? Especially When You Are The Boss
If the boss is actually in charge, then he or she has the ultimate responsibility for profit or loss. If those of us ?old warriors? in the business environment still believe this to be so, then why ??
do so many of us feel bewildered at the appearance that the bigger the company, the more incompetent the CEO? What is even more disheartening, a paradox is created when the more ineffectual these leaders seem to become, the more compensable they feel they actually are. Read on to find out how to help change such reasoning.
The message here is quite simple. There are far too many leaders today that feel they are too important to take ownership of the simple lessons discussed here. They believe that their accounting executives are, and should be, responsible for the company?s financial results. Nothing could be further from the truth. I spent over 25 years as a controller in medium sized factories (several hundred employees), and when profits weren?t as expected my staff and I were taken to task. But when things went well, senior executives took all of the credit. No matter how small or large your enterprise may be, the person in charge, and his or her most valuable operations staff, should easily be able to control, and understand completely, the outcome of an income statement (or profit and loss, or P&L). Following are three basic points to support my findings on this strategy.
THE MOST IMPORTANT LINE ON AN INCOME STATEMENT
In overseeing an operation for profit, the leader(s) must know when and how to go about ?raising the bridge? and/or ?lowering the river?. To comprehend that old adage, think of the bridge as revenue and the river as costs. As all of your employees know, profit and loss is the difference between sales coming in and expenses going out. For the most part, that is the basic understanding. However, the most important line on an income statement is not the one on the bottom, but rather, the cost of goods sold. In my 40 years of experience working with income statements, I have learned more is hidden, and therefore unknown (i.e. until exposed), in that one line than all others on a P&L. The bigger and more complex the enterprise, the less is known, and therefore, potential additions to profits are often times buried in there along with other acrimonious deeds. Almost all variable costs occur here and are very difficult to reveal. It goes far beyond waste factors (both built-in and unacceptable), allowances, over/under absorption, inefficiencies, the true value of beginning and ending inventories, et al. Every person in charge MUST HAVE A COMPLETE UNDERSTANDING of their gross profit (revenues less costs of goods sold). If you do not, have your controller or accounting manager explain it to you until you do. Attention all of you accounting and financial executives: it is your responsibility to make certain you know as much as can possibly be uncovered in a perpetual analysis of your cost of goods sold. If you do not know, then you are not doing your job, and your superiors probably will not be able to do theirs either.
HOW TO EXPOSE SECRETS HIDDEN IN COST OF GOODS SOLD
I have written an e-Book that explains, in detail, those who are the most knowledgeable people in any organization? the people actually doing the work (most often made up of direct labor). I have always advocated, if the leaders in charge want to know what is actually taking place in their organization, they must take a more hands-on approach to learning by listening. In order to listen, they have to ask. And they have to ask the right people. During my career I spent most of my time as a controller becoming an expert in the cost of goods sold area. If an adequate job is done there, accountants can become good at predicting profits, rather spending most of their time explaining variances from budgets AFTER the ?horse has left the barn?. I spent more time asking and listening out on the factory floor than today?s accountants appear to. Too many chief executives count on their subordinate staff to keep them abreast of events, when unfortunately in many cases, their lieutenants do not know either. In addition, in many situations, as is discussed in my third point, there can often be dangerous and more costly problems resulting from the actions of certain of those staff members.
HOW THE BOSS IMPROVES THE BOTTOM LINE
Because the CEO possesses the authority that goes along with the responsibility, he or she can overrule all staff members (this is a good thing for the boss; but maybe not for his or her staff). Three of the most prevalent, yet malevolent, conditions my consulting exposed in the hundreds of business enterprises I visited, were clandestine practices of? ?favoritism?, harassment?, and ?intimidation? among middle managers and supervisors. In almost all cases, the boss did not know these conditions existed. These are by far the most malicious deterrents to rank-and-file being able to do what is expected of them, thus directly affecting the bottom line. It is every leader?s job to know whether this is happening in their workplace. Moreover, communicating only with their staff is not the way to know what is going on. They must have a horizontal style of communication in place, from the presiding officer down through all employees, and back to the boss again.
Learn more about how to improve profits easily in your workplace by visiting my website at http://www.b2bawareness.com and sign in for a free report entitled ?Are You Asking The Right Questions To The Right People??
Thank you for visiting this blog ? and I wish you nice days always.
Bill Hartman
The Business Awareness Coach
guinea bissau google stock google stock gawker hayden panettiere china gdp looper
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.