Do profit figures really motivate employees?

In the old days a company’s numbers were kept secret from employees: Bosses not wanting the workers to know how much money was being made for fear of being tapped for a pay rise, and all that.

Now we’ve flipped around and share everything with employees. We reckon it’s motivational, inspirational and, anyway, we’ve gotten over our fear of the pay rise question, so why not?

In particular we like to set and share lofty goals for revenue and profit. We got the message that the key to success is getting all our employees working towards a common goal, so why not pick revenue and profit to work towards? After all, we’re on a mission to make our business bigger and more profitable, so revenue and profit goals must be pretty exciting for our employees?

Er, no.

I’m a huge fan of “open book management” and I think it’s important for employees to know how their business makes money. But do I think that most employees are excited about a bigger top line and bottom line? No.

Here’s why:

• Employees are human; they can’t help asking, “What’s in it for me?” You can tell them of course that the more profit a business makes, the greater the opportunities they will have, but let’s be honest – it’s a bit of a stretch for many of them to see that.
• Employees don’t know how they can contribute to an increase in revenue and profit other than by just working harder.

What I do think works though, is to effectively break up the profit goal into small actionable goals that everyone can participate in.

This works really well when you have a series of quarterly measurable goals that relate directly to the work that the employees are doing.

An example may be, say, to improve the DIFOT (Delivery In Full and On Time) percentage. With this sort of goal, employees can see how they make a genuine contribution to achieving it – not by working harder, but by doing things in a better way. And they get to see improvement in a number that means something to them.

Finally, of course, they get the extra motivation from celebrating the achievement of lots of little goals, rather than just one biggie.

This isn’t to say that you shouldn’t share revenue and profit goals. If it works for you, do it. Just don’t expect everyone to find those targets as exciting as you do.

Julia Bickerstaff‘s expertise is in helping businesses grow profitably. She runs two businesses: Butterfly Coaching, a small advisory firm with a unique approach to assisting SMEs with profitable growth; and The Business Bakery, which helps kitchen table tycoons build their best businesses. Julia is the author of How to Bake a Business and was a partner at Deloitte. She is a chartered accountant and has an economics degree from The London School of Economics (London University).