The document discusses the Personnel Productivity Ratio (PPR), which is the relationship between total payroll costs and gross profit. It provides two examples of how to calculate the PPR for different companies - one with a PPR of 35% and one with 65%. It indicates that a PPR below 55% may mean the payroll is too low and could be increased to boost sales, while a PPR above 55% likely means the payroll costs are too high and changes need to be made to reduce costs and increase profits. The optimal PPR can vary by industry but around 55% generally indicates the high end of the ideal range.

1. The Evans Group on PPR
PPR = Personnel Productivity Ratio
Chip Evans, PH.D., Ron Voelker
White Board Solutions vs. White Paper Problems

2. The Evans Group LLC on PPR
www.theevansgroupllc.com
In simple terms...
PPR = The relationship between TOTAL Payroll Cost vs. Gross Profit
Your largest Cost after COGS (Cost of Goods Sold)...Is always Payroll
Cost
Payroll is a factor of many decisions:
 Compensation Salaries & Wages
 Commission & Bonus Programs
 Benefits Offering
 How you have Built your Structure
 How you do or don’t Train
 Your Turnover Situation
 Pure Headcount
 How you Manage your Business
A Key Formula for Success!
BDP=Best Demonstrated Practice
PPR = Maximum of 55%

3. The Evans Group LLC on PPR
www.theevansgroupllc.com
White Board Example A:
Let’s Say your:
Wages & Salaries were: $310,850
(Incl. Temp Help, Bonuses & Commissions)
Payroll Taxes were: $29,680
Benefits were: $9,384
(Incl. Medical, Dental, 401K’s)
Then your Total Payroll is: $349, 914
Next Divide by the Gross Profit: $1,000,000
PPR = 35%
PPR of 35% is below 55%....but IS IT TOO LOW?
 A decent GP$, but could you do more GP$?
 Could more key personnel in focused job descriptions create more sales?
 Are your sellers performing too many non-selling activities?
 Are you holding yourself back?
 What key positions could you add that could increase your Gross Profit?
 Could you simply benefit from additional or outside Sales Reps?
 Each industry has a different PPR that is right for what they do.

4. The Evans Group LLC on PPR
www.theevansgroupllc.com
White Board Example B
Let’s Say your:
Wages & Salaries were: $310,850
(Incl. Temp Help, Bonuses & Commissions)
Payroll Taxes were: $29,680
Benefits were: $49,384
(Incl. Medical, Dental, 401K’s)
Then your Total Payroll is: $389, 914
Next Divide by the Gross Profit: $600,000
PPR = 65%
PPR of 65% is above 55%....That is TOO HIGH …. Now What?
 Chances are your company is losing money?!
 Do you have Dead Wood on the Payroll?
 Are your Commission and Bonus programs working effectively?
 Do you have an A-Team or a C-Team?
 Can you afford your benefits program as-is?
 Should your Gross Profit be higher?
 How long can your Balance Sheet maintain this level?
 Do you need a new plan?
Remember: In these examples…..We are saying that 35% PPR is most likely too low of an
overall payroll. That is usually indicative of a payroll that is too small and the organization
usually does not have enough time to sell. In other words we are saying to be cautious about
payrolls that are too small as they create logjams or unproductive selling environments. As
well as PPR’s over 55% are usually indicative of need for restructure.
We are not saying that 55% is the most profitable or optimal PPR%…. we are saying that it
represents the high end of the sweet spot in one specific industry. It will vary by each
industry.