I am at NPOA (National Print Owners Association). I learned a very important thing today, we think our payroll costs are increasing because we have to pay people more but its actually because we tend to overstaff our businesses. We staff for the peaks and keep the staff in the valleys.
Larry Hunt quoted Parkinson’s Law which is an adage that “work expands so as to fill the time available for its completion.” So we keep staff around when we don’t need them and then the work needed to be done expands to fill their days. When the work picks up, we naturally hire more. We are building a bigger and bigger staff whose capacity for work is slowly decreasing. Do you see why this results in the print industry leaders having payroll costs in the low 20% and the laggards in the 40%?
It doesn’t happen overnight, it happens day by day, minute by minute. If you’re not measuring productivity then you are at risk of falling into this trap.
I started my career at Kinko’s, we were all working for a small hourly rate but our store was rewarded each month with a share of the profits. I motivated my team by saying, “never say no to a customer, we’ll figure out how to get it done.” Our store was incredibly productive, we were really busy and staffed appropriately. When other stores covered for us so we could have store meetings they were shocked at the pace our store ran at and we were shocked how little they got done while we were out!
What is the pace of your company? Could it use more measurement, more attention to productivity? We work so hard and invest so much in our businesses, maybe one of the best investments you can make is to measure the productivity of labor so you can protect yourself against Parkinson’s Law.