Maximizing Profits

When asked what their jobs are, most employees respond by naming their job titles such as electrician, plumber or estimator. Yet, the more accurate and desired answer is, “to make money for the company.” Employees accomplish this by working both efficiently and productively, which are often intertwined.

Efficient employees maximize profit potential by performing their tasks correctly the first time. Productive employees complete their tasks safely and in a reasonable period of time. For example, a salesperson can be productive by making many sales calls and achieving a high closure rate. But if this employee is only calling on customers with low average orders instead of those with high average orders, then the employee may be productive but not efficient.

Or a construction employee may be extremely productive based on the volume of work completed. Consider an employee who builds a wall in one day. Similar to the salesperson, the employee was productive but not very efficient because the wall should not have been built until the duct work was completed. Now the wall has to be torn down. Efficiency is building the wall at the right time at the right place. Both efficiency and productivity are essential in order to increase revenue and profits.

There are several markers of efficient and productive work for owners to examine in their companies. In some cases, inefficiencies come from quality issues. When there are a significant number of rework situations, the crew has not been efficient. Similarly, when there are multiple callbacks to job sites because of customer dissatisfaction, this is another key indicator of inefficiency. On the other hand, here are some key markers of efficiency:

  • When crews reduce the quantity of scrap leftover upon completion of a job and do not waste the materials, they are being efficient.
  • When crews adhere to safety regulations and have no (or very few) safety violations, high efficiency is in effect.
  • When crews are both properly managed and scheduled, they have the ability to work efficiently.

Here are three key indicators that show productive employees: 

  • A productive crew completes its projects on time, and its on-time to overtime ratios fall within the acceptable company limits.
  • Productive crews complete jobs within or under budget.
  • Productive crews are highly motivated by more than the rewards of the monetary compensation.

On the other hand, productivity is reduced when crews are idle, when they have too much downtime, when the job conditions are worse than expected or when crews are under-supervised.

Planning and Communication Increase Profit Potential

A well-run organization plans job tasks in such a way to allow employees to achieve the overall goal of making money for the company. In these instances, the completed job is envisioned and then broken down step-by-step. A work flow is created to determine how many employees and the type of materials required each day.

This type of planning ensures that the right employees are at the right job site at the right time with the right materials. It reduces the chances that employees are unproductive and just waiting around to start working because of lack of materials or their services aren’t needed yet.

In addition to poor or non-existent planning, lack of communication also inhibits efficiency and productivity. For example, the estimator may visualize the work flow and the types of employees and material needed to complete this job, but never passes this information to the foreman.

Or the owner isn’t told until a few days before the job is due to be completed that the crew is running behind schedule. This lack of communication leads to an increase in overtime, which may mean the crew wasn’t very efficient or productive, not to mention profitable.

Many owners wait until the job is completed to determine if employees were efficient and productive. This approach is reactive and can be very costly. A more effective solution is to determine a daily or weekly metric (depending on the project size) that allows everyone involved with the project to see where they should be at the end of the day/week with this process or part of the job.

This solution sets the expectation for the required efficiency and productivity to finish on time. If the crew or project is not on schedule, owners and management can immediately take steps to rectify the problem and get back on track. By communicating these expectations up front, owners won’t be caught off guard at the end of the job when both time and money are lost.

Acknowledge the Problem – Find a Solution

A plumbing company was contracted to do the duct work when natural wood burning fireplaces were being replaced with gas ones. The salesperson would determine the measurements and give this information to the estimator who would make a parts list for all the necessary pieces, such as valves, fittings and joints.

Yet, many times when the installers were at customers’ houses, they would discover that they did not have enough material or the right supplies. This meant they had to go to their trucks to locate what was needed. If the materials were not on their trucks, then they had to make a run to a supply store or back to the warehouse for these items. Neither of these solutions was productive or efficient and resulted in additional labor costs for the company.

The solution was to prepackage a handful of kits comprised of extra parts for each type of fireplace. When the fireplace was put on the truck, so was the corresponding kit. The kit was returned to the warehouse and restocked if necessary for the next installation. In this way, the company reduced trips to the truck, supply store and warehouse, freeing up their installers to finish their jobs in a timely manner.

The Winning Formula

Frustration adversely affects both productivity and efficiency. Employees become agitated and annoyed when issues outside of their control impede their ability to work efficiently and productively. These include running out of material before the job is finished, arriving at a job site and the wrong materials are there or arriving at the site only to wait around until the other trade employees complete their work. It’s no surprise that employees want their work days to go smoothly, without hassles. Employers who take the initiative to reduce these irritations while emphasizing procedures that improve efficiency and productivity will reap the ultimate rewards: happier employees and more profit for the company.

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