GPI 313 – Ask everyone, “What one hypothetical event could materially affect our company’s bottom line?”

Everyone in your organization knows something that could substantially harm the company. Each of those people may not know that what they know contains important information that should be shared with management in order for action to be taken. You need to encourage everyone in your organization to speak up when they think something may be important. Why? What they know, if probed and investigated, most likely is very important and poses a risk. Managers are paid to eliminate risks so get started. Get prepared to be depressed.

Ask one hypothetical question. Ask all your employees one question to explore and help to eliminate risks to the company’s financial statement performance. Ask everyone what one hypothetical event, if it occurred, would cripple or at least cost the company a material amount of money.

Managers only know by asking. You in management may think you know all of the weak spots in the company’s organization but it is almost certain you do not. Ask everyone at all levels and thank them for all of their answers regardless of how trivial they may initially seem. These lower level employees are about to educate you.

Here are some examples of the types of replies you might get back if you truly invite open remarks. Make sure you do not taint the question. Keep it simple and wide open. Invite all concerned comments.

Possible answers to your hypothetical question:

If the second shift supervisor left permanently without notice, we are worried. None of us knows how to fix the first row of ten, new, one-million-dollar production machines the company bought last year. That guy is the only one who got fully trained and up to this point, he has made sure not to train anyone else when he is gone. When he takes a day off, he told us if we have trouble to turn the machine off and don’t worry about it.
If our one and only vendor for (special material) goes under financially, we will be out of business since we are not approved by anyone else in the market. We spoke about this to the buyers but they said they were covered up and will get to it later. They never approved anyone else after that.
If our product mix changes slightly for the worse (more low margin work in exchange for less high margin jobs), we could still be running at 100% but not be able to cover the basic monthly loan payments.
One day, the machine operators are going to start those large 15 foot blowers in the back and there will be an accident. We see people sleeping in them all of the time. People have been coming in to the back of our property since we cut the second shift security guard. The last guard chased everyone out of here, but he is no longer watching the perimeter and those street people are getting into the property at night.
One of our primary sales people has a son who drives the employee’s company car on weekends with beer on the front seat. Through my daughter, I happen to know the kid does not have a driver’s license. If he is picked up or has a wreck, I would think the company could have serious problems if that kid goes out and kills someone with a company car.
One of the 3^rd party truck drivers told us privately last week that our major customer has a new vendor making and delivering some of the same goods that we make. I thought everyone said we were sole provider?
The truck driver who was just here said one of our customers won’t see our sales person anymore because she does not answer her cell phone.
A vendor who wants our business told me one of our buyers paid for a vacation home with some of the kickbacks he has been getting over the years from a supplier.
One vendor just told me the place where they buy their stock just put them on hold for non-payment and he is looking for a job.
When we were testing out the new handheld weed-eater, we found out that in some cases part of the metal handle burns the user’s hand. We only knew that after the company nurse called us to tell us an injured employee who was burnt will need treatment at the hospital.
One of the taste-testers for our new food product broke out in a rash on her lower face and upper neck. She said it does not hurt, but when we took her to the hospital, another tester in the remaining group admitted she too had a rash, but it was under her blouse out of sight. When we asked them why they did not speak up earlier, they said they were threatened by their supervisor not to “blow things out of proportion” since the company spent a lot of R&D money on these new products.