Why New Hires Should Know How Your Company Makes Money


Whether your new hire is a fresh graduate or someone with years of experience, understanding howBusiness-acumen-success-2 your company makes money is essential for their – and your - success.

It’s essential the onboarding process provides new hires with the business skills and tools they need to impact your company’s bottom-line performance quickly and efficiently. For that to happen, new hires need to understand how your company makes money.

There are seven key areas of business acumen all new hires should be exposed to:

  1. What is our strategy?
  2. How do we generate revenue?
  3. What drives our costs of goods sold?
  4. What are our gross margins and what are we targeting?
  5. What impact am I making on our operating expenses, in particular my function?
  6. What is our profitability?
  7. How is our cash flow?

Why are these questions important?

While it’s an important onboarding process to introduce employees to your company’s basic information, processes, systems, and culture, it is critical for a new hire to understand how your company makes money. Having these skills and insights, employees can align their efforts with your company's goals and make informed decisions that contribute to its success.

  1. What is our strategy? Understanding the company's strategy helps new hires understand the short- and long-term vision, goals, and direction of your organization. It provides direction in decision-making and helps individuals better align their work with your objectives.
  2. How do we generate revenue? Knowing how your company generates revenue provides insights into your core business model and purpose. When employees understand how you generate revenues, they can better focus their day-to-day decision-making on contributing to revenue growth.
  3. What drives our costs of goods sold? This question helps employees understand the key cost drivers of your goods or services. When employees understand what affects costs, they are better able to identify areas where investment or cost-saving measures can be implemented.
  4. What are our gross margins and what are we targeting? Gross margin is a critical metric of success for many companies, identifying the profitability of each unit of product or service sold after subtracting out production costs. By providing employees with Gross Margin goals, employees are better able to make decisions that align with company expectations.
  5. What impact am I having on our operating expenses? This question helps employees recognize their impact on overall operating expenses. It encourages decision-making to align with the strategy within their respective functions.
  6. What is our profitability? Understanding your profitability means understanding your financial health. Employees should be aware of whether the company is generating consistent profits, essential for growth and attracting investors.
  7. How is our cash flow? One of the first things taught in business school is that cash flow is the lifeblood of any business. It's crucial for employees to know if the company is managing cash inflows and outflows effectively. Positive cash flow ensures the ability to pay bills, invest in future growth, and weather any potential economic disruptions.

A comprehensive understanding of how a company makes money is critical to new hires, helping to ensure they will contribute to your company's success, make informed decisions aligned with the organization's goals, and help drive strategy execution.

This in-depth knowledge enables employees to engage more effectively with peers, executives, customers, and stakeholders, fostering a more aligned and strategic work environment.

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Jim Brodo

About The Author

Jim is an award winning marketing executive with a proven background in driving pipeline value and revenue creation