Upside Down and Inside Out…Staffing Ratios

A danger area for all contractors especially in this recession with declining sales opportunities is eliminating or laying off outside techs and installers without addressing the need to do the same with people on the “inside”.

Rule of Thumb:  For every two techs or installers out there turning wrenches or doing the work, there should be one inside [support] person. This is the best of staffing ratios which is 2:1.

Example:  10 Techs [or Installers] each billing for their work for 5 inside people who don’t turn the wrenches and bill for their work.

With rare exception, a company who has a 2:1 staffing ratio is very profitable because the company isn’t too bloated with overhead expenses.

Guess what!  You count as inside staff unless you’re spending the majority of your time working in the field and making the company money and selling and having others do the work is better but still counts toward inside staff.

The problem comes with companies that once had a number of techs and installers out there making money and got used to having all the staffing positions filled on their org. chart by someone other than themselves. It’s nice to have a personal secretary or a service manager or someone else doing the books besides you or your spouse. But, if the outside sales falls and outside staff is cut, you must take the steps to cut your inside overhead.

By the way, if you have a staffing ratio of 1.5:1 you can still be a profitable company.

Example:  9 Techs [or Installers] each billing for their work for 6 inside people who don’t turn the wrenches and bill for their work

BUT if your staffing ratio drops closer to 1:1 which would be:

Example:  9 Techs [or Installers] each billing for their work for 9 inside people who don’t turn the wrenches and bill for their work.

You are in a very precarious position!

What can you do?

Start by tallying up who’s on the outside and who’s on the inside and count yourself and any sales staff, warehouse people and such that don’t bill directly for the work they do [aka turn the wrenches]. Then, think about what job positions can be combined and if necessary done away with or sub contracted out until you get back to a profitable and sustainable staffing ratio again.

Ultimately, the goal is to get back to growing your marketing and sales opportunities and building your staff the right way with the right resources and in the right proportion.

Al Levi teaches contractors how to run their businesses with less stress and more success with operating manuals. To get control of your business and grow the right way, get The 7-Power Contractor® Signature Operating Manuals System at today.

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