I’ll be releasing the full Return on People Benchmark Report later this month, which is an uncommon yet insightful measure into productivity, profitability, and how well you turn your only sustainable competitive advantage – people’s ideas and talents – into value that customers are delighted to pay for. It may change how satisfied you are with your performance… because once again, there’s a BIG increase in the results!
What does it take to be in the top 10% of the Return on People Benchmark – Manufacturing Edition?
Profits consistently exceeding $190K per employee per year – UP from $131K last year. Amazed by that number? Intimidated? Did YOUR profits per employee increase almost 50% last year? This Benchmark is a starting point to inspire you to work towards more! Keep an eye out for the detailed bell-curve diagram in a couple of weeks, find out if you’re an A, B, C, D or F, and keep reading to find out how you can move up a grade or two. Not in manufacturing? Let me know what industry you’re in, I’ll be happy to share numbers that are relevant for you.
What does it take to land at the BOTTOM of the Benchmark?
For a “case study” on what NOT to do, read the backstory on the Kraft-Heinz debacle, which has reduced two once-great companies to the absolutely worst-performing company on the Benchmark. Even Warren Buffet is no longer buying their shares, although he teamed up with a Brazilian private equity firm to “create value” from the merger. Instead, K-H fired all their senior managers, destroyed the cultures of both companies including long-established operating efficiencies, and is currently discounting and cutting costs all the way to the bottom of a very slippery slope – which is the typical way private equity firms try to find profit. They had bad ideas for cutting costs, and no good ideas for growing revenues. For a lower risk, much more successful approach, keep reading below.
Why is there such a difference?
Some companies excel at having their employees create value for customers. Some couldn’t find value if it was in their lunch bucket. Culture, engagement, alignment to strategy, getting things right the first time, competitive advantage, customer loyalty – all of those and more play a role.
And yes, sometimes there are good reasons for a company to land in the “dog” category – as Tesla did this year due to the huge expenses and investments related to disrupting an industry. The real story surfaces when you look at the relatively undifferentiated companies in an industry, and see vastly different results. Take a look at the list of the top 10% below, and you might just be surprised! Sometimes a Star becomes a Dog… and vice versa. Click on any of the links below for the fascinating stories behind the data.
Why does Steel Dynamics earn 3.5x the profit per employee that US Steel does? Why does GM earn 2.5x the profit per employee that Ford does? Aren’t lean practices ubiquitous in these industries? Don’t they all use robotics and other advanced technology? Clearly, other factors are at work, and that’s what you need to drill down into within your own industry.
Who are the Stars and Dogs?
Pharmaceuticals and Technology firms once again dominate the top spots, but everyday and somewhat mundane businesses such as Food, Beverage, and Tobacco routinely make it into the upper echelons too. Oddly enough, it’s EXACTLY those same industries that are also in the BOTTOM 10%! Broadcomm and Qualcomm are at opposite ends of the spectrum, as are Altria and Kraft Heinz, and that’s why this metric is so powerful as a catalyst for positive change. When you can see the heights that others have achieved, no matter where you are today, you can inspire your team to be the best. Then, all you need is a powerful roadmap to get there.
Almost EVERY industry has stars and dogs! Which one do YOU want to be?
|1. Altria Group||$839K||1. Kraft Heinz Co||$-262K|
|2. Broadcom||$812K||2. Newell Brands||$-186K|
|3. Biogen||$568K||3. Qualcomm Inc.||$-137K|
|4. Gilead Sciences||$496K||4. General Electric||$-79K|
|5. Celgene||$457K||5. News Corp||$-54K|
|6. Apple||$451K||6. Dean Foods||$-22K|
|7. Micron Technology||$393K||7. Tesla||$-20K|
|8. Amgen Inc||$390K||8. Zimmer Biomet||$-19K|
|9. Regeneron Pharmaceuticals Inc.||330K||9. A-Mark||$-18K|
|10. NVIDIA||$312K||10. Dell.||$-15K|
Here’s how to be the best in your industry.
When I’m speaking at conferences, corporate retreats, or small executive gatherings, leaders always say “But I’m not a Fortune 500 Company“. Even if you’re not, this metric is still very relevant, because of how it impacts strategy, and how it can impact everyday behaviors when you use it as a powerful catalyst.
These days, almost every competing company has access to similar capital, similar technology, similar processes regardless of size. What makes the difference is people, and how well they turn talent into value for customers. It’s your people’s everyday behaviors that create or destroy profitability, not bookkeeping. That means you need to have the right strategies to become a “destination company” for the best and brightest people in your area. And it means you need the tools and processes to guide them to behave like owners everyday, effortlessly managing costs and increasing revenues as they deliver value to your customers. But first, they need to break free from being complacent with the status quo in their work.
Enter Return on People as a powerful catalyst. When you’re doing performance reviews, do most of your employees think they’re pretty good performers? Do many of them often ask for a raise? Companies earning an F on the Benchmark couldn’t even stay in business if they gave their employees a raise, which is not exactly a sustainable business strategy. Instead, show them what “good” looks like in terms of where you’re at on the Benchmark today, where your competitors are, and where you’d like to be. Their competitive instincts will automatically kick in, and they’ll want to help your company be the best.
But wanting and doing are two different things. Because if you already knew what you needed to do, you would have already done it. And you don’t want to take the risk of the slash-and-burn private equity approach. So, what you still need is an actual roadmap to systematically shift your company from where you’re at today to where you want to be, engaging your employees and customers at every step of the way. That’s the work that I do with companies who are motivated to become the best in their industry, using ProfitU(tm), the innovative, online learn-by-doing system that fits into the way you do business every day, and delivers take-it-to-the-bank results.
When you’re ready for the tools and processes required to build a P.R.O.F.I+T Roadmap that will increase your Return on People by a grade or more and help you become a “destination company” for new hires, let’s have a chat and I’ll share some ways that you can do that. Book a time for a short no-obligation phone call or Email me.