Performance Indicator & Productivity

Assume:

• A company has 100 employees.
• Productivity is $100,000 per employee per year
• Variable non-employee cost of sales* is 50%

* example: materials or merchandise cost

If yearly productivity is improved by only 2%.....

The 2% productivity improvement would result in increasing revenues by $2,000 per employee X 100 employees = $200,000 per year.

With variable non-employee cost of sales at 50%, the pre-tax profit improvement is $100,000 per year.

The cost of using The Performance Indicator for all 100 employees for better management and to cause the productivity improvement is only $4,500.

The Return On Investment (ROI) = $100,000/$4,500 = 2,222%

This is why so many organizations are using The Performance Indicator.