Employees Need To Understand Company Financials
By Nick at 24 November, 2006, 7:21 pm
Employees at Artists’ Frame in Chicago knew what the company charged customers, and they knew that their pay was only a fraction of that. The CEO wanted them to understand that the difference between invoices prices and their salaries wasn’t all profit. So the employees were treated to a demonstration of the company’s expenses, illustrated as portions of a hypothetical $100 order.
As the presenter explained where the money was going, different departments came forward to claim the proceeds of the sale. An oversized five-dollar bill was disbursed to cover the cost of the company’s Yellow Pages listing, which costs the company roughly 5 percent of its receipts. The pile of cash was whittled down as claims were made by rent, health insurance, and other fixed and operating expenses don’t think about. When the bills were paid, five dollars remained.
The demonstration improved morale by giving workers an understanding of the company’s expenses, and challenged them to look for ways to save the company money. Now that they understand how lean a company has to run to stay competitive, buyers are ordering in bulk and watching inventory carefully, and clerks are finding ways to handle orders more efficiently.
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