Lessons in Efficiency & Productivity

Sunday, June 1, 2008 - 10:10

Organisations of whatever persuasion - for-profit, not-for-profit and public service - must pursue the twin and related goals of improved efficiency and productivity. No, you can't get off this particular roller-coaster.

Your competitors will be innovating to raise the bar in key areas for advantage that will translate into sales, market share or awareness. They will be actively chasing gains in these places because it can mean more value to the shareholders, it may raise morale at the workplace, or it may help the company to meet its stated aims in social responsibility or reducing its environmental footprint. Whatever the case, standing still is not an option.

On the back of a belief that lessons learned in one area may be applicable in others, experts in differing fields were canvassed for their views and practical recommendations on improving efficiency and raising productivity in the key areas of management, staff, individual growth, process and energy use. By Chris Sheedy

Management

A company will never become more productive unless its management team becomes more productive. Making that happen is all about learning to plan, to regularly measure against these plans, and having the discipline to then continue the routine.

It's perhaps unsurprising that Rafe Kruger, Joint General Manager, Unisys Business Process Outsourcing Asia Pacific, would use a rugby analogy to describe efficient and disciplined management, after all, he grew up in South Africa. But his point makes a lot of sense. "You have to constantly tackle and regroup, tackle and regroup. As soon as you stop tackling and regrouping then it's over, you've lost," he says.

A management team must know how to work together as a consistent unit before it is able to properly manage its staff and produce results. Once it has a complete check-and-measure routine in place and is able to quickly capture, adapt and apply all of the relevant information, Kruger says, the management team's greatest challenge is to keep this routine.

First, it's vital for management to figure out exactly what is important to the business and its clients. Once identified and understood by all in the management team, these become the areas where most energy is focused. Service level agreements (SLAs) and key performance indicators (KPIs) must be set for each area, and one person must be made accountable for each - even if it's within an external service provider.

The routine is then all about regularly checking how the organisation, or the department, is performing against these measures. In other words, tackling and regrouping. This allows timely identification of shortfalls, issues and benefits, and allows each to be fed back into the machine for constant calibration, always setting the bar higher.

"Within this type of system everybody understands what their requirements are on a daily basis," Kruger explains. "If every day at 10am they meet and report on these measurements then inefficiencies can be immediately escalated and rectified.

"I don't think a lot of people and a lot of organisations go deep enough into the detail and apply the rigid process on a consistent basis. You need to have the right people motivated to keep doing it well, otherwise you'll have a problem. And, of course, you need to be able to measure the improvement."

Through implementing such a program Unisys was able to manage the processes and back-end of the RAMS Home Loans business (which, of course, has recently suffered credit issues unrelated to this topic). Over the past three years customer numbers jumped from 30,000 to 70,000 and the loan book from $7 billion to $14 billion. Despite this rapid growth, because an efficient management plan was put in place the costs of managing the back-end of the business have not risen even once.

"We've managed to reinvigorate our people, our systems, our processes and our KPIs to keep lifting the bar," Kruger concludes. "For twice the volume we've managed to deliver the same high level of service at the same price."

Staff

Very few organisational processes can more effectively influence and improve a company's efficiency and productivity than employee engagement.
To illustrate the power of staff buy-in, Bridgette Di Ferdinando, Director Asia Pacific of Alexander Mann Solutions, points to an example of a global beverage retailer whose management discovered a direct correlation between employee engagement and profitability.

"They found that by targeting their strategies at activities that improved employee engagement, and by improving employee engagement by just one quarter of a point (employee engagement is defined by points), they could reap a profit increase of $50 million per year for the company," Di Ferdinando says. "It's very powerful stuff."

Powerful indeed. But how does an organisation go about ensuring its staff feel engaged in the greater goals of the business? And how do staff themselves become more aligned with plans and objectives that are developed in the rarefied atmosphere of the boardroom?.

It begins at the hire stage, Di Ferdinando says. It's vital that the promise made to the employee - about what the job involves, how much say they'll have in the company, what the company's internal practices are etc - are absolutely honest and realistic. And for the staff member it's important that they request enough information to fully understand the business in which they're going to be spending five days every week.

"Organisations that are doing it right are keeping their promise once the person joins," she says. "The other thing being done in organisations that are doing well is around relationship management.

When you hire an employee they're just like a client or a customer. The way you manage them needs to be aligned and consistent with how you manage your own clients. What I've seen as best practice is checkpoints throughout an employee's life, at the six-month and 12-month marks, for instance. It's important to get an idea of what it's like for them, how their experience has been so far? What do they see as their future in the company? - because career satisfaction is actually more important for an engaged employee than money."

Managers should then take this information one step further and ensure that there are visible opportunities for staff, particularly for the high performers who are most valuable to the organisation, to move upwards from their current role or to take on new responsibilities and challenges. Often in large organisations the avenues of movement are not immediately clear, but much can be done to help communicate the opportunities. This also, of course, greatly assists with the reduction of staff turnover, a costly enemy of productivity.

Finally, Di Ferdinando says, if you're hiring staff who you believe are up to the job, then let them do their job. "When we look at examples of what organisations are doing to increase staff performance and productivity, there is one very important area around empowerment. Highly productive staff generally work in cultures where they're empowered to make decisions and to take on pieces of work. With the right level of empowerment you can achieve a very productive workforce."

Personal productivity

When it comes to increasing your personal productivity, it always pays to spend less time at work.

Just as staff are not as productive when they don't feel engaged in the bigger picture of the organisation's objectives, so too are individuals less productive, particularly senior managers, when they have not sat back and figured out their life objectives. Paul Smith, Founder/Director of Carnegie Management Group and Fellow of the Australian Institute of Management, says the valuable knowledge that you are on a path of your own choosing, and the resulting balance this brings between work and personal life, always results in increased productivity.

"There's a mentality that I was guilty of years ago where you just go with the flow," Smith says. "You do what's expected of you, even when it comes to career change. You get a job offer and the salary's nice, but you never stop to ask yourself, 'How does this fit in with me?' and, 'Where do I want to be in the future?'. The point to me is all about focus."

Too often, Smith says, individuals will realise they have a problem only when they suddenly realise they're tired and burnt out, or they have a health problem, or some sort of crisis occurs in their personal relationships - or all of the above! The boom in the field of industrial psychology, as well as the plethora of life balance courses now available at universities and colleges, points to this topic finally being recognised as a serious issue. But how does it affect productivity?

"The bottom line is if the body's stressed, the mind's stressed and the emotions are stressed, then your productivity's going to go south big time," Smith explains. "Not only are you going to be less effective at work, that's a no-brainer, but there'll invariably be issues that crop up at home."

Smith recently spoke with a CEO of a large organisation in Melbourne who is a fine example of a successful individual who has found balance. He's in his 40s and keeps a strict routine. He comes home by 7pm every night and the weekend is completely off limits for work. He enjoys jet skiing on Port Phillip Bay, cycles regularly, is in great shape and is considering taking up triathlons. Of course, his career is also flying high and his bank account is in great shape. His productivity has been boosted by his great life balance.

Smith says there are a lot of ways to work smarter to create better balance, including being technologically savvy (although he says allowing email to rule your life, particularly with a BlackBerry, can have disastrous effects), achieving emotional balance and maintaining it in others, developing better interpersonal skills (particularly with staff), being flexible and adaptable, learning to say no, focusing on one job at a time and, most importantly, having your personal goals mapped out and staying fit and healthy by exercising and eating well.

"To me, productivity means producing maximum happiness for me, my family and friends. Give it a shot," Smith suggests. "You'll be happier, you'll get more done and you'll get to see your partner for dinner. That's what I call working smart."

Process

An effective method of increasing productivity is to look to technology to help streamline processes. Some very exciting options exist, but be sure to look before you leap.

Executive mentor Paul Smith, Founder/Director of Carnegie Management Group, says it's important for managers to be technologically savvy as there are no areas of business that will remain immune from the advancements of technology. Good managers don't need to be experts in all facets, he says, "but they need to stay abreast of technological development and work out which ones will improve productivity and effectiveness."

Never before have so many tools been made available to a company's management to help increase productivity and efficiencies. The great danger in such an environment is that management may be inclined to overspend on exciting pieces of technology without judging their true, long-term worth. There are also questions of whether users will be comfortable with and make full use of the technology at hand, and whether it will be scalable in the future. One example of stunning technological success in Australian business is men's underwear and swimwear company aussieBum, which, in five years, has grown from start-up to fashion-industry powerhouse, with an annual growth rate of 120 per cent over the past three years. Such growth would not have been possible without the intelligent use of technology, and technology has been a central part of the business since its inception.

"Most fashion houses start with a sewing machine, we started with a computer," says Guyon Holland, aussieBum Co-founder and Operations Manager. "Now, thanks to the efficiencies in our processes, for a company with just 25 staff our revenues rival some software companies."

Holland grew up on a farm, which he says taught him valuable lessons about making the most of what was available. This was never forgotten during his career in IT, and he now exploits every piece of technology in every way possible.

"We sell to some of the world's leading department stores, retail stores and specialty boutiques, and we just recently moved their ordering systems online. It's very efficient for them and they love it; in one place they get to see all the information, including video files about a product, photo shoots, additional images etc. We provide a very graphic-based Excel spreadsheet that allows them to place their order and see a thumbnail of every single item.

"Then, rather than re-keying their information, we're able to automatically extract their data out of the spreadsheet and electronically input it into the computer system of our choice, which is MYOB. It improves accuracy, improves turnaround time, it has increased our sales and it's very inexpensive. Rather than millions of dollars, we've only spent thousands by exploiting software that we're already using."

In order to ensure a system is necessary and will improve efficiencies, Holland says he tells his staff to wait until they're "drowning in their role". When their workload exceeds their capacity then he looks into the processes that generate the workload that can be automated. It's a simple and effective method that means the system will be useful, productive and helpful to well-challenged staff.

Environment

Green credentials are about so much more than placing a recycling bin in the photocopying room. Energy conservation and environmental efficiency now have proven beneficial effects on productivity, and on the bottom line.

When the staff at Horticulture Australia recently moved offices there was a great effort put into the sustainability of the new office space, and with very good reason. Not only were they hoping to practice what they preached, as the representative body that covers Australia's massive fruit, vegetable, nursery, nut and turf industries, but evidence clearly supported the fact that an environmentally healthy workplace is a more productive workplace.

"In the same way research has shown that patients who stay in hospital rooms with a leafy outlook will recover more quickly than those who look out on to a brick wall, overseas research has proven that staff in office environments containing plants will be 5-12 per cent more productive than those in plant-free spaces," says John Webster, Managing Director of Horticulture Australia.

"When we selected indoor plants we chose ones that have maximum oxygen provision levels. We looked at energy consumption, and not only do we have low-impact whitegoods and energy-efficient light globes, but we've also got a system where the lights go off in office spaces where there is no movement for a period of time. So now we're in a bigger office but our electricity costs have gone down. It's good for the environment and it's also good for the bottom line. We've used recycled products as we've refitted the place, and under every desk we have two bins, one for recycling."

Within his industry, Webster says, most businesses are interested in turning their land over to the next generation in even better condition than they found it, as these businesses are often family concerns. This makes for a truly sustainable business, and one that is prepared practically and financially for whatever environmental challenges the future may bring. They also offer valuable lessons for other Australian business owners and managers, all of whom will be facing strict regulation concerning carbon emissions over the coming years.

"In the Murray Darling Basin we've just seen the worst drought on record, and that's on the second most arid continent on earth, after Antarctica," Webster explains. "There was a huge shortage of water, but in all of the horticulture industries, the fruit and vine type industries along that Murray Darling Basin, they already had the technology to have the most efficient use of water possible; they using only 17 per cent of the water used in irrigated agriculture.

"So when this drought hit they already had the tools in place to cope with it, and the issue really became the fact that water became extremely expensive. The benefit of thinking about the environment earlier on had an enormous benefit, an enormous commercial impact. If those investments had not been made over the years then the industry would have been in far worse shape during the drought. Becoming efficient in an environmental manner is simply future proofing your business and your market."