Salary Expense (1 of 2): Improving Productivity - John M. Leask II CPA/ABV, CVA

Salary Expense

Part 1 of a 2 part series

Warning Signs:

    • Rising labor costs as a percent of sales.
    • High turnover of employees.
    • Evidence of inadequate training.
    • Employee/supervisor conflicts.

  • Increase in employee absenteeism/tardiness.
  • Confusion/duplication of effort.
  • Signs that a process needs improvement:
    • Falling profits with stable or growing sales, stable prices and costs.
    • Net sales to total assets out of line with industry averages.
    • Unnecessary duplications.
    • Unneeded income.
    • Bottlenecks.
    • Missing information.
    • Missing resources.
    • Poor morale.
    • Rejects.
    • Customer complaints.
    • Absenteeism.

Steps to Improve: PRODUCTIVITY

  • Evaluate staff productivity objectively.
  • Reward employees with non-cash compensation.
  • Reward your employees for bright ideas.
  • Link bonuses to performance.
  • Formula bonuses are less likely to become routine.
  • Stamp out negative attitudes throughout the organization.
  • Cross-train employees to handle multiple job duties.
  • Invest in training your people in ways that will increase productivity.
  • Daily direct input of time by time keepers increases billable time reported.
  • Seize opportunities to upgrade your staff.
  • Reshuffle under-performing staff to better suit their abilities.

Steps to Improve: OTHER

  • Have written personnel policies.
  • Pay twice a month or once a month, not weekly.
  • Conduct exit interviews to confirm suspicions and uncover problems.
  • Improve processes or re-engineer.

Back to The Business Doctor

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