Return On Investment Analysis for PPI and Productivity

"Employee Performance Solutions"

Solutions

Job Matching

Integrity / Work Ethic

Management Development

Employee Management

Assume:    A company has 100 employees.

                    Productivity is $100,000 per employee per year

                    Variable non-employee cost of sales* is 50%

                    * example: materials or merchandise cost

If yearly productivity is improved by only 2%.....

The 2% productivity improvement would result in increasing revenues by $2,000 per employee X 100 employees = $200,000 per year.

With variable non-employee cost of sales at 50%, the pre-tax profit improvement is $100,000 per year.

The cost of using The Performance Indicator for all 100 employees for better management and to cause the productivity improvement is only $4,500.

The Return On Investment (ROI) = $100,000/$4,500 = 2,222%

This is why so many organizations are using The Performance Indicator.

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