The owner is paid last.
Every wage, invoice, and loan payment comes out first. The owner keeps what remains and carries the loss when nothing is left. A company can develop an excellent manager for twenty years without ever requiring him to make a decision from that position. When that authority finally arrives, he is doing that job for the first time.
Residual Claimants is a practical system for developing people who can function on the residual side of the ownership line. It moves through three stages:
Seeing the work. Hiring, standards, supervision, and coordination done correctly.
Judgment into action. The conversations that cost you something, and the systems that hold without you.
Operator to principal. Cash and profit, risk, cost, delegation, equity, and the decisions that reach the person paid last.
Each of the thirty-three lessons states the question it answers, the conditions under which its rule holds, the rule itself, and where the rule stops working. Alice, who appears in every lesson, learns the material the way most people do, mostly by getting it wrong first.
Written for the owner-operator of a small or midsize company, for the manager who intends to become one, and for the owner developing somebody else to carry the claim.
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