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5 Strategies for Identifying Inefficiencies in Your Business

Executives, managers, and business owners alike all endeavor to cultivate workplaces that are streamlined, efficient, and productive. They’d like engaged, content workers and satisfied customers, happy to do repeat business with the company month after month.  And yet, every organization has some areas of inefficiency.

Identifying business inefficiency can be a complex and grueling undertaking. Getting there can be a convoluted journey involving paper tracking and hurt feelings among employees. Dire problems arise when several areas of minimal inefficiency conspire to create larger areas of poor performance, or when there are isolated areas in which deep inefficiency exists. Unfortunately, these latter dark spots can take down entire departments. 

Business inefficiency can lead to:

  • stressed, frustrated staff
  • compliance issues
  • lost or misplaced documentation 
  • missed deadlines

Although the economic losses may be imperceptible to most in the organization, they eventually lead to decreased growth and greater costs. The Pareto Principle tells us that 80% of any company’s negative outcomes are due to 20% of its inefficiencies. 

Experts maintain that inefficient processes cost companies up to 30% of their annual revenue. It stands to reason that once these inefficiencies are identified and remedied, both revenues and productivity will improve. 

The “Red Flags” of Inefficiency

No organization, no matter how tight its management, escapes the inefficiency goblin. What should managers look for in identifying inefficiency?

Although some inefficiencies are difficult to identify, common themes come to light with examination. These areas demand a manager’s or executive’s most intense focus.

Manual processes often give rise to wasted time, since some people work more quickly or slowly than others. Unfortunately, work is regularly duplicated and corrupted during manual processes. 

Lost or difficult-to-find data wastes significant employee time. If employees routinely complain about a lack of organization in the workplace or are forced to wade through piles of paperwork or raw digital data to accomplish everyday tasks, inefficiencies continually sap profits. 

Meetings often waste employee time. “Meeting ourselves to death” was a term coined by an assistant professor at a major university to describe how meetings impeded the progress of work across her department. 

Meetings are great for addressing key or critical issues, for sparking creativity, collaborating, and sharing ideas. When meetings become the “go-to” for discussing or addressing every issue that comes to light in the workplace however, it’s the perfect recipe for wasted time. Meetings that are too frequent also lead to boredom and frustration amongst workers who are repeatedly pulled away from their work. Additionally, “stream-of-consciousness” meetings that don’t have an agenda or clear objectives do not result in actionable tasks. 

Process drift is a common problem in many organizations, particularly in data-driven workplaces. When a company’s processes no longer complement or work within the operational parameters of digital solutions or suites, workers often find themselves in the position of having to devise workarounds for routine tasks on a case-by-case basis. 

Lack of strategic focus is a deficiency that costs organizations millions of dollars over time. An organization may have excellent managers, supervisors, and workers doing great work, but if there’s no “vision,” individuals may be working at cross-purposes. Objectives and goals just don’t align. Managers, supervisors, and workers who are often too busy (or perhaps attempting to appear so) are a good indicator that a lack of strategic focus is a problem. 

Lack of organizational analysis plagues many companies, particularly successful ones that have been operating in a given modality over a long period of time. We’ve all heard the axiom “The business that fails to plan, plans to fail.”. Failure to periodically compare performance over time to strategic objectives is a major inefficiency that is overlooked by many organizations. This issue tends to “run in the background,” rather than pinpointed as a glaring example of inefficiency.

People vs. processes. When identifying areas of inefficiency, sometimes it’s the people rather than the processes. Some established organizations, departments, and workgroups cultivate a laissez-faire attitude toward processes. By becoming overly dependent on established processes, workers may become unproductive. Such workers tend to get overlooked during workplace changes. After all,  managers married to an imperative of finding a new normal may become less attentive to performance. 

Taking Care of Business

Identifying every source of inefficient practices can be a bottomless time suck, but here are some proven methods you can use to find the most serious offenders in your organization:

  1. Evaluate current processes – This one can be complex for hands-on managers, but it’s definitely worth it. Take some time to observe current processes and ask questions of team members. This not only helps to reveal inefficiencies but improves morale because workers gain buy-in to the process. It also affords workers the opportunity to point out deficiencies they may have noticed but don’t feel called upon to disclose. It may seem like a no-brainer that processes should never be more complex than warranted, but analysis may divulge unnecessary complexities. Process evaluations that result in useful streamlining help eliminate process drift. Solutions often include scheduling and resource management tools, productivity suites, or stand-alone productivity solutions.
  2. Tighten up those meetings – As indicated above, meetings should always have an agenda, even for brainstorming sessions. Attendees should only include those who are involved in a particular project, rather than being open to nonessential personnel. Finally, there should be a clear statement of objectives and actions for every meeting, regardless of how short the meeting may be, or how inconsequential it may appear in the greater scope of things.
  3. Engage digital solutions – With the proliferation of data-driven organizations, it is now possible to make mundane tasks more efficient very quickly. Business Process Automation (BPA) is software designed to simplify complex tasks, which saves companies time and money and improves productivity. Productivity solutions and suites can centralize data, eliminating the “lost data” phenomenon, frustration, and wasted time.
  4. Set goals for improvement – If your organization has solid workers who follow directions, the process of improving efficiency can become like any other project that needs to be addressed, rather than some sort of punitive measure. Once areas of improvement are identified, managers can use KPIs, checkpoints and deadlines to ensure that the implemented measures are actually helping the organization improve efficiency. In this area, project management communication plans will aid in establishing clear-cut guidelines as to how information should be shared, who is responsible for what, and who needs to be privy to each type of communication over projects—in this case, the “Efficiency Improvement Project.”  
  5. Outlaw micromanagement – This may be another tough one for some managers, but some managers micromanage in order to feel useful. Micromanagement can be a colossal time-waster when workers are performing their jobs adequately. In an otherwise well-oiled organization, openness and transparency between workers and managers generally make micromanagement unnecessary.

Let Business Inefficiency Pros Guide You

It may seem daunting at first, but using a systematized approach saves time and profits.  Once you pinpoint the processes within your organization that need to be improved, improving them becomes rote. Today’s business environment can be frighteningly fast-paced at times, but detailing current inefficiencies ensures optimal results. Key personnel and the appropriate digital solutions are critical. Contact Trinity today to learn more.

Scott Burday

Scott Burday