A Quick Guide to Improving Your Business
Is growing your business a challenge? Do you want to retain your best talent? Do you want to have predictability in your business performance?
If you answered yes to the above questions, it’s time to improve your operational systems. The goal of improving operational systems is to boost sales and customer satisfaction and improve margins with fewer financial and people resources. This sounds great, right?
So, what happens when you don’t improve operational efficiency? You risk financial strain on the company and your employees will feel the stress of inefficient processes. Often, employees become “quiet quitters” which means they come to work to get through the day and wait for a paycheck. Imagine this happening week after week, month after month, and year after year!
Many times, employees know where the business can be improved, but the culture of leadership isn’t one that inspires them to bring forth their ideas or input. Without input from employees at every level of your company, you set your team up for frustration. Frustration, in turn, leads to losing key performers throughout the company and ultimately your customers going elsewhere.
As a business owner, your goal is always to improve performance in the fastest, least expensive, and most predictable manner for the business. So how is this accomplished? It all starts with measurements and benchmarks of your current performance and where you want your performance and efficiency to improve. You can’t improve what you don’t measure. Measurement through KPIs (key performance indicators) is critical. Keep in mind, KPIs will vary by industry.
Operational improvement is centered around key pillars: people, processes, technology, and funding. Within the pillars you must focus on input vs. output. The input pillar includes but is not limited to people, sales, time, and effort. Output centers around things like revenue, customer satisfaction, quality, and speed of production. The KPIs you build must be tied to measuring within these pillars.
Two main factors affect operational system enhancement: the variation in operational costs and talent across different regions, and the selection of KPIs aligned with the four critical pillars. Effective improvement and efficiency hinge on choosing measurable and quantifiable KPIs relevant to these pillars, reflecting regional cost differences and strategic choices.
So, how do we increase operational efficiency? Let’s start with the biggest asset and in most cases the biggest expense in a lot of companies: People. Nothing happens in any company without the right people in the right positions. This is why your people should take priority in improving operational systems. Do not make the mistake of getting bogged down in numbers. Your people are the ones who create relationships with your customers. Your people are also the ones who ultimately decide whether your business is successful or not. Having a robust incentive plan and training program will keep your key personnel engaged with improving your company’s operational efficiency.
Next, you must remove any bottlenecks within the company. Whether it’s people or outdated technology, these areas of slow down must be corrected. As things improve, you certainly do not want the flow of the improvement to stall. Bottlenecks can be detrimental to your company and any further improvements. Making these hard decisions to remove the bottlenecks blocking the way of efficiency makes or breaks the confidence your team will have in your ability to lead your company to new heights.
Once you have removed or corrected the bottlenecks, it’s time to implement higher standards. With improved efficiency, you can get a better idea of your team’s true capabilities. Why not change the standard? “Standard” is the minimum acceptable level of efficiency. Once a standard has been achieved consistently, you should communicate those wins and not accept less than your team’s best performance.
Keep in mind that you must be careful about overwhelming your team. Too much change too fast can have an unintentional adverse effect on improved efficiency. This is why you must observe and acknowledge the changes along the way. This allows your team to see they can improve operational efficiency and understand how and why the systems improved.
Now you are ready to evaluate the systems through observations, departmental checklists, and peer-to-peer input. Checklists must not be used as a form of micromanaging. Instead, checklists should be treated as a tool to help everyone stay focused on the areas that need improvement and to assist everyone with executing and developing consistent behaviors and processes. Peer-to-peer involvement allows department leaders to take chances and think outside the box when trying new processes and procedures.
Next, you should keep information up to date. There is nothing more demoralizing for a team than when they improve a process and are not recognized for it. By this time, there has been a lot of training and coaching happening at every level to create new best practices. Ensuring the latest data is communicated clearly to everyone is a must for the efforts to continue. Automate your communication when possible.
Finally, visualize your operational improvements. Visual aids are the most effective means for information retention. Install monitors or dashboards across your organization to display progress, or update a large whiteboard in the breakroom with colorful, dashboard-style KPIs. This approach doesn’t need to be costly, just efficient.
In conclusion, enhancing operational efficiency is not just a task but a strategic necessity that drives business growth, employee satisfaction, and customer loyalty. By prioritizing people, identifying and eliminating bottlenecks, setting higher standards, carefully managing change, evaluating systems with a collaborative approach, and recognizing improvements visually and effectively, businesses can create a dynamic environment where operational excellence is the norm. Remember, the journey towards operational improvement is continuous, requiring consistent measurement, adaptation, and engagement at all levels of the organization. By adopting these practices, businesses can achieve not only immediate gains in efficiency and performance but also set the foundation for sustained success and resilience in an ever-changing market landscape.
