Your profits: Pop quiz
In today’s challenging business environment, successful companies need to be highly focused, and that requires having a management system in place that drives sales, profits and employee accountability.
The following quiz is designed to get you thinking about your company, its management and culture. Keep track of your responses, and then compare them to the answers at the end of the article. In some cases, the answers explain how each question addresses an important aspect of running a successful business. Others pose additional questions to help you further evaluate your company.
Let’s get started! Answer "yes" or "no" to the following questions.
1. Every employee knows and understands the top priorities of the company, and their job activities are focused accordingly.
2. Every employee understands how his or her role fits with the priorities of the company.
3. Employees are empowered to do their jobs and understand the need to link empowerment with accountability.
4. The strengths and weaknesses of the company are known and acted upon accordingly.
5. All employees are held accountable by specific, measurable and time-framed individual objectives contributing to the success of the company.
6. Priorities, objectives and accomplishments are periodically reviewed, and adjustments are made, as appropriate.
7. The employee appraisal process and salary administration are linked to what makes the company succeed.
8. All employees know what salary increases are based upon.
9. Incentive compensation plans are linked to what makes the company succeed.
10. A formal, annual planning process is in place involving management and staff.
11. Managers and staff embrace a management system that enhances the company culture, promotes teamwork and makes everyone more productive and effective.
12. A current and easy-to-update strategic business plan is in place that inherently drives sales and profits.
13. Sales and profits are growing as a result of happy customers, happy employees and happy owners.
14. Double-digit pre-tax profits are consistently achieved each year.
The answers (and why they are important)
Most employees want the company to succeed, but without defined top priorities, they are left to guess what the company’s goals are.
Employees should understand they contribute to the success of the company and its goals.
Empowerment without accountability is a disaster waiting to happen. Employees must understand that to be empowered means they also must be accountable for their actions.
If you are not already doing so, conduct a SWOT analysis of your company each year, examining strengths, weaknesses, opportunities and threats.
All management and staff employees should have written objectives that are specific, measurable and time-framed.
Reviewing employee objectives once a year is not enough, and quarterly is not too often. Always have personal face-to-face review meetings. Employee objectives drive accountability and generate great results.
The employee appraisal process and employee salary increases must be linked to what makes the company succeed.
What do you believe salary increases should be based upon?
What are your incentive compensation plans based upon?
Do you have an annual strategic planning process involving a representative number of your management and staff employees? Why do you think it’s a good idea?
If you said yes, how do you know?
Remember, the strategic business plan does not need to be lengthy or complicated.
How do you know if you have happy customers and employees?
This is not an unrealistic expectation. If you don’t agree, raise your expectations!
If you said “yes” to 12-14 of the questions, congratulations on a great management system that drives profitability.
If you said “yes” to 8-11 of the questions, you might need to fine tune your management system.
If you said “yes” to 1-7 of the questions, you need to make significant changes to your management system to maximize profits.