* 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.