Welcome to the blog!
17 January, 2024
The results of any company depend on its people. Yet, to this day, many organisations lack clear and accurate insights into their workforce and the value they create. Not due to a shortage of data collection but rather a deficit in precise understanding of what data to collect and how best to use it.
Data collection itself goes way back; information on people has been gathered spanning years, decades, and even centuries, creating a rich source of human experience and knowledge.
This valuable reservoir of information has played a pivotal role in figuring out how things have changed over time read more...
27 November, 2023
In the current business landscape with never ending disruption, high levels of uncertainty and a highly competitive environment, the quest for higher productivity becomes a central focal point, with organisations constantly seeking new ways to achieve this elusive goal.
Often, businesses find themselves at a crossroads, surprised by the apparent gap between people and performance. Which is not just about productivity; it's about sustained productivity, and that's where the missing link becomes evident – Human Insight Data. Read more...
25 October, 2023
In the ever-evolving landscape of organisations and teams, the pursuit of the next stage of company growth is a shared aspiration. Whether you're leading a business, managing a project, or overseeing a group of individuals, the notion of creating a high-performance culture or team is a recurring theme. Such a culture is not just a buzzword; it's the very foundation upon which outstanding achievements are built.
But what exactly is a high-performance culture, and why is it so essential in today's competitive world? This blog delves into these questions and explores the four critical pillars that constitute the blueprint for success. Read more...
26 September, 2023
In today's rapidly evolving corporate landscape, successful companies are harnessing the power of human insight data to drive transformative results. This cutting-edge approach allows organisations to not only measure performance read more...
30 August, 2023
In the ever-evolving landscape of business and organisations, change is always present. From technological advancements to shifting and sometimes volatile market dynamics, the need to adapt and transform is relentless. As a response, organisations often embark on change initiatives read more...
17 January, 2024
Introduction
The results of any company depend on its people. Yet, to this day, many organisations lack clear and accurate insights into their workforce and the value they create. Not due to a shortage of data collection but rather a deficit in precise understanding of what data to collect and how best to use it.
Data collection itself goes way back; information on people has been gathered spanning years, decades, and even centuries, creating a rich source of human experience and knowledge.
This valuable reservoir of information has played a pivotal role in figuring out how things have changed over time, from deciphering historical trends to understanding the intricacies of human behaviour in the workplace and outside.
But now, there's a new wave in the sea of information – the age of Human Insight Data. This takes it past the domain of traditional analytics, this shift calls on organisations to go beyond the confines of collecting information to understand engagement and building capabilities. It invites them to delve into the intricate nuances of human behaviour, predict trends and to set the course that builds the culture and performance focused workforce that will win the future.
The Significance of Human Insight Data
Just as the shift from manual labour to knowledge work marked a significant transformation, the rise of Human Insight Data shows a new beginning. It goes beyond the usual way we think about people and data, urging organisations, both large and small, to start collecting data thoughtfully and on purpose. This reservoir of insights becomes the guiding compass for leaders as they navigate the labyrinth of organisational requirements, address the diverse needs of the workforce, and respond to external demands while charting the course for winning the future.
Understanding the Distinction: People Analytics vs. Human Insight Data
Before we dive into the details of human insight data, let's first grasp the difference between People Analytics and Human Insight Data.
People Analytics:
People analytics, sometimes known as HR analytics or workforce analytics, is all about looking at data about people to solve specific business issues. Many organisations are using it to understand workforce productivity, deal with talent retention, understanding employee engagement and to develop programs that will build capabilities.
Human Insight Data:
On the flip side, human insight data collects information from across the whole organisation in a consolidated approach, aligning it with positive cultural values, short-term priorities, and the organisation’s long-term goals. It helps find patterns and trends, leading to a more strategic approach in building an accountable and performance focused workforce, ultimately driving faster growth and more shareholder value.
Summing It Up:
Consider this analogy: People analytics is akin to identifying and fixing a leak in a single pipe. Its focus is on the immediate situation, aiming to repair or gradually improve it.
In contrast, human insight data can be likened to looking at an entire irrigation system. This process considers broader requirements, to ensure water flows efficiently throughout the entire system. The goal is to ensure efficient delivery to all elements requiring water, not just for the now but also for the future.
Crafting Your Human Insight Data Strategy
Starting this journey requires a plan, a strategy that fits with the organisation’s present needs and long-term goals. Creating a bespoke human insight data strategy becomes the cornerstone. It involves the regular and widespread collection of accurate data, and consolidating it in a strategic way.
The data then transforms into a compass, guiding organisations to immediate opportunities and predicting trends that will pave the way for future workforce strategies leading to improved talent density and greater output.
Building Your Data Lake
The urgency to build a data lake now arises not just as a way to stay competitive and drive workforce performance but also as a proactive measure to prepare for the integration of AI and its opportunities.
Data, likened to fuel, powers the engines of AI, and the quality, quantity, and accessibility of this data dictate the trajectory of organisational success. In a world where one size does not fit all, it is important for each organisation to have its own data lake, serving as a foundation to identify the most impactful initiatives.
Various surveys and assessments, spanning from employee engagement surveys, to manager 360 feedback, team and leadership assessments, should all contribute to an organisation’s own lake of Human Insight Data. This reservoir then becomes the source, guiding organisations to tailor their approaches, addressing immediate needs and strategically anticipating future capability and reward requirements essential for long-term success.
The Imperative of Conscious and Accurate Data
In this world of big changes, here's a really important point — the data you put into this reservoir must be clean and accurate. The old saying "garbage in, garbage out" is truer than ever. The pathway to success lies in the clean collection, and consolidation of data. It's not just about feeding AI with information; it's about providing it with accuracy, relevance, and the right data to ensure “gold in, more gold out”.
Harnessing the Power of Behavioral Insights and Data
In the world of guessing what might happen, understanding how people behave becomes a big deal. Organisations are beginning to see the effectiveness of small nudges in influencing positive behaviours. Adult-learning specialist David Kolb's insights further underscore the importance of small, experimental learning chunks.
AI tools, attuned to individual responses, pave the way for tailored interventions, accommodating preferred learning styles in order to deliver effective interventions that embed meaningful change. This however can only happen, with a well sourced reservoir of data.
As we dive into the space of human insight data, we start a journey that goes beyond traditional boundaries. It's not just about recording information; it's about deciphering patterns, adapting to diverse learning styles, and sculpting organisational workforce strategies that resonate with the future.
The era of Human Insight Data is here, and those who take it on have the chance to lead the way into new areas of company growth and workforce performance.
Conclusion
In the world of how businesses run, using Human Insight Data is like switching from just knowing stuff to having a secret weapon. We've explored how important it is to plan and use this data wisely, especially as we gear up for the era of Artificial Intelligence.
Creating a data lake isn't just about collecting information and reacting to the current environment; it's about getting ready for AI to join the team and shake things up. It challenges companies to see AI as something that can help them reinvent and be ready for a future where responsibility and being adaptable is the key.
It's also not just about storing data; it's about creating a company culture that is true to its values, excels in what it does, attracts talent and can handle whatever comes its way whilst delivering faster growth.
We are at a point where the companies that are combining what they know as well as accepting the unknowns can utilise Human Insight Data to proactively shape the future.
The journey has just begun, and the possibilities are boundless for those who unlock the power of Human Insight Data to create a performance focused workforce that is winning the future.
Would you like to start using Human Insight Data effectively, let us show you how. Email us on contact@i-bimp.com
27 November, 2023
In the current business landscape with never ending disruption, high levels of uncertainty and a highly competitive environment, the quest for higher productivity becomes a central focal point, with organisations constantly seeking new ways to achieve this elusive goal.
Often, businesses find themselves at a crossroads, surprised by the apparent gap between people and performance. Which is not just about productivity; it's about sustained productivity, and that's where the missing link becomes evident – Human Insight Data.
The Essence of Productivity
Productivity, at its core, is the ratio of units of output to units of input. Input typically encompasses labour, materials, or capital. Increasing productivity means accomplishing the same output with fewer inputs or generating more output with the same inputs. Yes, it sounds simple enough, however, where many companies falter is in how they measure productivity.
Why the Measurement Gap?
One common pitfall lies in the misalignment of measuring time, calls, and activities without connecting them to actual, tangible output. True productivity is not merely about the quantity of work but its value to stakeholders. It's not solely about producing more of the same; it's about delivering what the customer wants.
Productivity, therefore, should be synonymous with delivering value to stakeholders, and to gauge this, data is indispensable.
Using Data to Understand Productivity
To bridge the people-performance-productivity gap, start by defining the output. In addition, if your organisation emphasises team performance and collaboration, then the output should be assessed at the team level.
It also helps to shift your perspective from individual input to role-based input to better understand what each team needs in terms of skills, behaviours, and resources to deliver the desired output.
Key Steps in Bridging the Gap
1. Define the Elements That Matter
- Start by pinpointing the essential components required to achieve your desired output.
- Identify the specific skills, behaviours, and resources that are integral to reaching your goals.
- Tailor your approach to each team, considering their unique needs to contribute effectively to the desired output.
2. Establish Clear KPIs
- Define clear and measurable Key Performance Indicators (KPIs) that are closely aligned with your desired output.
- These KPIs should serve as reliable metrics for tracking progress, providing you with tangible data to assess the effectiveness of your strategies.
- Regularly monitor and adjust your KPIs to ensure they remain relevant to your objectives.
3. Analyse Engagement
- Recognise that employee engagement plays a pivotal role in determining productivity.
- Understand the factors that drive engagement within your workforce.
- Establish mechanisms for measuring and assessing engagement levels, enabling you to address any issues and optimise productivity.
The Role of Engagement in Sustained Productivity
Sustained productivity is the ultimate goal, and it is closely intertwined with employee engagement. While finding innovative ways to enhance processes is commendable, it's the engagement of your workforce that often determines success. In essence, the key to measuring productivity lies in measuring the engagement of your people.
The Missing Link: Human Insight Data
This is where Human Insight Data comes into play, forging the essential connection between people, productivity, and performance. By harnessing this data, organisations can delve into the intricacies of their workforce, understanding what truly motivates and engages their employees. Armed with these insights, businesses can fine-tune their strategies to ensure not just short-term productivity spikes but sustained, long-term success.
Conclusion
In today’s competitive landscape of business, it's not just about driving productivity; it's about understanding the people behind the performance. By embracing Human Insight Data, companies can find the missing link that leads to sustained productivity and enduring success. It's a transformative journey that begins with understanding the nuances of human behaviour and ends with a more productive, engaged, and successful workforce.
Would you like to start using Human Insight Data effectively, let us show you how. Email us at contact@i-bimp.com
25 October, 2023
In the ever-evolving landscape of organisations and teams, the pursuit of the next stage of company growth is a shared aspiration. Whether you're leading a business, managing a project, or overseeing a group of individuals, the notion of creating a high-performance culture or team is a recurring theme. Such a culture is not just a buzzword; it's the very foundation upon which outstanding achievements are built.
But what exactly is a high-performance culture, and why is it so essential in today's competitive world? This blog delves into these questions and explores the four critical pillars that constitute the blueprint for success.
A high-performance culture or team is one where every member is fully committed to a shared set of goals, with embedded trust among them. This commitment drives motivation and accountability within the organisation, creating an environment where positive risk-taking, agility and outstanding results are the norm, not the exception.
Why It Matters
In a world with high levels of uncertainty, constant competition for resources and talent, a never ending stream of new challenges, a high-performance culture serves as a catalyst for not only surviving but thriving. It's a culture that thrives on innovation, adaptability, and the continued focus of delivering more value to stakeholders - all of them. In such an environment, individuals are not merely clocking in and out; they are inspired to give their best, and doing so together.
The importance of fostering a high-performance culture cannot be overstated. It's not just about meeting targets; it's about making it easier to achieve them and often doing so faster. It's about differentiating from the competition, finding completely new ways of doing the work, and being the company or team that others want to be part of.
Now let’s explore the four essential elements that underpin a high-performance culture:
- Collective Commitment: The foundational element that ensures everyone is pulling in the same direction, driven by trust, motivation, and accountability.
- Clear Direction: Providing a defined purpose, goals, and metrics, which serve as the guiding star for the team's endeavours.
- Pace: How quickly a team can move towards its goals, influenced by agreed-upon ways of working, alignment, behaviours, skills, and a genuine interest to learn and do better.
- Creating Value: The ultimate measure of high performance, focusing on understanding stakeholders and delivering the right kind of value to them.
Now, let's explore these four fundamental elements that can transform an organisation or team into a vehicle of excellence, consistently delivering beyond expectations.
Collective Commitment - The Foundation
A strong, high-performance culture begins with a sense of collective commitment. The foundation here is trust, with the trust in place motivation, and accountability are built.
In essence, this commitment signifies that every member of the team is dedicated to achieving a common set of goals. It's not just about individual success but the shared success of the organisation or team as a whole.
Definition of Collective Commitment: Collective commitment is the dedication of every team member to the team's goals, characterised by trust, open communication, and a shared understanding of the mission and purpose. It creates a cohesive unit where members work together, rather than in silos.
The Role of Trust: Trust is the foundation of collective commitment. Without trust among team members, collective commitment becomes challenging to achieve. Trust creates an environment where individuals feel safe to share ideas, voice concerns, and collaborate openly, fundamental for effective team work. However, a consistently harmonious atmosphere within the team may indicate that team members are not yet comfortable challenging the status quo or expressing their concerns openly, rather than trust being embedded. We should therefore always look a bit deeper when we assess the trust in a team.
Motivation and Accountability: When everyone is collectively committed to a common purpose, people understand how their work really matters, motivation naturally follows. Team members are driven to excel, knowing that their contributions directly impact the shared goals. This intrinsic motivation leads to a sense of accountability, where individuals take ownership of their responsibilities and hold themselves and their peers to agreed standards.
Clear Direction - The North Star
With collective commitment in place, the next step in building a high-performance culture is setting a clear direction. A high-performance team knows where it's going, why it's going there, and how success will be measured. This clarity of purpose, goals, and metrics serves as the guiding star for the team's actions and decisions.
- Defining Purpose: The purpose is the overarching reason for the team's existence. It answers the question, "Why do we do what we do?" A well-defined purpose provides meaning and context to the team's efforts. As well as allowing for effective decision making. This part is often neglected and but by taking a little time to define and align around the purpose many future challenges and roadblocks can be instantly removed.
- Setting Goals and Objectives: Clear, specific, and measurable goals are essential for creating a roadmap to success. Goals should be challenging yet achievable, motivating team members to push their limits. The not so easy part is balancing team and individual goals and rewarding them appropriately. The organisation that allows the team goals to be appropriately rewarded will already be a step ahead.
- The Significance of Measurable Metrics: In the realm of high performance, "what gets measured gets done." Metrics provide a quantifiable way to assess progress and success. They enable the team to track performance, make data-driven decisions, and continuously improve. To learn more about how to leverage Human Insights Data read this article.
Pace - Accelerating Performance
Once collective commitment and clear direction are in place, the focus turns to the speed at which the team can move toward its goals. The pace at which a team operates is influenced by various factors, including the agreed ways of working, alignment around high-performing behaviours, the skills present within the team, and their willingness to learn.
The Relationship with Collective Commitment and Clear Direction: Pace is not a standalone element; it is interconnected with collective commitment and clear direction. When everyone is committed to a shared purpose and understands the goals, they can collectively work at a faster pace.
Defining Ways of Working and Alignment: High-performance teams have well-defined ways of working and are aligned in their approach. This alignment ensures that everyone not only knows what to do but also how to achieve it in the most efficient way.
The Importance of High-Performing Behaviours: Behaviours play a crucial role in maintaining a high-performance culture, communication, positive risk-taking, agility and resource negotiation just to mention a few.
High-performing teams consistently assess how effectively they employ these behaviours and actively invest effort in enhancing those that will have most positive impact. This commitment to self-improvement and the continuous refinement of behaviours allows the team to stay adaptable and resilient in the face of changing circumstances, ensuring they remain at the forefront of high performance.
Continuous Learning and Skill Development: The pace of a team is also influenced by the skills and knowledge of its members. Teams that prioritise learning and development are better equipped to adapt to changing circumstances and remain high-performing.
Creating Value - The Ultimate Measure
A team is only truly high-performing when it not only achieves its goals but also creates value for its stakeholders. Value creation isn't just about producing more output; it's about delivering the right output to the right people. Understanding who your stakeholders are and engaging effectively with them is a pivotal aspect of creating value.
Defining Value: Value, in this context, refers to the positive impact the team's work has on its stakeholders. It's about providing solutions that address the needs and desires of those who are affected by the team's actions.
Distinguishing Between Output and the Right Output: High-performance teams don't focus solely on quantity. They prioritise ‘the right output’ and ensure that what they produce aligns with the stakeholders' expectations and requirements.
The Role of Stakeholders: Stakeholders are the individuals, groups, or entities affected by the team's work. Understanding their perspectives, needs, and priorities is essential for creating value. Effective stakeholder engagement involves open communication and responsiveness.
In the quest for high performance, the ability to create value and align with stakeholders is a critical measure of success.
Creating and maintaining a high-performance culture is not without its challenges. Recognising and navigating these challenges is essential for the sustained success of a high-performance team or organisation. Let's explore some of the common obstacles and discuss practical solutions for overcoming them:
Resistance to Change - Staying in the Comfort Zone: Change can be unsettling, and the desire to remain in familiar territory is a common obstacle to creating a high-performance culture. People may be comfortable with the status quo and reluctant to embrace new approaches.
Solution: To address this challenge, it's crucial to foster a culture of adaptability. Encourage open dialogue about the benefits of change and how it can lead to growth and improvement. Provide training and support to help team members navigate the transition smoothly.
Individual-Based Rewards vs. Collective Recognition: If collective commitment and achievement are not recognised and rewarded, it is likely to lead to a culture where individual accomplishments are prioritised over teamwork.
Solution: Align recognition and reward systems with collective achievements. Celebrate team successes and emphasise the role each member plays in reaching common goals. Reinforce the idea that high performance is a collective effort and make time in meetings to talk about the progress made.
Leadership Actions Not Aligning with Words: Leaders who do not lead by example can erode trust and commitment within the team. If leaders don't demonstrate the high-performance behaviours they expect from their team, it can hinder progress.
Solution: The organisation should define what behaviours are valued in the organisation and how the leaders should consistently exemplify the high-performance behaviours they expect from their team. Leading by example builds trust and credibility and reinforces the commitment to a high-performance culture.
Lack of Cognitive and Demographic Diversity - The Peril of Groupthink: A lack of diversity in perspectives can lead to groupthink, where ideas are not challenged, and innovative solutions are stifled. This conformity can hinder the team's ability to find different or better solutions.
Solution: To tackle the challenge of insufficient cognitive and demographic diversity within the team, there are a few steps to consider:
1. Generate Awareness: Have you got true awareness of the existing diversity within the team? If not, create it. Demographic diversity is often more straightforward to assess, and simple psychometric tools can be employed to shed light on cognitive diversity or the absence thereof. Understanding the current diversity landscape is the first step toward improvement.
2. Encourage Diverse Viewpoints and Challenge Groupthink: Once awareness is established, the next crucial step is to encourage the sharing of diverse viewpoints and ideas. Every team member should be invited to share their unique perspective.
3. Value All Voices: In a high-performing team, it's essential that all voices are not only heard but also valued. Each team member brings a distinct set of experiences and insights to the table. Recognising and appreciating these differences fosters a culture where team members can cultivate a culture of constructive debate and challenge each other's ideas and assumptions. This can lead to more innovative solutions and a broader perspective on complex issues.
By following these steps, teams can not only acknowledge the importance of cognitive and demographic diversity but actively work to leverage it as a source of strength, innovation, and growth.
Complexity of Embedding High-Performance Behaviours: High-performance behaviours may be challenging to understand and integrate into day-to-day work. When pressure mounts, individuals may default to their previous behaviours.
Solution: Provide clear guidance and training on high-performance behaviours. Make it easy for team members to integrate these behaviours into their daily routines. Regularly reinforce the importance of these behaviours and create a supportive environment that encourages their adoption.
Reactive vs. Proactive Approach: Teams that constantly react to the current situation without considering the future may miss opportunities for improvement and growth.
Solution: Encourage a proactive mindset within the team. Foster strategic thinking and long-term planning. Make future-oriented discussions a regular part of team meetings and decision-making processes.
By acknowledging these common obstacles and implementing the provided solutions, organisations and teams can navigate the path to a high-performance culture more effectively and overcome challenges that may hinder progress.
In the pursuit of business growth, organisations and teams are constantly seeking a path to high performance. A high-performance culture is not a distant ideal; it's a tangible reality that can be cultivated, nurtured, and sustained.
The journey to high performance begins with collective commitment, underpinned by trust, and extends to establishing a clear direction, measuring progress through metrics, setting the pace with effective behaviours, and continuously creating value for stakeholders.
These principles have the potential to elevate your organisation or team from being good to being extraordinary.
However, building a high-performance culture is not without its challenges. It requires addressing resistance to change, embracing cognitive and demographic diversity, recognising and rewarding collective achievements, aligning leadership actions with words, and ensuring the integration of high-performance behaviours into everyday work. Overcoming these obstacles is the key to a resilient and enduring high-performance culture.
As the final point, a high-performance culture is not a static destination but a dynamic commitment to driving business growth through continued effort and learning. Continuously defining what success looks like and generate awareness of the current situation will help you determine the parameters that will take you there.
To learn more about how we can support you and your organisation on your journey to sustainable high performance email us now contact@i-bimp.com
26 September, 2023
In today's rapidly evolving corporate landscape, successful companies are harnessing the power of human insight data to drive transformative results.
This cutting-edge approach allows organisations to not only measure performance and productivity but also gain a deeper understanding of employee engagement and facilitate behaviour change that directly impacts business outcomes.
Let's explore the world of human insights data and its significant benefits.
Modern businesses are increasingly utilising advanced data gathering techniques and analytics to establish clear links between their actions and overall business performance. The valuable data collected through these methods is what we call "human insight data."
When used effectively, this data empowers organisations to make more informed, strategic decisions, leading to culture shifts and improved performance management, all of which contribute to growth and better business results.
By harnessing human insights data, you can ensure the success of various change initiatives, regardless of their nature—whether it's talent and workforce development, diversity and inclusion, performance management, or cultural transformations.
As the business environment continually evolves, future proofing your workforce becomes essential and factors such as remote work, diversity, storytelling, and artificial intelligence are reshaping the way we work. Human insights data can help your organisation stay ahead in these dynamic areas.
Let's look at some of the opportunities:
1. Building an Engaged and Capable Workforce
In an ever-evolving landscape, where shareholders demand faster returns and teams are consistently expected to deliver more, at higher quality, and do so with fewer resources, the challenges are compounded by unprecedented levels of wellbeing concerns. It becomes imperative for companies to prioritise continuous workforce development.
However, the nature of capability building is undergoing a profound transformation. It's not just about what employees know; it's about reshaping how work is done.
The key to future-proofing your workforce and determining the most effective approach to building the right capabilities lies in the execution of a well-defined human insight data strategy. This strategy not only ensures that your employees have the knowledge and skills they need but also enables you to understand how work is performed, providing invaluable insights into optimising the entire organisation.
2. Adapting to New Work Environments:
Human insight data plays a pivotal role in managing productivity and performance, particularly in the context of remote, in-house, or hybrid work environments. By providing high-quality data organisations can make informed decisions about their future workplace strategies, be it a return to the office, a fully remote setup, or a hybrid model.
3. Diversity, Equity & Inclusion (DEI):
The growing emphasis on DEI initiatives is backed by data that highlights the productivity benefits of diverse teams. After defining diversity and how it supports performance in the company human insights data can help uncover instances of unconscious bias, identify workplace inequalities, and assess the effectiveness of DEI training. Additionally, it aids in fostering a sense of belonging, a key driver of engagement and well-being, by leveraging real-world data to encourage the right behaviours.
4. Building Data-Driven Stories:
To gain the attention of leaders, employees, customers and consumers, it's crucial to humanise data and craft compelling narratives. These narratives should be directed at those you seek to influence, adding context to the data and helping stakeholders understand its significance. Humanising data through storytelling ensures that people not only comprehend its importance but also act upon it.
5. The Role of Artificial Intelligence:
AI is becoming increasingly pervasive in business operations. Collecting human insights data now positions companies to leverage this data for machine learning and other AI-driven initiatives in the future. Even if an organisation isn't ready to fully embrace AI, focusing on human insights data today ensures readiness for tomorrow while driving behavioural changes that enhance performance and foster business growth.
To effectively utilise human insight data, organisations should be mindful of three important factors:
Craft an Overall Data Strategy: Rather than sporadically conducting surveys, develop a comprehensive data strategy. This holistic approach prevents missed opportunities and ensures data collection not only aligns but also drives organisational goals and long term strategy.
Ask the Right Questions: Ensure survey questions are clear, concise, and relevant to the audience. Avoid combining multiple questions or making assumptions about respondents' knowledge or expectations.
Target the Right People: Focus on surveying individuals who can provide the specific information you seek. It's crucial to have a clear understanding of what you want to learn and what you want to ask before selecting participants.
Let's illustrate this point with a practical example:
Imagine a company with a sizable workforce of 25,000 employees. In an effort to gauge the level of engagement and connection employees feel toward their work, teams, and the organisation as a whole, they conducted an extensive engagement survey. One of the questions posed to employees was:
“Do you feel that you are in control of your career path and that you are progressing in both your personal and professional development at this company?”
Upon closer examination, this seemingly straightforward question actually contains three distinct inquiries. This multiplicity of questions within a single query could lead respondents to answer only one aspect of it or provide an average response, potentially resulting in data inaccuracies.
Moreover, the survey was distributed to the entire workforce, a decision that may not align with the variety of employee aspirations and experiences. Firstly, not everyone in the organisation may be pursuing career progression as their primary goal.
Secondly, employees who are relatively new to the company might not have had the opportunity to grasp how to take control of their career development or navigate personal and professional growth within the organisation. These factors can introduce inaccuracies into the responses and, consequently, steer the organisation toward change initiatives that may not address its most pressing needs.
This example underscores the importance of crafting clear, targeted survey questions and distributing them strategically among relevant groups within the organisation. Such precision not only ensures the accuracy of the data collected but also empowers the organisation to embark on meaningful and impactful change initiatives that align with the diverse aspirations and experiences of its workforce.
If you're inspired to enhance performance and drive business results using human insights data, follow these steps:
Define Your Goals: Start by clearly defining what you want to achieve and what a successful outcome looks like, whether it's developing your workforce, implementing DEI initiatives, or creating a productive hybrid work environment. Success begins with a well-defined objective that can be measured. The human insight data in this phase is collected through qualitative interviews.
Diagnose Organisational Readiness: Gauge the readiness of your organisation, including board members, the C-suite, leaders, other functions, and the workforce. Understanding their attitudes toward the change is crucial for designing an effective program that builds collective commitment for the initiative. A well-set up and executed Readiness Assessment will provide the essential human insight data you require.
Engage Your organisation: The success of the initiative depends on everyone in the organisation understanding why it's important, both for their own benefit and for the overall success of the business. Utilise data from your readiness assessment to create a compelling narrative that helps people understand and embrace the need for change.
Equip Your People: Employ lean and agile design principles based on data to identify and address obstacles. The targeted skills building need to seamlessly integrate and support the daily operations.
Embed Change: It's crucial to maintain a consistent and visible effort shared among peers and to stakeholders in order to successfully embed the change.
Progress should be measured, evaluated, and acknowledged by leaders across the organisation, as what is valued is what gets done. Achieving collective commitment and facilitating rapid iterations are key to effectively instilling behavioral change. Additionally, make sure to leverage your human insights data strategy not only for measuring progress but also to reinforce and encourage further action.
Harnessing human insight data is more than just a modern trend; it's a strategic approach that can revolutionise your organisation's performance and drive sustainable business results. By understanding the nuances of this approach and incorporating it into your corporate culture, you can lead your organisation toward a brighter future.
Get in touch to learn how we can help you build a Human Insight Data Strategy for your company, email us on contact@i-bimp.com with the subject line: Info HIDS (for faster response).
30 August, 2023
The Challenge of Change
In the ever-evolving landscape of business and organisations, change is always present. From technological advancements to shifting and sometimes volatile market dynamics, the need to adapt and transform is relentless.
As a response, organisations often embark on change initiatives with high hopes of achieving better outcomes, increased efficiency, and enhanced competitiveness. Yet, despite these aspirations, the stark reality remains that a significant number of these initiatives fail to deliver on their promises.
The reasons behind the failure of change initiatives are multifaceted and complex. However, by examining these failures closely, we can begin to uncover patterns and pinpoint areas where organisations commonly stumble. This exploration isn't just an exercise in identifying problems; it's a critical step towards finding solutions and ensuring that change initiatives deliver the intended results.
In this blog post, we will delve into the intricacies of change initiatives, specifically focusing on the people aspect of driving change and exploring the core elements that can make or break their success. Using a structured framework, we'll investigate why change initiatives fail, focusing on the crucial stages where things often falter.
We'll also offer insights and strategies to overcome these challenges, equipping you with the knowledge needed to be better prepared to navigate the complex terrain of change, leading your organisation towards a future of transformation, growth, and success.
Understanding the Change Process
There are many different models of change management, and the choice depends on the type of change your organisation aims to achieve. However, one often overlooked yet crucial element in any successful change initiative is the need for behavioural changes that people must make for the initiative to succeed.
Understanding how these behavioural changes happen is essential for comprehending why change initiatives can either thrive or falter. Let's break down the stages of the change process from this perspective:
The Behavioural Change Framework
Belief and Motivation to Change and Lead Change: Successful change starts with belief and motivation. Individuals must genuinely believe in the need for change and be motivated to take on the additional responsibility and action that will drive the required change. This starts with the leaders (senior as well as influencers) of the organisation as their commitment sets the tone for the entire organisation.
Knowing What Needs to Happen: Clarity is key. Comprehending the "what" and "how" of change involves having a well-defined vision and a clear strategy for its achievement. It starts with an accurate diagnosis, enabling specific goal-setting and the creation of a roadmap to attain these objectives in a way that connects with daily work.
Taking Consistent Actions to Embed Change: Change isn't a one-time event; it's a daily commitment. It involves consistent actions and behaviours that align with the change objectives. These actions should become ingrained in the organisation's culture, which happens when the new behaviours can be easily observed and measured.
Collective Evaluation and Measurement of Progress: Monitoring progress is essential to course correction and improvement. It means groups and teams evaluating whether they're moving in the right direction, based on defined metrics and objectives that have been identified through the early diagnosis.
Recognising and Rewarding Progress: Acknowledging and celebrating quick wins and achievements are crucial for sustaining motivation and momentum. It's not just about individual recognition but also collective appreciation for the collective effort.
Understanding these elements is fundamental. Now, let's delve deeper into how each of these aspects can either contribute to success or become stumbling blocks in change initiatives.
The Missing Link: How Change Initiatives Fail
Change initiatives are like intricate puzzles, and sometimes, a missing piece can lead to the entire picture falling apart. While the change framework provides a roadmap for success, it's essential to recognise how and why change initiatives often falter.
Here are the critical aspects where change initiatives tend to go off course:
A. Lack of Belief and Motivation
- Unclear Vision and Reason to Believe: When there isn't a clearly defined vision and a compelling reason for change, employees might wonder why they should invest their time and effort into something that appears vague or arbitrary. Supporting the change initiative with data from the early diagnosis can provide valuable insights into the purpose and direction of change.
- Inadequate Communication: When the reason for change isn't communicated in a way that resonates with employees at various levels, it can lead to uncertainty and, in some cases, resistance. Effective, consistent, and ongoing communication, supported by data, serves as the bridge connecting leadership's intentions with employee buy-in.
- Failing to acknowledge individual responses to change: People react differently to change. Some are quick to embrace it, while others require more time and information to get on board. Not recognising these individual differences can result in pockets of resistance and a lack of belief and motivation, which can undermine the entire change initiative.
B. Knowledge Gaps
- Insufficient Training and Education: When employees aren't sufficiently equipped for change they may encounter difficulties in adapting to new processes or behaviours, potentially resulting in resistance and lack of commitment for the change initiative.
- Misalignment of Skills and Change Efforts: When there's a gap between the skills that leaders and employees have and the tasks they're expected to carry out in the change process and the transformed environment, it can result in disconnection and a lack of accountability.
- Poorly Defined Goals and Strategies: Ambiguity in goals, strategies and how to prioritise the change activities can lead to confusion and lack of productivity. Without a clear roadmap, employees may not know where they're headed or how to get there.
C. Inconsistent Action
- Neglecting to Simplify the Change Process: Behavioural change requires an ongoing, integrated effort to become a part of the company's culture. To achieve this, it must be easy for everyone to understand what's required of them, how it relates to their daily tasks, and how much time it will take. Without this clarity, the perceived effort can appear overwhelming, often leading to neglect.
- Failure to Adapt and Iterate: Change initiatives should be agile and adaptable. If organisations are rigid and unwilling to modify the approach based on feedback and evolving circumstances, they risk failure.
- Lack of Collective Commitment: When teams and groups of people don't collectively commit to support the process, it can lead to individuals and teams not taking responsibility for their actions, and learning from them which ultimately hinders progress.
D. Limited Evaluation and Measurement
- Inadequate Data and Metrics: Without the right data and metrics to assess progress, organisations may be operating in the dark, unsure if they're making headway or veering off course. The data should not only assess employee performance but also align with the company's overarching direction and encourage employees to take action.
- Failure to Track Progress: Even with metrics in place, failing to regularly track and evaluate progress, both through surveys and informal engagements, means missed opportunities for adjustments and improvements.
- Ignoring Feedback: Feedback from employees and stakeholders is invaluable. Ignoring their insights and perspectives can lead to missed opportunities for course correction.
E. Recognition and Reward Shortfalls
- Neglecting Individual Contributions: Failing to acknowledge the efforts of individual employees can demotivate them and make them feel the effort is not valued or important.
- Ignoring Quick Wins and Smaller Successes: Celebrating quick wins and smaller successes is essential for maintaining motivation and commitment to the change process.
- Lack of Collective Recognition: Recognising and rewarding progress at team and organisational level fosters a sense of shared achievement and reinforces the collective effort.
Learning from Failure: How to Improve Change Initiatives
Change initiatives are complex endeavours, and while failures can be discouraging, they also offer valuable lessons. To transform these lessons into positive change, organisations must consider potential failure points at the start and address proactively.
Here are strategies and best practices to improve your change initiatives:
A. Engaging the organisation early and continuously to drive motivation for change
- Communicating the Vision Effectively: A properly structured change initiative, during the diagnosis phase, identifies the language and factors that motivate employees to embrace change. This should be mirrored in the communication led by leaders and influencers, who should display steadfast commitment to change while expressing it in a manner that caters to various employee styles and needs. A well-communicated vision serves as an inspiration and guide for the team while influencing the entire organisation.
- Leading by Example: Leaders should demonstrate the desired behaviours and actions, setting a precedent for others to follow. Their commitment to change sets the tone for the entire organisation. Leaders should establish clear definitions of these behaviours early in the change process, making sure the behaviours can be measured and observed.
- Continuous Communication: The change framework should incorporate ongoing communication, through different channels, to maintain employee commitment to the change process and to promote action and feedback.
B. Equipping employees
- Investing in Training and Skills Development: Equip employees with the essential skills and knowledge through integrated training and development programs that highlight the positive impact of the change and directly connect to their daily tasks. Ensure that they feel confident in their abilities to adapt to these changes.
- Ensuring Alignment between Skills and Change efforts: Regularly assess the skills and behaviours of your workforce to facilitate the integration of change into the company culture. Use the data to align and adjust efforts, ensuring that employees have the necessary tools and abilities to thrive in the transformed environment.
- Clearly Defining Goals and Strategies: Develop a comprehensive strategy that outlines the goals, behaviours, and key performance indicators (KPIs) for your change initiative. Transparency about the path forward empowers employees to contribute meaningfully.
C. Consistent Action Taking
- Keep it simple: Acknowledging that change initiatives add to employees' responsibilities enables the organisation to design a change programme that minimises disruption to ongoing work and makes it straightforward for individuals to consistently take action. Therefore, change efforts must be clearly prioritised and directly translated into daily practices that are easily measurable and observable. To achieve this including employees in the "how" can dramatically improve the commitment and motivation to change.
- Embracing Adaptability and Agility: Continuously ask questions and be open to adjusting your approach based on feedback and changing circumstances. Agility allows your organisation to pivot when necessary, reducing the risk of failure.
- Establishing Collective Commitment: Allowing groups and teams to determine how they will measure and report progress enables them to cultivate collective ownership for accountability, action-taking, and mutual learning in the context of the change initiative. Through regular progress reviews and recognition of efforts, without assigning blame for inaction, positive behaviours will naturally emerge to bolster the change initiative.
D. Data-driven Evaluation and Measurement
- Identifying Relevant Metrics and Data Sources: In the early diagnosis phase, identify the metrics, data points and language that align with your change objectives, and consistently gather data to evaluate progress. This data should include not only performance metrics but also behavioural aspects to provide actionable insights.
- Regularly Assessing Progress: Create a culture of continuous improvement by regularly evaluating progress and identifying areas that need attention or refinement. This should be done in a time-efficient manner, encouraging additional motivation and action-taking.
- Listening to and Acting on Feedback: Encourage open channels for feedback and actively use this feedback to inform decision-making as the change initiative progresses. Acknowledge when adjustments are needed, and make them promptly or communicate reasons for not proceeding with them. Additionally, recognise and reward when feedback is given to encourage an open environment where feedback is naturally given and received.
E. Recognition and Reward Strategies
- Acknowledging Individual Contributions: Celebrate the achievements of individual employees, recognizing not only their positive results but also their efforts and dedication to the change initiative. By rewarding effort and initiative rather than solely results, employees will be more willing to try and be open to change, enhancing collective learning and, ultimately, success.
- Celebrating Quick Wins and Small Successes: Recognising and rewarding quick wins reinforces the idea that change is not only possible but also encouraged. This boosts motivation and commitment, essential for embedding new behaviours.
- Creating a Culture of Collective Recognition: As a part of the change framework, it's important to establish mechanisms for recognising and rewarding progress at the team and organisational levels. Collective recognition underscores the significance of teamwork and shared goals, fostering a collaborative environment.
By implementing these strategies and best practices, organisations can address the common pitfalls that often lead to the failure of change initiatives. These proactive measures not only increase the chances of success but also contribute to a more resilient, adaptable, and forward-thinking organisational culture.
Embracing Change for a Thriving Future
Change is the constant in the world of business and organisations. But for many, change initiatives fall short of their goals. In this exploration, we dissected why this happens and how to succeed.
Understanding the Change Process is key, focusing on belief, motivation, knowledge, action, evaluation, and recognition as building blocks.
We identified where change initiatives often stumble: belief and motivation gaps, knowledge shortcomings, inconsistency in action, limited evaluation, and recognition issues.
To improve, organisations must engage early and continuously, and through accurate diagnosis equip their employees, maintain consistency in action, use targeted data for evaluation, and implement effective recognition and rewards.
Change isn't just about reacting; it's about seizing opportunities to create better results and have more impact through consistent high performance. By embracing change with purpose and data-driven insights, organisations can navigate the ever-changing landscape successfully and thrive in a dynamic world.
If you would like to know more about how you can use data-driven insights to drive positive behavioural change that enables consistent high performance in your organisation email us at contact@i-bimp.com
As an entrepreneur or small business owner, one of the biggest challenges you face is balancing investing in your business with rewarding yourself for your hard work. It can be tempting to keep reinvesting profits into the business, but if you're not paying yourself what you want, it can be demotivating and unsustainable in the long run. That's why it's important to identify and remove money leaks in your business.
Money leaks are expenses that don't contribute to your bottom line and eat away at your profits. They may seem small at first, but they can add up quickly and have a significant impact on your finances.
By regularly assessing your expenses and removing money leaks, you can increase your profits and have more money to use for growth and to pay yourself a higher salary.
So, how do you find and get rid of these money leaks? The first step is to review your transactions from the last quarter and categorise them into three groups: essential expenses (green), expenses that deliver a positive return (yellow), and expenses that don't contribute to your bottom line (red).
Green expenses are crucial for the smooth functioning of your business. These are the expenses that you simply cannot do without - platforms essential to deliver your services, tools required to fulfil your offers, utilities, and payroll.
These are the expenses that keep your business operational, and without them, your business may come to a halt. Identifying and categorising these expenses will give you a clear understanding of your essential expenses and help you make informed decisions on how to allocate your resources.
Yellow expenses are the ones that deliver a positive return, either in the form of time or money. For example, a scheduling tool that saves you time every week would be considered a yellow expense.
Red expenses are the ones that don't contribute to your bottom line and should be reconsidered. Challenge yourself on each one and ask whether it's really necessary for your business. If it's not essential and it's not bringing you any positive return, then get rid of it!
By regularly reviewing your expenses and cutting unnecessary costs, you can save money in your business and increase your profits.
It's also important to mark in your calendar when green and yellow expenses are up for renewal and negotiate a better deal. This will help you stay on top of your numbers and ensure that you're always running a profitable business.
It's essential to challenge yourself and ask whether each expense is really necessary for your business. Remember, anything that doesn't bring a positive return should be reconsidered. By doing this, you can increase your profits, have more money to invest in your business or pay yourself a higher salary, and create an always profitable business that has an even greater impact.
In conclusion, identifying and removing money leaks is an essential step for entrepreneurs and small business owners who want to increase their profits and pay themselves what they want.
By regularly reviewing your expenses, cutting unnecessary costs, and negotiating better deals, you can save money in your business and set it up for long-term growth and success..
So, what are you waiting for? Start reviewing your expenses today and see the impact it can have on your bottom line!
Join our free workshop on 11th May at 9am EST / 2pm UK.
Scaling a business is an exciting and rewarding journey for entrepreneurs and small business owners. However, it can also be a time-consuming and demanding process, often requiring significant personal effort.
Many business owners find themselves working long hours, sacrificing personal time, and neglecting their own paychecks in the pursuit of growth.
But what if it were possible to scale your business without sacrificing more of your time and yourself? What if you could start consistently paying yourself while also growing your business? In this post, we'll explore strategies and habits that can help you scale your business while prioritising your own financial goals and living the lifestyle you envisioned for yourself and your family.
We'll discuss 5 profit-driving habits and by the end of this post, you'll have a roadmap for scaling your business while staying true to your values and priorities.
Habit 1: Healthy financial tracking and management
As an entrepreneur or small business owner, it is crucial to develop a habit of regular financial tracking and management.
By setting aside a fixed time every other week or once a month, business owners can go through their finances, pay their invoices, and allocate their profits effectively. This not only saves time but also helps to identify and address potential cash flow problems early on.
As part of the financial management routine, it's also important to review expenses regularly, identify and plug any leaks, and manage cash flow effectively by negotiating with vendors and suppliers, cutting unnecessary expenses, and maintaining a cash reserve.
To simplify financial management, business owners can leverage user-friendly accounting software, expense trackers, and budgeting tools that provide a clear picture of their financial health.
Even for businesses with irregular income, creating a budget is possible by estimating income and expenses based on historical data or industry benchmarks, prioritising expenses, and allocating funds based on business goals and priorities.
Habit 2: Boost Your Business Success with Productivity and Time Management Habits
To achieve business success, it's not just important to manage finances but also to develop habits for productivity and time management. Effective time management can help entrepreneurs and small business owners set priorities, increase revenue, and achieve their business goals without working unreasonable hours.
To stay focused and avoid distractions, business owners can adopt strategies such as time-blocking, delegating tasks, and minimising interruptions. Prioritising the most important tasks and using the most productive time of the day to complete them can help ensure their completion.
Maximising energy levels and minimising time wasted on low-priority tasks can also boost productivity. Business owners can begin the week by identifying their top three most important activities, which can help them stay focused and avoid getting sidetracked by less important tasks.
Other productivity tips include taking breaks, practising self-care, and utilising productivity tools such as task management apps, time trackers, and email management software.
By developing regular habits for tracking their own and their team's productivity and time management, business owners can increase efficiency, achieve business success, and free up more time for personal pursuits.
Habit 3: Maximising Profitability through Assessment of Marketing Efforts
Developing strong habits for assessing marketing efforts is crucial to achieve sustainable growth in your business. By conducting regular check-ins with your ideal customer, you can gain a deeper understanding of their evolving needs and anticipate future opportunities, which not only ensures good business practices but also drives profitability.
This habit can help you identify areas where you can improve your marketing strategy, tailor your products or services to better meet the needs of your customers, and stay ahead of your competitors.
Another profit-driving habit is to regularly assess the performance of all marketing activities to ensure they are generating a good return on investment. This assessment can also identify opportunities to streamline marketing efforts, increase their effectiveness, and ultimately drive revenue growth.
Overall, developing strong habits for assessing and streamlining marketing efforts is an essential step to achieve increased profitability and long-term success in your business.
Habit 4: Regularly rank your product from most profitable to least
Regularly ranking your products from most profitable to least is a crucial habit that can help you identify opportunities to increase profitability and make informed business decisions on where to focus your efforts to best to scale your business.
By analysing your product portfolio and understanding which products generate the most revenue and profit, you can focus your resources on the products that are driving your business and identify areas for improvement in your product offerings.
Additionally, by identifying which products are least profitable, you can make data-driven decisions to discontinue or reposition these products, freeing up resources to invest in higher-profit products or new opportunities.
This habit can also help you identify cross-selling and upselling opportunities, allowing you to maximise revenue and profit potential across your product portfolio.
Regularly ranking your products from most profitable to least can help you stay competitive in your industry and make strategic decisions to drive growth and profitability in your business.
Habit 5: Continuously Growing Yourself as a business leader
As an entrepreneur or small business owner, developing personal and professional growth habits is crucial to scaling your business without sacrificing more of your time and yourself.
You need to recognise that what makes you an effective leader at one stage of your business may not be sufficient for the next.
Therefore, creating a habit of asking for feedback on your leadership style from team members, suppliers, and customers can help you uncover potential blind spots and address them early.
Understanding your natural work preferences can also help you build a team that complements your strengths and enables you to work in your zone of genius, enabling business growth and increased profits.
Moreover, it's crucial to set boundaries for yourself, particularly during growth phases. While it's okay to work more for a limited period, establishing limits on how long it continues can help you build a successful business while still achieving the lifestyle you envision for yourself and your family.
By implementing these habits, you can ensure you are not only growing your business but also growing as the leader your business needs and the person you want to be.
Habit 6: Regularly Tracking Performance for Sustainable Growth
Regularly tracking performance is crucial to ensuring that your business stays on track and continues to grow. One effective way to do this is to develop a tracking template that helps you measure your performance across different areas of your business, such as products, people, and processes.
This template can help you quickly identify when things start to slide, and take corrective action before it's too late. To get started, identify key metrics for each area of your business that you want to track, such as sales numbers, employee performance, or process efficiency.
Then, establish a regular schedule for tracking these metrics, and use the data you collect to identify areas where you can improve.
By creating a habit of regularly tracking performance across your business, you can stay on top of your operations and continue to drive profitability and growth.
Conclusion
In conclusion, scaling a business is a challenging process that requires significant personal effort. However, it is possible to scale a business while prioritising personal financial goals and lifestyle.
Developing habits like healthy financial tracking and management, boosting productivity and time management, maximising profitability through assessment of marketing efforts, regularly ranking products from most profitable to least, and continuously growing as a business leader can help entrepreneurs achieve their goals without sacrificing more of their time and themselves.
By incorporating these habits into their daily routines, business owners can drive revenue growth, increase efficiency, and achieve sustainable success while staying true to their values and priorities.
Our profit-driving coaching program, Profit Mastery, is designed to help entrepreneurs and small business owners master these essential habits that are required for success.
We go beyond that by also helping them implement systems that ensure a consistently profitable business, allowing them to pay themselves the salary they need to support the lifestyle they envisioned for themselves and their families.
If you're ready to take your business to the next level, learn more about Profit Mastery and how it can benefit you by clicking here.
Implement Profit First in your business, and do it the right way. Download your free pdf templated to start now.
11 April, 2023
Whether you're a budding entrepreneur or an experienced business owner, it can be challenging to make sure that your venture is consistently profitable.
However, with the right approach and attitude in place; generating profit while achieving maximum impact could become more obtainable than ever before!
In this blog post we'll equip you with a key approach to get started on creating success for yourself and your business.
Business profit is important for a number of reasons.
First, it is a measure of the health of your business. If your business is profitable, it means that you are generating more revenue than you are spending. This is a good indicator that your business is doing well and has potential for future growth.
Second, profitability shows your potential for growth. If your business is profitable, you can reinvest those profits back into the business to help it grow. This can include hiring new employees, expanding your product line, or opening new locations.
Finally, profitability provides you and other shareholders with a good return on investment. If your business is profitable, it means that you are making money for your shareholders. This is a good way to attract new investors and keep existing investors happy.
Business profit grows businesses and keeps them healthy in the long term. It should be a key metric that all businesses strive to achieve.
One of the best ways to ensure that your business remains profitable is to use what is known as a "profit first" approach.
This means that, instead of waiting until the end of the quarter or year to see how much profit your business has generated, you set aside a specific percentage of each sale as profit.
The profit first system also allocates money for your income, taxes and then manages your costs around that.
With this approach, not only will you as the owner reap the rewards of financial security and stability but also create a prosperous enterprise that has far-reaching positive impacts.
Let’s start with profit. If you are at an early stage with your business, 5% profit is a good target. For more established businesses this should be somewhere between 10-15%. If you are not there yet, not to worry, just start by allocating one percent and then increase every quarter until you reach your target.
Additionally, if the profit is going towards paying yourself directly as an owner/creator, aim for 45-55%, and make allocations from each sale accordingly.
Having an idea in mind about how much money you want to make monthly allows you to build steps towards achieving that income goal with a Profit First system.
In addition to setting aside money for profit and owners income, it is also important to set aside funds for taxes. This can be difficult to do, but it is essential if you want to keep your business running smoothly.
The profit systems recommend saving 15% of your business income for taxes. One way to make this easier is to think of taxes as money that was never yours in the first place. This will help you to set the funds aside without feeling like you are sacrificing too much of your hard-earned income.
Managing your costs around your profits
Now when you have the money you need for your pay, profit and taxes it’s time to see what’s left – this is what you have to cover your costs with.
The profit first system recommends your total costs to be no more than 30-40%, if your revenue is below 500k annually.
If you haven’t paid much attention to this there may be an uneven equation but not to worry.
Start by removing your money leaks. These are expenses that are not essential for business operations or generating a positive return, things like subscriptions and other small outgoings and can quite start adding up if left unchecked!
After you cleaned up your costs there may still be a gap. This may feel a bit concerning but trust me, this is a good level of awareness that far too many business owners miss, so you’re already ahead of the game.
If that’s the case, book a call with a trusted business partner, coach or someone else who can help you come up with the right ideas to close the gap, it may be as simple as adjusting your prices, or looking at your marketing ROI.
Good profitable housekeeping
Now when we talk about setting aside profits, owners pay, taxes and expenses from each sale, doesn’t mean we practically do it. But a good house keeping rule is to go through your numbers twice per month. That is when you do your allocation, check over your costs and accounts.
Creating separate accounts is another tip, this will allow you to keep the money out of sight and ensure you always have what you need for taxes and as well as for your pay and profits.
Your unique Profit Plan
By following these simple tips, you can ensure that your business is always profitable and that you are getting the income you need and want.
If you would like a template to get started you can download our Free Profit Plan Template here.
Do not hesitate to contact us if you need help getting started or if you have any questions. We would be happy to assist you!
Easily calculate how much you should pay yourself from your current revenue and see what revenue you need to reach your desired salary.
11 April, 2023
Are you a small business owner or entrepreneur generating reliable revenue but struggling to pay yourself what you deserve? If so, don't overlook the importance of knowing your numbers.
Amidst the daily hustle and bustle of running your business, it's easy to forget the financial side of things. But understanding these seven key numbers can help you make informed decisions that will ultimately build a successful and sustainable business - without sacrificing more time or yourself.
1. Net Income
This is perhaps the most obvious number that you need to be aware of in your business. Simply put, net income is your total revenue minus your total expenses.
This number gives you a good overview of whether your business is making or losing money and by how much.
To calculate net income, you simply take all the income to the business over a period of time and then take away all the expenses the business had over the same period of time.
If you are not tracking this at least monthly, now is a good time to start.
2. Net Profit Margin
Net profit margin is a crucial metric that provides deeper insights into your business's profitability than just net income alone. It reveals how much profit you are generating for every dollar earned.
This is calculated by dividing net income by total revenue. For instance, if your net income for the month is $30,000 and total revenue is $100,000, your net profit margin would be 30%. Ideally, you want to achieve a high net profit margin, with a target of around 45% if your revenue has not yet reached $1 million.
This implies that 45% of your income should be allocated to profits and owners' pay. To improve your net profit margin, you can focus on increasing revenue or reducing expenses, or a combination of both.
3. Overall Costs
Effective cost management is an essential component of running a successful business, and it requires close monitoring of both fixed and variable costs.
Fixed costs refer to expenses that remain relatively stable, such as rent, salaries, and utilities, while variable costs are expenses that vary depending on the level of business activity, such as materials and labour costs.
By closely monitoring your costs, you can identify areas where you can reduce expenses and improve your profits without compromising on the quality of your products or services.
4. Product Performance Indicator
The product performance indicator will tell you how well your products or services are performing as well as how they support future growth.
It’s calculated by multiplying the product’s profit margin with scalability and effort. It is easy to forget about scalability and effort when assessing products but these are really important to see to understand the real performance and fit in your business.
This number is important because it can help you to identify which products or services are selling well and which ones aren’t. If you see that certain items have a low PPI, it might be time to reevaluate their place in your product line-up.
On the other hand, if you have a high PPI, it could mean that you’re leaving money on the table by not charging enough for your products or services.
5. Revenue per employee
Essentially, revenue per employee measures how much money each employee generates for the company. It is ideal for a company to aim for the highest revenue per employee ratio possible because a higher ratio indicates higher productivity, which often means more profits.
So look at where you are with this today and aim to increase this every quarter - achieving this will be a good indicator that you hire for growth and that you are increasing productivity in the team.
6. Cash Reserve Ratio
Another important number to be aware of in your business is cash reserve ratio. This will indicate how many months your business will be able to cover its costs.
Having a strong cash reserve ratio is important because it gives you the flexibility to cover unexpected expenses or take advantage of opportunities as they arise.
If your cash reserve (liquidity) ratio is low, it is time to start building it up. A profit plan will help you get started, you can download a free template here.
7. Cash-Flow
In order to grow your business, you need a strong cash-flow. This means that the money coming in needs be greater or at least on par with what's going out - it can't just work one way!
Businesses can improve their cash flow in a variety of ways, including reducing inventory, reducing customer payment terms, and managing costs better.
If you don't manage your cash flow, you might go out of business simply after one bump in the road, so do make sure you stay on top of this regardless of what stage your business is at.
Conclusion
These seven will give you a good snapshot of how your business is performing. Knowing and understanding these numbers will help you make better decisions about where to focus your time and energy as you continue to grow your company.
What number do you find the most challenging to track and why?
Hanna Girling is the founder of i-BIMP- When she’s not serving her clients, she loves spending time outdoors with her family and friends, as well as training for the Swedish traditional cross-country skiing race - Vasaloppet, not the easiest challenge living in country without snow.
