What if every one of your employees doubled productivity? Sound far-fetched? Buckle up because I’m about to share with you a process I’ve used repeatedly, to double but often quadruple the profit per employee within a few years.
If you’re the kind of executive who feels like your people are already performing well, you’ll be delighted to see that often these people are the fastest to double or quadruple their productivity.
Or maybe you are one who believes some of your people are on corporate welfare, and you’ve had it. Great, because you will have a process to make sure none of your people hang out as tourists on the trip to more remarkable results.
Or perhaps you are one who has some high performers and others who underperform. If that’s the case, you’ll love knowing that you can bring up the consistency of performance for all. Where there are solutions, there are problems.
In this case, three recurring challenges get in the way of helping people understand how they are tied to profit:
First, new employees tend to get trained by the person who had the job before him. That person was not likely a top five percent performer for that position. As result, your high potential person is not realizing high performance, they weren’t trained for it.
Second, if your team members are normal, they don’t understand which customers provide all the profit. When we work with community banks, we have found that 50 to 140% of their profits come from their top 100 customers. Every industry is similarly impacted. Since most team members don’t understand who the most profitable customers are, or how to identify your next most profitable customers, they have no plan of how to best spend their time and effort to get in keep more of those top 100 customers.
Third, your operations people probably don’t think that they have a role that ties to profit. They don’t understand that they too need to do their job better, and by doing that they can substantially move the profit needle.
Every organization seems to have these same challenges that keep them from even higher profitability. So, I’ve come up with these three steps that will help you get some traction over the next few weeks, on aligning each of your teammates to profit.
Step one. Unlike much of what is taught as conventional wisdom, the best way to improve efficiency ratio is not tightening salaries, laying off people, or cutting marketing, travel or training expenses. You can lower your efficiency ratio by over 20 points in a few short years, which drives profit up by getting your people to do the most important most profitable things and doing those things in the most effective way.
Step two, in contrast to thinking that the next gadget, software, or tool will lead to more profit per employee, realize that there are top 10% activities for every job in your organization. If people knew what they had to do to perform their job in the top 10% of performance, your efficiency ratio would plummet as a miraculous impact on the profit, and your people will feel great about themselves because they will go home each night feeling like superstars.
Step three, unlike most attempts with employee performance improvement, where there’s a whole project that is done at one time and rolled out, start with the fastest path to the money, the highest revenue producing jobs. Give these people the skills and the clarity of what success looks like in their position.
If a salesperson can increase their sales from $15 to $35 million of new business per year and also command premium pricing on that business, that’s a massive impact move, and more impactful than improving the quality and quantity of the lower-level positions that are perhaps in operations.
To sum up with clear action items:
One – Stop cutting travel, salaries, and marketing expenses, the things that will tank your future potential. Instead, help people clarify what matters and how to do each of those things.
Two – Help each team member understand what their top 10% activities are and get them the skills to radically improve how they do them.
Three – Start with those positions that can have the most profound impact on your profitability fast so that you can drive improved profits within a quarter instead of a year.
In the next video, I’ll show you that without a proper visibility system, one that doesn’t create guilt and shame, you can’t ever achieve sustainable accountability to what matters, critical data that you don’t want to miss.