Green Economy

Happy Belated St. Paddy’s Day.

Yesterday, as I was driving to meet a prospective new client I heard an interesting discussion on the radio about whether and how the current economic crisis would affect the prospects for transitioning to a “green” economy. Since it was a day for all things Irish, and therefore all things green, I listened with interest.

Now, my prospect, who is not Irish, wanted to talk about how to increase his company’s output with absolutely NO INCREASE in staff (a phenomenon called increased productivity, or capacity). Since his is a service business entirely, staff salaries and benefits are his major categories of cost.

He wanted to make more “green” without spending more “green.”

So, I asked him if he could estimate the “capacity utilization” of his people right now. Puzzled, he wanted clarification of the question: did I mean how much client-related work was being created per employee? “Something like that,” I answered. “That’s a measure of demand and throughput, more than capacity utilization. To figure out when you’d need to hire new staff, IF demand went UP, you’d need to know what your current staff could reasonably create at their peak capacity.”

“Do you think they’re operating at their peak right now?” I asked him.

He and I worked through an estimate. We segmented his employees into three groups:

1. “The MUSTANGS”–those folks who were the best of the best and who were totally bought into and engaged with the company’s mission, vision, and purpose and who were the ones generating all the new ideas and most of the output. He estimated Mustangs were 30% of the total staff and created 60% of the total output. They were literally TWICE as productive as the next group…

2. “The MULES”–those folks who more-or-less reliably showed up and who were doing a decent job but who were not counted among the Mustangs. They take up 50% of the space and generate 50% of the productive output of the company.

“HANG ON,” you may be saying. That adds to 110%, Jimbo. Time to change the batteries in that calculator?”

No, because there is a third group, around 20% of the staff, we called  “The MONKEYS” whose gripes, grievances and gross negligence were actually undermining at least 10% of the productive capacity of the other staff. They “toss banana peels all over the place” and require handling that adds to costs but not to output.

That’s when we started talking “GREEN” energy. The cheapest, cleanest way to increase capacity is to light up the hearts and minds of non-engaged employee base. Somehow get them as productive as the 30% at the top. We estimated that if he could eliminate the “Monkeys” and light up half of the “Mules” he’d be looking at a 35% INCREASE in capacity with a 20% reduction in staff costs. That, he admitted, was probably conservative, since many of the Mustangs would run faster and farther if there were fewer Mules and no Monkeys in the way.

With about $4.5 million in payroll and benefits and a very high operating margin on new sales, we’re talking a potential benefit of $1.2 million greater annual profit, all in.

“So, how do we start?” he asked. You, dear reader, probably know the answer…

“YOU GO FIRST,” I said. 

Get on YOUR Builder’s Journey and lead the way. Some people will get mighty curious about what you’re doing, and will want to follow. Some won’t. Some won’t even notice. But you’ll be on your way and the rest will be history. 

YOU do it. We’ll help.

That’s lean, clean, and GREEN. Know what I mean?