Predictions 2017

As a specific example, rather than embracing fixed cost rises in labour costs, consider more variable cost increases such as profit share and bonus schemes. For most firms, employment costs are the single biggest fixed overhead and if you can get them to align to business outcomes it means your costs only rise if you hit those outcomes. That could be overall metrics like company profit or market growth or more specific goals closer to individuals and teams. Either way what we cannot afford as an industry is to bake in more hard costs which are not related to performance.

At Agile, we set clear individual goas for each employee which are reviewed quarterly. All of these measures ultimately support profitability so the model ensures if individuals hit their target the company will have the profits there to pay for it. Equally, if it is a challenging quarter or year then the cost base is aligned to the reduced income and does not expose firms to an unsustainable model.

Whilst larger firms have mostly embraced this, I believe it is time for smaller, dare I say it, family run firms to embrace the notion of profit share. It provides incentive and allows individuals to strive hard for success; it also force managers to accurately assess the key targets for the coming year. Finally, it encourages everyone to spot the next opportunity and be realistic about the targets they sign up to, which must help as we all plan for an uncertain year ahead.