Comments on: Is Your Continuous Improvement Organization a Profit Center?

By: Helene

Helene — Mon, 31 Aug 2009 03:04:17 +0000

I never ever post but this time I will,Thanks alot for the great blog.

By: Etienne Du Plooy

Etienne Du Plooy — Thu, 16 Apr 2009 09:34:33 +0000

We often suggest Harald’s thought to our clients after making provision for taxation on profit levels centers. I agree fully with Mark, however, we always when possible suggest taking it further to the ‘Autonomous Investment Center’ level. ROI can be measured in investment centers and one can use the T, I and OE measurements freely when the centers are managed autonomously from the group regarding investment decisions. There will always be a degree of control from group head office but without having Investment autonomy one can’t truly hold the investment center’s manager responsible for actions.

By: Mark Woeppel

Mark Woeppel — Wed, 08 Apr 2009 13:47:24 +0000

Thanks Harald – that’s definitely in line with my thinking. People’s rewards should be aligned with the stockholders. Thanks for the idea!

By: Harald

Harald — Wed, 08 Apr 2009 07:37:56 +0000

Mark,
An add-on-thought concerning your split of the “saved costs”.
We have introduced a compensation scheme where employees intitally get a relatively low fixed wage. This was reached by not giving any linear increase for several years.
This – in a traditional thinking very “boss oriented” way – is accompanied by a drastic success participation scheme. Ath year’s end we take a certain amount as a bottom line (very low). Above that 1/3 of the companies profit goes to the employees!!! (the thinking is that 1/3 should go to the owner, 1/3 should stay in the company to ensure long-term-growth and 1/3 should go to the employees.
In your example (beside a special compensation for those who have reached the target) people are interested in cutting the budget – because they get 1/3 of the cut into their pockets!.