In the October 2014 issue of PROSALES we discussed curbing internal theft. Its tagline was “Invest in ways to keep profits from walking away.” But there is a far more serious risk to your profits than internal pilfering. It’s the theft of employee productivity.

Have you noticed staffers taking longer than normal breaks? Do some workers lack enthusiasm? Are employees showing up late, leaving early, or not coming in at all? Productivity theft is influencing your business. Each employee determines his or her own level of productivity. We need to encourage and not demand productivity enhancement.

Employees increase or decrease productivity continuously through unannounced and unilateral modifications of behaviors that directly influence your stores success. Sometimes this is because of external influences (health, family issues and the like); other times this is in response to something we have done.

We have all seen articles about the importance of managing productivity. In the past, we probably could improve productivity to some degree—by installing time-keeping devices, creating strict policies, constantly supervising employees and the like. This is very basic and never totally worked.

That perennial problem has entered an era in which managers need strategies for dealing with our newest generation in the workforce: Millennials. Born after 1980, they represent a significant 27% of the adult population. By 2020 they will grow to 46% of the workforce. They are the source of future managers and, ultimately, our successors as executives and owners. They also are certainly important for our ability to adapt to new technologies and sale methodologies—in essence, our ability to live productively now and in the future. They also interface with Millennial customers.

Millennials are concerned about their internal and external environment and quality of life. They must be engaged and feel they are valued. They are sometimes referred to as “entitled” or part of the entitlement generation. Like all generations, they control their personal productivity.

Why do we care and can we quantify the risk of productivity theft? Let’s take a look at a $10 million business with a 30% gross profit margin. Assume that most employees are paid mostly in hourly pay or salary, not on large commission plans (Millennials don’t typically like commission plans anyway). The loss of just 3% of sales productivity will cost us $300,000 in sales and $90,000 of gross profit dollars. And most of this will flow to the bottom line—perhaps as much as 75%! Makes our inventory shrink seem rather minor.

I believe overall productivity can be increased or reduced by more than 3%, while truly productive employees can achieve a productivity gain of 10%--or an equally big loss if those same people choose to be unproductive. Using the same $10 million business as a model, that 20% spread converts $2 million in sales, $600,000 in gross profit and perhaps an impact of $450,000 to the bottom line. Serious business, indeed.

Many of the products that we sell are available from other sources and customers can find them with blazing speed. Productivity is one of the remaining ways to influence total value and satisfaction.

So, what do we do about this? Here are some thoughts:

  1. Come to grips with the fact that customers can buy what we have from other sources. Thus, the real key to true productivity is “how” we support and service our customers. It boils down to attitude and logistics.
  2. Realize we can only influence productivity; we cannot control it.
  3. Determine what each employee would like to achieve over the short, medium and long term (tip: have them indicate how long they regard each timeframe). Make a commitment to help each employee move toward his or her goals. Influence positive change.
  4. Truly engage all employees with your sales and service process. I call this “customer demand satisfaction.” If you don’t have a sales and service process, engage your employees to help develop one.
  5. Create quantitative and qualitative milestones (formerly known as budgets) and include these with job descriptions and reviews.
  6. With reference to reviews, don’t wait a year and then forget. Spend some time with each employee at least each month and engage. Don’t dictate. The response to a dictatorship is immediate loss of productivity; I call this the dictatorship tax!

Perhaps most important of all, respect employees who are trying to balance many objectives in their lives. Millennials are perhaps the most “balanced” generation so far. As I have told many of them through professional readiness programs, I am anxious to see how they continue to demonstrate this balance as they add careers, spouses, children and other initiatives to their lives. They have helped me become a better person. And, they can help you become both a better person and have a more productive and satisfying business.
Let’s accept and engage. The result will be productivity enthusiastically walking into our stores!