apply it in a different context. It is a powerful tool. Managing people is not always straightforward. The uncertainty of outcome, which is normal with people, makes the mathematical tools of probability a relevant analogy. An engineering analogue might be the derivation of reliability statistics for complex systems. Human beings are definitely complex systems!
Continue readingUse Your Loaf
Go back in history far enough and you reach a time when groups, tribes were self-sufficient: hunter-gatherers eating meat and berries. As civilisation advanced, goods started to be traded between groups on a barter basis. Most of the goods were still consumed by the people that produced them. They had a desire to create good quality produce, both for their own consumption and for their trade. The growth of trade and commerce led to the invention of an advanced bartering system – money. Most people still consumed their own produce and traded the surplus. Mistress Goodchild was pleased to sell a few loaves in her village, particularly as everyone knew her loaves were the best. The Industrial Revolution with its focus on specialising changed Mrs Goodchild’s working life completely. She worked for a baker of course, she like to be involved with bread making. Now though her job involved a small part of the bread making process and some days she didn’t see a loaf at all.
Continue readingManagement and Publicity
Have you ever had a business conversation, or made a decision, that you thought would be better kept secret?Have you ever made a decision, and communicated it, only to find that people already know, but know something different from what you meant! Management is done on a public stage. Never forget that!
Continue readingRevenue Growth through Operations
Your Gross Margin is an essential statistic to live and breathe. Improving your margins is something everyone should do every day! Enjoy the video.
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