How to Enlist Your Workforce to Fix Declining Profits

By November 27, 2018Business, Leadership

(A Case Study in Workforce Education)

One of our clients was a 40-year-old manufacturing firm that was crystal clear about the products it sold, the markets into which they were sold, and their end-users. Over a two-year period, it saw its profits declining, and it had gone from being an industry leader to the middle of the pack.

The company’s margins were shrinking and its cash flow was being squeezed. Curiously, its sales were continuing at a decent pace. As company leaders further analyzed their financials, they noticed that manufacturing costs had begun to soar.

Eager for a solution, the company’s executives started searching for drastic measures. They were intent on shuffling their supply lines in order to use cheaper materials for manufacturing.

Before they made any material changes, however, we asked them to try our solution: educating their workforce on the metrics of the business, including how the company made money and how it managed costs.

We encouraged company leadership to enlist the help of their workforce to better manage the costs of manufacturing. An all-company meeting to go through the numbers was set for the following week.

Immediately after the meeting and per our suggestion, the operations manager posted a series of graphs related to manufacturing numbers in the lunchroom, in hallways, and on the manufacturing floor. These graphs displayed the various aspects of the manufacturing process, including waste, quality, breakage, time to market, inventory control, and materials management.

The graphs were updated each week and the entire manufacturing organization reviewed progress on every item.

This created healthy competition between departments to lower costs. Within a relatively short period, the organization’s productivity improved dramatically. Manufacturing costs came increasingly under control and the company’s profitability began to rise.

An unexpected benefit was that morale on the manufacturing floor improved dramatically, as did employee retention.

When questioned about this change, employees said that they began to feel pride in making a difference in the success of the company. Management took note and identified additional ways to involve employees in the health of the business.

Instead of making major changes that could have had negative consequences, the company was able to leverage its employees to make a positive impact. How can you use this same strategy to increase your numbers?

THE TAKEAWAY: Educating your workforce about the metrics of your organization and incentivizing them to improve those numbers may be the most effective way to stem the tide of falling profit, or increase profits when times are already good.

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