Open Search

They're back: Getting control of gross margin and payroll

Publication date: 
January 2011
Author: 
Dr. Albert D. Bates, Profit Planning Group

Every few years the Profit Improvement Report series returns to the two big issues in improving profitability - gross margin and payroll. This redundancy is required because these two factors continually prove to be the ones that are the most difficult to bring in to line and the easiest to fall out of line.

The pressures associated with a somnambulant economy give these two factors even more relevancy. When things are slow, price pressures are inevitable. At the same time, sluggish or declining sales volume almost always results in an increase in payroll expense as a percent of sales.

This report will examine two different issues associated with getting control of both gross margin and payroll:

  • Measuring Performance - A review of how to best measure gross margin and payroll performance in a changing environment.
  • Setting Gross Margin and Payroll Goals - The development of specific targets for improvement to return performance to desired levels.