3 Reasons Why Non-Revenue Generating Staff Are An Important Cost

9 mins read

This article explains 3 reasons why non-revenue generating staff members are a necessary and important cost for your business.

Non-revenue generating staff vs. revenue generating staff; this is an ongoing battle that has been present in the workforce for many decades. Some may know this as back-of-house vs. front-of-house, or back office vs. front office. In this article we are talking about staff members that perform duties and services that can’t be directly billed out to clients to produce an income for the business. While this division can be ever present in some work environments, a company with a healthy culture will have these 2 types of staff members working in harmony. For some, non-revenue generating (NRG) staff can be seen as inessential workers where the costs outweigh the benefits. So, what are the benefits of having non-revenue generating roles present? Let’s look at 3 reasons why NRG staff are an important and essential cost for most businesses.

What are Non-Revenue Generating Staff?

First, it is very important to understand what non-revenue generating staff members are. NRG staff are employees that work in roles that do not directly generate an income for the business, meaning their hours can’t be directly billed to clients for their services. NRG staff are traditionally in vital support and administrative roles in the back office and provide much-needed support to the revenue generating staff members in the front office. It is crucial to understand that many of the revenue generating staff would not be able to perform their duties as effectively or efficiently without the support of the non-revenue generating staff members.

Here are a few examples of roles that would be considered non-revenue generating:

  • Administration
  • Reception
  • IT
  • Payroll
  • Accounting
  • Finance
  • Human Resources

3 Benefits of Having Non-Revenue Generating Staff Members:

1. Allow Executives to Lead

To do the work yourself, or not to do the work yourself; that is the question.

Many executives that do not have NRG staff for the vital support roles end up having to do the non-revenue generating tasks themselves. Executive leaders should be spending their time doing just that – leading the organization! If an executive leader is having to juggle too many responsibilities it can become very difficult for them to make sure the company is heading in the right direction. Wearing too many hats at once will not allow executives to be as efficient and effective as they could be in their role, which will affect the bottom-line of the company long-term as those vital hours could have been spent on tasks that would earn the business an income. Having dedicated staff members in the NRG roles will also result in higher-quality and more effective work, as their focus is much more specific, and they will be more practiced in their duties. There is a great advantage to having staff dedicated to these specific responsibilities.

2. Save Money in the Long-Run

How can yet another business cost save money in the long run? This is the important question most business owners want answered, as for most it comes down to the bottom-line. Business is business, and making a profit is important for a successful business! The best way to look at this, is to consider which revenue generating employees are having to take on the responsibilities and duties of the non-revenue generating staff that are not present in the company.

For example, you may have someone in an executive management role performing duties that involve payroll, human resources, and maybe even some administration. The best way to show the business cost is to apply that executive’s hourly pay rate to the amount of time spent on the non-revenue generating tasks they are performing.

If you have an executive with an annual salary of $100,000, that breaks down to about $48.08 hourly. If that executive were to spend 10 hours a week performing NRG tasks, then these costs would add up to $25,002 annually. So, the question then becomes, can that executive use those 10 hours a week to raise more than $25,002 throughout the year? If the answer to that question is yes, then it becomes much easier to see the benefit of hiring staff for the NRG positions. In some cases, the revenue generating staff you have performing non-revenue generating tasks may even be able to make up the salary of a new non-revenue generating staff member with the freed-up time they would now have to earn income for the business!

3. Create Room for Growth

Now that we have explained the previous 2 points, it should be easy to understand how NRG staff members can contribute to the growth of your business! Freeing-up more time for the revenue generating staff members, especially executives in key leader roles, will allow those leaders to focus on the full picture of the business and where it is going. When having to perform too many different tasks and wear too many different hats it can be easy to get caught up in the details of those tasks – which would most likely result in that executive not being able to see the BIG picture of the company, which would not help with succession and growth for the company.

Another consideration is the quality of certain work that is needed for business growth. For example, if you need to apply for financing, having a professional who is an expert in this area would increase your chances in securing the financing you need. They could even find you access to more financing options you weren’t aware of or wouldn’t have wanted to apply for due to the amount of effort and time needed to apply. Or consider when it comes to hiring the right fit for specific roles as your company expands. It would be highly beneficial to have someone in Human Resources or a Recruiter that would have the necessary skills and time to hire the right staff for the business’s success.

A Cost to Support Income or an Investment?

There we have it, 3 very important reasons why non-revenue generating staff members are a beneficial cost for business. We now understand NRG staff can free-up time for revenue generating staff members with the tasks they take over, as well as the support they provide, which creates more room for the business to grow and earn more income. So, perhaps we should go as far as saying NRG staff are truly an investment, rather than a cost! After reading this article and gaining a better understanding of the importance of non-revenue generating staff, it may be time to explore the following question “do I have revenue generating staff members performing non-revenue generating tasks?”

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