A company is simply a group of people working towards a common goal. That common goal is ultimately the sustained strong financial and operational performance of the company. Don’t we want a similar outcome for ourselves – sustained strong financial and operational performance? If so, we would benefit from observing some of the most basic principles of corporate operations and decision-making. Consider implementing some, or all, of these basics in your life.
- Companies implement internal metrics to decide what investments are worth pursuing. The most basic of these metrics is the “simple payback period.” A $1000 investment with a required 10-year payback period, must generate, on average, $100/yr in order to be considered viable. Consider implementing a payback period standard for your investments. The measure of “payback” and “investment” can be modified because we don’t measure life success purely in dollars and cents, but some assessment of our standard for a return on our investment (time, money, resources) is better than none.
- Smart companies use smart metrics. If we wish to improve or accomplish something in our lives, measure it and review it often — if possible, daily.
- Have we seen this before? When a company is faced with a dilemma, one of the very first questions asked and answered is “Have we seen this before?” If the answer is “no” – the follow-on is often “Who has seen this before?” Although past performance is not a guarantee of future performance, our decision-making abilities would improve if we looked for a past precedent on which to base our toughest decision.
- Dead weight is cut. A company cannot afford to carry people that do not contribute towards the company’s goals. A good corporate rule of thumb is “be slow to hire and quick to fire.” In our lives, what people or things drain our resources, especially time, but do not contribute towards our goals? Drop them.
- Charity is not only good for a company’s public relations, but it is the right thing to do. There is always room for charitable donations of our time or money in our life.
- Pay a dividend. After a company pays its expenses and taxes, it evaluates what to do with the money that remains. The amount that is not invested is paid to its shareholders in the form a dividend. Most people pay themselves a dividend, but it is not deliberate. Ensure you are investing the amount that supports your future goals first, and then determine the size of the dividend that you can afford to pay yourself.
- Conduct periodic assessments. A company compares its stated priorities to its actual performance often – usually monthly. If it’s performance is substandard or not consistent with its stated priorities, it will modify its plan or adjust its priorities. What are your biggest priorities? How often do you compare your actions to these priorities and adjust accordingly?