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Workforce Management

 

Employee Performance

March 16, 2012

By: Connie Blaszczyk, Managing Editor, Resource Center

Are your employees business savvy? Do they have the business acumen to understand cash flow, net profit margin and P&L -- and their impact on the company’s bottom line?

Having a clear understanding of how business works enables employees to be more productive and engaged, argues Kevin Cope, author of Seeing the Big Picture (Greenleaf, 2012.)

In this interview, Cope outlines the five key drivers of business and why business performance measurements should be shared and explained with all employees -- from the stock boy to the business owner. 

Monster: Your book, Seeing the Big Picture, advocates that everyone within a company, from top to bottom, have the business acumen to understand how business works. 

Kevin Cope: I’m a big believer that real success happens when employees consistently make smart decisions, work more efficiently, and really try and see the big picture without losing sight of the details.

Monster: Do younger employees more often lack business acumen?

Kevin Cope: A decade ago, when I founded Acumen Learning and started training people on business acumen, I thought our target audience would be front-line and younger employees, because I assumed everyone else understood business fundamentals. 

What our research has found is that you can go well into the middle ranks, and sometimes the senior ranks of organizations and find individuals who struggle to speak the language of business -- and if they do speak it fluently they often talk over people’s heads. 

Our work with some of the world’s most profitable companies, including 16 of the Fortune 50, has taught us that companies are becoming silos of functionally brilliant people, say in HR, IT, sales, marketing, operations, etc. 

But this highly-specialized workforce perpetuates a real problem -- offices and cubicles full of smart people who are not necessarily smart businesspeople.

Monster: What impact can a lack of business acumen have on smaller companies or start ups who utilize Gen Y talent

Kevin Cope: Our up-and-coming workforce wants to be engaged. They want to feel like they are making a difference. 

Gen Y’ers want to feel like they’re part of something bigger and when they’re valued for their individual contributions they thrive. So you really need to help them see the big picture (the purpose) and clearly understand how they are making a difference.

The mantra for a lot of start-ups these days could be, “It’s not what we make, it’s what we make possible.” Which isn’t bad, but you have to make a profit in order to make anything possible.

So companies today, both large and small, have to get clear on what their mission is and then hire and develop people who make smart, fast, and profitable decisions that propel the mission forward.

Monster: What financial information should all employees know?

Kevin Cope: I would advise leaders to do three things:

1) Identify 5-7 key business performance measures that reflect performance. These include cash flow, net profit margin, revenue growth year over year, customer satisfaction, new store openings, etc.  Even a privately held company can find a measurement that can be shared with employees. 

2) Teach your employees why these measures are important and what impacts them. And don’t assume employees know what the measures mean  -- give lots of explanations and examples. 

3) Regularly share results and trends on these numbers. Be sure everyone has line of sight as to how they are progressing and improving.  Provide ideas and direction on how employees can improve results.

Monster: How can this knowledge  benefit a company’s profits and bottom line?

Kevin Cope: When people are brought into the company’s mission and they understand how their actions impact the bottom line, they are more likely to do the right things.  

One key principle here is measurement.  Measurement brings focus and awareness, which brings action and improvement. In our business acumen training we share the example of UPS’s efforts to track CO2 emissions and gasoline usage.

They figured out how to reduce the number of left hand turns on delivery routes, which takes more engine idle time. As a result UPS has saved 10 million gallons of fuel (a great impact to the bottom line) and has eliminated thousands of tons of CO2 emissions (a great purpose).

Monster: Can you share any examples of smaller companies that do this well?

Kevin Cope: The CEO of A Small Orange, a hosting company out of North Carolina, explained how he’s tempted to split up their support costs between marketing and operating expenses.

“When we provide great service (which we try to do as frequently as possible), our customers notice and appreciate that. A lot of times it results in them telling their friends and social networks about us, which leads to more sales and greater customer loyalty.”

So here’s a company that values and measures customer service -- not so much as a cost center, but rather as a potential profit center.

Remember that measurement brings focus and attention, which leads to awareness and improvement. As a result, the company is profitable and growing. 

Monster: What are the five key drivers of business?

Kevin Cope: The 5 business drivers are: 

  • Cash 
  • Profit
  • Assets
  • Growth 
  • People 

The first three are based on a company’s three financial statements, the statement of cash flows, the P&L, and the balance sheet. 

Growth is what investors, employees and customers expect and it doesn’t happen without the last driver -- People. We’ve taught this model to over 80,000 people in more than 30 countries.

Monster: Why put people at the center of these five key drivers?

Kevin Cope: We teach that the people driver refers to both the employees and the customers they serve. A company’s ability to impact the other 4 business drivers all hinges on great employees anticipating the needs of their customers. 

While companies can copy your strategy and even your product to some degree, people are the one unique element that is nearly impossible to mimic. 

For example, while other airlines have tried to copy the strategy of Southwest Airlines, they can’t duplicate its corporate culture, which in the end is one of Southwest Airlines key competitive advantages.

Monster: Are people commodities?

Kevin Cope: People are not commodities. Great companies like Zappos recognize that a company culture that comes from putting people in the center of their business, instead of some other economic driver, is a real competitive advantage with real economic benefits.  

As CEO Tony Hsieh says, “We are just a service company that happens to sell shoes.”

Author Bio:
Kevin Cope
is President and CEO of Acumen Learning. He is a trusted resource and confidant to business leaders from around the world and a sought-after keynote speaker. For over twenty-five years, Kevin has promoted the idea that the brightest minds in business understand the essence of how a company makes money, and they use this knowledge to drive their decisions. These people have business acumen, and youʼll find them everywhere, from the factory floor to the corner office. Follow Acumen Learning on Twitter, Facebook and YouTube.

 

 

 
 
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