When Profit Sharing Goes Wrong

bby Dean Zatkowsky, co-author of Two Billion Dollars in Nickels

Managing the behavioral impact of a profit sharing plan is more challenging than designing the financial incentive in the first place. Among inexperienced business people, profit sharing leads to the unintended consequence of excessive scrimping. Frugality fuels profitability, but not when we trip over dollars to pick up pennies. Anyone offering profit sharing to coworkers must ensure they understand the big difference between cutting costs and cutting corners: The former improves profits; the latter eventually destroys them.

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Categories: Corporate Culture | Customer Service | Management Skills | Entrepreneurialism | Leadership | Competitive Advantage

1 comments - Posted by Dean Zatkowsky at 2:36 PM

Nation of Straw

A few weeks ago, LA Times columnist Joel Stein wrote about peanut allergies. He clearly stated in his article that peanut allergies are real, dangerous, and very serious for actual sufferers, but he believed over-protective parents were exaggerating the incidence of peanut allergies - claiming many more cases than doctors report. 

The Times' website was flooded with comments accusing Stein of criminal negligence for saying that peanut allergies do not exist, and demanding the Times fire him or be responsible for the deaths of children. 

My first thought was this: Aha! The problem with newspapers today is that the only people reading them are illiterate!  My second thought: No, I'm sure many people read the article correctly, saw there was nothing controversial or inaccurate about it, and went on their way. My third thought: The respondents were reflexively using the single most popular tool of debate these days: The Straw Man Argument.

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Categories: Corporate Culture | Management Skills | Leadership | Ethics

0 comments - Posted by Paul Orfalea at 8:59 AM

Shelter from the Storm

By Lance Helfert

Many financial journalists wrote about bear market opportunities long before our current recession achieved official recognition. Back in December 2007, Tim Middleton wrote about "Recession-proof ways to make money," noting that "Consumer spending, which accounts for two-thirds of gross domestic product, is weakening. But some forms of spending do not weaken as much as others. Addicts will buy cigarettes at almost any price. When factories are emptied, saloons fill up. People don't stop going to the doctor or paying their electric bills."

Companies like Molson-Coors (NYSE: TAP), Johnson & Johnson (NYSE: JNJ), and Kimberly-Clark (NYSE: KMB) seem to fit in with this set of "everyday purchase" companies, and they also meet the three criteria of the so-called "recession playbook" of large-cap stocks with safe earnings and international exposure.  Portfolio Manager Chris Orndorff told US News & World Report that recessions create opportunity as well as upheaval: "There are always ways to make money, even in a recession."

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Categories: Economics | Investing

0 comments - Posted by Dean Zatkowsky at 10:05 AM

Coworkers and Community

By Dean Zatkowsky

Lately I've been talking to small businesses about strategies for surviving and possibly thriving through today's economic uncertainty. I've been urging owners and managers to stay focused on customers, coworkers, vendors and community, rather than monetary policy, legislation and regulation. By all means, let your representatives know what you think, but remember that if your delivery vehicle has a dead battery, it's highly unlikely that Nancy Pelosi or Timothy Geithner is going to come over with some jumper cables.

One of the strengths of Kinko's original partnership model was the fact that even when we had 126 partners and over 1,000 stores, we continued to operate like small businesses in our communities. I used to joke that we combined all the disadvantages of franchising with all the limitations of sole proprietorship. But it was just a joke: the passion and connectedness of local involvement was good for the business and good for the communities we served.

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Categories: Corporate Culture | Customer Service | Philanthropy | Management Skills

2 comments - Posted by Dean Zatkowsky at 11:19 AM