The employee as ‘antrepreneur’

Question: I want my employees to think like management so that they would do their job with malasakit or in a caring fashion just like how an owner of the business would. How do I foster such a mindset?—Business Owner

Answer: Let me first ask if you know the formula that explains how airplane wings provide lift. It’s really simple. The formula is lift (L) = coefficient of lift (CL) × ½ rho or atmospheric density factor × velocity in feet per second squared (V2) × total wing area in square feet (S).

“Hey, I am not an aeronautical engineer,” you say. You might even say, “You lost me at the first mention of lift!” That’s exactly how your employees are going to react if you ask them to think like owners of your business. They will say they can never be business owners because they lack capital. But see the pleasant surprise in their faces when you tell them they already are managing their own businesses, that of their household.

This is where personal finance comes in. At Personal Finance Advisers Philippines Corp. and RFP Philippines, we teach that running the finances of a household is no different from running the finances of a business. In our training, employees are allowed to see in a fun way (i.e. singing, contests, some dancing and target shooting) and also in meaningful way that they themselves are entrepreneurs. The company employing them is the customer while they run their households as businesses that are suppliers (of labor) to this single customer.

Once employees understand how to run their own households more efficiently and effectively, they will begin to understand how and why they should value their employer as their customer. Eventually, they will also begin to appreciate the need to run the business of their employer efficiently and effectively.

Set personal finance aside first. Did you know that next to humans, leafcutter ants form the largest and most complex animal society on the planet? In a mature leafcutter colony, ants can be categorized into castes as follow:

1. Minims, the smallest workers, tend to care for the young and the ants’ fungus garden.

2. Minors, the next-largest, form the first line of defense and continuously patrol the terrain, attacking enemies that threaten the foraging lines.

3. Mediae are the leafcutters that carry the cut leaves back to the nest. They have powerful jaws that vibrate 1,000 times a second and can carry 20 times their body weight—that’s like a human carrying a small car.

4. Majors, the largest ants, protect the nest against intruders, clear main foraging trails of debris and carry bulk items back to the nest.

Are leafcutter ants mere drones with their role in society already hard-wired in their tiny brains from birth? Perhaps not since, as we know, most animals are focused on physical survival, the lowest level in Maslow’s hierarchy of needs. Yet, leafcutter ants understand that they are in the colony as entrepreneurs, taking risks in providing the colony with their invaluable service in return for food and protection as well.  That’s why we call them “antrepreneurs.”

Employees are also antrepreneurs. Each employee would have his or her own household whose members have respective roles to play in keeping the household running efficiently and in helping the household’s “worker ants” take risks in providing their invaluable service in exchange not only for salaries or wages but also for professional growth, emotional and financial support, health care and even retirement support.

Similarly, each employee will have his own role to play in the company according to his capacity to work. And each will be rewarded according to current market practice. If the employee produces below the output expected of him or her, inefficiency arises. And just like an ant colony with inefficient worker ants, the company will break down and eventually close shop.

Here are just some ways that show how running the finances of a business can be applied to running the finances of a household:

1. Balance sheet—the balance sheet of a household reflects all of the assets it owns. Any company should have most of its assets generating revenues. The same is true for a household. The net worth (total asset minus total debts) may be high. If most of the assets are invested in the family home, cars, furniture, appliances and even low-interest savings accounts, the household assets are not doing much in compounding the earnings from employment income. This is a household that is only living for today. The good news is that a little tweaking in the way the household’s funds are allocated among assets can already turn the situation around.

2. Income statement—the only two ways to increase net income and savings are either to increase gross income or reduce costs. Increasing gross income by setting up a side business or investment portfolio is not really much of an option to career employees. Direct management of a business or investment portfolio requires full-time attention, something that employees do not have. The solution is to hire a business manager or fund manager. The better and easier solution is to manage costs first.  Observe how a household cuts back on unnecessary expenses when the going gets rough. The same is true for companies. But wouldn’t it be better if there was a system to manage costs, like a budget?

If you want to see how we train people on thinking like entrepreneurs, join us on October 27 for another EnRich program. Visit www.personalfinance.ph or www.income-tacts.com or call  2161541 for details.

Here’s to the antrepreneur in all of us.

(Efren Ll. Cruz is a registered financial planner of RFP Philippines, personal finance coach, investment adviser and author. Inquiries may be sent by SMS to 0917-5050709 or e-mailed to [email protected].)