Inefficiency is bad for business and bad for the people working in that business. The risks of ignoring inefficiency not only impact the bottom line but also result in an inability to recruit staff who would have the potential to turn the situation around. Here we look at what risks businesses run if they ignore the perils of efficiency in their business operations and examine how they can improve.
What is inefficiency?
Inefficient businesses exhibit low productivity, poor quality workflows, systems or processes, employees who are not engaged, and less-than-effective management. This can result in low output, decreased revenue, wasted resources, high costs, and poor customer relations.
Efficient businesses conversely generate high revenue, make the best possible use of their resources, invest in their employees, and build effective and constructive relationships with their customers.
The risks of inefficiency
Inefficiency has numerous risks in a variety of metrics including:
- Falling behind your competitors
- Slowing sales growth and market share and, therefore, profitability
- Financial instability
- Low productivity
- Rising costs
- An inability to innovate
- Low customer satisfaction
- Potential legal repercussions and penalties
- Your ability to attract and retain talent.
Why are some businesses inefficient?
There are numerous reasons for business operational inefficiency but the most common include:
Inefficient processes – if you’re doing the same things in the same way as you always did and are seeing no change to the results then it’s time to change. Audit how you do things to see if they can be done better and then implement those changes.
Not involving employees – asking your employees how they think things could improve is one of the most efficient ways to progress. They’ll understand your business better than anyone and are in the ideal place to offer suggestions.
A failure to adapt to new technology – if your back office functions are still running on Windows XP it’s time for an overhaul of your technology, and the applications you use. Automation and the use of AI can reduce time spent on mundane tasks and free up your staff to build your core business.
Not clearly defining your business’s brand, culture and values – at the core of every business a clearly-defined brand is essential for it to move forward, attract and retain talent and visibly differentiate it from its competitors. Your company culture defines how you treat your employees and how they will feel if and when they come to work for you so make sure they understand it.
A lack of diversity – take a look around your workplace. Are there people there are all of a similar age? A similar background? Do they all have similar qualifications? Diversity is one of the key drivers for increased efficiency in business operations, increasing innovation, providing a broader range of skills, increasing employee satisfaction, boosting productivity, providing better insights into your customers, and bringing higher revenues.
How can businesses boost efficiency?
The good news is that even the most inefficient business can turn things around, become more efficient and eliminate the risks that inefficiency brings. Strategies for doing so include:
Set long-term objectives – these should be delineated and outlined in a strategic plan. Think short-, medium- and long-term and make decisions about exactly what you want to achieve.
Involve your employees – two-way dialogue and an open and honest system of communication can begin an efficient process that makes a real difference. Employees who feel valued and empowered and are involved in decision-making processes are more productive, have suggestions for efficiency improvements and can push a business forward. Training can also offer internal strengths, and recognition programmes can motivate a team to reach even greater heights.
Automate – save time and resources on workflow automation to save money and increase efficiency. AI technology now allows quick and simple data entry, for example, as well as streamlining payroll processes and creating engaging customer emails. This will free up employee time to focus on tasks that yield higher problem-solving solutions and customer-facing activities. Automation also results in more accurate business data on which critical planning can be based, as well as speeding up processes and increasing revenue.
Diversify your workforce – attracting and retaining diverse talent brings new solutions to efficiency problems and can be a solution to talent shortages which increase inefficiency and retention problems that cost large amounts of money. By widening your recruitment net and actively searching for people with the skillsets you need, whatever their socio-economic background, ethnicity, gender, sexuality, marital status or age, rather than the qualifications and experience you’ve always looked for, you can bring new ways of thinking and doing into your business.
Guarantee a good company culture – increasing numbers of people are looking for a better work/life balance which not only benefits them outside of work but also brings a renewed focus, higher morale, the desire for advancement, and more productivity inside the workplace. It benefits everyone to ensure that your employees are valued, recognised and incentivised to innovate and increases levels of efficiency too.
The long-term benefits of investing in efficiency improvement are inestimable for businesses, especially today when competition is fierce and most organisations are operating on ultra-fine margins.
For expert advice on any of the topics discussed in this blog, contact Brighter Consultancy.
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