5 Tips to Increase Productivity (And Profits) in Your Small Business
Founder of Appreciating Change, Sarah Lewis explores the questions you should ask yourself when looking to add to your bottom line
Regardless of how many efficiencies you believe you’ve built into your new business, at some point, you’re going to be looking for increased productivity and/or some general cost saving. When this time comes, before you do anything, ask yourself some key questions …
1) What lessons can you pick up from your best performers?
The productivity of the individuals within your workforce will likely vary considerably. Instinct may draw you to directing effort into boosting the effectiveness of your worst performers. There’s nothing wrong with that, but be careful that course doesn’t lead you to lose sight of the excellent performance of your best staff members.
You might find that obsessing over avoiding your worst workers from costing you money gets in the way of examining how your best workers make or save you money. Look for the different ways your best performers approach and/or execute their tasks. They may have devised a faster/more accurate/less wasteful routine that seems to them to be such an obvious way to work that they’ve assumed everyone else has thought of it.
If someone is a consistent top performer, take a close look.
2) What is the cost of the saving?
There’s no such thing as free money, and there’s no such thing as free savings. There are always costs; remember, every process requires some level of management, and that has some cost, even if only in extra time.
For example: Within Housing Associations, passing all requests for housing repairs to a manager for assessment and approval may seem likely to be an effective way to control costs. However, delays caused by red tape can result in formal complaints or disputes; resolving these issues incurs a cost and takes considerable chunks out of senior management’s time.
To avoid these costs, some housing organisations give their front line staff direct access to budgets, allowing them to authorise payment for repairs. The overall repair budgets haven’t risen, but perhaps more significant is that engaged and committed staff feel they can really make a timely difference, which creates more satisfied clients, and that results in a real boost to the organisations’ reputations.
3) What behaviour do you want, and what behaviour do you reward?
As your new business transitions into becoming established, you may find that perverse incentives creep into organisational life. What may feel like a great innovation could cause a misalignment between behaviour you desire and the behaviour you reward.
This can often occur with a sales team.
For many sales staff, rewards are based on individual sales. This is an established motivational system, and it can be very effective.
However, organisations often reach a point where they see they’re missing opportunities for cross-selling, either across products or between areas. Their sales staff are then given cross-product training and encouraged to sell other products, or introduce colleagues to their clients (to sell those other products). A great idea – unless the reward system hasn’t changed. Sales staff are then being asked to spend time selling something they don’t get rewarded for. Therefore there is a perverse incentive in the system for the sales staff not to spend time cross-selling.
4) Have you matched your pegs to the right shaped holes?
When someone has little aptitude for an aspect of their role, it isn’t unreasonable to spend some time increasing their skills. But sometimes the return on that time investment can be miniscule.
Rather than attempting to push someone into a task they loathe, rearrange the workload. People played to their strengths are usually highly motivated, engaged and productive. Doing what we feel good at is motivating; struggling with things about which we feel a hopeless inadequacy and dread is demotivating. Demotivated people are a cost to your business.
5) Have you created a great place to be?
A happy workplace isn’t just more pleasant, it can be more profitable. Think of it this way: sick days cost you money. Either productivity falls or bringing in a replacement adds to your costs.
However, often sickness is a discretionary behaviour.
At one extreme people are bursting with health and vitality. At the other, they’re too ill to get out of the bed. In between—where people are tired, or hung-over, or a bit down—the decision to come to work or not is mostly influenced by the push or pull factors of the alternatives.
- Push factors may be: being fed up with the work they’ve got at the moment; problems with colleagues; feelings about their managers
- Pull factors may be: loving the work; enjoying the company; feeling appreciated; believing your presence makes a real difference
If your business is a great place to work, you’re likely to find that that great environment will have a positive effect on attendance levels. And that’s money in your pocket.
Sarah Lewis M.Sc. C.Psychol is founder of Appreciating Change, a business psychology consultancy specialising in helping organisations to achieve sustainable change. Contact: firstname.lastname@example.org 07973 782715 / 0845 055 9874.