Are You Choosing To Have an Inefficient Organization?

It is not uncommon for a management consultant to identify inefficiencies during a client’s operations assessment.  However, lately I have met with several companies that have identified their own inefficiencies and chosen not to correct the identified problems.  Out of curiosity I reviewed the costs of inefficiencies in Wikipedia.  It is defined as “Productive inefficiency – says that we could produce the given output at a lower cost—or could produce more output for given cost. For example, a company that is inefficient will have higher operating costs and will be at a competitive disadvantage (or have lower profits than other firms in the market)”. So in these conversations, the executive leadership have chosen to have their organizations have higher operating costs resulting in the conscious decision to lose their competitive edge.   That’s right – there are companies that choose to leave money on the table because it is easier than changing a culture.  Wow!

It is in every company’s best interest to have an efficient operating system.  Yes, ultimately it makes your company more money, but it also creates a less stressful and toxic environment for your staff, the clients, and you.  So how do you go from chaos to an efficient company without closing the doors for a few weeks?  You can call a business consultant to help you or you can slow down long enough to ask questions.  The questions should be about your organization and its current processes and procedures. Asking questions can result in a more objective viewpoint of your organization.   (Refer to Six Steps to Strategic Thinking.)  It is difficult to “fix” an inefficient system if you don’t have an idea as to what the outcome should look like.  Start with the following questions.  Once you get started, I am betting that you’ll have more of your own.

1.       If you had the ‘perfect’ organization, what would it look like?

2.        How much time do you or your staff spend looking for things or researching?

3.        What process causes the biggest frustration for you?

4.        What process causes the biggest frustration for your clients?

5.        What ‘best practices’ does your industry have?  How do you compare?

6.        Which processes are documented?

7.        Do you have an effective training program?

8.        Do you have the right technology to do your job?

9.        Do you have a systematic process for paperwork?

10.    Are there stacks of paper everywhere in spite of being automated?

If you are an executive leader who is tolerating inefficiencies in your organization, then you are choosing to lose money and time.  However, realize that you can’t be the one to fix all the inefficiencies unless you are the only one in your company.  It must be a team effort to fix an inefficient organization, but the commitment must start at the top.  In the short term, it will take time, effort, and possibly money to address the inefficiencies, but in the long term, you can establish the foundation for a healthy organization.  Take the time to stop the insanity and set your organization up for success.  It has to start with the leadership.

1 Comment

  • Brad Closson September 30, 2010 at 10:03 pm

    I second that motion! This is such a true phenomenon. Companies choose to look the other way, usually because the thought of changing seems “too hard.” This is a costly mistake. Great post Penny. Thanks for sharing.

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