I realize that many managers have not had the benefit of a formal education and therefore lack some of the key terms that may get thrown around by their colleagues. While I am a big believer in education and books (especially the books I recommend), I can give a shortcut on some of the business vernacular that any manager should be familiar with.
If you can’t find what you’re looking for here, drop me a line and I’ll add your suggestion to the list.
Ok, class is starting so pay attention…
Define Internal Customer
Those people within your organization who rely on your for service.
Define External Customers
Those people outside your organization whom you serve.
Define Process Mapping
A method used to examine the effectiveness of the current approach used in accomplishing a task. It’s called process mapping because it provides a visual map of the various steps in the process. These steps are listed in the order they are performed, then analyzed with an eye to increasing efficiency.
Define Continuous Improvement
The goal of becoming better at what we do every day. When applied to organizations, it includes all segments of the company’s operations.
Define ERP or Define Enterprise Resource Planning
Business management software that integrates all facets of a company’s operations in order to give full information to managers for decision making.
Define Flat Organizations
A phrase that refers to businesses that have reduced the number of layers of management. Modern companies generally have four or less layers.
Define 360 Degree Feedback
An appraisal system that elicits feedback from your boss, your peers, and your subordinates.
Term used to describe a management style in which managers try to control every minute detail of everyone’s tasks.
Define Employee Retention
The ability to keep valued employees.
Define Just-In-Time Inventory
A system designed to bring in only those materials that are needed for that day’s production. This allows the company to minimize storage and handling costs.
The act of measuring, recording and analyzing an entity’s financial well being. An accountant can be considered as a historian, in the sense that he tracks the performance of a firm over time.
Define Balance Sheet
The financial statement that measures the assets, liabilities and shareholder’s equity of an entity. It draws a picture of a firm at a given time, usually at the end of a month, quarter or fiscal year.
Define Income Statement
The financial statement that assesses the performance of a firm over a given period. It gives an assessment of a firm’s ability to generate profits. An income statement separates a firm’s operations from its finances. All items above EBIT (see below) represent a firm’s operations, while all items below represent financial items.
Define Cash Flow Statement
The financial statement that provides managers and shareholders with how much free cash a firm generates. Essentially, a firm’s cash flow is found by taking a firm’s earnings available to common shareholders and adding back non-cash expenses like depreciation and amortization. Ultimately the most important financial statement of them all, indicating whether a firm is solvent or not.
Generally Accepted Accounting Principles, the admittedly outdated guiding light that determines how transactions are measured and recorded. Vague and difficult to understand.
Define Opportunity Cost
The cost of the foregone opportunities. A fundamental economic term, human beings must estimate the opportunity cost of all their decisions.
Define ROI, ROA, ROE
Return On Investment, Assets or Equity is an important way to determine the profitability of any venture, project or business.
When you put your eggs in different baskets so that the positive surprises offset the negative ones.
Define Project Management
A temporary job that is accomplished by securing, organizing, planning, and managing resources with the goal of completing a specific project.
Define Progressive Discipline
A series of employee warnings, or write ups, that leads to employee improvement or termination. Generally 3 strikes and you’re out.
Earnings Before Interest, Taxes, Depreciation and Amortization. What the heck does that mean? Just the earnings before taking out all the intangible stuff. Manufacturing companies use it the most.
This isn’t exactly a business definition, but a strange question came up the other day, so I thought I’d add a quick note. The question was “What is the correct manager abbreviation?” I thought is this was pretty common knowledge, but the correct way to abbreviate ‘manager’ is ‘Mgr’.