This was no accident the performance measures that

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This was no accident. The performance measures that drive the company adjust our thinking to control the prosperity illusion. Sure we want aggressive revenue growth. But we demand ever-increasing revenue per employee, ever-higher capital productivity (revenue dollars per dollar of undepreciated fixed assets), and ever-lower expense ratios. And we constantly check our performance against the best of our competition. The graphs in “Tracking Performance at Cypress” review our record on these measures. No Excuses Management 15 of 28 6/14/2018, 2:27 AM
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Tracking Performance at Cypress Our system for controlling head count is one of the three most important systems we have at Cypress. Here’s how it works. At the beginning of every No Excuses Management 16 of 28 6/14/2018, 2:27 AM
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quarter, we hold a head-count meeting for the entire company. Our eight vice presidents attend the meeting along with middle managers. Together we review the last quarter’s total revenue, total head count, and revenue per employee. We then use forecast revenues to determine the allowable head count at the end of the quarter and thus the total number of requisitions we can afford to open in the new quarter. There are two things to keep in mind. First, we are almost always within 1% or 2% of forecast revenue—this is not a hypothetical exercise. Second, our target head count is based on continual improvement in revenue per employee. We expect this critical productivity measure to improve every quarter or, in difficult economic times, to hold the line. Thus, quickly and directly, everyone in the room (which means virtually everyone in the company with hiring authority) understands how many new employees will join Cypress over the next three months. This is not a negotiable figure. The negotiations start once we total up the vice presidents’ head- count requests and start adjusting them to meet the new total. The power of our system is that it presents the real trade-offs to everyone at the same time. Everyone in the room understands that we are playing a zero- sum game. A vice president who insists on all his or her requisitions understands (as does everyone else) that these slots come at the expense of other requests. Such stark trade-offs create incentives for everyone else to think creatively about solving that vice president’s problems without hiring more people. In other words, I enlist many allies in my effort to hold the line on resources. Moreover, vice presidents who can’t make the number of hires they want don’t feel arbitrarily denied. Even if they’re unhappy, they understand the logic behind the final decisions. The negotiations are conducted in great detail—they’re not for the faint of heart. Every department has a microperformance index that divides some useful measure of output by head count. These indexes, which we flash on the screen for everyone to see, become the basis of the trade-offs between departments. Let’s say shipping and receiving has requested an additional clerk. We flash a graph that tracks the department’s productivity index—line
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  • Spring '12
  • DirkJenter
  • Finance, Management, vice president, Vice President of the United States, Excuses Management

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