How can a company increase the profitability of its employees? For many hiring managers, the answer is no more complicated than “hire the best people, then get out of their way.” And while this method works at some firms, it rarely maximizes employee potential.
Companies who set their employees up for success have a greater chance of reaping the benefits. This includes creating goals, systems, and processes that encourage employee productivity and support motivation and morale. While many employees react well to incentives, few succeed in a poorly-structured or badly-maintained work environment.
To improve the profitability of your people, consider the following four tips:
1. Outline company profit by employee.
Create a business model that sets a minimum standard for profit per employee, then work to control fixed costs so that they stay below the minimum profit standard. For instance, if you set a minimum standard for quality performance that leads to 45 percent or more gross profit, keeping fixed costs below 35 percent will result in a minimum of 10 percent profit per employee – more if your people have the training and support they need to shine.
2. Set appropriate standards for behavior.
When employees are evaluated based on behavioral standards they can control, their motivation and productivity improve. They have the power to identify problems, fix them, and have their performance judged more positively as a result. When you put the power to earn a glowing review in your employees’ hands, most will rise to the challenge – and many will produce more than you thought possible.
3. Tie performance standards to compensation.
Employees should be paid a competitive base salary that covers their living expenses. After this basic wage, however, consider tying compensation for certain employees to performance standards through bonuses, commissions, and other means. Use performance standards the employees can control, such as scheduling or quality of work. The organization that does this puts the power to “earn big” in the employees’ hands, but it also makes it clear that the employees are responsible if service suffers.
4. Track and publish the results.
Although each employee contributes to the overall profitability of the organization, it is the combined efforts of all employees together that produce the total result. By tracking performance closely and making the results public, employees develop positive peer pressure and a healthy sense of competition that pushes the entire organization toward peak performance.
At Daley and Associates, our recruiters can help you find the best people for financial positions throughout the Northeast. If you are looking for executive recruiters in Boston MA, contact us today.