How would your organisation be different if everyone knew the organisation’s finances in detail? In this two-minute video, Pim de Morre explains what happened in a cookie factory when the Director explained the costs that went into producing each bag and why he couldn’t give staff payrises.
Speaking at the 2017 Happy Workplaces CEO Conference, Pim explained that the Director of the cookie factory was frustrated by all the requests for payrises, and so decided to go through all of the costs involved in each bag of cookies they sold. This gave the team a much better understanding of the costs involved at the company, and meant that everyone could contribute ideas to reduce these.
“The interesting thing is that people were not put on a training programme for Lean or any other methodology, but they themselves thought that they wanted to decrease this waste and asked how do we do that? Because if we do that, then we could increase our salary levels.
“All of a sudden people were really engaged and involved in running the organisation, simply because they understood what was going on financially; and this is something we see in a lot of organisations.”
Resources and related content
- Open salaries at Piscines Ideales, a blog by Henry Stewart
- How to Run a Maxist Business within Capitalism – a talk by Simon Biltcliffe from the 2017 Happy Workplaces CEO Conference, who talks about their policy of trust and being open about company finances with staff
- Is it time to move beyond budgets?, the concept of Beyond Budgeting, a blog by Henry Stewart. Do you want your people spending because it’s in the budget, or fits the rules, or because they have used their best judgement and think it’s the right thing to do?
Another interesting thing is, as we discussed before, people often don’t know the basic financials of an organisation. We went to a cookie factory where they also increased transparency. Why? Because the Director became really frustrated with how employees constantly came up to him to ask for pay rises. This might sound familiar to you as well, but he said, “We simply cannot do it.” People then went back frustrated that they couldn’t get a pay rise when they thought they made a lot of money as an organisation, so why can’t they spend more on salary?
After having heard these complaints for a long time, what he did was he said, “well maybe I have to explain to them the financial situation we are in.” So he made it very simple, he drew this big package of cookies and showed them, saying nowadays they sell these cookies for €2, and this is the cost we spend on marketing, on production, on raw materials, on salary levels, and he built up the entire cost of this package of cookies and he said, “There are two things we can do to increase your salary levels. We can either raise the price of the cookies, but we probably won’t sell enough anymore. Or, we can play around with any of the other costs we have, become more efficient in the way we work, and then we can increase your salary levels.”
All of a sudden, people understood what was going on and they saw for example, the cost of waste in the production process, and they started focusing on how they could eliminate waste as much as possible. So the interesting thing is that people were not put on training for lean or any other methodology – they themselves thought they wanted to decrease this waste and worked out how they could do that, because if they did that they would increase their salary. So people became really engaged and involved in running the organisation, simply because they understood what was going on financially, and this is something we see in a lot of organisations.
Joost, Pim, and Freek Ronner, known as “The Corporate Rebels” to their readers, are on a mission to make work more fun. They quit their boring jobs to find a solution to a widespread problem: 87% of all employees are disengaged at work.
They have travelled the world to learn from workplace pioneers by checking off their renowned Bucket List of the most innovative organisations on the planet. They will share what they have learnt from these unique workplaces, to help others create more progressive, inspiring work cultures. The Corporate Rebels have been nominated for the Thinkers50 Breakthrough Award.
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Happy's next event is Creating Happy, Productive Social Enterprises on 20th September at Happy's training centre in Aldgate, London. This joint seminar hosted jointly by Happy and E3M and is for leaders and senior team members in social enterprises. You will hear from inspiring leaders: Jonathan Bland of Social Business International; Henry Stewart of Happy; June O'Sullivan MBE of London Early Years Foundation; Brendan O'Keefe of Epic CIC; Liz Mouland of First Community Health and Care CIC; and Scott Darraugh of Social adVentures. Visit the event page for full details and the agenda for the day, and to book your ticket.