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Increasing Productivity

A Winning Culture Keeps Score

Does your company culture drive profitable growth? Here’s how to get your employees focused on the bottom line.

John Case

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People often think of corporate culture as ‘soft’ because it involves squishy things like values and expectations. That’s true as far as it goes – but winning cultures have a hard, metrics-driven element as well.

A culture that feels upbeat and positive but doesn’t contribute to profitable growth or beating the competition is destined for the dustbin.

In sports, everyone gets that and knows what winning looks like. It’s reflected in your score, plain and simple. Sure, you track other numbers – what you might think of as key performance indicators – such as on-base percentage. The Boston Red Sox, the 2013 world champs in baseball, are known for their sabermetrics. But nobody in the organisation thinks those stats are more important than outscoring opponents.

In many businesses, however, people have no clue what winning would mean.

  • More profits?
  • A higher stock price?
  • How can I affect those?

Maybe ‘winning’ just means making my KPIs – or not getting laid off. Employees can’t get excited about winning, because they never know whether they’re winning or not. They need a score to tell them.

That’s what they get when they work for companies that practice open-book management.

The trick is to focus everyone’s attention on a single key number – the one number that, if improved by a significant margin, will leave the business healthier and stronger at the end of the year.

If that number is headed in the right direction, you’re ahead. If you hit an agreed-on target, you win.

For an SME, the key number might be something as simple as net profit. More often, it’s an easily understood indicator that contributes directly to the bottom line.

Larger companies usually expect each unit or function to come up with its own key number. When jet fuel was going through the roof a few years ago, the pilots at Southwest Airlines identified fuel usage as a key number. They learnt to monitor it closely, and they came up with ways to help lower it.

But if different units’ KPIs aren’t closely connected, they may come into conflict with one another. At one mining company Bill worked with, production crews were measured on tons produced while maintenance was measured on maintenance costs.

Production naturally worked the equipment hard, leading to breakdowns. Maintenance crews were slow to make repairs, lowering their own costs but hurting production. Eventually the company took an open-book approach, changing everyone’s key number to production profit, or production revenue (tons multiplied by price per ton) minus maintenance costs.

Employees in these units not only found they could work together; they also got fired up about the improved financial performance they could generate.

Most open-book companies link progress on the key number to a bonus or some other incentive. Now everyone has a stake in winning – in making that number move.

At Boardman Inc., a US-based specialty manufacturer, managers and employees agreed that the key number was job margin dollars, meaning shipment revenue minus direct labour and direct materials. (Shop-floor employees in open-book companies learn to understand and use terms like that.) Managers and employees together set a target for improvement. When the company blew away the target in 2012, workers received a bonus of ten weeks’ pay and Boardman enjoyed its most profitable year ever.

Part of the power of open-book management lies in its simplicity – deciding on and tracking that one key number. The process generates buy-in, because you’re asking people their views about what’s most important right now.

And it helps them understand their own connections to the company’s financial results. Employees begin to think and behave like business people with a vested interest in success – not like hired hands.

Related: How to Make Your Team Happier and Smarter

What makes a number ‘key’?

You can’t pick just any old metric and call it a key number.  A good one meets three conditions:

  • It’s directly connected to the financials. Improve the key number, and you get better financial results.
  • It’s not imposed from on high. Open-book companies consult with managers, employee teams, and other stakeholders to develop their key numbers. They ask: What are the biggest challenges we’re facing this year? The biggest opportunities? How can your unit best measure its contribution?
  • It’s for now — not forever. Companies’ situations change. Sometimes revenue growth is the top priority, other times it’s profitability or cash flow. When a company makes progress on one objective, it may want to set its sights on another the following year.

High Alert

4 workforce stats that affect your team

  1. 80% Employees who say their relationship with their boss directly influences their happiness at work
  2. 67% Employees who believe their managers have their best interests and career advancement in mind
  3. 53% Employees who believe they can do a better job than their manager or supervisor
  4. The top reason for leaving a job is because of limited career or promotion opportunities

John Case is the author of Open-Book Management and The Open-Book Experience.

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Increasing Productivity

How To Build Organisational Wealth Through Increased Efficiency

Using the right business systems can allow your staff to become more efficient through best-practices and better process flows.

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As your business grows, the demands of running and managing all its parts increase. Fortunately, technology can help you standardise, streamline and adapt your operations in order to meet these increased demands. Let’s have a look at some of the ways in which you can increase efficiency to build your organisational wealth.

Integrated business units

It can be difficult to get a holistic view of what is going on in your business if information is floating between different departments and/or locations. Manually pulling data together can be very time consuming, causing delays and leaving greater room for human error.

Related: How To Improve Your Business Productivity And Efficiency With Help From Tech

By implementing an integrated business management solution, you can significantly increase efficiency among all your business units, allowing departments to easily share and access information. This real-time, inter-departmental integration allows you to get a birds-eye view of the performance of your business at the click of a button.

Business process automation

You can significantly save time by automating key business processes with an Enterprise Resource Planning (ERP) system. Accounting, for example, is much easier when details of all transactions are quickly and automatically shared between departments (no need to manually upload or download information).

Automation will enable your teams to respond to customer enquiries with alacrity and maintain optimal stock levels. Through automatic alerts and responses, relevant managers will be notified when stock reaches predetermined minimum levels. When these levels are reached, purchase orders for replenishment stock are automatically generated.

Automation also enforces consistency in your business’s day to day operations by following local and industry best-practices built into the system.

Synchronised customer data

The success of any small to medium sized business depends on getting new customers and providing excellent products and services to existing customers. Collating and sharing customer data across all departments is essential for effective customer service. SAP Business One, for example, provides the tools to track and manage the entire sales process, from initial contact and invoicing through to project management and after sales support – playing a pivotal role in customer retention management.

This complete view of past, present and prospective customers, along with historic purchases will help you to better understand your customers’ needs, behaviours and preferences. This will enable you to respond to clients effectively in order to boost satisfaction levels, increase sales, maximise profits and ultimately promote client retention. In addition, your marketing team can better plan campaigns based on insights from accurate data about prospective and current customers.

Related: 101 Efficiency Hacks For Busy Entrepreneurs

Instant access to information

You have to be able to plan properly to stay ahead of your competitors. Having access to up to date, relevant and accurate business data removes the guesswork and empowers employees to make informed business decisions. With an integrated business management system, you will be able to better manage your cash flow and stock holding with a real-time overview of current stock levels, orders in process and outstanding payments. This, in turn, will save time and allow you to better manage your procurement process and help build organisational wealth.

Who doesn’t like it when a plan comes together and things are working well? Working smarter and better – not harder – is what increased efficiency is about. Your teams will share the benefits of increased efficiency as you grow your organisational wealth together.

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Increasing Productivity

Mi Casa Es Su Casa: Achieving Positive Corporate Culture

How to achieve positive corporate culture in a group company.

Greg Morris

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According to management consultant Peter Drucker: ‘Culture eats strategy for breakfast’. And there’s a good chance of this being true, especially since studies have shown a direct correlation between a strong, positive organisational culture and a business’s financial success.

The importance of culture

Prof JL Heskett writes in his 2011 book, The Culture Cycle, that a positive culture can make as much as a 20-30% difference in company performance, when compared with “culturally unremarkable” opponents.

Culture is also a form of protection – strong competitors may be able to copy a strategy, but can’t duplicate a culture. Indeed, when things go wrong in the economy, public opinion, or even the strategy itself, a company’s culture can serve as a safeguard against these, because employees are faithful to it.

But… while culture is a remarkable thing, it’s difficult to define and attain.

Related: A Culture Of Discipline Critical For SMMEs To Thrive

The definition of culture

Company culture is traditionally interpreted from a corporate perspective, to include the principles, opinions, basic assumptions, and mindsets that are shared by a group. But these don’t hold any value if they aren’t entrenched in a company’s processes. This is why culture is also about action.

A company can’t create an intelligible culture without people who a) agree with its core values or b) are prepared to commit the time needed to.

Further, those employees who succeed in a company are generally those who most closely associate with the culture. If the principles and ideals of an organisation are shared, a strong culture can even support recruitment through self-selection.

As a result, leaders should spend as much time determining, collaborating on, and communicating culture as they do on strategy.

Culture in a group company

With different and broad-ranging companies working together, the goal of building and sustaining culture in a holding company can be trickier than in other organisations.

In cases like this, it’s critical for every company in the group to hold onto its own distinct culture, in ways that fit the greater business.

Simultaneously, the parent company should create a culture for all of the holding companies to attach to. Because, without a uniting mechanism, real integration can be difficult to accomplish.

The problem is: which culture is the priority? The composition of a group company evolves as it acquires and sells different companies, so a root culture is necessary; one that current and new subsidiary cultures can buy into.

Related: The 7 Culture Pillars That Will Skyrocket Your Start-up To Success

Where to start

  1. Develop a set of principles, behaviours, and motivators for culture, and define what these mean practically.
  2. Write a positioning statement to share what the organisation stands for, both externally and internally. For example, Google’s is “organising the world’s information and making it universally accessible and useful”.
  3. Generate a motto that summarises your culture. Google’s is: “Don’t be evil.” In other words: do positive things for the world, even if it means letting go of some short-term wins.
  4. Communicate these messages widely and repeat them continuously. (As obvious as this sounds, many group companies make the mistake of not communicating values to subsidiaries.)
  5. Invest time and resources into smoothing out the cultural differences every time a new company is acquired. This is important because an implosion of combined cultures can cost valuable talent, customers, or worse.
  6. Teach the culture. Not just through induction programmes for new employees, but through ongoing events, reminders, collaborations, and other ways that remind people what the culture looks and feels like.
  7. Share and ingrain the group’s root culture, as an element of unity.

The heart of the matter?

Peter Drucker highlights a potent triad in organisational transformation: Strategy, capabilities, and culture. He says that all three must be created together, aligned, and designed to be supportive of one another. This is more complex in group companies but, with strong communication and high levels of collaboration, a clear and productive culture is possible.

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Increasing Productivity

Why Deadlines Aren’t As Great As You’d Think For Creative Work

Be careful about how much time pressure you put on yourself.

Nina Zipkin

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Do you ever find yourself staring down at a deadline and just freeze? There is something to be said for setting a schedule for yourself and following through, especially when you are first starting a business, but recent research from Harvard finds that when you are dealing with creative pursuits, you need to give yourself enough time to breathe, otherwise you’ll just be doing busy work instead of actually building something that is truly innovative.

In an interview with Harvard Business Review’s Working Knowledge podcast, Professor Teresa Amabile said that during a hectic day, it’s possible to get a mistaken sense of creative energy powered by adrenaline simply because things were being crossed off a checklist.

“People who are under a lot of time pressure on a given day, actually feel very productive, they tend to feel very creative,” she said.

“But, here’s the interesting thing; they were actually significantly less likely to come up with creative ideas, or solve problems creatively on those days. They got a lot of stuff done, but they weren’t necessarily creative.”

Related: Follow These 8 Steps To Stay Focused And Reach Your Goals

She noted that in her research, people came up with the most creative solutions when they were working under low to moderate time pressure. So the next time you think about imposing an arbitrary deadline on developing new ideas, you might want to go easier on yourself.

Because feeling like you’re on a treadmill doesn’t only make your thinking more fractured, Amabile says that it also makes it tougher to find meaning in your work. So what can managers do to make sure that their employees always have time to innovate? Start with providing spaces where they can be quiet, focused and away from distractions.

“Let them understand the importance of what they’re doing, their own individual actions, and how that translates into something that will contribute to a customer need, to a societal need, to something that the company really needs to move forward,” Amabile said.

“Try to give people enough time for projects so that they can explore, so they can do that background research to get the information they need, and then so they can play with it somewhat. That doesn’t mean indefinite time frames, but it probably means longer time frames than people are usually given in most companies for most projects.”

This article was originally posted here on Entrepreneur.com.

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