Unleashing your company‘s productivity
By Jim Vass
A few years ago, Big Four Accounting firm Deloitte published a report on productivity.
The report stated that private sector bureaucracy is costing the economy about $250 billion dollars a year. The most striking finding was that it costs the private sector $155 billion each year to administer and comply with rules it imposes on itself.
And there were some hilarious examples:
- The small taxi fares that have to await approval from the weekly executive team meeting
- The firm that rejects application forms from potential customers if they are completed in blue ink
- The firm that made engineers sign off on new parts at a fixed location, and nowhere else, enforcing them to waste time commuting to and from one place
- The rules that made staff record every guest coffee made, but let them order as much alcohol as they like
- The firm that made staff do an ergonomic checklist when moving desks, then introduced ‘hot desking’
And so while I’d like to tell you that these are the stuff of suburban myth, or great Aussie pub yarns, they’re not. And while they do seem quite ridiculous, they make an excellent point.
Are you getting in your own way?
Every business needs systems and processes and accountability. But what’s the real cost of these to your company? Have you ever thought about it?
Just take a moment to consider … Do you have procedures that are manual and antiquated and could be updated with an app, or a new piece of software? Do you have duplications across authorisations – for example for expenditure or annual leave? Or sign off on sales contracts? Are they absolutely necessary? Maybe they are. Do you have protocols that were set up some years ago and no longer serve the business? Do you have clients on original fee or service structures that perhaps you could renegotiate?
These hidden costs can really erode your both your productivity and profit.
While the Deloitte survey is useful, it’s important to note that it takes into account the entire private sector, and what we do know from other research, is that small businesses tend to be more nimble, competitive and innovative than the larger corporates.
Take time to review processes
But that doesn’t necessarily let you off the hook. The start of the new financial year is a great time to be reviewing how your business runs.
Compliance costs will always exist, particularly those mandated by the Government, and these are important because they provide a framework of rules to operate within as well as a set of standards for health and safety, environmental protection, and so on. And some industries are more highly regulated than others.
If you’re using an accounting system such as Xero, then the ‘external’ compliance costs should be easy to identify and plan for. It’s the ‘internal’ ones you need to look at.
Because when it comes to your own business, it’s important that for every policy and process you implement there is a cost/benefit analysis, otherwise you can just tie yourself up in red tape unnecessarily, and stop reaching your full potential as a business.
The best way to identify things that are outdated or unnecessary is to talk to your team. Take the time to understand what’s really eating up their time, so you can brainstorm solutions (chances are they’ve already thought of a better way, if it’s something they’re doing regularly!).
This kind of planning is always rewarded. First of all, it helps you understand how efficiently (or not) your operation is. Secondly, it has the potential to cut some of your administration and overhead costs over the longer term.
If you need our help, contact us.
Read More Blogs