Recent reports showed that business owners are getting squeezed between higher employee benefits and lower employee productivity. Factor in a less qualified workforce and the U.S. businesses are in real jeopardy.
Many organizations look at numerous factors when constructing a strategic plan. However, very few look at revenue per employee. This statistic is necessary when looking at where and how to grow the bottom line. Did you know that average revenue generated per U.S. employee was around $100,000?
Now, look at your most recent P&L statement. Take your total revenues and divide by your number of employees. What is the average revenue per your employee? Is it near the U.S. average? Or is it less? If you are in technology and advertising, your average per employee revenue should be double that average or $200,000. However, if your business is tax preparation, your average revenue per employee is half or $50,000.
Revenue per employee is even more critical for small business owners. When one employee is not working at his or her full potential, the small business suffers far more negative affects than in a much larger organization. For example, a small business service company with 10 full time employees secures gross revenues of $1,000,000. If 50% of them are not engaged, then they are only generating $50,000 each while the other 5 are responsible for $150,000. This disparity is potentially affecting the performance of the high achievers and resulting in higher stress for the engaged employees and ultimately higher turnover for the small business owner.
Years ago, Jack Welch was chastised for his policy of cutting the bottom 10%. However, Jack saw the bigger picture and realized that for General Electric to grow and innovate demanded high performance from every employee. He set the expectation and revenues increased per employee.
With the first quarter of the new year almost two thirds over, maybe it is time to return to your strategic plan and set aligned goals based upon revenue per employee. And it probably wouldn’t hurt to evaluate what employees are not actively engaged in your business.
Leanne Hoagland-Smith, M.S. is a business coach and executive coach with offices in Indianapolis and near Chicago. She writes, speaks and coaches people in businesses to quickly double or triple results through the creation of an executable strategic plan along with the necessary leadership skills “to pull it off.”
One quick question, if you could secure one new client or breakthrough that one roadbloack holding you back from success, what would that mean to you? Then, take a risk and give me, Leanne, a call at 219.759.5601 to experience incredible results.
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