Experiences in change management
Profit Blog
Jarmo Manninen & Muutosdraiveri Oy
When change is managed the right way at the right time, it is always a possibility. In my blog I write about a business's change management from multiple angles. If any questions arise, I would be happy to answer them!
When a company first encounters a situation where the company's cumulative profitability targets are not being met, the company should use its own resources to create a concrete action plan of corrective measures and implement it in such a way that the company will achieve the company's cumulative profitability targets within the specified timeframe. If the company is unable to achieve the company's cumulative profitability targets within the specified timeframe, the company should seek the right kind of external expertise with the right kind of agreement to remedy the situation. When profitability problems are detected in companies, companies typically either convince themselves that the profitability figures will improve in the future without any concrete grounds, or they invent external causes that will fix the company's profitability problems on their own. Time itself does not fix a company's profitability problems, and they do not fix them on their own. A company's profitability problems can only be corrected by taking the right corrective action and in the right way. Too often, companies that are unable to achieve their cumulative profitability goals think that external help cannot be used because it causes additional costs for a company that is already struggling with payment difficulties. This is definitely the wrong way of thinking. It is worth remembering that every moment that is lost in correcting a company's profitability problems often costs the company many times more money in lost profits than what it costs to use an external expert. When a company acquires the right external help to solve profitability problems, the changes it produces can help the company achieve concrete, measurable performance improvements many times over the costs that using an expert would cost the company. When choosing an external expert, creating credible performance effects is much more important than the images of the expert's abilities that arise from the expert's statements. The expert used by the company must be able to promise and guarantee that he or she can find change measures with measurable results that will help the company fix its profitability problems. If the expert cannot responsibly promise this, then the company should not use such an expert. Did the above things make you think? I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
In my opinion, the basis of a company's business should be that everyone in the company must do their job and fulfill their responsibilities in the company so that the company's goals are always achieved. If a person's best effort is not enough, then they must be able to do better, either on their own or with the advice of someone else. If a person's own abilities are not enough to achieve their goals, then everyone is obliged to ask for help from their superior. In turn, the superior must always be obliged to either help in the situation in question, either by helping themselves or by arranging help. It is not enough that everyone has the right to ask for help from their superior in a situation where doing their best is not enough, but everyone also has the obligation to use this right without unnecessary delay. In this case too, wasting time will not fix the problem; rather, wasting time unnecessarily multiplies the problem. In well-functioning companies, a person can always ask for help from their colleagues if necessary. The idea behind helping someone is not that the helper's job is to do the work for the person being helped. The idea is that with the help of the helper, the person being helped learns from the help they receive so that they can achieve their goals after this situation without the helper. By doing this, the latent abilities and creative ability of people to find new solutions are put to use, which has proven to be a very significant potential in my experience. In order to achieve this in a company, the company's work culture must be able to be developed to be positive and encouraging, and such that problem situations are not hidden in the company, but rather they dare to bring them up as soon as they arise. If every person in a company only did their best at work and no one ever wanted to or was able to exceed their best, then the development of the company's business would stop sooner or later, depending on the case. A company should always have a sufficient number of people working in it who are ready to push their limits, who are able to surpass their own previous best, and with whose contribution the company can develop sufficiently to continuously achieve its performance goals. Did the above things make you think? I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
A company's work culture tells you how the company operates. In other words, a company's work culture tells you about the ways of operating in the company. A good work culture promotes the commitment, motivation, productivity, job satisfaction and well-being of the company's people, while a bad work culture typically leads to dissatisfaction, high turnover and poor performance. I have visited hundreds of companies. When you walk through the door of a company and observe the activities in the company for a moment, this already gives you the first impression of what kind of work culture the company has. When I visit companies, I have always asked: What kind of work culture do you have here in the company? The answers to this question have typically been very consistent, that we have a good work culture. When I have then asked: What does this mean in practice? The contents of the answers to this question have typically been very different depending on who I have asked. When I have next asked: Has the company drawn up written work culture rules according to which every person in the company must act? The typical answer has been that they are not needed. The justification has been that everyone in the company knows how to act in the company. I have not asked my questions further than this, because the answers I have already received have shown that the perceptions of the content of the company's work culture in practice are very different. Every company should jointly draw up written rules for the company's work culture. In my opinion, the key questions that should be answered in the rules are, among others: 1. How is leadership implemented in the company? 2. How is communication implemented in the company? 3. How do people behave in the company and how do they not behave in the company? 4. How do people collaborate in the company? 5. How do people work in the company and how do people not work in the company? 6. How do people act in exceptional situations in the company? 7. How do people act in the company if the rules are broken? Every company is unique and therefore every company should draw up individual rules for the work culture and train every person in the company to understand their content in practice. Did the above things make you think? I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
The aim of everything a company does must be to generate monetary value for the company in accordance with its objectives. This, of course, requires that the company is able to deliver products and services to its customers at a price that the customers are willing to pay for them. Every person in the company must be able to generate monetary value for the company at least as much as the costs they cause to the company. Preferably more. When a person generates monetary value for the company as much as the costs they cause to the company, then in my opinion the amount of salary paid to the person should be equated with that, or correlated. When a person is able to generate monetary value for the company more than the costs they cause to the company, then part of this monetary value exceeding the costs caused by the person belongs to the person as an incentive. In Finland, salary discussions are too focused on the salary increase demands defined by the trade unions. Trade unions do not pay salaries to the company's employees, but companies according to what the companies can afford to pay in salaries. In my opinion, this is not the core of the problem, but rather the fact that companies in Finland do not make the kind of profit they could make. This is because the financial management of companies in Finland is not at such a level that every person in the company is genuinely and fully responsible for the profit of their company and that every person is genuinely and fully involved in both making and developing the profit of their company. There is still a long way to go in Finland to achieve this goal. Incentives and commitment opportunities paid to company employees are excellent ways to help achieve the above goal. Companies in Finland know how to use incentive payments to some extent, but not well enough or extensively enough. I have not met a single company in Finland that knows how to use the commitment opportunities of employees comprehensively and correctly. Excellent possibilities for committing employees in a company are: 1. Directed share issue to an individual. 2. Transaction between the company's owners and an individual. 3. Subscription and purchase price as debt. 4. Options. Did the above make you think? I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
What is meant by the utilization rate of a person? In general, the utilization rate refers to the part of the production capacity or other capacity that is currently in use. By monitoring the utilization rate of a company's personnel, the company can obtain useful information about how the company's personnel are being used. The utilization rate is often calculated so that during the monitoring period, the resource utilization rate is the working time used by the resource to perform work per the working time available for the resource to perform work. However, everything that is done in a company must aim to produce a result. This means that each resource in the company must do as much and as valuable work as possible, for which the customer is willing to pay the invoice. For this reason, in these blog posts and in the books I have written, the utilization rate monitors the working time used by the company's resources for billable work, and not the working time used by the resource to perform work in relation to the time available for the person to perform work. The price and amount of work that a person can invoice for is monitored by the monetary value that the person generates for the company, as I explained in my previous blog post. It is worth remembering that from the perspective of the company's results, all work done in the company that cannot be invoiced to customers is a cost in the company's results. What is meant by a person's workload? A company's person's workload refers to the ratio of a person's workload to the time available. It measures how much an employee is employed in relation to their working hours. Especially in companies that do not achieve their financial goals, the company's personnel utilization rate is low and the workload is high. This is because the conditions for financial management in these companies have not been put in place and therefore financial management in these companies cannot be implemented in the right way. Did the above things make you think? I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
From a financial perspective, the company's sole task is to achieve defined performance targets continuously. When it comes to producing a person, it means only monetary value in this context. There are two basic questions related to the financial management of a company. Question 1: What monetary value can each person in the company produce for the company? Question 2: How much monetary value can each person produce for the company? In answer to question 1, here are a few examples, each of which directly affects the company's results: 1. A person can produce additional sales. 2. A person can produce margin as added value. 3. A person can produce margin as added value. 4. A person can reduce the company's costs. 5. A person can raise prices. 6. A person can produce margin for the company as an "In-house service". 7. A person can produce value specified in the order. 8. A person can produce added value in the execution of the order. 9. A person can increase the utilization rate. 10. A person can increase efficiency. 11. A person can produce calculated value related to the company's results. 12. And so on. For each of these means that affect the company's results, a metric must be defined, a target value for the metric and a schedule for achieving the goal. Unfortunately, in too many companies, both in Finland and abroad, generating monetary value for each person in the company is not yet part of the company's financial management. This is one of the main reasons why so many companies in Finland are unable to consistently achieve their results targets. On the other hand, this is an excellent opportunity to positively differentiate themselves in the market. The answers to questions 1 and 2 must be defined company-specifically. Did the above things spark your thoughts? I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
Of course, forecasting a company's profit should be based on the most reliable, credible and concrete data possible. However, when it comes to forecasts, my follow-up question is: What is this data? The following is a list of the sources of information for company profit forecasts, based on my experience, in order of importance: 1. The company's order book. 2. Information received from the company's customers. 3. The company's offer book. 4. The impact on the results of implementing the change measures in the company's action plans. 5. The impact on the results of implementing plans made based on the company's strategy. 6. Other company-specific data sources, such as data from the company and its people's networks or other data sources. If forecasting a company's profit figures is based on making forecasts based on the actual figures in the company's external accounting profit statement, then this seems to me to be completely useless and not worth spending the company's resources on. In my opinion, this is done purely on the basis of assumptions and guesses. In addition, the company's profit forecasts made in this way are often overly optimistic and based on unfounded beliefs. When the company's profit forecasts made in this way do not come true, the situation is tried to be fixed with explanations produced by the imagination without any concrete basis. I hope that what I have said above is not true in your company. Did the things presented above arouse thoughts in you? I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
When I started working in loss-making companies during my career as a change manager that lasted over 30 years, either as a CEO or a management consultant, the initial situation in the companies has typically been as follows: 1. The company's financial management conditions have not been in order. 2. The company's financial administration has focused on invoicing, paying invoices, calculating and paying salaries, and preparing the company's accounting. The company's financial administration has regularly produced the company's operational management with the company's income statement and balance sheet. In practice, the company's financial administration has only maintained contact with the company's operational activities to the extent that it has been mandatory. The company's financial administration has not understood the company's business, but has lived its own almost isolated life without producing any development proposals on how the company's financial administration could, through its own actions, help the company's operational management achieve the company's financial goals. 3. The company's operational management has focused on preparing the company's budget proposals, which have been approved by the company's board of directors, and after that the company's management has focused on reporting to the company's board of directors on the company's business results using the company's income statement and balance sheet. Reporting has taken place by inventing explanations without knowing the exact reasons for the companies' financial problems and without any concrete action plans to solve the company's financial problems. The company's operational management has lived its own life, almost separate from the company's financial management and other operational activities. 4. The company's operational activities have lived their own life, almost isolated from all other activities of the company, with the exception of communication between sales and production. In practical work, all of the above means that in these companies, the company has operated in such a way that the company's operations have been guided and managed by occasional needs to fulfill promises made to customers. In this way of operating, the company's operations have been guided and led impulsively by individual momentary needs. It is quite clear that a company's operations should always be guided by the promises made to its customers, but in addition, a company's operations should always be guided by a systematic approach aimed at continuously achieving the company's goals. Did the above make you think? I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
If the company's financial management conditions have not been put in place, this means in particular the following: 1. The company does not know how well or poorly the products and services sold by the company are profitable. 2. No performance targets have been defined for all the resources invested in by the company, i.e. people and machines, and their implementation cannot be managed in the right way. 3. No operational efficiency targets have been defined for all the resources invested in by the company, i.e. people and machines, and their implementation cannot be managed in the right way. 4. No capacity utilization targets have been defined for all the resources invested in by the company, i.e. people and machines, and their implementation cannot be managed in the right way. The prices of the products and services sold by the company must be determined based on their market, market situation and strategic importance in achieving the company's profitability objectives. For this reason, the company must define the company's profitability objectives by product and service. If a company does not know how well the company has achieved its profitability targets by product and service, then it also does not know how much the company needs to be able to develop its product-specific and service-specific profitability in order to achieve the company's profitability targets. If the issues I have presented above have not been put in place and kept under control in the company, it means that the pricing and operations of the company's products and services are based on assumptions and guesses. In practice, this means that it is only a matter of time before the company first runs into profitability problems in the market, then payment difficulties and finally bankruptcy. This can be prevented when the company's financial management conditions have been put in place and are kept in good condition. Did the issues present above spark thoughts in you? I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen
Rolling budgeting is a budgeting method in which the budget is updated regularly, such as monthly or quarterly. This means that the budget is not static, i.e., annual, but is constantly reviewed and updated to reflect changing circumstances and forecasts. The advantages of rolling budgeting are often cited as: 1. Flexibility: The budget is updated regularly, which allows for quick response to changes and the exploitation of new opportunities. 2. Timeliness: Because the budget is reviewed frequently, it always remains up-to-date and better reflects current circumstances. 3. Better predictability: Regular updates help improve the accuracy of forecasts and reduce uncertainty. 4. Improved decision-making: An up-to-date budget provides a better basis for decision-making and strategic planning. I completely disagree with the above-mentioned benefits of rolling budgeting. Here are my reasons for disagreeing with each of the above-mentioned benefits: 1. Flexibility: Budget targets should not be flexible, but all of the company's operations should be flexible so that the budget targets are met. Budgeting by financial period does not prevent you from reacting quickly to changing needs. New opportunities can also be utilized in budgeting by financial period. 2. Timeliness: The budget should not be changed according to the results of the results. If budget targets are always changing, the efficiency of the company's resources and the capacity utilization rate do not have to be high. 3. Better predictability: Predictability does not improve by constantly changing the forecast. Constantly changing forecasts shows that the basis for the forecasts is wrong. 4. Improved decision-making: Decision-making is not improved by constantly changing the budget. In fiscal year-specific budgeting, the results achieved must be compared with the budget targets at regular intervals, e.g. in two-week periods or monthly, and any deviations must be reported. The reporting of the company's financial management results must be at such a level that the root causes of deviations can be identified from the reporting and the right corrective measures can be taken based on them. Rolling budgeting requires much more resources for administration and technology than fiscal year-specific budgeting, which unnecessarily increases financial management costs. As you have probably noticed from the text above, I am definitely a supporter of fiscal year-specific budgeting. I encourage you to share this blog post of mine on social media. If you have any suggestions for the topics of the next blog posts, I will gladly accept them. I hope that you were interested in this matter and that you can continue to be involved. I have written four books on creating the conditions for the company's financial management, and they are available in well-stocked bookstores and online bookstores in Finland, for example from BoD (Books On Demand) at: https://kirjakauppa.bod.fi/catalogsearch/result/?q=jarmo+manninen