The Personnel Productivity Ratio (PPR) expresses total payroll expense as a percentage of gross margin. Every business in every industry according to Al Bates at the Profit Planning Group must be under 60%. WF&FSA's most recent Operating Ratio Report reports that the typical WF&FSA wholesaler has a PPR of 58.8% and the high profit wholesalers have a PPR of 54.7%. This ratio has been steadily improving in recent years for WF&FSA wholesalers.
Total payroll includes not only salaries and wages, but all payroll taxes, insurance coverage and other fringe benefits. The ratio measures the portion of each gross margin dollar that must be committed to payroll. This is one of the few productivity ratios where a lower figure is desirable.
Here is the formula to calculate your own PPR: Total Payroll Expenses divided by Gross Margin times 100.
Source: Wholesale Florist & Florist Supplier Association
