Summary

The cost of labour is one of the largest overhead expenses in most businesses.  Any inefficiency here is an expense that must be recovered from the potential Profit of the organisation.  Labour tends to grow of its own accord and it is very difficult for the business operator to know just how labour productivity is going as costs are rising.  The Labour Efficiency Ratio discussed in this article is an early warning alert if wages are moving in the wrong direction.

Read this if: You have have sufficient staff to find yourself losing track of their costs and contribution to company productivity / profitability or if you are looking at putting on staff, like accountants, that don't directly contribute to profit generation. Probably more likely to appeal when you have 10 staff or more.

Relies on: mentions a metric dashboard to monitor your business.

Audio/visual materials: none

Degree of Difficulty: blue belt (intermediate)

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