Economic
downturn, a culling of the herd
Abe WalkingBear
Sanchez
Editor's comment: The
last year or two have been very difficult for many businesses.
Countries have been through recession or close and there has been
added uncertainty from other factors. During such times, business
efficiency takes on an increasingly important role. Quite simply,
those businesses that do not operate at their maximum efficiency will,
at the very least, find survival difficult and, at worst, will be
culled.
Companies that
document their best biz ways can enhance profitability and position
themselves to better survive economic downturns.
Scientists believe
that about 150,000 years ago a huge volcanic eruption created a
cloud of ash that covered most of the Earth for 6 years. Not all
sunlight was blocked but enough so that most plants and animals died.
Those life forms that
survived "the long winter" were the smart and the
strong. Those life forms that perished were the weak and those
who couldn't adapt to the change. It's kind of that way in
business.
We are in an economic downturn and
a culling of the herd is taking place.
Never Time Enough
Errors, glitches,
screw ups, misunderstandings, omissions, the left hand not knowing
that the right hand exists much less knowing what it's doing; all drive up the total cost of doing business.
Vendors, sellers and customers all pay for inefficiency. Too often the
unofficial motto of some companies seems to be "we never have
time to do things right, the first time. A
"redo" is the most expensive and most often unprofitable
work that a business does. Some businesses make money in spite
of themselves.
By documenting the
knowledge it takes to get things done right the first time, their best
biz ways, companies can improve their efficiency and better prepare
themselves to deal with reduced sales, slow cash flow, thinner
margins and major business disruptions. Moving from "word
of mouth" operations to written policies and procedures promotes
efficiency of action.
The Closet Report
If you've been
around any length of time, you've most probably encountered
inefficiencies that have left you scratching your head and wondering
what the heck is going on. Steve Epner of BSW Consulting, Inc.
tells a story about a report that clearly illustrates wasted time and
effort. It seems that this woman spent the last 2 hours of each
day compiling some data into a report. She'd leave it on the
corner of her desk and the next morning it would be gone.
When asked what the
report was for and who it went to, she didn't know. The
woman had been trained by her predecessor to do the report but was
never told why or to whom it went.
It turned out that
about 3 years before the CEO had asked that the report be generated
and left for him to pick up at the end of each day. After a
while he decided he didn't need it and he quit picking it up, but
forgot to tell the preparer.
As the reports piled
up the janitor took note that they were unsightly and got in the way
of his cleaning. He started moving the report to a nice safe out
of the way closet. He referred to it as the "closet
report. "When the stack in the closet got too high, he'd
toss them out and start a new stack.
Clean Floor, Dead Customers
Russ Case, President
of www.bestbizways.com, tells a real story about a hospital room in
England where the patients unexpectedly kept dying. All the
equipment was checked and double checked, the air was tested, the
water and food were checked out and found to be safe. The deaths
continued and the toll hit 10 before the cause was found. Again,
it was the janitor.
It seems that this
room has a shortage of electrical outlets and when the clean up crew
came in they'd unplug the life support equipment so that they could
plug in their cleaning equipment. To protect their hearing the
cleaning guys wore ear muffs and couldn't hear the patients' death
struggles.
Information and
Knowledge
Humans are creatures
of information. We store it, use it and pass it on, yet
information on its own is just data and means little. When
organized so that it becomes useful, information becomes
knowledge, and that has value to a business.
Every business runs
on knowledge, how efficient a business operates is tied to how well it
manages the knowledge it takes to get things done. It's critical
that different business functions not work at cross purposes.
The best run and more
efficient organizations are those with written policies and procedures
that document their best biz ways.
Why the Costs?
Every business
function must have a clearly stated purpose that supports the overall
company strategy and which answers the question, "Why incur the
costs that go with the function?" Many department and
business function managers can't give a clear and concise answer when
asked the "purpose" of their department/function; and if
they don't know, what are the chances the people working with them
know? Or care?
From the Mind to the
Paper
There's a lot of
valuable knowledge in the minds of the people that make up every
business, and most often that's where it stays.
To be efficient
(powerful in effect with little waste of effort) businesses must
document their hard earned best biz ways; they must have written and
useable policies and procedures.
How To:
For each business function make up a list of the costs that go with
the function. There will be direct and indirect costs (people
cost is often the greatest). Based on the costs, establish a
purpose for each function that supports the overall business strategy.
Once there's a
clearly stated "Purpose" for the business function break the
function down to its major components and come up with a goal(s) for each component.
State the goal(s) for each major component,
within the function, as a policy; i.e. a goal driven guideline.
Determine the steps
needed to be taken in order to achieve the stated goal(s). Procedures are steps.
Based on the
procedures needed to achieve the goal(s) (policies), establish
the People Requirements (skills and personality traits) needed to
carry out the steps.
How the people
involved think about a business function and the actions they take is
determined by the key steps that are monitored (quality control) and
by the goals measured. "People respect what is inspected,
not what's expected."
If thought and care are given to the purpose and the policies (goals)
and the goals are not achieved, look to the steps or to
the people involved.
The
organizational 5Ps
The 5 Organizational Ps is a method for the documenting of policies
and procedures for business functions.
-
Purpose: Must support the company's overall strategy and answer
the question, "Why incur the costs?"
-
Policies: Goal driven guidelines for each of the major
components within a business function.
-
Procedures / Process:
The steps that lead to
achieving the goal(s) for each of the major components.
-
People Requirements:
Based on the steps (process), what skills and the personality traits are required?
-
Process Monitoring / Performance Measurements: Monitor for
the key steps in the process (quality control) and measure against the
goal(s) established by the policies.
If your goals are valid and are not achieved,
it's either your
procedures or the people involved.
Profit and Survival Enhancement
Above all else a business and its functions must be well
managed. The entire organization must know what the strategy is
and how everyone can best contribute to the overall plan.
Companies with documented best business practices (best biz ways)
avoid many of the pitfalls that plague companies operating on a
"word of mouth" basis. During good times such
companies maximize profitability, and during bad times they gain
market share as inefficient companies go belly up.
Mitakuye Oyasin (We are all related)
