Profit Leak 4 – Are Vacant Positions Affecting Business Performance?
Payroll is typically one of the largest costs in most companies, which may cause you to become too focused on individual salaries and myopic when staffing your company. While cost management is important for your business it may also become a trap, causing you to inadvertently develop leaks in growth and profits. Do you give enough consideration to how hiring the right people can bring value and help you grow your business?
Imagine your business as a sports team. If we tried to match your team against the competition player by player, position by position, how ready is your organization to compete? Do you think the key performance indicators you require from each of your positions are lofty enough? How does it affect the team when one of the positions is not filled properly because the owner is trying to keep payroll down? How does it affect the team when a player has to leave their “real” position to make up for the absence or inadequacy of another player? How well can a team that has only filled some of its positions compete against another team that has filled all of its positions? What happens when one player has to play too many minutes or has too many positions to cover?
Invest In Growing Your Team
One of our clients increased revenue by 70% in nine months by identifying where they had unfilled and underinvested in positions. The company was growing and profitable but could not turn profits into cash fast enough. Had they continued with inadequate staffing, they might have gone insolvent. Instead, they invested in growing their team and found that for every $1 they spent in upgrading their team, their return was more than $10.
Key Questions to Determine Leaky Bucket
Here are some questions that can help you determine if you have a leaky bucket in this area:
- What key performance indicators do you use to measure high performance for each position/role/function?
- Is anyone person accountable for too many key roles in the organization?
- Is there any key role or function that has no one person accountable?
- Is there any role that is not functioning well?
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. Call us for a FREE consultation (305) 722-7213.