Improve Profitability and Productivity: Why Working More is not the Solution

Most employers want to see their salaried employees work more than 40 hours per week. This is a flawed philosophy because it assumes that more work time equals more output or that putting in more time will equal more profit. This leads me to the following question.

Which employee is more valuable?

Employee #1: Works 50 hours per week and is able to bill out for 40 hours.

Employee #2: Works 20 hours per week and is able to bill out for 30 hours.

Employee #2 is more valuable, even though employee #1 works more hours. Employee #2’s output per hour is much higher than employee #1.

Below are the top things you can do to increase your profit margin and productivity, while being able to decrease the time requirement.

  • Take an honest look at your customers and get rid of the 20% who produce 80% of the problems. All customers are not worth keeping.
  • Brainstorm ideas in how you can speed up processes and eliminate bottle necks.
  • How are you wasting time? Constantly checking email or voicemail messages is one time pit that many of us fall into. A few others are: long meetings, phone calls or emails.
  • Is there anything that you do that someone else can do that doesn’t get paid as much? This will save the company money and will allow you to focus on what you are good at. Looking at outsourcing this type of work is also an option.
  • If you are trying to satisfy all customers with multiple products, maybe you are spreading too wide and thin. Becoming the most profitable often times means simplifying and narrowing down what you sell so that the most profit generating aspects of your business become the focus.
  • Are there staff that take too much time to manage? There is a point where they cost more than they are worth it, which includes investing into their future. The key is that they learn from their mistakes and are improving.
  • If possible, let staff focus on what they are good at. If a programmer is good at management, that doesn’t mean they should become the production manager.

Just because we are spending a lot of time working doesn’t mean we are working efficiently. And if you are working efficiently, that doesn’t mean you are working effectively. There is a huge difference. (Note: I will write an article that goes further into this specific point.)