One of the biggest profit leaks in your company may be related to your philosophy regarding people. The biggest cost in most companies is payroll, and therefore, the biggest asset or investment is “people”. How seriously are you and your company taking this investment?
In our experience, A Players bring two to three times the productivity of employees who do not, regardless of their function.
A Players are employees who meet the productivity requirements of their position and your company’s core-values requirements.
When measurement tools are put in place, business leaders are shocked by the high levels of B and C players they have on their teams. The employee performance gap costs companies millions in lost revenue and profit. This gap doesn’t get enough attention because there is no financial statement line item for the lost customers, lost productivity, mistakes, and lost opportunities attributable to these nonperforming B and C players.
Most sharp business owners measure the performance of their business on at least a monthly basis, and fail to properly relate that performance back to individual employee performance. Worse, the lost performance from your poorer performing team members may exceed your annual income.
By not requiring a specific level of employee performance, monitoring that performance, and holding your employees accountable you are allowing your employees to establish their own performance requirements. Common sense tells me they will set lower work standards for themselves than you would.
To maximize employee motivation and raise standards of performance, it is imperative that you establish key performance indicators for every position in your company. A standard should be set for each indicator, and all employees should be expected to consistently live all of your core values.
Once these are benchmarks are established and communicated, you should measure performance against the requirements on at least a quarterly basis. Immediate action must be taken to help employees that are not meeting their requirements, and people that cannot meet your standards must be replaced.
If you are interested in addressing your “profit leaks,” let’s schedule a time to further discuss your business and how we might work together to patch up your leaky bucket. Contact us for a FREE consultation or give us a call at [phone link=”true”].