John Briggs presents the 80% Capacity Method: assign employees 32 hours of work per 40-hour week to prevent burnout while maintaining growth. He proposes measuring team ROI with a simple formula—total revenue divided by total team cost—targeting a minimum 2× multiple and optimal 4× (10× for sales). Profit is a deliberate choice that protects both business and people.
What type of return on your investment should you expect in working with your team? And what I'm talking about is the actual cost of your team. What's the return? What's the revenue generated on that? So I am writing a book. Current working title is The 80% Capacity Method. The book is for business owners who are burnt out or they have teams that are burnt out. Or almost burnt out. And the model that I'm teaching is that a business can grow and thrive if you keep your team members working at an 80% capacity. Meaning if they're working 40 hours a week, assign 32 hours worth of work to them. Now I go into more detail and I provide structured suggestions on how to break up someone's workday, but— That's not the purpose of this. I just wanted to introduce the concept of the book to you. I'm hoping to have it published by the end of the first quarter of 2023. But the chapter I just finished last night, I wanted to share my thoughts on that. As a business owner, we need a return on the money invested into our team. It's not to say we don't treat them as human beings, but in order to stay in business and to be profitable, If I'm paying a team member $50,000, I need more than $50,000 in revenue back in order to basically justify having that employee around. So in my book, I talk about— I call it the Forbes-Ramsey scale. And the reason is because in Forbes magazine, I read an article and the guy was quoted saying, hey, we all know the game. It's all about shareholder value. Play the game, maximize shareholder value. That's what it's about. That is not what it's about. For sure, you need profitability, but under that mindset, on that far end of the scale, those companies are treating human beings like assets. They're treating them like they're machines. They're dehumanizing them. They're pushing them with unconscionable overtime hours and just squeezing last— every last bit of energy out and soul out of those people. And like, oh, you're burnt out? Cool, we'll just replace you with the next person coming in. Not cool. So that's an extreme. Then on the other side, we have Dave Ramsey, who in an interview, he was asked about the model Profit First, which sounds like the Forbes side of the scale, but it's not. And Dave didn't know what the model was, but then he says it's a stupid model. Because it's always people first, and that's also an extreme, and I also disagree with it. The reason is, is I don't know a single human being who, if offered a raise, isn't going to take it. I don't know anyone who would turn down additional income. So cool, we could give raises, which is what people want. Everybody wants more money. Especially if you offer it to them. So I can't just put people first because if I do, I'll have no cash to stay in business. It takes cash and profit to drive that cash to support my people and treat them like humans and give them a good work-life balance. So like most extremes, the answer actually is in the middle. You need to be profitable, but you also need to make sure you're not pushing your team to work unconscionable hours. So one factor to look at in determining, am I in the right part of the scale? I don't want to be on either extreme because on one hand I'm going to lose team and that puts my business at risk and it also makes me a terrible human being because I shouldn't push people that hard. And then on the other end, I won't have any cash to pay myself or stay in business or serve our clients if I'm putting all my money there. that exist towards just putting my people first. So in the middle, we can look at what is my return on investment on my team cost. So that's one factor to look at, an actual calculation. You can take your revenue, total revenue, divided by your team cost. Now when I see team cost, W-2 employees, independent contractors, Even if you're a solopreneur, you potentially have team. You might be outsourcing things. Maybe you have a virtual assistant or you have a marketing person. All of that is your team. So your team cost, total revenue divided by your team costs. At a bare minimum, you want that multiple, you want that number to be 2. If it's less than 2, you're probably losing money on that team member because there's other stuff that goes into it. And you need a bit of a return. So in my mind, 2 is the bare minimum. One of my business mentors, Kelly Roach, she pushes the 4x model, which is you are looking for a 4 times multiple. So if my team cost is $50,000, 4x of that would be $200,000. Or in other words, if I'm doing the formula, total revenue is $200,000 divided by my team cost of $50,000, 1,000 gives me 4. Now, if you have a sales role, you really want that sales role to be about 10x. Now, before you say, hey, that's not fair to the sales guy, I'm not trying to shortchange the sales guy. The reality though is that the sales guy closes the deal, but he's not doing any of the work. You need a margin in there in order to then pay your team. Your other team that you're hoping to be at a 2 at a minimum, 4 at a good number, 2 to 4 times their cost, you still want a return on that, which is why the sales guy needs to be able to generate around 10x. So those are some factors to look at. Again, a formula is total revenue divided by team cost. That's something you can look for. Another metric that's kind of related, which is good to track, and you kind of want to make sure that it's trending up Is total revenue divided by full-time employees. It's a good metric to track because then if it does dip, you can then go and see that the number dipped and then ask questions about why it did. So that's what I wanted to share with you today. To be profitable and a good business owner, you want a 2 to 4 times return on your investments Never put people at risk of being abused with unconscionable hours just because you're looking to push shareholder value. Not cool. And you do need profitability, so you can't just give all your money to your team. That doesn't help either. So be somewhere in the middle, and remember, profit is a choice. Have the courage and wisdom to choose it.
