In the current fast-paced business world, it’s vital to maintain operational efficiency or risk being left behind.
Operational efficiency describes the maximisation of desirable business outputs - e.g. revenue, customer satisfaction - relative to the inputs, such as money and time.
All businesses want to keep costs (an input) down, however, data shows that approaching operational efficiency with the explicit aim to cut costs can be counterproductive. Research from PwC shows that less than 30% of cost-cutting programmes reach their targets, and less than a fifth of these reap sustained reward over the following three years. So what is a better approach?
Operational efficiency combines many different facets - involving the use of metrics, streamlining processes, technological innovation and employee feedback and satisfaction.
A mindset of continual improvement should be adopted to ensure that the company remains forward-looking and open to innovation.
Here, we run through the most important elements to consider when it comes to keeping your company’s performance competitive.
Any new procedures should be dissected with a high degree of scrutiny.
Negativity and criticism should be encouraged - companies have suffered by only permitting blue sky thinking.
An example: Nokia ignored potential competition from the iPhone and held onto its business model due to discouragement of negative feedback in corporate circles.
Once ubiquitous, Nokia’s market share of the global mobile phone market plummeted from almost 40% in 2011 to below 15% today. Troubleshooting during the planning phase of any new procedure or idea can prevent a similar fate befalling your company.
Once new procedures are introduced, they should be subjected to ongoing, rigorous tracking and feedback concerning their effectiveness and popularity with employees.
Auditing should remove ineffectual procedures before they become too ingrained in office culture. Similarly, even procedures that are working well could be improved after taking employee feedback on board.
When it comes to processes and procedures, it’s important to prioritise effectiveness over speed. Although it can be tempting to cut corners to slim down time allotted to tasks, it could quickly result in shoddy work and disenfranchised employees.
Finally, consistent procedures across the organisation can increase the cohesion between departments and ensure simpler work processes.
It’s important to schedule any tasks and larger initiatives to manage employee time wisely and transparently. Let employees know what is expected of them and in what time frame.
Identifying constraints on operational efficiency is vital. This can be identified once operational inefficiencies emerge, by examining the chain of steps. It can then be tackled by changing different steps of the process and then reevaluating until it is no longer an issue.
Facilitating cross-departmental exchange can radically improve the overall efficiency and transparency of various tasks and processes. Hard line divisions between different departments can slow the speed of operations. This is one of the ideas embodied by DevOps, a workplace culture incorporating a number of practices which are geared towards streamlining processes across the whole organisation. Read more on how companies are using DevOps here.
An ongoing process of measuring all the major business objectives and metrics is vital to streamlining operational efficiency. In order to do this effectively, you must decide on the most important metrics to evaluate the success of your organisation - is it customer satisfaction, sales or web traffic? Set targets that are ambitious but achievable and aim to exceed them.
To do this, companies may want to employ business analytics tools that collate and analyse data to inform decisions. Read more on how CIOs can use business intelligence tools here.
CIOs have commented on the importance of using data in the most strategic way possible. "We recognised that while we had lots of data we weren't monetising it as effectively as we should so I recruited a new role of 'Data Revenue Director' to work with the commercial teams. This role looks to articulate the data strategy to bring in new revenues through the use of our data," said News UK CTO Christina Scott to CIO UK.
Sharing this data with employees in an accessible manner can help the whole organisation feel invested in and responsible for company performance.
The power of satisfied employees should not be underestimated. Countless studies have linked happiness at work to increased productivity, and as a result employee engagement has risen up the corporate agenda. For example, data from Gallup indicates that employees engaged with their work and the workplace are 21% more productive.
Keeping track of your employees’ thoughts and experiences in the workplace is vital to keeping employees feelings of engagement up. Some workplaces choose to monitor employees’ satisfaction daily with tools like Celpax which allows employees to enter a quick response measure of happiness, providing a temperature check on employee morale.
Many workplaces have moved away from the format of the annual or semi-annual appraisal, instead adopting a form of continuous feedback, where employees provide their thoughts on workplace initiatives and relationships more frequently.
Want to effect an even bigger morale boost in your organisation? Incentive programmes have been shown to be effective, where specific perks are offered in exchange for staff meeting targets.
Another way to make employees feel valued is to encourage the flow of information and feedback up the chain of command. Welcoming ideas and insight from every level of employee can also facilitate a more innovative and nimble company culture.
CIOs have mentioned how this cross-flow of information can benefit their teams. "We use technology evangelists to educate non-tech colleagues on the 'art of the possible' and a culture that challenges the team to dare what has never been tried before. The result is a tech savvy business and a well-respected technology team, integral to the growth of Global," said David Henderson, Director of Technology and Operations at Global to CIO UK.
All of these initiatives reduce the chance of valued employees leaving due to dissatisfaction, taking their skills elsewhere and leaving the company with a costly hiring and training process.
When it comes to technology, businesses must be proactive or risk becoming quickly irrelevant. In a recent survey, 68% of top business school graduates said that the rate of technological advance was the greatest challenge facing business today. To tackle the technological needs of the business head on, they should devise a technology plan for each year, reflecting their changing tech requirements and new business tech on the market.
Vendors should be closely weighed, with an analysis of any changing needs or issues down the line taken into consideration.
When it comes to technology used in-office, this requires regular updating which shouldn’t be neglected. This includes replacing technology that is out of date as well as maintaining the software and hardware which is in use.
"We're applying the principles of simplify, standardise and share across everything we do in the IT services," Birmingham City Council CIO Peter Bishop, told CIO UK. "Every set of services that we buy are going to be looked at in terms of can we test the market and different service delivery options, and can we take advantage of technology that comes with those new service models."
Insight from the workplace ideology of DevOps suggests the automation of any time-consuming, simple processes that allows employees to focus on more productive tasks. Read more about DevOps here.
For small companies, it might be advantageous to outsource certain internal processes to IT vendors. These could include tasks such as monitoring network security or the IP communications system. This approach can help reduce costs compared with carrying out these processes in-house and frees up employees’ time for more productive tasks centred at the core of your business.