When the surveyed agencies of revenues between $5m and $10m were studied, it was reported that there was a 30% difference in the measures of profitability. Apart from this the spread per employee was also accounted which is the difference revenue per employee and the compensation per employee. This happens to be an excellent metric of productivity because it enables the measurement of employee contribution to the business before overheads.
Apart from the metric discussed above the rule of the 20 formula assigns points to the agencies based upon the organic growth and the EBITDA margin, which looks at the growth and profitability in a balance. A score of 20 implies that the company has good returns for its shareholders. Average agencies that were surveyed scored 20.3. Agencies having +25percent profit had scored 27.7 whereas agencies with a +25% growth had a score of 29.5.
In either situation, the rules applied showed how improvement in employee productivity can improve in scaling up the business. If only the output per employee is improved based upon the improvised operations, efficiency, and effectiveness it becomes economical without making huge investments.
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