Is your Business Productivity Buzzing this Spring (or pushing up the Daisies)?
Spring is here and it’s a period when we and our teams should be bursting with energy – always a good time to take a fresh look at boosting performance in your business.
We hear so much about productivity but how many of us actually understand how to measure it, and why it’s important to business performance. The terms Utilisation, Efficiency, and Productivity are, proverbially, thrown around a lot. They are very separate measurements, but have one common denominator – they allow us to monitor and manage that very expensive resource – TIME.
Old Father Time
The Time and Motion studies of the olden days conjure up visions of white coats and stop watches, clipboards, and pens. Time is, however, Master of the Commercial Universe.
Employee contracts, shift patterns, and indeed our working lives are dictated by time. Yet, ironically, companies have turned away from defining how long a job should take.
Any business that wants to secure long-term sustainability and profits has to factor in time considerations in its performance measurements.
So here are a few pointers to get you started on managing the performance in your business.
Utilisation measures your staffs activity, their busy-ness. If during an 8-hour working day they are actively busy for 6 hours, losing time due to for example:
- Lack of proper training
- Not following the correct procedure, making up their own
- Procrastination and dawdling because they’re not supervised adequately
- Not being given any guidelines as to how long the work should take
Then they’re only 75% utilised, and you’ve already started to lose money.
Efficiency is working to defined standards of both time and quality to complete a task. If, of the 6 hours our employee was busy, they produced product, or served customers, that should only have taken 4 hours, had they been working effectively and at an adequate pace, they’ve only been 67% efficient. Now you’re losing 33% of your costs.
Productivity is the overall output compared to the total input. Our employee achieved 4 hours worth of work (their output) yet we paid them to work an 8 hour day (your input). Their Productivity is only 50%. On a £20k annual salary, this is costing you £10k a year – but you can’t see it – the inefficiencies and opportunities to improve are hidden amongst the problems, fire-firefighting and down time.
Throwing Light on Hidden Opportunity
Achieving higher productivity requires our staff to know how long a job should take using best practice – the way it SHOULD be done, not necessarily the way it is being done. Armed with this knowledge, as the Business owner you then have the flexibility to decide how much slack you are prepared to build into each job.
As a Business Owner you should communicate your required performance levels as part of your management systems. Staff are given greater clarity as to what is expected of them. Rather than the woolly “pull your socks up” or “you’ll have to do better than that” appraisal they’re used to, performance expectations can be managed objectively and fairly.
If you involve your employees in working towards better productivity they’ll feel more valued too, building a positive culture of continuous improvement. I’ll leave you with two fundamental mantras to contemplate:
If you can’t measure it you can’t manage it
If you can’t see it you can’t correct it.
As Arthur Nielsen pointed out “The Price of light is less than the cost of darkness”
If you feel you could benefit from external support during your early years of trading, or need expert advice developing your first management systems, processes and teams, Alluxi Consulting Ltd provides business performance consultancy and Executive Development Coaching. An initial exploratory discussion can quickly uncover what you need to move your business forward.