Dynamic, growing companies are the result of maximizing 6 outcomes, what I call the Focus Areas. One of the six Focus Areas is maximizing per employee revenue. And no, I do not mean simply cutting head count. No company grows from a cost cutting mindset.
These 5 sequential steps will maximize your revenue, maintain your costs, and increase your profit. Devote one day to this work.
- List all of your employees by name and job category or duties. Include every single person, including the CEO, C-suite execs and the people in all departments.
- One-by-one, consider how each person’s job, as they currently peform it, contributes to revenue. Write it down. Most people are not actively selling. Ask “What is it about this person’s job that contributes to revenue?” This can be time consuimng, but it is the crucial element in achieving the goal.
- Assign a rating of the performance of each employee: A, B, C. You have to define what constitutes A, B, And C performances for your company.
- Focus on the B and C people. Can the Bs be turned into As? If yes, how? If no, do they contribute enough as a B to be retained? Can the Cs be turned into Bs? If yes, how? If no, what is your plan for removing them (by reassignment where they could perform as a B or by termination) and replacing them with Bs?
- Determine how to augment the As with more Bs and how to replace the Cs with Bs or As. Not every job needs a college graduate with an advanced degree and 10 years of experience. But every job should have performance standards that contribute to revenue. Improving the performance of your current employees or bringing in new ones that meet these performance standards is key to maximizing per employee revenue.
As the CEO/Owner it is your obligation to annually evaluate your employees through the lens of per employee revenue. You are the one who “owns” the revenue and profit goals. The buck stops with you. Be confident and a strong leader when you’re executing this process. It is not an HR exercise.
When you, the CEO/Owner, lead this process, you’re reinforcing both the commitment to the goals and demonstrating appreciation for the high performers in every job or organization level without whom the company would not reach the goals.