It took me a while to understand the link between people and profitability.
I routinely ask our management team how we can achieve a step change in bottom-line margins, and invariably they will suggest some version of the three proven methods:
- Raise prices
- Cut costs
- Change revenue mix
But you come to a point where none of these three can deliver a step change in margins, because you’ve already raised prices and cut costs. Then what? How can it be possible that competitors have higher margins?
The answer is to get more out of less.
Get a higher return on your assets.
And in a labor-intensive business, the main asset is people. So if you can get more out of your people, then a step change in profitability can follow.
