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Concerning Profits And Employees
One of my very first presentations was to a small
privately owned company that had six retail establishments. The
company was in a very competitive industry and many of the
businesses in that industry were experiencing financial losses.
Profits and revenues were very thin. The CEO thanked me for my time
and said that he would give it some thought. Much to my surprise, I
received a phone call from him about a week later wanting me to stop
by his office. During our meeting he was very frank. He told me that
four of his six locations were losing about $40,000 a year. Two of
the locations were making money, but not enough to cover the losses
from the other four. If he closed the other four locations, there
was simply not enough profit potential to justify the company
remaining in business.
We discussed the demographics of each location
and the drive by traffic patterns. He could not see any reason why
his four locations were losing money. He had good dependable
managers at each of his locations. He had increased his advertising
considerably and nothing seemed to work. I suggested that we test
his store managers to see if there was a measurable difference
between the managers whose locations were making money and the ones
that were losing money.
When I returned the pre-employment evaluation reports to him, I
advised him that I had placed them in the order of each store’s
profitability, with the most profitable being on top. He quickly
reviewed the order of the reports and his face lit up as he
exclaimed, "How did you do that, I never discussed with you
which stores were profitable and which ones were not." I told
him that we had discussed the demographics and since there were no
real discernable differences there, I reasoned that the difference
had to be with the managers. I had simply organized the reports
based on each manager’s general management and sales ability.
Next
we reviewed each report and by the time we had finished, he knew
exactly where his problems were and how to fix them.
What a difference a year makes
About a year later, that CEO invited me to lunch
at a very nice restaurant. While waiting for the meal to arrive, we
reviewed the prosperity that his business had experienced. He summed
it up very nicely, "If you had told me a year ago how much
money my company would be making today, I would have told you that
it would have not been possible. I would have never believed that my
business could have ever become this profitable and I want you to
know that you were a big part of making that happen." That was
after a year of using the pre-employment assessment program and he was just seeing
the tip of the iceberg.
Without having to battle people problems, he
was able to concentrate more on operations and expansion. When he
looks at an evaluation report, he links it directly with
profitability. When he reviews a couple of evaluation reports, he
will tell you, "this man will make me $20,000 profit and this
one will make me $40,000 profit." He will set both reports on
the side because he is hunting for the applicant that will generate
$60,000 of profit. He really doesn’t mind if he has to assess a
number of applicants to find the right one. At the most he will
spend $1000.00 to get that extra $20,000 in profit. It’s a no
brainer.
The best employees are free!
The people we hire will directly affect the profitability of the
company. Some employees will generate profits far greater than
their overhead expenses. From a practical standpoint, those
employees cost you absolutely nothing since they are contributing to
the overall profits of the business. Selecting the wrong
employees will cost you money and will eat into the profits that the
good employees are making for your company. You will always
lose money on a bad investment, so my advice is to invest wisely,
especially with the people you hire.
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