We interrupt our regularly scheduled Competencies programming to introduce you to a new program we’re offering. It’s called the Profit Zone.
In most organizations, less than 10 percent of the staff really understand how the company makes and keeps money. Employees choose to be employees and not entrepreneurs because they want the certainty of a paycheck. Ironically, most employees don’t understand their direct role in making sure those paychecks happen. They just assume the boss will make sure there is enough money to pay them. The staff is rarely connected to the reality of how they directly affect the company’s ability to make payroll.
The Profit Zone program changes that.
The program starts by educating managers on critical financial concepts. It then shows those managers how to take those financial concepts to their direct reports. Once managers understand the ins and outs of how your company makes and keeps money, they can teach their staff.
After both your managers and staff understand the key financial concepts of your business, then the program helps them identify how they can impact that bottom line. They’ll work to find profit-building activities that they can do in order to help the company make and keep money.
Lastly, the program creates a benchmark of employee engagement and company profitability that you can use to measure your growth going forward. It’s important to make sure that you keep your staff engaged in order to continue to grow your profits.
It is a fairly simple and straightforward program in theory. But there must be real work involved to make this a success. You must commit to building this knowledge into the DNA of the company in order to make this a reality and not just theory.
Let’s take a closer look at each of these steps.
Step 1: Raise Awareness
This step is all about education. It aims to educate each of your employees on key financial terms and concepts. And at the same time helps them understand that they can impact the company’s bottom line. Everyone will know which financial performance indicators are important to pay attention to and they’ll know how to understand what those numbers are telling them. It will instill in them the idea that they can, and should, take responsibility for helping improve the company’s profits.
This education will help them connect the dots between your company’s everyday workload and its profitability. People will know exactly what goes into making a profit. This foundation will help build your company up and keep it stable in both good times and bad.
Your employees will start to think like owners. Conversations about how to improve profits and reduce waste will start happening naturally. With their newly gained knowledge, they’ll be better informed about what activities affect the bottom line. It will create a culture at your company of consistent focus on profitability at all levels of the organization. And each employee will be able to create positive change because of it.
Step 2: Identify Profit-Building Activities
Once each employee knows how the company gets and keeps money and that it is part of their responsibility to help improve profitability, now it’s time to help them identify where they can do just that.
Step two is all about uncovering the areas that each employee can have a direct impact on. This step is an exercise in identifying which financial aspects employees are in control of and showing them just how important their work can be in improving profitability. It will show them how they can contribute to the bottom line. It will point out the financial triggers that each individual impacts. And it will show them how they can improve that area.
This step will give them each a better understanding of their role and the part that they play in helping the company grow. It brings the added benefit of helping them to better engage with their work. When employees know how they affect the company as a whole and they can tie into the bigger picture, they are much more engaged in and excited about their work.
Your employees will start taking responsibility for their domain. They’ll know exactly how their role provides value. And they’ll know exactly how they impact the company’s overall financial success.
Step 3: Create a Benchmark
In order to ensure that you continue to make marked progress, we will create a benchmark of where you and your company are currently.
This step is extremely important. It is what will make sure that the program sticks. It will make sure that you are actually incorporating the Profit Zone into your daily work. The benchmark shows where you are right now as a company. This means that you can then measure your progress against that benchmark again in 6 months to see what progress you have made. This keeps everyone focused on the right priorities. And makes sure that everyone is tracking and measuring the same key performance indicators. Tracking and measuring the right results drives better decisions. Better decisions create great companies.
Another benefit is that employees embrace the accountability of their actions when what they do can be measured and reported. If they know that you and your managers will be paying attention to specific indicators going forward, they will pay attention to them as well. They will make sure that they are hitting the numbers that they need to because they know you will hold them accountable for meeting those targets when you measure the numbers again.
The Profit Zone Program will make your company more successful.
Financial literacy is often overlooked as a means of improving engagement and profitability. But it has an incredible impact on both. Imagine if every single one of your employees thought like an owner. What difference would that make? If every person was focused on that bottom line. Looking for ways to save time, effort, and money. Looking for ways to increase margins and bring in new clients. How much more successful could you be?
The key is to help each of your employees connect with the value that their role provides. If employees understand the value they bring to a company, they will be more engaged. If an employee is engaged, they are more productive. And a company full of productive employees will make more money.
Written in part by Laurie Taylor of Flashpoint! LLC with edits and additions by Clay Eure.