Adam SandCEO of Roofing Business Partner

The Rubber Pants Problem

28 Feb 2024 · 0 min

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0:28

Adam Sand (speaker) discusses measuring revenue per employee and uses a humorous "rubber pants" metaphor to illustrate how low revenue per employee indicates overstaffing and cascading compliance/operational costs. He gives numeric examples: average salary ≈ $85,000 and COGS 40–60%, implying a required revenue per employee between about $450,000 and $900,000, and warns that ~$400,000 per employee suggests inefficiency.

Questions this video answers

About $85,000 a year.

About 40% to 60%.

Between $450,000 and $900,000 revenue per employee.

At $400,000 revenue per employee.

When we start to measure revenue per employee, we got to look at what is your business doing. Let's say your average salary is about $85,000 a year, and your cost of goods sold is about 40 to 60%. Well, in that case, you need to be making between 450,000 to $900,000 revenue per employee. At $400,000 revenue per employee, you're probably throwing people at problems. One person farts, everybody wears rubber pants. Now, because people have to wear rubber pants, need a compliance officer to make sure that they're wearing the rubber pants. But then because you're buying so many rubber.