When Al Bates of the Profit Planning Group, author of Triple Your Profit, looked back at the financial data he has collected over the past three decades on the wholesale distribution industry, one thing jumped out at him. “In almost every line of trade there’s been no improvement in payroll as a percent of sales,” he says in the latest episode of MDM’s Executive Briefing on-demand webcast, available now at www.mdm.com/executivebriefing.
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Sure – productivity has gone up significantly. “The problem is it hasn’t translated into an improved payroll percentage,” Bates says.
Companies have to invest in technology, because if they don’t – but everyone else does – “you’re behind the power curve.”
But even though investments in productivity are necessary, they aren’t sufficient, Bates says. “You can’t just rely on systems and procedures to solve the problem.”
Payroll doesn’t necessarily change just because you improve productivity because salaries, health care costs and other inputs into the payroll equation have also grown over the past several years. “I think it’s going to be a brand new battleground in terms of distribution,” Bates says.
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