Do you have critical number sense?

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Published on July 16, 2016 with No Comments

Pick a number. But not any number. Pick your critical number and try to improve it. In any given scenario a critical number could be anything but in business the critical number is a number that represents the company’s weak point. Find that number and focus on improving it. So says Jack Stack, CEO of SRC holdings, a company that works with Original Equipment Manufacturers on a wide range of products. Improving your critical number is best accomplished with Stack’s signature, “Open Book Management” style where all employees are called upon to direct their time and efforts toward the selected goal. Continuous improvement of the critical number is the key to long term sustainability and prosperity.
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Your critical number could be anything from, your debt-to-equity ratio, sales-per-employee, inventory turnover, billable hours or cash flow. If it’s not where you’d like it to be, Stack recommends you set a goal and harness the power of your employees. Their compensation and job security depends on it. At SRC employees receive bonuses for reaching and exceeding the goals. But instead of a large end of fiscal year bonus, the company gives mini bonuses each quarter. Say ten percent in the first quarter then twenty percent the next. This levels out the work so employees are less likely to slack off early on then go for the mad scramble to reach goals at the end of the year.
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Like IDQ and KFC, SRC is a contraction of Springfield ReManufacturing Corporation, based in Missouri. Stack founded the company in the 1980s when he engineered an employee buyout of International Harvester’s remanufacturing facilities. The process of remanufacturing can mean different things to different people. Ink cartridge re-filling is a common example. SRC companies are generally involved in taking apart “stuff,” such as engines, finding flawed or broken parts and remaking them.

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