Part 3 – Key Performance Indicator- (KPI) How to improve your Gross Margin per Person – GMPP
By Thad Whittenburg
There are a number of different ways to improve productivity or GMPP. Here are 3 key areas:
1. Continuously Improved and Consistently Used Processes
2. Attracting and Retaining Top Talent
3. An Amazing Customer Experience
Today we are going to focus on number one: processes, processes, processes.
You are probably getting the idea of how important these are to your business. Easy and consistent processes allow you to do some great things that will be a huge impact on your business.
First and foremost- Training- Unless you have a process on how to do business within your company it’s pretty hard to train to it. I sometimes hear companies say that everybody runs their business differently within their walls. Yikes! How did they come up with their own processes? Were they left on their own to create a new path? Do all these different processes create a consistent customer experience? I think not! It makes it very difficult to engage in process improvement when there is not a set one in place.
Let’s start off with the idea that you need to have a process in place to improve processes. A set methodology that can guide you down a consistent path of how you can improve your current processes is key. I like Manage to Lead. We used this at my previous place of employment and it really helped us take the existing processes and improve them. https://intelliven.com/change-initiatives-dont-fail/
Intelliven is doing a seminar this summer. If you’re interested, please contact us for more information.
Here’s why I like it:
1. The system is easy to understand.
2. It’s driven by the people that actually use the process and will be using the new one in the future
3. People who develop their own new process are more likely to have buy-in and the implementation stage goes a lot easier. Changing behaviors is the hardest part.
4. Involving everyone on how to make the company better typically leads to a stronger engagement level that leads to some pretty amazing things for a company- Fact – less than 30% of American workers are truly engaged in the success of their company.
5. It’s performance driven- If you can’t measure it, you can’t improve it.
There are other methodologies like Six Sigma, Lean Management, TQM, and Kaizen to just name a few. I am sure all of them are good but I will stick with what I know best. Oh… before I forget… I often hear people say that they are too small to need a formal method to improve their processes. “We only have 5 people and if we need to improve something we just come up with the idea and implement it.” HHHmmm not sure I buy that, but if it works, great… run with it. Most companies developing new processes and really implementing them can have a pretty big challenge getting it done on a consistent basis.
Here are my last two tips-
First- Find the formal methodology you want to use within your company and choose someone (not you) that can learn it backward and forwards and become the captain of the process improvement ship. Choose someone that is well organized and detail oriented for best results. Doing this shows your commitment to continuous process improvement.
Secondly, start with the low hanging fruit so that you can get a little experience and success under your belt before taking on a 900lb gorilla that needs to be worked on.
Hope you enjoyed Section One! Next time we’ll tackle section two and focus on attracting and retaining top talent and how “High Turnover”, 30% or more, will absolutely kill your GMPP and your profitability.