3 Core Components Of An Employee Management System:
1 – Company Policy Manual
The Company Policy Manual is a detailed breakdown of all relevant State and Federal laws as well as all specific Company data relevant to your business. This is where you put the details of what you expect as far as conduct as an employee of your company.
2- Job Description
This is the shortened version of the Company Policy Manual. The Job Description should list all relevant tasks associated with that position which you are describing in as much detail as possible.
The Scorecard is a tool to measure the performance and compliance of your employees tying back to the Company Policy and Job Description.
So why should you care? Think about it, are you as profitable as you could be? No BS here, we all do it, we all hang on to employees much longer than we should. Here's why you need to think about why that is a bad decision.
Contractors Payout 50-60% To Employees and Suppliers
The majority of your expense as a contractor is the direct payout of labor and materials. When money comes in, you first pay your employees and then your suppliers. This can account for up to 50-65% of your gross sales receipts.
For example, if you bring in $1,000,000, you turn around immediately and pay employees and supplier’s $500-650,000 of that money and the largest share of that is employee wages averaging approximately 30-35% according to industry averages.
When You Go Over The Estimated Hours, Down Goes Your Profit
If it takes longer for your employees to get a job done over the estimated values, the more you’re going to pay out and your profit will be smaller than you would like. The quicker your employees get a job done, the more profitable you will be.
In our example above, if wages account for 35% or $350,000 in a baseline year, how much additional profit would you make if your workforce was 20% more efficient over last year?
$70,000. That is a lot of money in an industry with single digit profitability.
We get that number by multiplying $350,000 by 20% = $70,000. That $70,000 has a direct relationship to your Net Profit assuming all of your overhead would remain the same whether your workforce was 20% more efficient or not. See figure 1. Follow the Green line (the Money Line) down to Net Profit.
Therefore, one of your best ways to increase your profitability rests within the structure of your company and it isn’t within Marketing. An investment in developing operational efficiencies is one of the best investments you can make into your company.
Develop Operational Systems In Your Company
Document Your Process
One of the main components of that process is to create a system to manage the workforce and develop accountability within the workforce. You need a document to explain what the rules are and what boundaries to operate within as well as details of the types of tasks you expect those individuals to perform. If you are going to maintain the best employees, you need to score them to indicate overall performance of the employee.
Do Your Employees Know What Is Expected Of Them?
If an employee does not know what is expected of them, you have not created a daily task list for them and you are not measuring their performance on a regular basis, you will literally have people showing up to collect a check. They could care less what contribution they make to your Company or team. One of the best ways to illustrate the relationship and importance of performance is to look at sports.
Take A Look At Professional Sports Teams....
Everyone has a favorite team or sport. Teams seek out the best talent possible, pay the talent what they are worth and lay out the rules of the team. When looking at our own companies, they should follow the team structure of most professional sports organizations;
NFL rules = Company Policy
Quarterback, Lineman, Coach, Line Coach = Job Description
Win Loss record and Individual Statistics = ScoreCard
Nascar rules = Company Policy
Driver, Crew Chief, Gas Man, Tire Changer = Job Description
Race Standings / Sprint Cup Standings = ScoreCard
MLB rules = Company Policy
Pitcher, 2nd baseman, 3rd baseman, Manager = Job Description
Individual Statistics / Win-Loss Record = ScoreCard
- How long will a Quarterback remain a starter if they throw 10 interceptions in a game?
- How long will a driver in Nascar stay behind the wheel if the team finishes in the bottom 10% all the time?
- How long will a pitcher remain in the big leagues if they lose 3 or 4 games in a row?
You know the answer, but why don't you run your company that way?
You Should Manage Your Company Like A Professional Sports Team
Granted, we don’t deal with salary levels of the professional sports leagues, but why shouldn’t we have the same expectations?
- Can you be at the top of your game with people who don’t do their job?
- Can you be at the top of your game with people who break the rules?
- Can you expect something from an employee that you never clearly laid out in writing?
We all have a favorite sport. We all know how competitive sports can be. Do you realize that the business you are in is likely just as competitive, if not more competitive than Professional Sports?
Can You See The Similarities?
Yet, we often complain and ponder why we can’t make any money while we watch our favorite sport every week. We don’t make the connection between the way a Professional Sports team is managed and how we run our companies.
Professional sports only accept TOP performers, anything less is not tolerated, period. That is how the best teams perform at the highest level. They have the best coach, best players and an organization that performs at the TOP.
You have to identify your TOP performers so your company can win the Superbowl or World Series of your industry; be better than any of your competition and be world champions.
Ready To "Draft" Some New Players?
If someone is not pulling their weight, it is time to release them and “Draft” a new team member to do the job. If they don’t work, we “Draft” another until we have the best team. There are three components you need to establish a system to identify your top performers.
Learn how to build a complete employee management system with this Free e-Book Below.