How We Got Everyone Focused on Cash Flow

Source: The New York Times
Date: 03/09/2010
Author: Jack Stack

In my last post I talked about how, every year, we pick a critical number or ratio to improve. This year, we’re focusing on cash flow. The idea is to pick a metric that we’ve been doing poorly on, compared with our competition, and turn it around. We do that by tying everyone’s bonus plan to our performance.

We set up the plan in such a way as to allow people to receive a portion of their bonus each quarter. By doing this, we provide both motivation and instant gratification. Most programs are designed to just pay out the bonus when the company closes it books for the year. The problem with that approach is that people wait until the third or fourth quarter to start making changes because that’s when they begin to think about getting their bonus. It’s human nature to put things off until something gets close. We found a way around that.

Read more to find out the ‘way’ we found >

JRI Consulting, LLC