“Why is it so hard to find good workers nowadays”
These words are uttered by business owners throughout America daily in every industry. But is it true?
Employees can make or break a business. The difference between a top earning franchise and one that is run into the ground is generally the staff in place doing the daily operations. A bad employee can change the attitude of an entire business or shy away customers costing the business thousands of dollars. To make matters worse, firing a bad employee can cause even more problems- a business may be on the hook for unemployment cost, benefits, and more which can take a major toll in an already difficult climate.
According to ‘Small Business Matters’ “The average small business actually generates about $100,000 in revenue per employee. For larger companies, it’s usually closer to $200,000. Fortune 500 companies average $300,000 per employee. Oil companies generate over $2,000,000 in revenue per employee. We should all own oil companies…
Using revenue per employee as a staffing tool takes three steps:
Step #1. Do the research. Find out what an optimal number is for your company based on the size of your company and the industry you are in. There are a variety of resources available to find this data including Hoovers, RMA,, and your local Small Business Development Center (SBDC) office.
Step #2. Set a range for your company. Let’s say you do your homework and determine that a good revenue per employee number for your business is $150,000. You then may set a performance range that determines when you might have to either add staff or downsize. That range might be $125,000 – $175,000. If your ratio goes under $125,000, you may need to look at reducing headcount. If the number goes above $175,000, it may be time to add staff. The key is that you are now managing to a number and not just a gut feeling.
Step #3. Manage the number. I recommend looking at your number at least every quarter. It may fluctuate short term due to seasonality, but if you see a three-month trend, it’s time to act. It’s also important to be looking for ways to increase the ratio. How can you improve the productivity of your employees? Better hiring? More effective uses of technology? Leveraging efficiencies?”
Still, all the math in the world doesn’t prevent you from making a bad hire. So what can you do?
Test drive employees with temporary labor. Temporary labor companies seek to fill the gap between employers and employees. Businesses can essentially lease an employee with the option to hire full-time after a trial period. This arrangement offers protection to the employer and allows prospective workers a great option to show case their skills.
Ready to try your hand with a temp agency? Labor Works staffing offers ‘a no show no pay guarantee’ along with industry leading service to provide you the workers you need on time every time. Contact us today to find out how Labor Works can work for you!