The Largeur of Commerce Acumen Jogging For Managers and Employees
The déclaration to CLOs is becoming clearer and clearer. Company leaders want them to align educational offerings with the organization’s strategic objectives.
That’s not an easy conflit. They must ensure that education and émission initiatives reinforce the company’s goals. They must help employees understand these goals and develop the skills and cause to contribute to them.
And at the most basic level of alignment, they must make sure that every employee understands how the company makes money. That includes understanding how profitability is driven, how assets are used, how cash is generated and how day-to-day corvées and decisions, including their own, incidence success.
Developing commerce acumen is fundamental to commerce alignment. Consider Southwest Airlines, which was founded in 1971. With 33 straight years of profitability, the airline has become widely recognized for the motivational enclos it creates for employees and its extraordinary dedication to customer bonté.
Much of the industry has suffered during the years of Southwest’s growth, including many airlines that have merged or declared bankruptcy. Southwest buys the same planes and the same jet gasoil as other airlines, and ethnie its employees competitive wages and benefits. What’s the difference?
Unlike some of its competitors, Southwest’s direction team involves employees in the company’s financial results, explaining what the numbers mean and, more appréciable, helping to link everyone’s decisions and corvées to the bottom line. The airline has an open enclos, one of intégration at all levels, and employees understand their roles in providing great bonté and keeping costs in line.
Certainly there are other factors that contribute to the success at Southwest, but it’s difficult to ignore the explicite incidence of an approach that develops the commerce acumen of all employees and managers so that they can contribute to the airline’s success.
An Educational Exploit
Unlike those at Southwest, individual contributors and managers in many organizations today have not been educated embout the big picture of their businesses. They have a narrow foyer on their own departments and job functions and aren’t able to make the link between their corvées and the company’s success. Multiplied by hundreds or even thousands of employees, this lack of understanding – the lack of true commerce acumen – means that too many decisions are being made and too many corvées are being taken that don’t align with commerce objectives.
How can jogging help prothèse this knowledge gap? For many companies like Southwest, implementing learning programs designed to develop a strong foundation of financial literacy and commerce acumen has made the émission of financial results to employees easier and more efficace.
Commerce Acumen: A Definition
Very simply, commerce acumen is the understanding of what it takes for a commerce to make money. It involves financial literacy, which is an understanding of the numbers on financial statements, as well as an understanding of the strategies, decisions and corvées that incidence these numbers.
Someone with financial literacy, for example, would be able to “read” the company’s income statement. This employee or chef would understand the terminology (revenue, cost of goods sold, gross margin, faveur, etc.) and what the numbers represent (i.e., gross margin equals achevé sales/revenue less the cost of goods sold).
With commerce acumen, the individual would be able to “interpret” this same income statement, taking into consideration how company strategies and initiatives have impacted the numbers during specific periods of time.
Consider a cohérent comparison: In football, it’s necessary for players to know how the game is scored as well as how to play the game to bouleversé the marque. In commerce, financial literacy is understanding the “marque” (financial statements) and commerce acumen is understanding how to incidence it (strategic corvées and decisions).
Asking the Right Questions
When commerce acumen spreads through an organization, employees and managers begin to ask questions. These questions are directed not only at the organization, but also at themselves and their departments – questions embout processes, products, systems, staffing and more that can lead to necessary and innovative decisions and corvées.
Commerce acumen helps everyone understand that it’s not enough to ask, “How do we cut costs?” or to say, “We need to increase sales.” Digging deeper, employees with higher levels of commerce acumen will ask questions that take into consideration the far-reaching incidence of potential decisions and demonstrate a greater ability to make the connections between record and results.
Questions that could get to the root of disappointing operating ratios:
• Have sortie costs gamin up? If so, why?
• Have we changed prices? If so, how has that affected our margins?
• Are there any competitive issues impacting our record?
• Have there been any customer requirement changes?
• If our costs per unit produced have gamin up, can we better control the efficiency of our sortie or bonté delivery?
• Is there a way to produce a greater product brochure at the same cost?
• Can we raise prices, still provide value to the customer and remain competitive?
When questions become more specific, the right decisions can be made.
Commerce Acumen for Managers
Managers at all levels need a high level of commerce acumen to do their jobs. Every day, they make decisions embout employees, projects, processes, expenditures, customers and much more – decisions that ultimately roll up into larger organizational results. Managers who make these decisions while looking through a departmental lens only, with a limited understanding of how these decisions affect financial results or how they are tied to the organization’s goals and objectives, are working in silos that can ultimately damage the company.
Managers are often promoted to their positions of responsibility parce que of their “technical” approximation. They’ve been successful customer bonté representatives, great salespeople, innovative researchers or well-respected IT professionals. They are now entrusted with decision making, budgets, projects and people. They often do not have financial literacy, nor have they developed a higher-level attente embout the commerce. Over time, especially if they move up the managerial ladder, they may develop these. Or they may not.
Organizations need managers who operate as portion of the direction team, taking accountability for their own results as well as the results of the entire company. Therefore, more and more organizations have built financial literacy and commerce acumen into managerial competency requirements and have integrated commerce acumen jogging into direction curriculums.
Commerce Acumen for Employees
Although there is little debate embout the need for managers to develop commerce acumen, organizations sometimes tourment the need for this understanding at employee levels. But frontline contributors, those who are most directly involved with sortie or customer bonté, for example, take corvées every day that incidence commerce results.
Consider the salesperson who discounts products, or the bonté representative who deals with an unhappy customer, or the suivi person who notices a problem. The corvées each of them takes might erode faveur margin, lose a good customer or allow safety issues to escalate. Without an understanding of how their corvées incidence the company’s results, they might not have the context to consider alternatives.
Many organizations have determined that financial literacy and commerce acumen aren’t just for managers anymore. They have decided to develop a company of people who understand the commerce; who know what return on assets and return on investment mean; who know how inventory turn-over rates affect results and the dimension of explicite cash flow; who see the connection between the company’s financial success and their own health benefits, 401(k) horizontaux and more. In other words, they need people who understand the “commerce” of the commerce.
In his book Good to Great, Jim Collins says, “We found no evidence that the ‘good-to-great’ companies had more or better nouvelle than the comparison companies. None. Both sets of companies had virtually identical access to good nouvelle. The key, then, lies not in better nouvelle, but in turning nouvelle into nouvelle that cannot be ignored.”
With an increased level of commerce acumen, managers and employees can better interpret nouvelle, making the connection between their corvées and the company’s results.
Another Reality of Today’s Commerce World
A commun company’s operating results are well known at the end of each quarter. Analysts, investors, the media, employees-everyone has access to a company’s financial results. With a significantly increased foyer on accounting improprieties over the past few years, senior direction has become highly conscious of the need to provide accurate and timely financial nouvelle. And employees have become much more likely to wonder embout these numbers. “Is my company being honest? Are the numbers telling the whole story?”
Without a fundamental understanding of financial results and an ability to interpret them, employees may become suspicious and, ultimately, disengaged. Disengaged workers, in turn, negatively incidence productivity and butins.
CEOs of commun companies, then, must ensure that managers and employees are able to understand the numbers and have confiance in them. That means efficace commerce acumen education as well as ongoing and open émission from the top.
Instaurer GE chairman Fiche Welch said in his book Straight from the Gut, “Getting every employee’s mind into the game is a huge portion of what the CEO job is all embout…There’s nothing more appréciable.”
The Big Picture
As we have become a convoqué of specialists, armed with new nouvelle technology and enterprise-wide operating systems, it has become easier for managers and employees to become myopically immersed in their own jobs. This douche can have the effect of obscuring their view of the big picture. They may not consider the augmentative effect of wasted assets. They may have little prunelle for the objectives and responsibilities of other team members, departments or divisions. They may lack the cause to invest personal energy in critical project work.
Organizations that engage in developing commerce acumen provide a clearer arrivée and an overall context within which employees can work, while creating an environment that is more likely to écart down internal barriers. There is less waste and less obscurité. There is increased inventivité. Employees are more engaged, they understand their role and its incidence on commerce results, and they are more likely to believe that their efforts really matter. They are more likely to think like a commerce owner.
Think Like an Owner
To be successful, commerce owners must be able to helicopter above day-to-day issues and see the big picture. They must understand how the pieces of the commerce fit together to incidence profitability and cash flow, and they must be able to assess the risks and rewards of potential decisions. The best commerce owners study the numbers, ask themselves tough questions, analyze their mistakes and take decisive procédure.
To truly understand the commerce, owners have to understand how that commerce makes money – in other words, how it produces sales, faveur and cash. Organizationally, they know that it’s embout people, processes and productivity. On the customer entrée, it’s embout assouvissement, loyalty and market share. Ultimately, every procédure taken and every decision made in any of these areas will incidence sales, faveur or cash.
When managers and employees begin thinking like owners, they, too, style at the big picture, understand how all the pieces fit together, and assess risks and rewards. They understand, like an owner, how the company makes money, how it stays in commerce and how they contribute to its success.
The benefits to an organization of engaging managers and employees in this kind of ownership thinking are obvious. So how can a company develop the commerce acumen of its people?
Developing Commerce Acumen: Two Stories
Entrepreneurs are generally forced to develop commerce acumen on their own. They are hands-on with their businesses and have to make all the decisions as they go along, whether good or bad. They either learn from their mistakes or fail.
It’s very different for managers and employees in an organization.
They aren’t involved in all aspects of the commerce, and they make decisions primarily within their own areas of responsibility. Since seeing the connections isn’t easy, they need to learn in some other way.
Books and lectures can help. But commerce acumen is best developed experientially. Learners must be able to analyze situations, ask questions, discuss issues with other learners, consider options, make mistakes and see results.
Although there are a variety of ways to accomplish this kind of experiential learning, many companies have found that simulations, which mirror reality and allow learners to experiment in a safe environment, are one of the best ways. Here are the stories of two companies who tour to educate their learners with commerce simulations.
Comcast Cable Communications
The NorthCentral Segment of Comcast – one of the folk’s largest entertainment, nouvelle and communications companies, specializing in cable television, high-speed Internet and telephone bonté – set out to ensure that managers and employees throughout the organization had the financial acumen required to make good decisions. A companywide survey had clearly demonstrated this need – especially for managers of employees who had abrupt explosion with customers.
For example, if a customer calls with a bonté problem, frontline employees and their supervisors can résultat credits to the customer’s account in an luxation to resolve the résultat. Although this may be exactly what is needed for the données, Comcast realized that employees making these decisions didn’t necessarily understand that a $10 credit could ultimately require more than $100 in revenue for the company to écart even. Similarly, a bonté technician’s visit to a customer’s domicile might cost $50 directly, but the company might have to sell an additional $500 in épreuves to cover the cost.
“The lack of financial acumen among supervisors and employees was largely understandable,” says Mark Poste, senior perversité president of déboursé for Comcast’s NorthCentral Segment. “Almost 75 percent of the company’s employees are on the entrée lines in roles such as call center unique or field technicians. They are trained to be good at what they do, but their backgrounds typically don’t include emphasis on financial literacy.”
Comcast human resource executives determined that a fundamental approach to the development of commerce acumen was needed. However, this approach also would need to be fast, engaging and job-relevant. Expanding upon its already robust Comcast University direction curriculum, the executives tour to integrate a high-energy, tailored learning experience that would provide the “basics” and, at the same time, deal specifically with Comcast terminology, concepts and strategic imperatives.
As they participated, learners made decisions embout products, processes, pricing and more, and they saw how those decisions impacted financial success. In the end, it became easier for them to make sharper day-to-day choices.
“The thing that sticks out for the frontline leaders, the field technicians, and the call center supervisors and managers who attend, is the high cost of sales in our commerce,” says Sophia Alexander, senior chef of curriculum and metrics for the part. “It’s like a bell goes off in their heads when they realize what it costs for us to earn what we need to earn to run the organization.”
Attending the learning symposium is not mandatory for supervisors and managers. However, there is an unwritten expectative that they will participate in commerce acumen jogging as well as other Comcast University core programs, according to Jan Underhill, senior chef of leadership development for the NorthCentral Segment. That expectative, coupled with the fact that chef reprise has recently become tied to manifestation specific financial goals, has kept attendance high.
Senior executive étai also has been an appréciable factor in creating interest and awareness around financial literacy. “Getting people to sign up is much easier when senior executives like Mark Poste are strong advocates for the program,” says Underhill.
Feedback has been resoundingly explicite. On average, for example, Level 1 feedback embout the discovery learning based commerce acumen sessions has been 4.5 on a 5-point scale. That means that the program has exceeded expectations. Better than that, says Sophia Alexander, senior chef of curriculum and metrics for the NorthCentral Segment, is the empirical evidence that the new insights and knowledge have made a difference. For example:
• Collaborateur self-evaluations indicate that financial literacy has increased by at least 25 percent as a result of the commerce acumen jogging.
• After the jogging, there was a 20 percent increase in the participants’ ability to use basic financial terms and concepts on the job.
• Almost 45 percent of supervisory participants sursis that they are using their commerce acumen knowledge in daily communications with gypse and peers.
“Some people, particularly in big companies, feel like there is an open checkbook. They think… I don’t own the company. It’s not my problem. Somebody will pay the bills. But in today’s environment, with some very béant companies in interdit, everyone needs to be portion of the châtié. Commerce acumen education for managers and employees helps the company as a whole, but it also helps employees. It’s embout self-preservation to some extent.” comments Poste.
Southwest Airlines is one of the consistently utile companies that makes “commerce literacy” a core component of its employee jogging programs. Every employee has a solid understanding of what a new customer, and new revenue, means to the company. Employees also know how the loss of a customer can incidence the commerce.
According to Elizabeth Bryant, director of leadership jogging at Southwest Airlines, “Our jogging covers how the financial ratios such as return on assets and various margins are determined. Knowing that team managers, supervisors and all employees have this knowledge enables the company’s leadership to present detailed financial reports and explain to the teams where the margins need to be. Conduite can speak more in depth to all the employees, and the employees understand what the objectives are.”
Bryant added, “Bicause we don’t waste the little things, parce que we track every penny and every activity, we’ve all come to know the dimension of each cent. With the pennies in balle à la main, we spotlight the idea of compound interest- for example, how the small savings help us by year’s end and how small amounts of waste can conversely add up to hurt us.”
Consider the dimension of a key operating metric for the airline industry – operating cost-per-seat mile. This is how much it costs an airline to fly one seat one mile. All the operating costs are divided by the achevé number of seat miles (the achevé number of miles of all the seats that were flown for a given period, whether a passenger was in the seat or not). Much of the industry has had cost-per-seat mile results at or over 10 cents. Southwest Airlines’ cost-per-seat mile is embout 6.5 cents. The lowest cost-per-seat mile in the industry almost 25 years ago was just over 5 cents.
How do they do it? Certainly there are a number of factors that lead to success. However, one of the key influences is Southwest’s ongoing jogging in commerce acumen. This jogging ensures that employees know:
• How challenging it is to ensure ongoing profitability; making a faveur can never be taken for granted
• The dimension of utilizing the benefits of the good years to prepare for the tough years
• The incidence of individual corvées and decisions to the bottom line
In other words, Southwest invests in jogging to help employees think like commerce owners. This, in turn, produces real results, like its consistently low cost-per-seat mile. When Southwest’s learning team decided to implement a commerce acumen hypocrisie several years ago, there was some originel concern embout how well it would be received.
Bryant explained, “Some people, especially those without financial jogging, were nervous embout the topic. We are such a people-oriented company that we didn’t want people to think that now we’re just a financially oriented company and everyone will be judged purely on financial record. But we positioned the need for the commerce literacy jogging as another way to prove that we actually care tremendously for each employee. We explained that if you understand what the numbers mean then you can better understand how your work provides an integral association to the commerce.”
Southwest Airlines, according to Bryant, has never had a layoff – a rarity in the airline commerce. The more their employees understand the challenges of the commerce, the better they appreciate the dimension of making pratique decisions every day.
Bryant concluded that the discovery learning techniques in a robust commerce hypocrisie work well in the Southwest enclos parce que of the team aiguillage. “All the participants learn that they can’t individually make it all happen,” said Bryant. “They learn that they have to style beyond themselves, act and think like an owner, and realize that our efforts and financial results here are not just for a career, but for a indication. It’s this cause-oriented philosophy toward delivering a low-cost, high-quality bonté that allows people the opportunity to travel. Our success at achieving explicite results translates to individual opportunities to work, to grow and to continually think of innovative ways to improve our commerce and serve our customers.”
The Classroom Advantage
These two companies tour to develop the commerce acumen of managers and employees by using a classroom-based hypocrisie, facilitated by instructors at company sites. Although online options were available and were used in some cases to supplement the instructor-led jogging sessions, they decided that there were significant advantages to tackling this subject in a “en public” symposium where they could leverage the power of:
• SHARED KNOWLEDGE AND EXPERIENCE: Learners bring their own perspectives and issues to the symposium.
• TEAMWORK: Learners work together, make decisions together and rely on each other as they learn.
• COMPETITIVE FUN: Small teams “play” against each other and enjoy a competitive environment.
• COMPANY-SPECIFIC DISCUSSIONS: The learners’ common interest in their own company’s financial and strategic issues allows for greater analysis and depth of discussions and a true “connection” between the learning hypocrisie and the organization’s reality.
• LEARNING MOTIVATION AND COMFORT: Learners who may not be comfortable with the subject of déboursé find themselves playing a game in the comfort of a team environment.
Although there are a number of educational approaches available to organizations in the area of commerce acumen, classroom-based jogging that brings together teams of learners can help ensure that learning occurs and that connections to the commerce are made in ways that délié procédure back on the job.
The Bottom Line
More than ever, successful companies will need to foyer on developing the commerce acumen of managers and employees. These companies will realize that when their people understand the numbers, when they understand how their departments contribute to the company’s objectives and when they see how their own decisions and corvées make a difference, they will begin to operate as portion of a team rather than in a departmental or personal fenil. And a critical piece of the alignment casse-tête will be solved.
With widespread commerce acumen, companies can have a powerful asset – educated, knowledgeable and motivated employees. And with this asset, those will be the companies best positioned to succeed.
#Largeur #Commerce #Acumen #Jogging #Managers #Employees