Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Sat May 03, 2008 8:30 am Post subject: Thought Piece, Why Is Profit Low and Prices High?
Very often, I have heard employers complain, their staff just doesn’t seem “to care about the business.” Obviously this is a relative term, few staff members are likely to show the level of commitment of an owner. After all, they are not an owner. This does not mean they do not care about the business.
Common sense would dictate, the majority of normal employees would have some concern for the place they work. At very least, failure of the business means a disruption of their lives and an inconvenience. At best, they wish to see it succeed, grow and prosper, much the same as an owner. In between is the truth and often a huge challenge for most owners.
By nature, people tend to enjoy being on a “winning team.” Much like motivation, I feel it is intrinsic and does not have to be created by outside stimulus. I believe this is a natural state of man and wishing to work against the team is an inversion. Yet many actions of employees indeed do work against the team. This results in one employee [perhaps the owner in the beginning] producing X. Adding an employee results in perhaps 1.5X and adding another 2X. Now three people equal 2X performance.
As more people are added the contribution becomes less. Many managers respond by adding a supervision. Perhaps the thought is people are lazy and must be supervised. We now have a company that is growing top heavy, likely not very profitable or has very high prices.
Supervision is not effective, because it does not address the problem. When people act counter to their nature, there will always be causes. Removal of the causes will be far more effective than manipulation, in any form. This is why incentives, rules and even threats are largely ineffective.
In a properly managed organization one may equal X. An additional person may equal 2.5X and a third equal 4X. Three people now equal 4X performance. This is due to cooperation, sharing of natural abilities and positive interaction. The strength of one member compensates for another and vice-versa.
The answer lies more in removing negatives than attempting to supply motivation. How many things can you think of that create negative interaction in business?
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