Operationally efficient companies continue to focus on how to reduce costs and to improve efficiencies to boost revenue, usually by performing tasks and delivering client goods and services in less time and/or with fewer expenses. One of the core drivers of operational efficiency is having a company culture that values it and commits repeatedly to improve it.
In these hyper-competitive times, you may find yourself doing everything you can to make your business stand out from the crowd. You may work to provide excellent client experiences to keep up with market trends and client demands. You may have to quickly pivot and adapt during moments of crisis. Ultimately, it’s important to provide a healthy, functional workplace in which your employees can perform their jobs well and grow professionally. Without operational efficiency, all these endeavors may become much more challenging.
By making operational efficiency a central tenet of your company culture, you can continually review and improve processes, tools, and resources which enable your company to respond effectively to any challenge or opportunity. Let’s take a deep dive into the reasons why operational efficiency matters and highlight some of the ways you can improve it.
Why operational efficiency matters
Those who can do it better, faster, and cheaper are usually the ones to succeed. This is especially apparent in our current era when the rise of new technologies has helped numerous companies tighten up and improve many aspects of their business.
Instead of continuing to rely on old ways of working (i.e. manual effort, paperwork, and huge administrative overhead), many companies have adopted a more modern approach through a variety of software and artificial intelligence (AI) tools that streamline business processes, cut costs, and produce better products and services.
The delineation between companies that have wholeheartedly embraced this modern way of working and those that haven’t is becoming clearer. According to Forrester, before this year, only 15% of companies were fully digitally savvy. This alludes to the other 85% likely having had to expend additional effort and cost just to keep up with the dizzying rate of change, potentially making them less efficient and less competitive.
Now that the pandemic has disrupted so many industries, more companies may take this current opportunity to rethink their internal and external processes, and implement new technologies that can improve their efficiency and competitiveness.
It’s not just about putting the right tools in place. Nor is greater efficiency achieved with a few piecemeal efforts here and there. Even more than a set of practical steps and applications, operational efficiency is a philosophy and a mindset that has to permeate your company at every level — from employees to managers to leadership. When everyone understands that they play a key role in helping the company become more efficient, then you can truly transform business performance.
3 ways to improve operational efficiency
To improve operational efficiency and begin to enshrine it as a core component of your company culture, here are three key areas where you can focus your efforts.
- Take a critical look at your processes. If teams are spending too much time on repetitive tasks, always fixing errors, and relying on paperwork to take care of everyday operations, chances are, your business processes need improvements. Employees know what isn’t working, so listening to them is a good place to start. Automating repeatable tasks and implementing software platforms that centralize data and keep it up-to-date can help teams reduce the time spent on administrative work and cut down on errors.
- Prioritize information-sharing and collaboration. When teams work in silos, with each relying on their own business systems that don’t integrate with other systems in the organization, it makes collaboration very difficult. Conversely, when information flows freely and transparently, teams across departments and functions can more easily work with each other to carry out tasks, meet goals, and drive innovation. Research shows companies with cross-functional collaboration typically outperform by 30-40% of those that don’t have it. Plus, improving collaboration can help everyone feel more engaged in the company’s success.
- Shore up employee management practices. Even though most employees may feel they’re doing their best, there could be areas where they need more support or ways in which they’re being held back. By taking an up-close-and-personal look at the day-to-day performance of employees, you can discover which employees are being overworked, or, conversely, which of their skills and talents are being underutilized. Then, you can refine KPIs accordingly and determine if more training is needed. Additionally, you gain a better sense of when to hire, to spread out the workload, or boost output to meet a specific goal. Having a more realistic and granular understanding of employee performance can help you know which additional tools and solutions to put in place.
It takes a combination of the right technology and management practices to optimize operational efficiency. It first takes an organization-wide commitment to it. When operational efficiency is an integral part of your company culture, every effort aligns to reduce waste and increase profit, and, by extension, can make your company a more dynamic, adaptable, and ultimately enjoyable place to work.
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