When determining work productivity, it can be very helpful to look at your sales per man hour (SPMH) or sales per labor hour (SPLH). These two labor metrics are frequently used when determining business profitability. So, what do they mean? Sales per man hour and sales per labor hour are two very closely related terms. However, there is one key difference you need to know.
What’s the Difference Between SPMH and SPLH?
Practically speaking? Nothing! They’re the same. Both sales per man hour and sales per labor hour refer to your number of sales over a given period for the number of employee hours worked. The two terms refer to the same exact measure, the main difference is in how people react to them today. Typically, sales per labor hour is more inclusive, polite, and politically correct because it is not gendered.
Calculating sales per man hour or sales per labor hour is simple. Just divide your number of sales for a given period by the total labor hours worked for that same period.
Should You Use Sales Per Man Hour or Sales Per Labor Hour?
Ultimately, both sales per man hour and sales per labor hour refer to the same concept. If you use either one, most people in the business will know what you’re talking about. That being said, in the modern business world, many people have transitioned to using sales per labor hour, sales per employee hour, or revenue per employee hour. In the US, sales per labor hour is becoming more popular than sales per man hour because it’s a more inclusive term. Since employees can be of other genders besides male, sales per labor hour better represents the average employee.
Furthermore, sales per labor hour simply makes more sense. When inexperienced managers first calculate their sales per man hour, they can get confused, thinking the number of employees they have is somehow relevant. Discussing labor hours instead of man hours makes it more evident that the focus is on the number of overall hours worked. For example, whether you have two employees working 10 hours each or one employee working 20 hours, your SPLH will be the same.
Why Do You Need to Know Your SPLH?
Understanding this labor metric is important because it tells you how productive and efficient your staff members are. You can figure out whether you can save more money by cutting staff or by keeping your current number of employees. Keep in mind that sales per labor hour varies quite a lot depending on the type of business you run, time of day, and other factors. For example, the SPLH of a restaurant during the lunch rush is likely to be a lot higher than at closing time.
When using SPLH as a measure of productivity, you need to carefully consider how much profit your sales make and how much you pay your employees. This can help you find a sales per labor hour that best suits your business’ needs. Once you figure this number out, you can use it to fine-tune your employee scheduling. For example, if you need a higher number of sales per labor hour, you may want to remove some scheduled shifts to achieve your target or hire less experienced workers to staff your busier shifts.
TimeForge makes it easy to keep track of your sales per labor hour. Our labor management software, which offers attendance tracking, online log books, and employee scheduling, will help you figure out exactly how many employees you need — and when you need them. Thanks to our POS integrations, you can compare your sales and labor and even forecast your future sales. Ready to handle your business as efficiently as possible? Call 866-684-7191. Our rockstar Support team would love to hear from you!