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Learn how to engage employees and drive profit growth through transparency.
Let’s say you’ve spoken with your customers, as we suggest you do regularly. They’ve told you what they value. After all, it’s your customer that defines the value of your business. Now, it’s time to get excited about the economics of your business. And not just you, but everyone in the organization, from bottom to top. Why? Economics determine profits, and when employees have economic understanding, it only increases profitability.
Employees should understand the economics of business.
The economics of your business are what the customers value (offense) versus your cost to provide the value (defense). They’re also operational. They’re the hands-on metrics your employees deal with every day:
- Call center agents focus on average handle time and customer satisfaction scores to assess service quality and responsiveness.
- Truck drivers measure on-time delivery percentage or fuel efficiency to optimize logistics performance.
- Staff in a restaurant tracks their table turn time to manage kitchen efficiency and profitability.
- Software developers pay attention to deployments without bugs to measure software quality and release efficiency.
- Nurses monitor medication error rates to ensure efficiency and safety in patient care.
- Warehouse workers monitor orders fulfilled per hour to gauge efficiency and accuracy.
Motivation increases when employees have a stake in success.
Once your employees understand how these operating metrics impact overall company success and how they themselves contribute to those metrics, they can focus all their efforts on improving them. This empowers employees to make smart choices and act in ways that drive performance. By giving them a voice in the important metrics of your business, their level of engagement—real engagement—soars.
Imagine two employees working at the same level in the same industry. The first employee has a clear understanding of her company’s economics. She’s not trained to read financial statements, as some experts recommend. Instead, she tracks the operational metrics that drive profitability, such as units shipped—the stuff she has a hand in. Each week, she monitors and forecasts these numbers, actively working to boost them.
As her whole team does this, customers are served more profitably. Value increases. When performance improves, her quarterly bonus improves, funded by the improving financials. Transparency fuels this improvement. (more…)