Author – Chairman of the Cost Management Group

Ten years of managing medium and large companies in different industries have helped me to realize that to increase traffic and revenue growth, as well as cost reduction is possible only if the goals of employees in conformity with those of owners. This is a very difficult task, but if you do not decide it, the result is not achieved: the employees of the company are the main carriers of a lot of knowledge about the enterprise market where the company is present and are a major driving force in any goals.

Work half-heartedly

Before taking on the responsibility for asset management, we fully diagnose the entire company in order to determine the real situation in the company and securities. One part of this diagnosis is an anonymous survey of employees regardless of their status and position, for knowledge of the strategy and objectives, definitions of loyalty to the leadership and the enterprise as a whole. Answer questions, not all, about 60-70%, but this is enough to draw conclusions. For example, one of the questions is: “What do you think, by what percentage do you implement your skills and knowledge in this company?”. These six companies from different industries showed that only 11% exercise their skills in more than 50%. What conclusions can we draw? This means that in companies where all employees spend at work full time, receive a salary, but only 11% of them work. The reason is that the goals pursued by these 89% of employees do not have anything to do with the goals of those who hired them.

CEO Error

What can be done in this case? The owner of a large manufacturing company JBI shared how he had tried to solve this problem. Allocated 1 million rubles for the development of strategies that have attracted the company to business intelligence. In the end, after a month got a plan for business development, which was based on intelligence in 2007, bought on the internet, but with reduced double digits. Further, the general sent out this strategy over the heads of services and their zamam to those of a detailed study. After which held two meetings, which announced the goals that the company must be achieved through this strategy (objectives were as follows: “in 2011 to substantially increase work efficiency by introducing new developments”, “2013 to go to the highest cost-effective in the industry “etc.). The general director has established strict time limits of the objectives and personally supervised their implementation at all stages. Personally, because even for the deputies of these tasks were not so important, they were perceived as “another trick master” (this is one of the quotes from the normative vocabulary of the dialogue’s deputies for sales and production). Literally, three months later the situation has worsened (sales sagged, began to delay repayment of loans and delays in salary payment). The Director-General dismissed the director of sales, staff cuts, and then dismisses the founder of the General, but the situation does not change.

Cognitive dissonance

Certainly well known to all specialists in psychology “theory of cognitive dissonance.” Its essence is this: when a person commits any act which he considers to be important for himself, he appeared uncomfortable mental disabilities. These feelings are removed in two ways: first, to cease to perform this action, the second to start to do the action that is valuable to a particular person is personally and for its value.

If even to force the employee to do the necessary work for the company, he will not be effective, since all his efforts and thoughts will be directed to the removal of internal discomfort, not to achieve high results.

Six theses success

How to create an atmosphere in which the employee would be beneficial and comfortable to reach the objectives of the owner? 6 of the rules that we used in the management of a large company specializing in the chemical industry:

Every employee wants to
1. know what would be his business a year, two, three. What it will reach? Therefore, together with the founders together we will form a specific purpose, supported by specific figures and dates.
2. worker wishes to achieve these goals, he must be sure that these goals really .
3. with representatives from related departments, we create a special group of workers headed by the director profile. Each group must work through a number of proposals to produce new goods and services, a number of ways to reduce costs, improve the mechanism of sales, etc. Based on these proposals and formed the company’s strategy. First of all, the employees see that The strategy is realistic. Second, once it is formed on the basis of proposals from middle and senior management, then responsibility for it and as delegated.
4. We prepare a plan of indicators to be achieved. Indicators are divided into four groups: customers and markets, finance, infrastructure, personnel. While each of the indicators painted a specific timetable and specific action units that are necessary for its implementation, that is, a tactical plan. Unit heads are working on the same plan, only for specific performers.
5. addition to the general strategy of the company, the employee should understand what the challenges facing them. And also that The assessment of his work was simple and fair. Each worker together with his chief chooses 03.04 rate for which it is expedient to evaluate his work. It also requires 3.4 overall figure for the entire company.
6. Indicators must be transparent, that is, to them that everyone can find himself. However, each employee should be no more than seven (3 common to the whole company and not more than 4 private). For example, general: specific overheads, the plan for the proceeds; rate margins on the sale of goods. For each indicator has two values: the base level – the number of accrued bonus which begin; target level – the value of which coincides with the strategic development plan. Every general indicator should attend their own quantitative factor: the first figure – 30%, the second – 50%, third 20%. Based on these indicators formed the size of the bonus pool. Each unit was also a factor – the share premium fund. Of course, the highest rate was in the sales department. What then individual performance? For example, take the individual salesperson performance: the percentage of completion of the sales plan, the percentage of overhead costs, the average percentage discount from the prices established in the price. At head of sales third indicator was a dynamic residual products in stock for the previous month.