I was talking with a client today in the manufacturing business who just has another record month. "Dang we are really busy," he told me. "Nobody told my people there is a recession going on."
"Ok, so maybe we are coming out of it," I thought. But the fact is his business has been doing remarkably well over the last 8 to 10 months.
So I asked him why he thinks his business is doing so much better than others.
He compared his business to another manufacture. The other manufacture has nearly 100 employees and is doing 4 million in revenue. He has 28 employees and is doing nearly 10 million in revenue. Now I am not sure how comparable the companies are in products, but I can tell you one thing for sure. The revenue per employee in my clients business is much higher than the other company.
Which led to the fact that one of the reasons why he feels his business is doing so well is because they put so much emphasis on improving employee productivity.
He naturally attributed that to the fact that they put a lot of emphasis on developing, innovating and training systems.
I have found that focusing on productivity measured either by profit per employee or revenue per employee can be a very effective way to monitor you progress in developing a highly efficient business.