2015-22-7-22-12-14

Why Sales per employee ratio important for your Human resource management?

Man, material & machine these three are very key elements for an organization and most expensive part. So good management is required to ensure maximum profitability. In this article you will learn how you will determine your staff’s efficacy. There is ratio called Sales per Employee ratio in financial management. This ratio will indicate how your workforce are performing comparing to other origination from same industry.

For example

ABC RADIO BANGLADESH
Sales $10000
Number of employee 100
So sales per employee = $10000/100= $100

Oklahoma RADIO Inc.
Sales $10000
Number of employee 10
So sales per employee = $10000/100= $1000

how to calculate sales per employee ratio
Its clearly showing Oklahoma RADIO Inc. sales per employee is greater than ABC radio Bangladesh. It means Oklahoma radio inc has better employee management system which is very important to reflect positive impact on bottom line.

Lets CFO of ABC radio start digging the reason behind this. He wonder when he start comparing human resource between this two radio station.

ABC RADIO BANGLADESH

Producer 40 person,
News presentation section 20 person
Sales and marketing 20
Accounts and admin 10
Creative 10 person.

Oklahoma RADIO Inc.
Producer 3 person,
News presentation section 2person
Sales and marketing 2
Accounts and admin 2
IT 1

He also found Oklahoma RADIO Inc. Has no paid creative designer. They complete creative task using Odesk and they have freelancer who collect news from town and send it to news department and paid per quality of the content.
They have IT department who maintain a ERP system so that only 2 person can complete accounts and admin job. They have very sophisticate archiving and sound mixing software. This help them to produce program 10 time faster than any other orthodox system.

What is the comparative advantage between this two radio station as Oklahoma Radio has less employee?
1. Less salary need to pay
2.Less logistic (computer, space, stationary, furniture)
3. Less long term liability (Pension,,gratuity)
4. Yearly incremental salary and bonus

What about, as Oklahoma radio inc introduce a new IT department?
As they have IT department, now they can use world class ERP and music system which helping them product quality product with less time which help engaging more audience. On the other hand as they have ERP, they can analysis data to take efficient decision to get more revenue.

This is how Sales-per-Employee Ratio help organization to reshape its manpower for efficient utilization, and its sound like “Pay less, do more”

Hope this article is help you to understand Sales-per-Employee Ratio. Please see the video to learn calculating Sales-per-Employee Ratio. If you have any specific question, please feel free to write down your question on comment section.

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