Financial literacy

It was Jan Carlzon, that superb leader of Scandinavian Airlines, who said:
“An individual without information can’t take responsibility. An individual with information can’t help but take responsibility.”

Without information, staff make sense of things in their own way. Do you want to leave this to chance? Do you want them to have an idea of their role in the business based on what someone hurriedly conveyed to them first day on the job; and never again, since?

Or would you rather they know the following……..?
• The cost to the business for every minute they are there
• What revenue is needed to cover this cost and provide your target margin
• The effect of their moment-by-moment choices and actions on this
• The role they play in increasing income and/or decreasing outgo
• A productivity formula where they can constantly assess whether they are contributing what the business needs, and how to continuously improve this

A restaurant owner (true story, apparently) was frustrated by the repeated burning of hamburgers in the kitchen. He gave the kitchen staff one piece of information: the number of additional hamburgers that had to be sold to recoup the loss due to one burnt hamburger. The result? Their behaviour instantly changed – no more burnt hamburgers.

Financial literacy, commercial nous (whatever you want to call it) is essential for staff to contribute fully in their role. Albert Koopman, the legendary founder of Cashbuild, fully involved his staff in every aspect of the business. When they wanted shares in the business, he knew he had succeeded in educating them financially. Google his name – read about his success for yourself.

• Decide what financial info you can share with staff
• Let them know what margin is needed in the business and what influences income and outgo
• Have them work on a productivity formula (or contribution calculator – call it something significant). Don’t spoon feed them with ratios that turn you on! Rather let them develop their own more meaningful measures, and decide how to report back their progress and improvements. (Message? Up to you to prove your contribution to the business.)
• Emphasise the value of simplicity and speed of info-gathering. Analysis paralysis rarely improved the bottom line.
• Be patient – these measures may be rough to start with but they will refine these over time as they get smarter.

Remember: You purchase their whole brain with your payroll; why not use it?


About Cherri Holland

Fascinated with business, brains and how to use the brains on the payroll to make business buzz.
This entry was posted in Measuring return on people expenses. Bookmark the permalink.

1 Response to Financial literacy

  1. Pingback: The way you get control is to give it away | Cherri Holland Blog

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