“How can we make our employees more profit conscious?”
I often hear this question from managers and executives.
Employees are wasting time and wasting money. Leaders think that they want to change their behavior, such as low awareness of increasing sales.
Therefore, the leader shares the profit situation of the whole company with the employees. However, employee behavior does not change. If you can’t tell from the company-wide profit, we will also share the profit of each business division and division. However, this does not change employee behavior. What should I do? That’s why I’m holding my head.
Whenever I am asked about these concerns, I often give advice:understand when dividedis the key word.
For example, even if only the leader is in a state of “understanding”, if the members are in a state of “not knowing”, they cannot move. I can’t move, so I can’t get results. By “dividing” according to the member’s condition and level, the members finally “understand”, and because they understand, they can act correctly and get results.
in short,In order to communicate to members and others, this technique of “dividing” (according to the other party) is importantThat’s it.
So, specifically, when you ‘separate’ what and why, do you ‘understand’ and the members can ‘move’? Let me give you two examples.
Keyence’s secret to high profitability
The first one I would like to introduce is a case where members can “move” by “dividing” by “time” introduced in “Keyence Anatomy: The Mechanism of the Strongest Company” (written by An Nishioka).
Keyence is a manufacturing company that handles devices such as so-called sensors. Even though we are in the manufacturing industry, we are a fabless manufacturer that outsources most of our manufacturing.
Keyence’s market capitalization exceeds 16 trillion yen. Operating income for the fiscal year ending March 2023 is expected to increase by 19% year-on-year to approximately 500 billion yen, with an operating margin of over 54%. A gross profit of over 50% is a high figure, but I’m surprised that the operating profit margin, which excludes general and administrative expenses from the gross profit, exceeds 50%. There are many fabless manufacturers in Japan similar to Keyence, but I have never come across a company that boasts such a track record.
Keyence, which boasts a high operating profit margin, has various mechanisms and devices, but one of the underlying mechanisms is “time charge”.
Hourly charge is a mechanism for all employees to have an awareness of profit per hour, and is expressed by the following formula.
in short,Approximate amount of gross profit that each employee should generate per hourabout it.
It seems that the time charge will be shared with all employees when the new year begins.Keyence employees have their hourly charge numbers in their heads, so they can always ask themselves if their hourly work adds more value than this number.. Also, the boss can give advice on his subordinate’s behavior based on this number.
Anne Nishioka, the author of the book, wrote that there were various confirmations from the interviewees before interviewing Keyence. She can imagine that Keyence’s interviewees, who are aware of the time charge, took actions to increase the maximum added value within the interview time.
At the beginning, I talked about an organization where employees do not change even if they share company-wide profits and departmental profits. It’s not wrong to tell employees about the company’s situation.The problem is that employeeIt’s still too big for each person, and I can’t imagine it (= “I don’t understand”), so I can’t move.There is a thing.
Keyence’s time charge is even more detailed and “split” per employee. It is further “divided” by working hours. With this granularity, you can finally “know” how much gross profit each employee has to make per hour, and act on it.
As mentioned above, there are only two things needed to calculate the hourly charge: the previous year’s added value (gross profit) and the total number of hours worked by employees. Few companies are unaware of this. If you divide the added value by the total working hours of the employees, you can easily calculate the time charge for each company, so any company can immediately put it into practice.
Companies that want their employees to be profit-oriented are encouraged to calculate this hourly charge, share it with their employees, and monitor it monthly.
Achieving a Hopeless Goal with Section Chief O’s “Magic”
Let me introduce another episode from when I was the sales manager of recruitment media at Recruit’s Yokohama branch.
It was the end of the term. The organization I was in charge of had achieved its goals, but the next section was in a pinch because the numbers did not reach their goals.
In the next section, 10 salespeople were making an average of 1 million yen a week. In other words, 1 million yen per week x 10 people = 10 million yen in sales.
At the end of the term, the remaining business days were two weeks. That’s 10 business days. Predicting the average sales per week, sales in 2 weeks can be expected to be 10 million yen/week x 2 weeks = 20 million yen.
However, the remaining business target figure at this time was 40 million yen. In other words, in order to achieve the goal, it was necessary to double the average weekly sales of 10 million yen to 20 million yen for two consecutive weeks.
Faced with this harsh reality, all the members looked down at the sales meeting. From the size of the remaining numbers, I thought it was impossible.
However, the manager of the next section, O, did not give up. By exchanging the following in a meeting, I was able to cast a spell on the members that they could do it.
O section manager”I want to know exactly how many numbers I have left. Mr. A, how much is it?”
Mr. A”It’s 40 million yen.”
O section manager”I want to know the exact number of remaining business days. Mr. B, how many days in a week?”
Mr. B”Two weeks, 10 business days.”
O section manager”I want to accurately grasp our sales power. Mr. C, how many people are there?”
Mr. C”Ten people.”
O section manager”I want you to calculate how much you should sell per day. Mr. D, how much?”
Mr. D”40 million yen ÷ 10 days = 4 million yen”
I “divided” the remaining digits from 2 weeks to 1 day.
O section manager”I’ve figured out the sales per day. I want you to calculate how much each person should sell per day. Mr. E, how much?”
Mr. E”4 million yen ÷ 10 people = 400,000 yen.”
In addition, we “split” the remaining figures per day per person per day.
O section manager”I was able to figure out the sales per person per day. I want you to calculate how much you should sell per hour. Mr. F, how much?”
Mr. F.”400,000 yen ÷ 8 hours = 50,000 yen”
O section manager”50,000 yen per hour”
In addition, we “divided” the remaining number per person per day into 1 hour per person per day.ThenThe faces of the members have changed.It is.
Mr. G“Until now, I was conscious of the number per week.
Mr. H”This might work”
As I happened to be present at the meeting, I witnessed the magic of Mr. O. The sales staff, who had been looking down and giving up, looked up, came up with a concrete strategy, and started to move.
Then, partly because of a lucky business meeting, the neighboring section was able to achieve its target by selling the remaining figure of 40 million yen in two weeks.
OWhat the section chief confirmed with the members can be expressed in the following formula.
By setting the remaining sales target for all employees on a daily basis, further dividing the work by each person per day, and finally dividing it by each hour, the section employees became able to understand what they had to do and act accordingly.
The method used by Section Manager is similar to the Keyence case, and can be done by any company. The difference with Keyence is that this way of thinking has become a habit at Keyence. On the other hand, in Recruit’s O section manager’s organization at the time, it was not natural to “divide” each hour.
Therefore, there was a possibility that it would not be communicated well even if only the numerical value was communicated to the members of the section. So, Chief O devised a device.By sharing the process of calculating per hour with the members, we promoted understanding..
By sharing the number per hour, it will be an opportunity to review the work content per hour of the members. It’s a simple calculation, but it’s a very effective method. Please use it as a reference.
The object of “dividing” is not limited to “time”. As I’ve covered several times in my articles, it’s also useful to “divide” the process. Or, there are many big words such as “communication”, “motivation”, “sales activities”, and “how to attract customers” that can be “understood by dividing”.
If there is a big number or matter that you or the members “do not understand”, you can “understand it by dividing it”. Please remember this keyword. I’m sure it will be useful.
Ryuichiro Nakao:President of Nakao Management Institute. Completed Graduate School of Engineering, Osaka University in 1989. He joined Recruit. After serving as executive officer (in charge of business development) of Recruit Sumai Company, president of Recruit Technologies, and deputy director of Recruit Works Research Institute, he assumed his current position in 2019. He is also an outside director of Tabikobo, LIFULL, and ZUU, and a part-time auditor of LiNKX. His new book is “I tried to summarize 64 masterpieces of ‘really useful’ management in one volume”.
(Serialization logo: Mio Hoshino, editing: Ayuko Tokiwa)
Source: BusinessInsider
Emma Warren is a well-known author and market analyst who writes for 24 news breaker. She is an expert in her field and her articles provide readers with insightful and informative analysis on the latest market trends and developments. With a keen understanding of the economy and a talent for explaining complex issues in an easy-to-understand manner, Emma’s writing is a must-read for anyone interested in staying up-to-date on the latest market news.