Axiom CPA, P.A. - Axiom CPA Blog

I love golf. I love everything about it. I love the game, I love being outside, I love the mental side of it, I love the strategy and I love the competition. I even love the practice. When I was a kid in a junior golf clinic one of the club professionals observed me hitting balls on the range. He asked what I was aiming for. But I wasn't aiming for anything. I was just trying to hit the ball well. It didn't take long for him to drill into my head the fact that if you're not going to pick out a target you might as well not even practice. This early lesson has stayed with me to this day.

In our work with clients adopting open book management practices we strive to get them to have team members report their numbers in group staff meetings every week. The basic idea is that the person responsible for sales posts the sales number for the week and explains why it did or didn't meet expectations. Then the production person gets up and posts the cost of goods number for the week and does the same thing. On and on it goes until the entire income statement for the week is presented by those managers responsible for the various income and cost centers of the business.

In the early days of a new system like this we do a lot of baseline measuring. For instance, we not only want to measure gross sales. We also want to measure total number of transactions, transactions per customer, average dollar value per transaction and transaction frequency. Once these baseline measures are established we start to understand how operational changes can drive revenues and costs. For instance increasing the number of transactions per customer from 1.5 to 2 should result in a 33% revenue increase. This baseline measurement process usually takes one to two months.

The struggle is getting teams to move beyond the baseline and start setting targets. This is understandable. It's one thing to report a number I'm responsible for. It's another thing entirely to report that number when everyone else in the room immediately knows I didn't hit the target that was set for me. This type of accountability is scary until a team builds enough respect and trust in one another to put ego aside and focus on the business as a whole.

But you absolutely must have a target or you shouldn't even bother going through the exercise. As uncomfortable as it will be to sit through that first staff meeting and ask tough questions of those who don't hit their numbers you have to do it. Many managers are reluctant to hold people accountable to firm targets because they're afraid of destroying the team culture they've built. But the truth is if you're not holding everyone accountable to preset standards you're showing favoritism to some on your team and favoritism is the number one enemy of team building.

Other times managers are afraid to hold people accountable because they don't want to be held accountable themselves. If this describes your company and you are the problem you need to make a commitment to be truthful with your employees, show a little vulnerability and get over it. Your company will never achieve its full potential as long as you are sticking your head in the sand.

The last big reason I run into resistance in this area is because managers are afraid their team will fail. But that is precisely the point. You need everyone to fear failure a little bit in order to foster a sense of urgency and commitment to getting the job done. Your employees will surprise you. If you put the target out there and tell them what is expected they will usually exceed it. Then you'll put up a higher target and they'll exceed that one. Then things get really exciting. The employees start setting their OWN targets and exceeding those. Of course they need to be rewarded for their efforts but if you follow an open book management approach that's not a problem. The resources will be there to reward them and there will be plenty left over for the owners to enjoy.

So be bold. Tell your employees what you plan to start measuring. Baseline it for several weeks. Then start setting targets. That first staff meeting will be one of the most uncomfortable things you've ever done but push through it. The rewards are just too great to pass up.