© 2019 by VITAL MGMT

Proudly created with Wix.com

Be a SociaLight and  Follow Us:

  • White Facebook Icon
Please reload

Recent Posts

Business Intelligence Is It Beyond Me?

September 29, 2016

1/1
Please reload

Featured Posts

How To Maximize Labor Productivity?

February 27, 2019

 

* In this issue: Unlocking Labor Productivity

* Less than 281 words, a two minute read. 

 

 

 

 

We define Labor Productivity as the Labor Revenue generated per 40 Hour Tech Equivalent over the course of the Month. A great target is $10,000 per month or $120,000 per year. Don't leave out your sub-contracted labor. In the best cases, we should make 60% to 65% margin on this level of production. You probably think it is about timekeeping and detailed project reporting. It's not. Here are the real creators of high labor productivity.
 

1-You must have adequate dollars in every proposal; a 30% labor level is minimum. Review each proposal before presented to client. Consider a higher commission rate on Labor.


2-Your Labor Rate to Wage Cost must be 4X minimum; higher is better,

3-You must bill for every 8-hour direct employee everyday without exception. If they are on the clock, they should be charged to a job. Few exceptions. If you pay them to get to the job; the client should too. Why should delivery be free?


And, planning the work is as chargeable as doing it.


4-How Can the Team help the techs complete the jobs faster? Identify ways to use less than the budgeted hours on every job.


5-Conduct post mortem on every job over a certain amount. Catalog what could have been improved. Implement change. Effective Labor MGMT is more in the number of hours you bid than in the hourly rates you charge.


6-Have the techs share in the improvement dollars per tech per month. If you want to improve by $3,000K assign 25% of the improvement to a tech bonus pool. Who can’t use $750 a month? Report productivity by tech.


right respective buckets.e7-You must make sure all items are classified properly to get Labor, Equipment & Parts in th

 
What Outcomes You Should Look For
      Labor Gross Margin of 60%
      Labor Rev Per Tech/Month of $10,000 
      that is, Billable Revenue/Direct Tech Payroll at 40-hour equivalents
      Labor Mix above 30% & increasing
 
Conclusion: you cannot achieve exceptional profit performance unless you manage the labor part of the business extremely well.

 

 

Share on Facebook
Share on Twitter
Please reload

Follow Us

I'm busy working on my blog posts. Watch this space!

Please reload

Search By Tags