- September 26, 2011
- Posted by: Paul Foster
- Category: Business Growth Advice, Business team management, Grow a Business
Two work crews, one saw
Every morning before each crew went in different directions there was a discussion to determine who needed the saw most. One crew had lost the second saw and the owner did not want to pay for another. In fact, there were quite a few tools and basic equipment that were lost.
From a financial standpoint the payroll for the two crews was about $200 per hour. The new saw cost less than $200.
The solution – I convinced the owner to restock the crews with everything they needed at a cost of around $1,000. We then set up a $500 tool fund. If the crew lost or broke a tool it was replaced and paid for from the tool fund cash. If at the end of the season they didn’t spend all of the money, the crew got to keep the remainder of the tool fund cash.
Employees sharing a computer
The version of the software program that three employees used was only licensed for one user and wasn’t set up to run on a network. The employees took turns using the computer which was located in an inconvenient place for two of them.
From a financial standpoint, the three employees produced a total revenue of $210 per hour when working at their most productive.
The solution – We determined productivity would increase at least an hour a day with two new computers added. On an annual basis that’s $52,500 more revenue! That is a good return for roughly a $3,000 investment in two computers networked together and 2 more users on the license. (We didn’t even calculate the uplift from much happier employees!)
In both of the above examples, by spending a quarter, the business made far more than a dollar!
Talk to your teams about what tools they need to be more productive.
- Evaluate the investment
- Calculate the value of the lost revenues from downtime and the payroll costs of unproductive employees
I suspect every business has an opportunity to spend a quarter to make a dollar.