Carl Taylor Senior Consultant

You’ve heard it before and we’re going to say it again - your people are your most valuable asset, they are your competitive advantage.

They are also likely to be one of your biggest investments (the biggest expense on your profit and loss), so nurturing and improving the productivity of your staff, can have a huge impact on the rewards you (and they) achieve.

To start with, it’s essential to know what return you’re getting right now, and the fundamental measure for staff productivity in business is the productivity ratio:

Worked example

  • Overhead wages = £600,000 per annum
  • Commercial salaries for directors – 5 full time working directors at £80,000 = £400,000
  • Total = £1,000,000
  • Gross Profit of £3,000,000

£3,000,000 Gross Profit divided by £1,000,000 total overhead labour cost = Productivity Factor of 3

From the results we see, most businesses are achieving a productivity of between 2 – 3.  If you’re coming out at less than 2 you’re unproductive and inefficient.  If you’re hitting 3 – 4 then you’re on target – above 4 and you are cruising. Can we improve productivity?  Here are 5 key tips:

Streamline and cut out waste by investing in your systems

There’s nothing that saps the time and energy of your workforce like manual data entry and inefficient systems – investing in up to date systems lets you cut out wasted time entering data into systems in multiple places, releasing time to spend in productive areas.  Taking advantage of the benefits of cloud software can also boost productivity by allowing staff in multiple locations to access your systems from anywhere at any time.

Set realistic and achievable targets for each staff member

Set targets for employees that are both realistic and will stretch them.  Set targets for sales people based on 5 or 6 x their salary, and make sure you measure their performance against the targets – after all ‘what gets measured gets done’.

Have salespeople focussed on the most profitable products

Make sure your salespeople’s time is invested in selling the products that will yield the most gross profit, so their time yields the highest return.

Improve employee skills through training

Training is a crucial part of ensuring productivity – even just making sure your employees know their way around your systems.

Make sure you’re not overstaffed

While outside expertise is needed in business to help us forward, employing full time experts with a narrow field of expertise can be a financial drain on your business.  Get experts in to advise on specific projects as and when you need them.

Spending time on these 5 key points will help you increase productivity, and will set you on a course for increased profitability, improved cashflow and ultimately greater rewards for you and your staff.