April 2, 2015- ISSN# 1545-2646
Reasonable Accountability
As I drove between appointments the other day I turned on the radio and there was a discussion about how our society allows for people to not hold themselves to a standard of accountability.
To some degree it is even encouraged on social media to see just how far some people can go to get around being accountable and then broadcast it to all of their “Friends” about how they got away with it.
Unfortunately this is costing business millions or maybe billions of dollars. As small and medium sized business owners, your weekly payroll takes a hit every time a paid employee is compensated and does not deliver value back into the business.
I’ll try to be understanding that we cannot expect a person to contribute at 100% of their workday but are your employees closer to 80% or 50% or maybe even 30%? You most likely don’t have good data to substantiate a claim either way. It also takes time which is an expense to track the difference so many businesses just don’t spend the time/money to get a handle on employee contribution to the bottom line of the business.
This week take a look at the average value an employee contributes to the gross revenues in the business. For example your business is $20 million dollars and you have 100 employees. Each employee on average has a revenue value of $200,000 each. Obviously some employees are a straight cost to the business and do not have an opportunity to impact or directly generate sales. In these cases the sales resources must double their production to offset those resources which are straight cost. If you have 10 straight cost resources and you have 10 sales people, rather than their contribution being $200,000 each they carry $400,000 each to compensate for the straight cost resources.
This is obviously a very simplistic view of this process. It starts to get you thinking about targets for performance for various roles in the organization. If a person is in direct sales they have a significantly higher generation value. Those in sale support have lower value and those in direct cost roles not only zero contribution to sales but you must add in their carrying cost as well. I’m not going to give a big math lesson here but if you do not have targets for performance then you have no standard to measure contribution. Without those metrics, people can exist day to day in your organization not being held or holding themselves to an accountability standard.
These standards need to be reasonable and attainable or everyone feels defeated before they even start. Being reasonable does not mean weak or soft. It means that consideration has taken place to adjust for various items out of the control of the individual such as product delivery schedules, marketing, etc..
The key here is to establish accountability standards and have your team members hold themselves to those standards. This week take some time to look at what standards you have in place and which ones you need to put in place.
Wondering what you should measure? Give JKL Associates a call at (313) 527-7945 to discuss your situation.
Questions or comments – email us at partners@jklassociates.com or call our Office at (313) 527-7945
Copyright – JKL Associates 2015
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