You will probably be familiar with the adage: Productivity = Potential – Interference. It’s not hard to see that we battle with interference of one sort and another every single day – either internal or external, of course, because we are all of us more than capable of disrupting our own day, even before the phone starts to ring!
Potential is different – it’s not always something that is easy to quantify, or to realise.. Growing a business, finding a market, and bringing in orders and opportunties is something that takes time and effort, and a degree of luck sometimes. Whatever happens, it is likely to take some time to realise potential, whereas interference is something that can often be reduced quite quickly by putting in place the right measures, so here are some ideas to get you started!
A lot of productivity “advice” is around personal development – get more sleep; go to the gym; work at home; have clear goals, and all that sort of stuff. That’s fine, and there are plenty of people who will help you with that but (being an operations person) I am more interested in business productivity than personal, so my tips are based around that.
Recognise how important it is
This may sound incredibly obvious, but often people are not looking at the “big picture”. If business A pays its workers £25 per hour, and business B (making the same items) pays £20 per hour, who will produce the cheaper goods?
The answer is that you can’t tell unless you know the respective productivity levels. If business A have really got their act together, and are more productive, then their output cost per unit might well be lower than business B even though they pay a lot more in wages.
You also have choices – with higher productivity you can take better control of your prices and margins, allowing you to undercut competitors without undue pain, or to increase the profitability of the business. You will have some headroom in which to operate.
Therefore, it isn’t always about keeping costs as low as possible (keeping them under control is a different discipline!) but about recognising where to invest and spend, an how to maintain high levels of productivity. Looking after staff, who are probably your biggest outlay, seems a good place to start.
Invest in training
Making sure that staff are properly trained, and accountable, is critical. If you give people ownership of their roles, as opposed to just telling them what to do, you will normally find the response to be positive.
Anything you can do to increase engagement and loyalty in the team will almost certainly pay dividends. Motivated employees will bring higher productivity.
Have the right equipment and processes
Again, this may seem obvious, and it also ties in with keeping the employees happy, but unsuitable, old, or damaged machinery is one of the biggest dampeners of motivation. Equally, processes that involve endless workarounds, and little sidesteps that have grown up over the years to overcome some impediment or other, are also demotivating.
It may seem expensive to buy new kit, but the calculation is not just about cost – you need to consider the improvements in productivity, margin, customer service and staff morale that such investments might bring about.
Remember that machine output is often far more easily measured than people are, so the cost benefit of investing in plant ought to be fairly easy to calculate. It could be a false economy to keep that old machine chugging on for another year or two!
Keep an eye on quality
This is not just about standing at the end of the production line looking at the goods rolling off. Consider introducing “quality circles” which are groups of staff who meet regularly with the specific aim of discussing and improving quality in the business. it also works toward the first point above, by making employees feel involved.
The brief of the circle is to highlight issues and, crucially, to come up with solutions. You must, as the senior manager, listen to these ideas and implement some of them (assuming that they are not all too left field!) or you will lose the support of the circle – they will end up feeling that nothing they say is listened to, and there will then be an adverse effect, of course.
Always aim to reduce waste
One of the biggest drags on any business is waste, both of time and materials. In terms of productivity, time is the key one on which to focus. Processes need constant review and (ideally) measuring to ensure that they are as effective as possible.
Data flow is always a good one to look at … how many times are staff typing or retyping order details, addresses and so on? Any duplication is a drag on productivity, and ideally any specific bit of information should only be created once, as early as possible in the process, and then reused as required through the workflow. It’s often about tiny little “wins”, and depends on the specific business of course, but a minute shaved off each of 100 orders going through a warehouse each day is more than an hour and a half of time.
Not only does that reduce the direct costs of processing an order, but increases the opportunity for doing something else with the available time.
As business owners, people are often looking at the detail – this is costing too much, that is taking too long – and sometimes losing sight of the bigger picture. Overall improvements in productivity may cost more in pure cash terms, but if those expenses are essentially revenue-generating, then don’t be afraid of them!
We’re happy to help provide that overview, and implement the systems and processes to support the improvements that you need to make. The object of the exercise is that it should produce more revenue than the outlay, so it is entirely a self-funding exercise.
Get in touch to find out more, and to discuss some case studies …