Increase employee performance and productivity to increase your EBIT
Whether you are a Business Owner, Executive Manager, Manager or Board Member, if you or your Organisation employ people, I would hope the reason for employing is for the individual to assist you to reach the business goals. Right!? Right!
Now we have established that I understand in business that the EBIT (Earnings Before Interest & Tax) or operating profit is a big consideration and so is increasing it! So, if you are employing people into the business to achieve your business goals and you want to increase your EBIT then you want to ensure that their performance and productivity is maximized wouldn’t you – to ensure you get the biggest return on investment? Not sure. Really? Then let me help…..
Employee where Performance and Productivity is not Optimised
Employees that are performing to maximum level are generally not engaged, are not advocates for the business, not ‘going the extra mile’ or contributing. It can even be worse they could in fact be working against the goals of the business. There can be various reasons for this; poor culture, poor leadership, bullying, harassment, not in the right roles, not aware of their responsibilities or what is expected of them, an unsafe environment, little focus on employee safety and the list goes on – and I’ve seen this in workplaces.
These employees are not efficient nor are they productive and most of the time they know it but do enough to perform their role and they usually know they can get by without being any other way (and they usually do). There may be personal reasons for not performing to a maximum capacity and if this is the case they generally communicate this. The profitability of the business is impacted on here as they are not productive as they could be, not producing the results they could or behaving in a way that fosters collaboration, innovation and great customer service. Imagine the figures or EBIT in that scenario. OK, still making a profit you say.
Employee where Performance and Productivity is Optimised
However, where employees performance and productivity is optimised they work in a positive, strong environment that places an importance on their health & safety, inspired by their leaders, love what the business is about and trying to achieve, know and understand how their roles fit into the big picture, contribute and collaborating on ideas to improve and again the list goes on. Their efforts are rewarded because they are producing results and having a positive impact on the bottom line and I’ve seen this too.
These employees are efficient, productive and strive to contribute positively to the business doing great work, being advocates, providing great internal and customer service which increases your EBIT. So you thought it was good when they weren’t optimised, imagine the figures now then!
Working Environment is the Major Contributing Factor
I think it’s important to understand it’s not about the individuals but rather they are impacted on by the environment they work in, physical and culturally, and the leaders in the Organisation which effect individual performance and productivity. In fact this can play an even larger role in that it can have more impact rather than the individual and any issues they themselves may be dealing with or have.
Don’t get me wrong we have, do and will assist businesses with fixing quick problems but this is generally a result from a cause or causes which means it will re-occur to someone else, some other way in the business and therefore the business is having to spend more money having to fix yet another problem and not getting the most out of employees. Rather, they could invest in changing the cause of the problem, reduce re-occurrence and get the most out of their employees by maximising performance and productivity and getting a return on investment from them.
Want to increase your EBIT?
If you are paying someone a salary, no matter how much it is, but lets’ just say $80K – then would you like to pay $80K in salary (with possible indirect costs) or would you prefer to pay someone $80K who performs and behaves to pay for their own salary and much more? Which would you choose?
By ensuring that employees are working in an environment that is conducive to optimum performance and productivity has the effect of increasing income and through workplace planning ensures employment expenses are efficiently managed. Thus, increasing your EBIT.
So, which employee is it that you would want in your business assisting you to reach or even exceed your goals? One that is optimised? So why is it then that so many businesses just want to fix a problem and / or accept satisfactory performance rather than being proactive and increasing their EBIT from another perspective other than reducing direct costs or alike. Also, be open when looking at your figures that high performing departments may actually be as a result of a great Manager (and vice versa!) not increased sales as an example.
At HR Business Direction we are able to assist with optimizing your people and performance. Contact us here.
Leisa Messer BBus(HRM); GradDipIR; CAHRI; IRSQ
Managing Director | HR Strategist
leisa.messer@hrbd.com.au
07 3890 2066
www.hrbd.com.au