Measuring Profitability for Small & Medium Companies

In simple terms, Profitability is how well the company generates return on investments made.  The success of any company can be related to its  profitability. Profitability has different approaches for analyzing.

Finance and HR should be able to find out the value their people create for the bottom-line.  The most widely practiced workforce composition model can help unravel the value of people.  Looking at the proportion of staff, their costs and what they bring to the table – if addressed early can have a positive impact on Profitability.

The employee engagement and corporate financial performance must be directly linked and thorough research should be conducted within the organization to see the cause-effects. Measuring Human Capital performance is the key to success.

Whatever is getting done – has to be measured and shared with the respective employee. These simple metrics should be played back to them giving them an experience of their contribution.  Monitoring them consistently and tracking them to improvements is the key to success.

The starting points :-

1. Understand the relationship between people and business performance

2. Find a simple and consistent way to measure value and report it

3. Spend time analyzing results rather than arguing about the data

4. Act on the outcomes to improve bottom-line performance