Ownership Thinking will move your employees from “me” to “us,” creating a better work environment and significantly improving financial performance.
There are four requirements in creating an environment of Ownership Thinking. The first is talent, the right people to move the business forward. Putting the right people on the bus in the right seats. Second is business and financial education for all employees. Third is identification and utilization of the critical leading indicators (measures) that will drive financial performance. What you measure gets changed. Fourth is design and implementation of incentive and/or equity plans that benefit employee and employer.
Let’s describe the Right Measures. How do businesses measure success? They utilize financial statements such as the income statement (sales – expenses = profit). That’s important information, but there are problems with focusing only on this data.
First, statements are “rear view.” The data is historical, and nothing can change it. Second, most employees cannot read statements, so they are not useful tools. Finally, they do not deal with activities that go on in the business. If we are to proactively manage financial performance, we must identify measurable activities that drive our financial performance, and get our employees focused on these.
We call these measures Key Performance Indicators, or KPIs. Your leadership team needs to identify the appropriate KPIs for you, and then build a scoreboard to proactively manage financial performance. Many companies that have KPIs have the wrong ones. Instead of focusing on Lagging KPIs (rear view mirror), you need to focus the company on Leading KPIs (foresight viewing).
Ownership Thinking utilizes cutting-edge methodologies such as Scoreboards, Rapid Improvement, and simple but effective employee exercises to create an Ownership Thinking program and incentive plans that are self-funding and clearly aligned with business objectives. The objective of an incentive plan should be to shape employees’ behaviour toward driving financial performance. To do this, employees must understand that the plan needs to be self-funding, and it is their responsibility not only to fund the plan, but to improve the company’s financial performance.
Businesses are built to create wealth, have fun, and serve their community. Ownership Thinking can help achieve these goals.
Until next time,
Perry Phillips, President
Ownership Thinking Canada Inc.
Visit www.ownershipthinking.ca to learn more about Ownership Thinking Canada and our new online e-learning tool.