The Biggest Player in the Profit per Employee Game – Where do YOU Fit?
This month we’ve been exploring the recently-released Return on People™ Benchmark, which is an uncommon yet insightful measure of productivity, profitability, and the ability to turn your only sustainable competitive advantage – people’s ideas and talents – into a value that customers are delighted to pay for.
What does it take to be in the top 10% of the Return on People Benchmark?
Profits consistently exceeding $131K per employee per year. Are you there? If not, download the bell-curve diagram and find out if you’re an A, B, C, D or F… and get insights on how to move your performance up a grade.
Who’s the biggest player in the Profit per Employee game?
It’s rarely the same year to year, with Pharmaceuticals, Energy, Chemicals, and Financials taking top place in the past five years with Profit per Employee numbers in the $600K – $2.9 million range.
This year’s top dog is once again Host Hotels & Resorts (Four Seasons, Ritz-Carlton, Marriott, and more) at a whopping $3.4M – up more than ONE MILLION DOLLARS OF PROFIT PER EMPLOYEE from last year’s 2.3M. However, before you get dazzled or envious, note that this reflects a fabulous comeback from a dismal 2009 performance of $-1.3M in ROP. Host Hotels is a business of extremes, and sometimes they’re up, sometimes they’re down, so I don’t by any means suggest that you aspire to their business model, which is highly leveraged and consists of just 214 employees.
And the biggest loser? Chesapeake Energy hits the bottom of the barrel, replacing last year’s worst-performing Apache (2 years in the basement, making a comeback with, a huge improvement from $-6M to $-377K, still a dramatic slide from their 2011 A+ grade). As with Host Hotels, the Energy sector is a notoriously feast-or-famine industry. This is one of the reasons why I’ve focused this year’s in-depth report on the Manufacturing Sector, which is less volatile and provides a more balanced picture for most firms, yet revolves around the same median value as the overall index of $25K. However, if you’re in the Services or Retail space, please feel free to ask me for the data in your Sector – I’m happy to share.
If you can’t be the best of the best… aim to be the best in your industry
When I’m speaking at conferences, corporate retreats, or small executive gatherings, I ALWAYS get asked: “Doesn’t it matter what industry you’re in when it comes to Return on People?” Yes, of course, and when you download the Benchmark infographic, you’ll see which industries ON AVERAGE score highest and lowest, but the real story is in the differences WITHIN each sector, not between sectors.
There are 72 industry categories in the Fortune 500. Of them, 47 (up from 33 last year) have a consistently CLEAR market leader that often earns several 2x, 3x, or 4x the average profit per employee in their sector. That’s probably the case in YOUR sector. In many cases, they consistently lead while many others in their industry struggle. Occasionally, someone comes from behind and suddenly eats their lunch. Asking “why” is beyond the scope of this blog post… but if you see that gap in YOUR industry, that’s the question I’d ask!
They all have access to similar capital, similar technology, similar processes. What makes the difference? It’s how well they turn talent into value. Are YOU leading your industry? Or desperately playing catch up? Let’s talk about YOUR industry. I’ll share the data, and help you interpret it.
