Ruth King Photo SmallerIn honor of Labor Day, let’s look at three easy actions to increase labor productivity.

First, why is productive labor important? The more productive your employees, usually the more profit you earn. The more productive your employees, usually the more satisfied your customers. Increased labor productivity translates into increased customer satisfaction and profits.

Here are three suggestions.

1. Track Labor.
How many hours are they putting on their time cards? How many hours can you bill to a customer? How close are you coming to project labor estimates? If you estimate a project at 40 hours and it comes in at 50 hours, you lost money.

Calculate the billable percentage. Put these percentages on a chart where everyone can see it. Productivity will increase. Why? Simply because it is being tracked. What gets watched gets improved. If you continue to track and post labor productivity every week, then this alone breaks the old habits. The week you stop tracking and posting is the week that everyone starts slipping back into hold habits.

Office personnel get the billing and accounting completed on time without overtime. They must answer the telephone promptly and handle other office functions when they are not on the telephone. Your office personnel (including managers) are responsible for ensuring the field personnel stay productive.

Listen to the Kevin’s and my discussion about labor productivity:


2. Give everyone an incentive to be productive.
The best way to do this is to share the profits of the company. If everyone works towards increasing productivity and profitability, they deserve a share of the results. How do you do this so it’s fair? The best way is to determine what percentage of profits will be shared. Usually this figure is less than 50%. You need the other profits to be saved for manager’s bonuses based on the profitability of their departments, future growth, increased raises, and company stability. Everyone must understand this.

3. Ask everyone how to increase productivity in a manner that they understand.
For example, how can we bill 15 minutes more per day? How do we save $100 per month in overhead costs? How do we cut down on wasted time?

They can visualize a 15 minute increment, a $100 overhead decrease. They can’t relate to 5 hours or $10,000. If five people have a different idea that can be implemented you’ll increase revenues and cut costs. The key is to take their ideas, implement them, and track the results through a chart on the wall. Keep that chart updated every week.

For any of these ideas to be successful, you as the owner must be serious about change and implementing the changes. Communicate this to your employees, solicit ideas, implement them, track them constantly, and report the results. This is how long lasting changes get made, productivity increases, and your company’s bottom line profits.