Companies Squeeze More Profit from Existing Employees

Employees have been more efficient and productive in the past two years than ever before, contributing to greater profit per employee than in previous years, according to new data from the financial information provider Sageworks.

The finding echoes a trend that finds businesses delaying the hire of more full-time employees, until the need proves to be sustained, while instead filling their ranks with temporary staff.

“Our data shows that temporary staffing agencies saw sales grow around 20 percent per year in the immediate wake of the recession,” said Libby Bierman, an analyst at Sageworks. “It can be a risk for companies to take on full-time employees, which require a certain number of hours and pay as well as benefits. Part-time or temporary employees might be a lower cost option for the businesses.”

The findings are bolstered by the latest monthly employment report from the U.S. Bureau of Labor Statistics, which found that only 58.7 percent of the civilian adult population was working in June and only 47 percent of adult civilians had a full-time job.

The data indicates that many companies are remaining efficient while maintaining their current employee count, providing increases in their profit per employee. Many such businesses are not likely to hire anytime soon, unless their top-line sales growth improves and reaches a pace that indicates expansionary growth. Privately held companies are managing with an eye on the bottom line, while overhead costs such as employee payroll are still managed tightly.