My Library and Courses
Last Update: Tuesday December 12, 2017

Key Idea: Give Employees Key Indicator Responsibilities

Jim Schell recommends sharing financial tracking responsibilities for reports identified in "the little green book" with employees.  Here are more insights from Jim:   Staying Power,   On selling the business, and  Opportunity Knocks.     Even more...

Key Question:

A: 

Every person worth having on your payroll wants desperately to know if they are doing good or if they are doing bad.  We say, give them a number that shows them how they are doing on a daily basis.

Q: What happens to an employee who is given a specific goal to manage?

A: In most every case, the employee will improve performance. There are so many books on the subject of employee productivity it is depressing. Obviously leaders just aren't learning because the books keep coming out and they say so much of the same thing. Jim wants you to find a key indicator that every employee can own then step back and watch them improve.

Tom Gegax started a business from scratch and built it into a multi-million dollar company with 2,000 employees. Here is his advise for building an effective team of people. Notice it starts with making each person aware of your expectations and that should begin with establishing a key indicator that an employee can track.

Tom believes that employees can contribute to the team success most effectively if they are:

1. Fully aware of his expectations of them,

2. Motivated

3. Educated, and

4. Provided with constant feedback.

Set Expectations: Provide each employee with a written job description and a copy of your company's organizational chart as part of his or her first day's orientation. In addition to increasing the employee's productivity, setting expectations very clearly and in writing provides the employee with a level of comfort and knowledge of his or her role in the business.

Motivate Employees: Every employee in the organization should meet with the person to whom he or she reports at least annually. This meeting should include a historical evaluation of performance since the last meeting as well as goal and objective setting for the next period. The employee should be made aware of how his or her individual goals are part of the overall goals of the business. Finally, the anticipated award, e.g., promotion or bonus, for successfully achieving those goals should be clearly stated. Both the evaluation and prospective goal setting should be in writing and signed by both the employee and supervisor. Subsequent years' evaluations should include a review of goals set the previous year.

Educate Employees: Every position in a company requires a certain minimum skill set. That skill set should be included in the written job description. Improving the skill set with additional training for the current position or for a position in the company that the employee is working toward should be discussed in the annual evaluation and goal setting session. Every employee in the organization should benefit from training each year.

Provide Feedback: Annual evaluations and goal setting, formalized and documented, are an outstanding way for even a small business to effectively manage its human resources. However, once a year is just too infrequently to provide employees with the constructive feedback they need. Positive feedback should be provided publicly, with recognition given to the employee throughout the company. Negative feedback should be provided privately, behind closed doors, and documented if it is considered to be grounds for dismissal if not corrected.

Think about it

Can your key indicator report be used as a management tool? Are you willing to give it a try?
 

Clip from: Learn to Use Your Financials; Track your Numbers

USA and around the world:  Let us all get our houses in order!  Keeping track of business... it is the job of everyone in a business  The best way  to do it is to read, grasp and act on those monthly financial statements. If you share that information and give everyone bottom line accountability through the key ratios, your business will rally. You'll see an impact immediately!

In this episode you meet three small business owners. Two have gotten control of their financials and one is working to do better.

Unfortunately, most of us do not work closely with our financial data.  We all must.  With all the features built into today's accounting software programs (be sure you have your latest upgrades), any owner should have the numbers they need to run their business with the push of a button.

Opportunity Knocks

Jim Schell, Founder / CEO

PO Box 9073
Bend, OR 97708
541 317 9490

Visit our web site: http://www.opp-knocks.org/

Office: 541 317 9490

Business Classification:
Education

Year Founded: 1999

Give Employees Key Indicator Responsibilities

JIM: The key indicator report has two purposes. Number one it will make your management job easier. It allows you quick access to the important things in your business and it shows you the trend and the direction in which you are going. But an even more important use of the key indicator report is to engage your key employees in the management of the business. If you were to hand them a P & L, balance sheet and cash flow statement, you have trouble reading them, right? What do you expect of your employees?

HATTIE: Their eyes cross and they say no wonder I'm not the owner. I don't even want to fool with this.

JIM: Right. Let's say you have your bookkeeper and you've got on your key indicator report the percentage of receivables over 60 days. And if 6 months ago your percentage of receivables over 60 days was 10% and now they're 5%. Everybody in this meeting knows that your bookkeeper is improving at collecting your receivables.

HATTIE: (Voiceover) Jim points out that Nani needs a specific key indicator to watch.

JIM: I want to go back to the 25% gross margin. If I were your consultant, I would say this is your number one problem in this company. You should create a key indicator report and the top item should be gross margin. You should do everything you can do to focus on increasing that 25% to 30%, 35% whatever, in a reasonable timeframe. In the first place, you need to go back to that job costing form, redo the job costing form, redo the logic with which you estimate jobs. It is too low, something is wrong here. My guess would be in your industry that the gross margin should be up in the 35% to 40% range.

HATTIE: (Voiceover) Creating financial reports and tracking key indicators would be hard without software but now it's easy.

NOEL: We're able for the first time to get quality information back right now on where we are and what we're doing. That is something I have never had in the history of the company. I now know what my receivables are. I now know what my payables are. I now know that my accounting for payroll is going to be right.

JIM: When a business owner gets to the point where his favorite day is the day his financials some out, or even better than that, his favorite day of the month is the day he can push the button on his software and out will kick a preliminary P & L -- when that's the favorite day of the month-- then you know you've arrived at the point where financial statements are meaningful to you. Where you know that you get it. That it's all about numbers.

HATTIE: (In the Studio) We think Jim Schell's book, "Understanding Your Financial Statements," should be required reading for every business owner who wants to grow. (Voiceover) And these business owners are smiling because they're watching their numbers and the numbers tell them they are growing in the right direction. (In the Studio) I'm Hattie Bryant for Small Business School.
 
 

Not a member yet? Learn!  Be empowered! Join us!