Posts tagged with: performance
If your company is growing, it will have a tendency to continue to grow because you’re doing things right. Conversely, a company that is going backwards or shrinking has a tendency to continue to go backwards or shrink until acted upon by an outside force or you choose to make a change.
When we read about the concept of business growth in the top business periodicals, they always reference the multi-national corporations. That context isn’t relevant to small and medium size businesses. For you, business growth requires individual effectiveness.
In your business, you hold the office of president or CEO of the corporation, and you’re responsible for its success or failure. You and the members of your team are invested in your corporation, and it’s your responsibility to see that the value of the business continues to increase in the years ahead.
Growth vs. Death
All responsible company officers know that unless the company is growing, it’s showing the first signs of death. As the head of your corporation (be it 1, 50 or 500 people), you must realize that this applies to you as well.
However, because you are also a person, you have a tremendous advantage over even the largest corporation. In a large multi-national corporation, can it double its production in a single day? Of course not. Can it double its sales in a single day? Of course not. It might like to, but its growth options can be gated by the complexities of such a large organization. Yet an individual person can double, triple, quadruple his/her effectiveness in a month or less. As a smaller business, you can implement flexibility, control and responsiveness to get immediate results which is very difficult for corporate giants to do.
Can you grow and improve as a person at least 10% a year? Of course you can. In fact, experts estimate a person can increase his or her effectiveness anywhere from 50% to 100% and more within 30 days. Now apply that to each person in your entire business.
History is filled with people who exceeded their previous performance to an almost unbelievable extent (artists, athletes, musicians, orators, military and political leaders, not to mention the corporate rags to riches stories).
Cost of Wasting an Hour
Think about it. If you waste even an hour of productive time every work day, it adds up to 250 hours a year. If you had an employee who wasted that much time, would you keep him on the payroll or fire him?
What is your time worth per hour [the burdened hourly rate it costs the company]?
If your salary is $150,000 and your burdened hourly rate is 1.5 then your hourly cost to the company is $108 (assuming a straight 40 hours/week).
Multiply this by 250 and you can see what you’re throwing away. $108 x 250hrs/yr = $27,000/yr.
The effect is compounded when you tally the cost for each member of your team.
If even 5 people (at $50,000 salary) waste an hour a day, that’s $36/hr x 5 = $180/day x 250 hrs/yr = $45,072/yr.
Salaries are sunk costs. That’s $72,000 you can’t recoup and you have nothing to show for it.
What can you do now to improve the effectiveness of every member of your team, to get better results/person? How would that improve your bottom-line?
Here’s the challenge from Earl Nightengale:
“How much are you worth right now, today, as a corporation? What’s your value today, to yourself, your family, your company? If you were an outside investor, a stranger [e.g., a potential acquirer], would you invest in this corporation?”
Effectiveness, Performance, Productivity
Business growth requires individual effectiveness from the entire team. Wasted time equals lost opportunities and a direct reduction in net profits to your business that can be measured daily. Measure these three factors: effectiveness, performance, and productivity, to track the value each individual on your team contributes to your corporate growth.