What people actually cost you

Are the people you have the people you want?
And what is the cost to your business if the answer is no?
We know that the cost of employing staff is as much as $63,000 per annum for every $40,000 of actual salary (due to indirect costs, from research conducted by Dept of Statistics, Business New Zealand and KPMG.)

The question is: Is each person paying their way and returning to the business more than they consume? Enough to actually leave margin on the bottom line? Margin higher than what the business owner would earn putting money in a bank account?
What do you deliberately do to get 100% return on your money and sweat equity  investment?
Or is your view that people can be expected to contribute fully at all times in the best interests of the business?
I am often asked:
HOW do I focus on People Management while having to focus on so many conflicting demands?”
Is it worth the effort? Or is it preferable to focus on other priorities and pay staff to BE there as opposed to work for the exceptional success of the business?

Would you be able to count the difference if you engage them 100% in the business? If so, then it is a simple matter of cost-benefit comparison. You don’t need to be a people management specialist – these are skills that are easy to pick up and apply, and your business success depends on it.

Every business is resourced with people assuming that certain jobs get completed as agreed. When they do, all things being equal, the business can succeed. When they don’t, there is pressure on others including managers and business owners. Managers have to do extra to make up for the deficit. Now the business is under internally-created pressures.

For many business operating in New Zealand’s small and volatile market (where 87% of businesses have 5 or fewer employees) this is more pressure than it needs. You have to get people self-managed, prevent performance issues and deal with those that are there.
The bottom line is: manage your people and watch your profits grow.

Some would say “lead” not manage, but then there is an argument that these are two sides of the same business brain. Lead from the right (brain) and manage from the left (brain). All I know is this: Don’t set up feedback systems that focus energy, attention and self-correction, and you will count the cost.


About Cherri Holland

Fascinated with business, brains and how to use the brains on the payroll to make business buzz.
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