# Are You Losing Money By Calculating Margins Wrong?

I spent time on Friday helping a client update spreadsheets and Excel reports that used an incorrect formula to calculate the margin on bids for construction jobs. While this particular client was looking for a margin of 25%, he was actually getting one closer to 20%. On a \$100,000.00 bid, that can be the difference between profit and disaster.

I see sellers new to retailing make this same mistake over and over again.

The seller wants a “mark up” of 30%

So they take their cost (the wholesale price), multiply that by 30% and add the result to the wholesale cost to find the retail, or selling price.

Wrong!

You can certainly find a retail price that way, but it won’t give you a 30% margin. The confusion stems from

2. The difference between margins and mark ups

Although it is less important, let’s talk about mark up vs margin first.  Many people use these terms interchangeably to mean the difference between what you pay for goods and what you sell them for – that is, gross profit. However, they are not the same thing. Misunderstanding the nature of mark ups and margins can make it easier to calculate them incorrectly – which cuts deeply into your bottom line.

A margin is, most simply put, the percentage of the selling price that is the profit.

• If you pay \$6.00 for an item and you sell it for \$10.00, you made a gross profit of \$4.00.
• \$4.00 is 40% of \$10.00 – so you have a margin of 40%
• Notice this important distinction- the 40% margin is 40% of the final selling price, not of the wholesale cost.

A mark up is the percent of the cost you add to the wholesale price to get to the selling price.

• If you pay the same \$6.00 and sell the item with a 40% mark up, you make a gross profit of only \$2.40
• 40% of \$6.00 is just \$2.40
• A mark up of x% will yield a smaller profit than a margin of x% because the mark up is a percentage of the lower wholesale cost.

IT DOESN’T MATTER IF YOU MIX UP THE TERMS AS LONG AS YOU DO THE MATH RIGHT

Many people say “mark up” when they mean “margin.” If you are fussy about language, this is annoying but it will not lead to financial disaster. It’s just words.

However, if you’ve confused the two concepts and are calculating your margins by mutliplying the wholesale cost by the margin percentage, you could be headed for trouble.

Just remember – you want to calculate your profit as a percentage of the final value, not as a percentage of the original cost. When a customer hands you \$10.00, you need to know how much goes into your pocket and how much goes to your vendor.

Do you need a 40% profit margin to survive? Then you want to keep \$4 out of every \$10.

Also keep in mind that this is a gross profit margin. It does not take into account overhead, fees, etc. You may put \$4 into your pocket, then have to turn around and give \$1.00 to the landlord, 75¢ to the tax man, 15¢ to the bank for processing fees, etc.

You might end up keeping only \$1.50 (net profit) of the original \$4.00 (gross profit). Which is why calculating your margin by incorrectly using the wholesale price can be such a disaster. You can actually lose money with every sale!

WHAT’S THE FORMULA?

Now that you know you want your margin to be a percentage of the final cost, how do you actually figure it out?

Relax – as long as you have a calculator handy, it is easy.

Say you want a 40% margin. We know that 100% less 40% leaves 60%. So your wholesale cost represents 60% of the final value. To find the remaining 40%, divide the wholesale cost by .6

• If  you want a 90% margin – divide the wholesale cost by .1
• If  you want a 80% margin – divide the wholesale cost by .2
• If  you want a 70% margin – divide the wholesale cost by .3
• If  you want a 60% margin – divide the wholesale cost by .4
• If  you want a 50% margin – divide the wholesale cost by .5
• If  you want a 40% margin – divide the wholesale cost by .6
• If you want a 30% margin – divide the wholesale cost by .7
• If you want a 20% margin – divide the wholesale cost by .8
• If  you want a 10% margin – divide the wholesale cost by .9

As long as you follow this formula for calculating retail price, you will get the margin you want.

# What makes an effective executive? – by Peter Drucker

An effective executive does not need to be a leader in the sense that the term is now most commonly used. Harry Truman did not have one ounce of charisma, for example, yet he was among the most effective chief executives in U.S. history. Similarly, some of the best business and nonprofit CEOs I’ve worked with over a 65-year consulting career were not stereotypical leaders. They were all over the map in terms of their personalities, attitudes, values, strengths, and weaknesses. They ranged from extroverted to nearly reclusive, from easygoing to controlling, from generous to parsimonious.

What made them all effective is that they followed the same eight practices:

• They asked, “What needs to be done?”
• They asked, “What is right for the enterprise?”
• They developed action plans.
• They took responsibility for decisions.
• They took responsibility for communicating.
• They were focused on opportunities rather than problems.
• They ran productive meetings.
• They thought and said “we” rather than “I.”

The first two practices gave them the knowledge they needed. The next four helped them convert this knowledge into effective action. The last two ensured that the whole organization felt responsible and accountable.

## Get the Knowledge You Need

The first practice is to ask what needs to be done. Note that the question is not “What do I want to do?” Asking what has to be done, and taking the question seriously, is crucial for managerial success. Failure to ask this question will render even the ablest executive ineffectual.

Asking what has to be done, and taking the question seriously, is crucial for managerial success.

When Truman became president in 1945, he knew exactly what he wanted to do: complete the economic and social reforms of Roosevelt’s New Deal, which had been deferred by World War II. As soon as he asked what needed to be done, though, Truman realized that foreign affairs had absolute priority. He organized his working day so that it began with tutorials on foreign policy by the secretaries of state and defense. As a result, he became the most effective president in foreign affairs the United States has ever known. He contained Communism in both Europe and Asia and, with the Marshall Plan, triggered 50 years of worldwide economic growth.

Similarly, Jack Welch realized that what needed to be done at General Electric when he took over as chief executive was not the overseas expansion he wanted to launch. It was getting rid of GE businesses that, no matter how profitable, could not be number one or number two in their industries.

To refer again to America’s best-known CEO: Every five years, according to his autobiography, Jack Welch asked himself, “What needs to be done now?” And every time, he came up with a new and different priority.

But Welch also thought through another issue before deciding where to concentrate his efforts for the next five years. He asked himself which of the two or three tasks at the top of the list he himself was best suited to undertake. Then he concentrated on that task; the others he delegated. Effective executives try to focus on jobs they’ll do especially well. They know that enterprises perform if top management performs—and don’t if it doesn’t.

Effective executives’ second practice—fully as important as the first—is to ask, “Is this the right thing for the enterprise?” They do not ask if it’s right for the owners, the stock price, the employees, or the executives. Of course they know that shareholders, employees, and executives are important constituencies who have to support a decision, or at least acquiesce in it, if the choice is to be effective. They know that the share price is important not only for the shareholders but also for the enterprise, since the price/earnings ratio sets the cost of capital. But they also know that a decision that isn’t right for the enterprise will ultimately not be right for any of the stakeholders.

Asking “What is right for the enterprise?” does not guarantee that the right decision will be made. Even the most brilliant executive is human and thus prone to mistakes and prejudices. But failure to ask the question virtually guarantees the wrong decision.

## Write an Action Plan

Executives are doers; they execute. Knowledge is useless to executives until it has been translated into deeds. But before springing into action, the executive needs to plan his course. He needs to think about desired results, probable restraints, future revisions, check-in points, and implications for how he’ll spend his time.

First, the executive defines desired results by asking: “What contributions should the enterprise expect from me over the next 18 months to two years? What results will I commit to? With what deadlines?” Then he considers the restraints on action: “Is this course of action ethical? Is it acceptable within the organization? Is it legal? Is it compatible with the mission, values, and policies of the organization?” Affirmative answers don’t guarantee that the action will be effective. But violating these restraints is certain to make it both wrong and ineffectual.

The action plan is a statement of intentions rather than a commitment. It must not become a straitjacket. It should be revised often, because every success creates new opportunities. So does every failure. The same is true for changes in the business environment, in the market, and especially in people within the enterprise—all these changes demand that the plan be revised. A written plan should anticipate the need for flexibility.

In addition, the action plan needs to create a system for checking the results against the expectations. Effective executives usually build two such checks into their action plans. The first check comes halfway through the plan’s time period; for example, at nine months. The second occurs at the end, before the next action plan is drawn up.

Finally, the action plan has to become the basis for the executive’s time management. Time is an executive’s scarcest and most precious resource. And organizations—whether government agencies, businesses, or nonprofits—are inherently time wasters. The action plan will prove useless unless it’s allowed to determine how the executive spends his or her time.

Napoleon allegedly said that no successful battle ever followed its plan. Yet Napoleon also planned every one of his battles, far more meticulously than any earlier general had done. Without an action plan, the executive becomes a prisoner of events. And without check-ins to reexamine the plan as events unfold, the executive has no way of knowing which events really matter and which are only noise.

## Act

When they translate plans into action, executives need to pay particular attention to decision making, communication, opportunities (as opposed to problems), and meetings. I’ll consider these one at a time.

### Take responsibility for decisions.

A decision has not been made until people know:

• the name of the person accountable for carrying it out;
• the names of the people who will be affected by the decision and therefore have to know about, understand, and approve it—or at least not be strongly opposed to it—and
• the names of the people who have to be informed of the decision, even if they are not directly affected by it.

An extraordinary number of organizational decisions run into trouble because these bases aren’t covered. One of my clients, 30 years ago, lost its leadership position in the fast-growing Japanese market because the company, after deciding to enter into a joint venture with a new Japanese partner, never made clear who was to inform the purchasing agents that the partner defined its specifications in meters and kilograms rather than feet and pounds—and nobody ever did relay that information.

It’s just as important to review decisions periodically—at a time that’s been agreed on in advance—as it is to make them carefully in the first place. That way, a poor decision can be corrected before it does real damage. These reviews can cover anything from the results to the assumptions underlying the decision.

Such a review is especially important for the most crucial and most difficult of all decisions, the ones about hiring or promoting people. Studies of decisions about people show that only one-third of such choices turn out to be truly successful. One-third are likely to be draws—neither successes nor outright failures. And one-third are failures, pure and simple. Effective executives know this and check up (six to nine months later) on the results of their people decisions. If they find that a decision has not had the desired results, they don’t conclude that the person has not performed. They conclude, instead, that they themselves made a mistake. In a well-managed enterprise, it is understood that people who fail in a new job, especially after a promotion, may not be the ones to blame.

Executives also owe it to the organization and to their fellow workers not to tolerate nonperforming individuals in important jobs. It may not be the employees’ fault that they are underperforming, but even so, they have to be removed. People who have failed in a new job should be given the choice to go back to a job at their former level and salary. This option is rarely exercised; such people, as a rule, leave voluntarily, at least when their employers are U.S. firms. But the very existence of the option can have a powerful effect, encouraging people to leave safe, comfortable jobs and take risky new assignments. The organization’s performance depends on employees’ willingness to take such chances.

Executives owe it to the organization and their fellow workers not to tolerate nonperforming people in important jobs.

A systematic decision review can be a powerful tool for self-development, too. Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information. It shows them their biases. Very often it shows them that their decisions didn’t produce results because they didn’t put the right people on the job. Allocating the best people to the right positions is a crucial, tough job that many executives slight, in part because the best people are already too busy. Systematic decision review also shows executives their own weaknesses, particularly the areas in which they are simply incompetent. In these areas, smart executives don’t make decisions or take actions. They delegate. Everyone has such areas; there’s no such thing as a universal executive genius.

In areas where they are simply incompetent, smart executives don’t make decisions or take actions. They delegate. Everyone has such areas.

Most discussions of decision making assume that only senior executives make decisions or that only senior executives’ decisions matter. This is a dangerous mistake. Decisions are made at every level of the organization, beginning with individual professional contributors and frontline supervisors. These apparently low-level decisions are extremely important in a knowledge-based organization. Knowledge workers are supposed to know more about their areas of specialization—for example, tax accounting—than anybody else, so their decisions are likely to have an impact throughout the company. Making good decisions is a crucial skill at every level. It needs to be taught explicitly to everyone in organizations that are based on knowledge.

### Take responsibility for communicating.

Effective executives make sure that both their action plans and their information needs are understood. Specifically, this means that they share their plans with and ask for comments from all their colleagues—superiors, subordinates, and peers. At the same time, they let each person know what information they’ll need to get the job done. The information flow from subordinate to boss is usually what gets the most attention. But executives need to pay equal attention to peers’ and superiors’ information needs.

We all know, thanks to Chester Barnard’s 1938 classic The Functions of the Executive, that organizations are held together by information rather than by ownership or command. Still, far too many executives behave as if information and its flow were the job of the information specialist—for example, the accountant. As a result, they get an enormous amount of data they do not need and cannot use, but little of the information they do need. The best way around this problem is for each executive to identify the information he needs, ask for it, and keep pushing until he gets it.

### Focus on opportunities.

Good executives focus on opportunities rather than problems. Problems have to be taken care of, of course; they must not be swept under the rug. But problem solving, however necessary, does not produce results. It prevents damage. Exploiting opportunities produces results.

Above all, effective executives treat change as an opportunity rather than a threat. They systematically look at changes, inside and outside the corporation, and ask, “How can we exploit this change as an opportunity for our enterprise?” Specifically, executives scan these seven situations for opportunities:

• an unexpected success or failure in their own enterprise, in a competing enterprise, or in the industry;
• a gap between what is and what could be in a market, process, product, or service (for example, in the nineteenth century, the paper industry concentrated on the 10% of each tree that became wood pulp and totally neglected the possibilities in the remaining 90%, which became waste);
• innovation in a process, product, or service, whether inside or outside the enterprise or its industry;
• changes in industry structure and market structure;
• demographics;
• changes in mind-set, values, perception, mood, or meaning; and
• new knowledge or a new technology.

Effective executives also make sure that problems do not overwhelm opportunities. In most companies, the first page of the monthly management report lists key problems. It’s far wiser to list opportunities on the first page and leave problems for the second page. Unless there is a true catastrophe, problems are not discussed in management meetings until opportunities have been analyzed and properly dealt with.

Staffing is another important aspect of being opportunity focused. Effective executives put their best people on opportunities rather than on problems. One way to staff for opportunities is to ask each member of the management group to prepare two lists every six months—a list of opportunities for the entire enterprise and a list of the best-performing people throughout the enterprise. These are discussed, then melded into two master lists, and the best people are matched with the best opportunities. In Japan, by the way, this matchup is considered a major HR task in a big corporation or government department; that practice is one of the key strengths of Japanese business.

### Make meetings productive.

The most visible, powerful, and, arguably, effective nongovernmental executive in the America of World War II and the years thereafter was not a businessman. It was Francis Cardinal Spellman, the head of the Roman Catholic Archdiocese of New York and adviser to several U.S. presidents. When Spellman took over, the diocese was bankrupt and totally demoralized. His successor inherited the leadership position in the American Catholic church. Spellman often said that during his waking hours he was alone only twice each day, for 25 minutes each time: when he said Mass in his private chapel after getting up in the morning and when he said his evening prayers before going to bed. Otherwise he was always with people in a meeting, starting at breakfast with one Catholic organization and ending at dinner with another.

Top executives aren’t quite as imprisoned as the archbishop of a major Catholic diocese. But every study of the executive workday has found that even junior executives and professionals are with other people—that is, in a meeting of some sort—more than half of every business day. The only exceptions are a few senior researchers. Even a conversation with only one other person is a meeting. Hence, if they are to be effective, executives must make meetings productive. They must make sure that meetings are work sessions rather than bull sessions.

The key to running an effective meeting is to decide in advance what kind of meeting it will be. Different kinds of meetings require different forms of preparation and different results:

#### A meeting to prepare a statement, an announcement, or a press release.

For this to be productive, one member has to prepare a draft beforehand. At the meeting’s end, a preappointed member has to take responsibility for disseminating the final text.

#### A meeting to make an announcement—for example, an organizational change.

This meeting should be confined to the announcement and a discussion about it.

#### A meeting in which one member reports.

Nothing but the report should be discussed.

#### A meeting in which several or all members report.

Either there should be no discussion at all or the discussion should be limited to questions for clarification. Alternatively, for each report there could be a short discussion in which all participants may ask questions. If this is the format, the reports should be distributed to all participants well before the meeting. At this kind of meeting, each report should be limited to a preset time—for example, 15 minutes.

#### A meeting to inform the convening executive.

The executive should listen and ask questions. He or she should sum up but not make a presentation.

#### A meeting whose only function is to allow the participants to be in the executive’s presence.

Cardinal Spellman’s breakfast and dinner meetings were of that kind. There is no way to make these meetings productive. They are the penalties of rank. Senior executives are effective to the extent to which they can prevent such meetings from encroaching on their workdays. Spellman, for instance, was effective in large part because he confined such meetings to breakfast and dinner and kept the rest of his working day free of them.

Making a meeting productive takes a good deal of self-discipline. It requires that executives determine what kind of meeting is appropriate and then stick to that format. It’s also necessary to terminate the meeting as soon as its specific purpose has been accomplished. Good executives don’t raise another matter for discussion. They sum up and adjourn.

Effective executives know that any given meeting is either productive or a total waste of time.

## Think and Say “We”

The final practice is this: Don’t think or say “I.” Think and say “we.” Effective executives know that they have ultimate responsibility, which can be neither shared nor delegated. But they have authority only because they have the trust of the organization. This means that they think of the needs and the opportunities of the organization before they think of their own needs and opportunities. This one may sound simple; it isn’t, but it needs to be strictly observed.

We’ve just reviewed eight practices of effective executives. I’m going to throw in one final, bonus practice. This one’s so important that I’ll elevate it to the level of a rule:Listen first, speak last.

Effective executives differ widely in their personalities, strengths, weaknesses, values, and beliefs. All they have in common is that they get the right things done. Some are born effective. But the demand is much too great to be satisfied by extraordinary talent. Effectiveness is a discipline. And, like every discipline, effectiveness can be learned and must be earned.

Peter F. Drucker (November 19, 1909 – November 11, 2005) was an Austrian-born American management consultant, educator, and author whose writings contributed to the philosophical and practical foundations of the modern business corporation. He was also a leader in the development of management education, he invented the concept known as management by objectives, and he has been described as “the founder of modern management.”

# Leaders Don’t Manage Time, They Manage Choices

This is an article I liked and found valuable on Psychology Today. The link to the original article is here.

Over the last few weeks, we’ve looked at the four behaviors that differentiate a functional manager from a true leader.  As you know, I refer to these behaviors as the “Phenomenal Four,” which include:

• Cultivating Reflective Silence
• Capturing Meaningful Stories
• Reinforcing What’s Important
• Posing Curious Questions

If you haven’t had a chance to read the first two entries in this series, I recommendstarting here, then reading this.

Today, we are going to examine the third behavior: Reinforcing What’s Important.

In its most basic form, reinforcing what’s important is about ensuring you are working on the most important things each day. This behavior may seem ordinary, cliché in fact.  However, I would caution you not to dismiss it as just another tip for time management.

This third behavior, in all of its supposed simplicity, may be the most powerful out of the four in distinguishing a functional manager from a leader.

Let’s dive in.

## The Truth About Time Management

In the last year, I (like many people) read Marie Kondo’s charming book The Life-Changing Magic of Tidying Up.  One thing that struck me was her conviction that before you can begin to organize your possessions you must first cull through them and purge what does not bring you joy.

Ms. Kondo notes that most people skip this purge and go straight to organizing, assuming that they are happy with everything they have.  However, over time organizing becomes harder and harder the more things you accumulate.

To me, this is exactly what is wrong with traditional approaches to time management.

Instead of starting the process from a place of deciding what is important, we assume the worthiness of all our existing commitments, responsibilities, and activities and focus exclusively on how to fit them all together into our waking hours.  Over time, this challenge becomes greater and greater, and pretty soon our efforts to “manage” time become akin to efforts to “manage” clutter: futile.

This is why I say leaders don’t manage time, they manage choices.  They constantly try to stay attune to what is important in their life (what brings them “joy,” as Ms. Kondo says) and make decisions on a daily, sometimes hourly basis based on it.

While managers struggle to fit everything into a day, a leader is willing to purge, delegate, or just say no to anything that isn’t truly important.

The ability to reinforce what is important, and exert energy in accordance with what is important, is what makes this third behavior so powerful.

## The Third Behavior: Reinforcing What’s Important

The behavior of reinforcing what’s important is about giving yourself a moment each day to see both the big picture and the little pieces at the same time so you can act accordingly.

This means taking five minutes at the beginning or end of the day to review your list of big picture goals, and then reviewing your daily action plan to ensure you’re working on the most important things related to your larger goals.

I have found this to be an invaluable strategy for helping me to stay above the urgent-not-important things that bombard leaders every day.  It is also a great way to keep those seemingly productive time sucks (i.e. email, social media) in their proper place.

Personally, I review my lists at both the start and end of the work day. It’s always satisfying to strike through an action or two or three or more. Over time, I realized that when I took care of the important items, my work really progressed. I finished that webinar design. I published that blog. I got that meeting scheduled where a decision had to be made.

I also noticed that when I did the items that were the least pleasant, progress was faster. What was it about those items? They were the ones I was avoiding because they had implications, and as a result were important. Avoidance was coming out of my fear that they would not produce the right implications. What was I afraid of? Today, as I look at the list either in the morning when I am determining which are the most important or at the end of the day when I am considering the accomplishments of the day, I’m conscious of what avoidance means. It tells me exactly which are the most important.

This week, challenge yourself to reinforce what is important by keeping a list of long-term goals alongside your daily action list, and check it at least once a day. Tell me about how this behavior is working for you here or on Twitter: @madelynblair!

Next week, we will explore the final Phenomenal Four behavior: Posing Curious Questions!

# Talk. Listen

It takes courage to say something to someone. Be it anything. From simplest things to difficult life changing decisions. People try to convey what they want to say. At times it maybe a success or a fail. Communication is the key. Above all that we need courage to communicate what we want to say all the way from the heart.

It also takes a person courage to listen. Listen to the other person what he wants to say from bottom of his/her heart. To listen and understand what the person is trying to communicating so courageously. It takes a heart to listen to a person and its a big deal. It wouldn’t be necessary for us to take action but just listening is so important and effective.

People today don’t have the time to listen. So many things come in between. Maybe lack of prioritizing. Maybe lack of interest. But…

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# Success in a new assignment

When you join a new job, you don’t know what you don’t know.

Success in a new job is not about doing what you know or waiting for you to be told what to do. It is mostly about getting to know what you need to know. This is mostly about working with people. And with people humor, sarcasm, etc. becomes important to build that human quotient.

# Sell-in, Sell-out and Sell-through

Sell-in: how many units of a product is a manufacturer selling into the retailer

Sell-out: how many units of a product is selling out to the customer (from the retailer)

Sell-through is the same as sell out. They just invented it to confuse you.

# Steps to Take When You’re Starting to Feel Burned Out – HBR

It’s the opposite end of the spectrum from engagement. The engaged employee is energized, involved, and high-performing; the burned-out employee is exhausted, cynical, and overwhelmed.

Research shows that burnout has three dimensions: emotional exhaustion, depersonalization, and reduced personal accomplishment. When you’re emotionally exhausted, you feel used up—not just emotionally, but often physically and cognitively as well. You can’t concentrate. You’re easily upset or angered, you get sick more often, and you have difficulty sleeping. Depersonalization shows up in feelings of alienation from and cynicism towards the people your job requires you to interact with. One of my coaching clients summed it up like this: “I feel like I’m watching myself in a play. I know my role, I can recite my lines, but I just don’t care.” What’s worse, although you can’t imagine going on like this much longer, you don’t see a feasible way out of your predicament.

It’s this third dimension of burnout — reduced personal accomplishment — that traps many employees in situations where they suffer. When you’re burned out, your capacity to perform is compromised, and so is your belief in yourself. In an insidious twist, employers may misinterpret an employee suffering from burnout as an uncooperative low performer rather than as a person in crisis. When that’s the case, you’re unlikely to get the support you desperately need.

Research shows that burnout occurs when the demands people face on the job outstrip the resources they have to meet them. Certain types of demands are much more likely to tax people to the point of burnout, especially a heavy workload, intense pressure, and unclear or conflicting expectations. A toxic interpersonal environment—whether it shows up as undermining, back-stabbing, incivility, or low trust—is a breeding ground for burnout because it requires so much emotional effort just to cope with the situation. Role conflict, which occurs when the expectations of one role that’s important to you conflict with those of another, also increases risk of burnout. This might happen, for example, when the demands of your job make it impossible to spend adequate time with your loved ones, or when the way you’re expected to act at work clashes with your sense of self.

If you think you might be experiencing burnout, don’t ignore it; it won’t go away by itself. The consequences of burnout for individuals are grave, including coronary disease, hypertension, gastrointestinal problems, depression, anxiety, increased alcohol and drug use, marital and family conflict, alienation, sense of futility, and diminished career prospects. The costs to employers include decreased performance, absenteeism, turnover, increased accident risk, lowered morale and commitment, cynicism, and reduced willingness to help others.

To get back to thriving, it’s essential to understand that burnout is fundamentally a state of resource depletion. In the same way that you can’t continue to drive a car that’s out of fuel just because you’d like to get home, you can’t overcome burnout simply by deciding to “pull yourself together.” Rebounding from burnout and preventing its recurrence requires three things: replenishing lost resources, avoiding further resource depletion, and finding or creating resource-rich conditions going forward. Many resources are vital for our performance and well-being, from personal qualities like skills, emotional stability, and good health, to supportive relationships with colleagues, autonomy and control at work, constructive feedback, having a say in matters that affect us, and feeling that our work makes a difference. Try these steps to combat burnout:

Prioritize taking care of yourself to replenish personal resources. Start by making an appointment with your doctor and getting an objective medical assessment. I encourage clients to take a lesson from the safety briefing provided at the beginning of every commercial flight, which instructs passengers to “secure your own oxygen mask before helping others.” In other words, if you want to be able to perform, you need to shore up your capacity to do so. Prioritize good sleep habits, nutrition, exercise, connection with people you enjoy, and practices that promote calmness and well-being, like meditation, journaling, talk therapy, or simply quiet time alone doing an activity you enjoy.

Analyze your current situation. Perhaps you already understand what’s burning you out. If not, try this: track how you spend your time for a week (you can either do this on paper, in a spreadsheet, or in one of the many apps now available for time tracking). For each block of time, record what you’re doing, whom you’re with, how you feel (e.g., on a scale of 1-10 where 0=angry or depressed and 10=joyful or energized), and how valuable the activity is. This gives you a basis for deciding where to make changes that will have the greatest impact. Imagine that you have a fuel gauge you can check to see what level your personal resources (physical, mental, and emotional) are at any moment. The basic principle is to limit your exposure to the tasks, people, and situations that drain you and increase your exposure to those that replenish you.

Reduce exposure to job stressors. Your condition may warrant a reduction in your workload or working hours, or taking some time away from work. Using your analysis of time spent and associated mood/energy level and value of activity as a guide, jettison low value/high frustration activities to the extent possible. If you find that there are certain relationships that are especially draining, limit your exposure to those people. Reflect on whether you have perfectionist tendencies; if so, consciously releasing them will lower your stress level. Delegate the things that aren’t necessary for you to do personally. Commit to disconnecting from work at night and on the weekends.

Increase job resources. Prioritize spending time on the activities that are highest in value and most energizing. Reach out to people you trust and enjoy at work. Look for ways to interact more with people you find stimulating. Talk to your boss about what resources you need to perform at your peak. For instance, if you lack certain skills, request training and support for increased performance, such as regular feedback and mentoring by someone who’s skilled. Brainstorm with colleagues about ways to modify work processes to make everyone more resourceful. For instance, you might institute an “early warning system” whereby people reach out for help as soon as they realize they’ll miss a deadline. You might also agree to regularly check in on where the team’s overall level of resources is and to take action to replenish it when it’s low.

Take the opportunity to reassess. Some things about your job are in your capacity to change; others are not. If, for example, the culture of your organization is characterized by pervasive incivility, it’s unlikely that you will ever thrive there. Or if the content of the work has no overlap with what you care about most, finding work that’s more meaningful may be an essential step to thriving. There is no job that’s worth your health, your sanity, or your soul. For many people, burnout is the lever that motivates them to pause, take stock, and create a career that’s more satisfying than what they’d previously imagined.