Developing and testing new business simulations at CMOE is always a lot of fun. It’s a time when the CMOE staff gets free lunches, prizes, and the opportunity to meet countless new people we ask to join us. So in addition to creating or reworking our products, we create a culture of fun.
This past week I was assigned to pick up the food for a volunteer test group. I went to get Pizza and as I was standing at the payment counter, I noticed a computer screen on this wall. In big, black, block print, it read “LEADERBOARD.” I was immediately excited to see this. As I was waiting for my order to be finished, I was trying to identify what was being tracked by the “leaderboard” and how it worked. It was obvious that the leaderboard was networked with other stores and I quickly noticed that the store I was purchasing from was second from the bottom. This piqued my interest further. I decided to speak with the manager to understand how it worked.
Me: I noticed your leaderboard on the wall; it looks interesting. It appears to be tracking certain success factors and percentages. Do you get rewarded when you hit certain levels of performance? The reason I ask is I work for an organization where we use effective management, measurements, and scorecards to drive bottom line profitability.
Manager: Yeah, it tracks just about everything in the store from the time a phone call was placed to the time the order leaves the store for delivery. Corporate can pull up data on just about anything in the store.
Me: It doesn’t sound like you believe it’s a good thing by the way you are speaking. Do you get recognized or rewarded for hitting certain levels of performance?
Manager: No, it basically indicates what you have to do as a minimum to keep from getting fired.
The manager continued to explain that this tracking system was to help employees have higher levels of customer service, reduced mistakes, and shorten production times, among many other things. While those are great focus areas, I was emotionally deflated by the way he explained it. This employee was telling me that the “Leaderboard,” this scorekeeping system, was the worst thing about his job.
If organizations are to succeed against strong competition and have higher levels of profitability, measurement cannot build fear and negativity into employees. Driving bottom line performance with the right measurement will engage people and get people excited and committed to push performance levels. By using our piles of data, managers can help employees sort out measurements that drive individual results.
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Of those people who work an average of 45 hours per week, approximately 17 hours of their week is considered unproductive. It’s not just one nation or geographical area, but this occurs globally. The Personal Productivity Challenge conducted by Microsoft in 2005 sampled over 38,000 people in 200 countries, in 29 languages about their productivity. The study was based on 18 statements about their working environment and has some unsettling findings.
• People work an average of 45 hours a week; they consider about 17 of those hours to be unproductive.
• More than half the participants, 55 percent, said they relate their productivity directly to their software.
• People spend 5.6 hours each week in meetings; 69 percent feel meetings aren’t productive.
• Only 34 percent said they are using proven scheduling tools and techniques to help them gain more free time and balance in their lives. Likewise, 60 percent said they don’t have work-life balance, and being unproductive contributes to this feeling.
• Women had an average productivity score of 72 percent, compared with 71 percent for men.
• The most common productivity pitfalls are unclear objectives, lack of team communication and ineffective meetings — chosen by 32 percent of respondents overall — followed by unclear priorities at 31 percent and procrastination at 29 percent.
(Source: Microsoft Personal Productivity Challenge)
If you are responsible for Profit & Loss, top line growth, cost management, or higher productivity, this study should have your attention. What type of impact would it have on your organization if you could reclaim the 38% of vanishing productivity? Most organizations would be able to increase profits, drive down costs, and simply get more done with existing fixed costs and resources. Surprisingly, organizations can do this by implementing the right tools and processes that:
• Clarify and communicate goals of the organization in a way that is relevant to each individual. This requires commitment, results based leadership and is the responsibility of leaders, managers, and supervisors.
• Links the contribution of employees to organizational goals and helps them see why they matter to the organization.
• Use communication, feedback and coaching to build motivation and commitment all while helping employee see how meaningful and engaging the drive for increased profits and productivity can be.
Develop your people to be more productive and performance focused.
I believe there is a correlation between employee happiness, customer satisfaction, and increased profit margin. We all know in order for a company to stay in business it must produce profits. Too often though, the focus is centered around profits and not enough on the drivers of profits, the employees. Employees tend to treat the customers, whether internal or external, to the extent to which they are satisfied and happy with their current position. The question becomes how does a leader create enthusiasm and ensure job satisfaction for their team members.
Most satisfied employees feel empowered. This means they must have the tools, support, training and ability to make decisions. In addition, a leader needs to become more of a coach than a “teller” or dictator. Coaching creates an atmosphere of collaboration, trust, and confidence, where constructive and sincere feedback is accepted. Remember, “The worst feedback is no feedback”.
Employees need to understand how their job function contributes to the bottom line of the organization. Employees will tend to work harder if they feel like their work is meaningful and adds value. My first job in high school was at a dry cleaner. I staffed the front counter taking in clothes, entering the information into the system and creating an invoice for the customer. The job was not exciting and every day I wished for the fewest customers possible. When a customer came in I would get the order entered as fast as I could and get back to doing nothing but wait for the next customer. Looking back, I imagine that not everything was entered properly and those mistakes, although small, cost the company some profits.
I wonder if it would have been different if the manager took some time to explain how my work added value to the company through something simple like a scorecard. What if we created a scorecard review of my key functions so I could see the importance of the work I was doing. Even the “front counter” employees need to understand how important the work is that they are doing.
If employees are happy, customers are happy. When customers are happy, they come back and tell others of their experience. Repeat business and referrals equal greater profit. Sometimes we need to step back and look at our own performance. Are we focusing solely on the profit and forgetting about the people driving the profit? Are we creating an atmosphere where employees are coached or are we a dictator? Do the employees know how important their job function is? Do the employees feel empowered and find their work meaningful? Are we tracking the important functions that help build profit? We need to look at these questions often as we lead for greater profit.
The Value of You We all like to see results. Whether it is in the work we do, our bank account, or other personal activities, results make us feel good. The life of Warren Buffett is a great story about leadership that gets results. He spent decades mastering the financial industry and understanding how to get results. Regardless of how you feel about his approach, philosophy, or business style you cannot argue with the effectiveness and success he and his organization has had. In 2008 Warren Buffets net worth was estimated at $62 billion dollars. Those results were achieve by a lot of focus on the bottom line.
So how does Warren Buffett’s success apply to you? In November 2009, Warren Buffett and Bill Gates participated in a Town Hall meeting at Columbia University. During this event the following question was posed by a student:
Student Question: “Mr. Buffett, Mr. Gates, thank you for being here today. My name is Justin, I’m a second-year MBA, as I get ready to graduate, I was wondering, what’s the one thing that your MBA didn’t prepare you for when you got out into the real world?”
Warren Buffett Response: “Well, I was — it prepared me very well, not the whole degree, but specific professors prepared me very well for what I wanted to go into. I knew I was interested in investing, like I say, from the time I was six or seven years of age. So I was lucky that I found what turned me on early on. And I had these two marvelous professors here at Columbia that just being around — I had read all the stuff they had written. So it wasn’t I was acquiring lots of incremental knowledge but I was getting inspired. They were terrific for me. They treated me like a son. They would take me out to dinner. Ben Graham did the same thing for me. So it gave me confidence in myself. It just propelled me into a field I already love with a terrific tailwind from these professors that believed in me. [APPLAUSE] But let me add one point because — to the MBA situation. Right now, I would pay $100,000 for 10% of the future earnings of any of you. So anybody that wants to see me after this is over — [LAUGHTER] [APPLAUSE] If that’s true, you are a million-dollar asset right now, right, if 10% of you is worth 100,000? You could improve — many of you, and I certainly could have when I got out, just in terms of learning communication skills. You know, it’s not something that is taught. I actually went to a Dale Carnegie course later on in terms of public speaking. But if you improve your value 50% by having better communication skills, that’s another $500,000 in terms of capital value. See me after the class and I’ll pay you 150-thousand.”
Monetary Value of Learning and Communication
This matters because it illustrates the importance of learning and effective communication. As individuals, it is important to develop ourselves. Whether you get an industry trade degree, look at going through a mini MBA program, or complete a Masters Degree at Columbia University, ongoing development of yourself is important to you, your future success, and ultimately your net worth. Investment in learning will pay huge dividends. If good communication skills are worth an additional $50,000 to Warren Buffet, it’s worth far more to you individually.
Heavily Invested
Ask yourself this question. What would an investor ask you at the annual shareholders of YOU meeting? At a high level, you might hear questions such as:
- Do you understand what it takes for you (and your organization) to win today?
- Do you understand where and how we can increase profit margins?
- Are you cutting operational expense to increase profit margins?
- How can you create distance or differentiation from the competition?
- Is the organization focusing on what matters?
If you can answer those questions, you are doing great. If not, look to refocus your efforts. Educate or develop yourself to the point where you can answer them. You are heavily invested in yourself so what do you want your future earnings look like? Are you a million-dollar person? It’s hard to argue against hard results.
Your people drive your business. Most have the best of intentions when it comes to making a solid contribution to the overall success of the enterprise. They do good work so you give them more work to do. They were your best account rep, your best payables clerk, best welder or project engineer so you made them leaders of people. The problem is that these outstanding individuals have neither the experience nor the training to be outstanding leaders, leaving them ill prepared for the job that they didn’t sign on for in the first place.
Take John for example. John recently became the team leader of 14 people who are responsible for $1,000,000 in production. Doing their very best, John’s team delivers 90% of the million dollar production budget. Managing by instinct, John tends to avoid conflict, uses the relationships with his former co-workers to emotionally bribe them into doing additional work, and measures success in the number of days passed where John manages to fly below the radar of the management team. John deserves better. He needs to be given the tools needed to do his job well. A small investment in his bottom line leadership skills will have a two-fold return: A gift to John that will last a lifetime and the opportunity for you to close your $100,000 budget shortfall.
Who’s holding you back? Who, not what, is standing in the way of your initiatives to increase sales, cut operating expenses and learn how to increase profit margins across the board? There is a John in your organization. He deserves a chance to succeed and continue to grow his contribution to the organization. An investment in John is not just an investment in John; he has 14 people reporting to him and they will also reap the benefits of his development. As John becomes a better leader we create the culture that will meet the demands of your business tomorrow and build ownership and commitment in the next group of potential leaders.
Do you think it’s too hard to find the time? Too hard to find the money? Stop for a moment and do the math. Can you really afford not to?
While conducting a workshop on driving bottom line performance a few years ago for department managers in a chain of supermarkets, I had an interesting experience. One of the participants was a rather elderly and somewhat crusty Bakery Manager. His name was Lynn and at the first session he introduced himself as having been a bakery manager for longer than most of the other attendees had been alive. I took his unusual statement to mean that because of his experience he was unlikely to learn any new tricks or techniques about performance at any workshop, especially one facilitated by me.
You Can’t Teach A Old Dog New Tricks
Over the course of a couple of sessions, Lynn participated just enough to stay out of trouble with his boss, but not enough to gain much advantage as a manager. After the second session he told me privately that with his considerable experience as a manager he didn’t need to attend the sessions, but that he was being forced to attend. He told me, “You know old dogs can’t be taught new tricks. Well, I’m that old dog.” I thought at the time that he was trying to put me on notice that I should back off in trying to change his managerial style.
Lynn’s statement motivated me to look for a way to get his attention so he could benefit from the workshop experience. That’s when I concocted an experiment that not only taught him and his fellow managers a valuable lesson, but also me as well.
In the workshop I asked Lynn if he would help me conduct a “psychological experiment.” Before he could say no, two of his bosses were nodding affirmatively. Truthfully, I had set that reaction up in advance. Shame on me!
With Lynn obviously very reluctant to hear my proposal, I nonetheless pushed on. I told him that the experiment was to test the power of a graph, or scorecard, to motivate hourly employees to change their behavior. I explained that I would help him create a separate scorecard for each of his employees who worked the bakery counter on Saturdays. The scorecards would have the person’s name at the top, and across the bottom x-axis of the graph would be the dates of the next six Saturdays. Up the vertical y-axis would be numbers from 1 to 20.
Driving Results To Increase Profits
His employees would be instructed that each time they mentioned the words “chocolate chip cookie” to any customer in any way on Saturday they could put a mark or dot for that date progressing up from 1 mention of chocolate chip cookie to as many as 20 mentions. The measurement would be voluntary, because about one person in five typically doesn’t like to participate in such exercises that require competition. We would be happy to deal with the four out of five employees who find such exercises fun and exciting. The scorecards would be posted in the bakery back room and employees would be encouraged to keep their scorecard up to date as often as they could during the day. The experiment would use an honor system, where marking scorecards accurately would be up to the employees. Lynn’s responsibility would be to explain the exercise to the employees, have a positive attitude toward the exercise, and, of course, lead by example, because he needed a scorecard too.
At the next two workshop sessions Lynn gave brief progress reports on the project, but didn’t elaborate very much. I became worried that the experiment wouldn’t work and that Lynn might miss the point of it. But those fears were forgotten when Lynn returned to the last session and exclaimed, “Did you know that it’s possible to sell too many chocolate chip cookies?”
Lynn explained that by the second Saturday most of his employees really got into the exercise. It became a Badge of Honor to be recognized as the employee with the highest number of chocolate chip cookie mentions each week. Lynn’s assistant manager had a badge made at a local mall that said, “Chocolate Chip Cookie Champion.” The person with the highest mentions each Saturday got to wear the Champion badge during the following week, which further intensified the competition. Isn’t it interesting how a simple badge can create so much excitement? During the week his employees plotted what they were going to do and how they were going to get the most mentions. Lynn said that he had to adjust the rules because people “were taking unfair advantage.” One employee got on the store PA and mentioned chocolate chip cookies, then walked around the store counting how many customers must have heard her announcement, trying to claim those mentions. Another employee stopped in the middle of taking a cake decorating order and said, “Oh, by the way we sell chocolate chip cookies. Now how do you spell your son’s name?”
Apparently the competition got so intense and the bakery was selling so many cookies that the ovens were consumed with baking cookies, at the expense of the other products that needed oven time. That’s why Lynn exclaimed, “It’s possible to sell too many chocolate chip cookies.”
As a facilitator it was fascinating to see the change in Lynn’s attitude over the six session series of workshops. The crusty Bakery Manager became a champion of measuring, providing instant feedback, and healthy competition. He even told me in the last session that he had “learned a ton of new stuff.”
So how did Lynn’s cookie sales go? In his final report he explained that for as long as he could remember his bakery had sold about 15 dozen chocolate chip cookies on an average Saturday. (Actually, for a bakery the size he managed, 15 dozen is at best only a fair result, so I’m told.) The first Saturday of the project the bakery sold 27 dozen. The second Saturday they sold 36 dozen. The third Saturday they sold 67 dozen. The fourth Saturday they sold 117 dozen. And on the fifth Saturday they broke the bank, or perhaps the ovens, with 157 dozen chocolate chip cookies!
Increasing Profits 10X
The improvement over a month was a ten times increase. How did this happen? Providing frequent feedback to people who otherwise had not much incentive to suggestive sell cookies caused the incredible results. The personalized scorecards each employee had in the back room provided a method to measure performance. Thomas S. Monson once said, “When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates.”
As Lynn was leaving the last workshop session I asked him, “Well, was this experience worth it?”
With a slight smile on his face Lynn replied, “Maybe it’s possible to teach an old dog a thing or two. Thanks for a great class.”
Me: I noticed your leaderboard on the wall; it looks interesting. It appears to be tracking certain success factors and percentages. Do you get rewarded when you hit certain levels of performance? The reason I ask is I work for an organization where we use effective management, measurements, and scorecards to drive bottom line profitability.
If you are responsible for Profit & Loss, top line growth, cost management, or higher productivity, this study should have your attention. What type of impact would it have on your organization if you could reclaim the 38% of vanishing productivity? Most organizations would be able to 
I wonder if it would have been different if the manager took some time to explain how my work added value to the company through something simple like a 
Your people drive your business. Most have the best of intentions when it comes to making a solid contribution to the overall success of the enterprise. They do good work so you give them more work to do. They were your best account rep, your best payables clerk, best welder or project engineer so you made them leaders of people. The problem is that these outstanding individuals have neither the experience nor the training to be outstanding leaders, leaving them ill prepared for the job that they didn’t sign on for in the first place.
