During a recent sales seminar for executives sponsored by INDUSTRIAL DISTRIBUTION magazine, keynote speaker Dirk Beveridge of 4th Generation Systems made a comment that rings entirely true in today's industrial marketplace.

"Good times camouflage poor work performance," he said. On the surface, those words sound like a cliché, but that is what has happened in business these past few years.

Think back to the late '80s. Staffing levels were high, productivity (at least compared to today's numbers) was low, and companies were flush with cash and profits strong. You didn't need to be a genius to make money and payrolls were at an all-time high. Let's face it. If you were running a company back then, you probably let a lot of things slide, particularly when it came to really examining your business operations. Even more importantly, because business was so good, you may have overlooked some failings of some employees. Sales were good, you thought, so why rock the boat now.

How things have changed. Looking back you're probably thinking that you were overstaffed at the time and you didn't even realize it. Your travel expenses were high but you weren't looking to reduce them because sales were strong. For some people, the party was never going to end. But it did. Today, your companies are running lean and mean. You have fewer people doing more jobs and, as a result, productivity is at an all-time high.

In the past year, the economy has come back strongly. ID recently interviewed executives in a number of distributorships in the past few months and many indicated they intend to grow their businesses by hiring more employees.

That's a good sign but it's also a warning one. Today it's as important as ever to look at your costs, your payroll and all your operational expenses. As you grow your business (most distributors expect to increase sales this year), it's imperative that you take all expenses into account before taking the plunge to expand.

And there's one other thing to keep in mind. Sales per employee is one of the easiest ways to determine your proper staffing levels. It's one of the keys to determining your correct profitability levels. Learning from the past is a great way to foretell the future.

jkeough@reedbusiness.com