Drive: take control of your business' profitability.

• Author: Alleckson, Joan

Is your business reaching its true potential? If you're like most experienced CFOs and controllers, you probably would answer "yes." You and your team have spent your careers analyzing your business' financial results and finding ways to reduce costs and leverage investments. Every investment is analyzed to ensure that ROI hurdles are cleared.

In addition, you probably do a pretty good job of budgeting, tracking and managing performance. Unfortunately, all of your hard work may be subverted because your organization lacks a culture that encourages and rewards profitable behaviors throughout the business. If driving profits is a team effort, why is it so often seen as the job of the finance department?

TIME FOR A TUNE UP?

If you are wondering whether your business might need a profit process tune up, ask yourself the following:

* Does your business delay implementing a good idea until the next budget cycle because it wasn't part of the annual plan?

* Do most profit improvement ideas come from the finance department or top management?

* If someone leaves the company, does the position automatically get filled?

* Do some areas of the company have a "use it or lose it" attitude about spending?

* Are you behind in utilizing technology?

* Is your tax department brought in to review major transactions after it is too late to change the structure?

* Are your employees' skills outdated because of training budget cuts?

* Does your business automatically try to perform all functions in-house?

* Has your finance department spent so much time on Sarbanes-Oxley implementation that profit initiatives are behind schedule?

If you answered "yes" to any of these questions, your business may need a profitability process tune up. Here are some ideas that can help jump-start your profit improvement process.

INCENTIVES FOR ALL

It's common for executives and high-level managers to receive incentives for reaching profitability goals, yet many companies fail to provide incentives for all employees--and the type of incentive is only limited by your creativity.

Barney and Barney, a San Diego-based risk management consulting and insurance brokerage firm, has successfully implemented a companywide incentive program that involves profit sharing of approximately 4 percent of base salary as well as an individual bonus plan for everyone in the firm. This has led to year-after-year revenue increases in excess of 20 percent due to the contributions and teamwork of all employees.

Barney and Barney CFO Hal Dunning says that by getting the right incentives in place, everyone plays a significant role in helping to drive the revenue and profitability of the company.

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TOP MANAGEMENT BUY-IN

Does your firm have a formal process for soliciting profit improvement ideas from all areas of the company? If not, you may be missing out.

Phil g, a principal at Regent Pacific Management, is an expert in company turnarounds. Regent Pacific is often called in when a...