The number one reason many banks do not publish total expenses related to staff is to hide their staff inefficiency. A company with total revenue of say US $1,000,000 and total staff costs of US $300,000, can efficiently compute productivity as a ratio of staff costs to income. In this case, the total staff costs associated with staffing – basic salaries, bonus, allowances, benefits, and all costs incidental to staffing represent the input. In this case, you have an average staff productivity rate of about 30%.
In reality, some staff are more productive than others.
As a leader, you need more accurate and straightforward ways to monitor their productivity. Start with the hourly costs of having staff. Determine the:
Total monthly staff salary = US $2,000 gross.
Total working days in a month = 25 days
Total working hours in a week = 8 hours
Total number of working hours monthly = 8 * 25 = 200 hours.
Total employee cost per hour = US $2,000 / 200 hours = US $10 per hour.
Whether the company makes money or not, you must pay the US $10 per hour as long as the staff is on your payroll. As a leader, it is your responsibility to train the staff and empower them to provide more benefits and revenues to the business over and above the average costs.
Unfortunately, some staff have a terrible attitude which makes them very unproductive and a cost to the business.
When a staff reports late at work by arriving late, the company loses the US $10 per hour. If you have about ten employees, and each wastes an hour in checking their Facebook or taking longer lunch breaks and or other breaks, the company would lose the US $100 per hour per day.
The cost of a single public holiday to an SME is enormous. A company that has ten employees loses US $10 x 8 hours per day x 10 employees = US$ 800.
That is why the coronavirus pandemic has hit so many businesses badly, especially those without good business models like subscription business.
In these times, every leader or business manager needs staff who are putting their best foot forward. Pushing and working hard and smart against all the odds. People with the attitude of playing to win, not playing for the sake of playing like Arsenal football club, pun intended.
Copyright Mustapha B Mugisa, 2020. All rights reserved.