What Is Business Efficiency And 11 Strategies To Improve It
Updated 28 September 2022
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Efficiency is the process of working smarter and doing more with the available resources. Inefficient businesses are likely to lose their competitive advantage and miss valuable revenue opportunities. Understanding workplace efficiency and taking proactive steps to eliminate workplace inefficiency can win the admiration of your colleagues and senior managers, helping you advance in your management career. In this article, we explain business efficiency, share key strategies that can help you improve workplace efficiency and explore efficiency types.
What Is Business Efficiency?
Business efficiency refers to how effectively a company produces the desired output, be that product, services or revenue, using the available inputs, such as labour, capital and material. In simpler terms, it refers to how productive and effective a company is in making the best use of available resources. Maximising the efficiency of a business helps the company generate increased revenues by utilising less capital and time. Running an efficient business helps reduce labour costs and increase profit margins in the short and long term.
Related: How To Improve Work Efficiency And Become More Productive
How To Improve Business Efficiency
The efficiency of a business depends on several factors, like the business model, industry, goals and resources. Here are a few strategies that you can use to reduce inefficiency and ensure that all business operations run smoothly:
1. Leverage business process automation
Business automation can help companies gain an advantage over their competitors by eliminating operational inefficiencies. Automating monotonous business tasks offers several benefits, like reducing errors, completion time and operating costs. It also helps free up employees' time to concentrate on more productive tasks directly impacting business outcomes. Implementing innovative business automation tools might involve a big initial investment. Still, they are worth it in the long run as they help lower business expenses while increasing efficiency.
Related: Automation Of Processes (With Definition And Examples)
2. Equip your team with the right tools and skills
Provide your team with the right tools and skills to complete their tasks efficiently. You can ask senior managers to conduct practical on-the-job training for junior employees to demonstrate the nuances of specific tasks. Once junior employees understand the end-to-end process, they can take on more responsibility, improving process efficiency at all levels. Besides practical training and knowledge transfer, you can also provide team members with the right tools to complete various tasks. For example, implementing a customer resource management (CRM) tool can help in improving the efficiency and productivity of the customer service team.
Related: Top Business Analyst Tools For Improving Efficiency
3. Make meetings short and focused
Inefficient and poorly organised team meetings waste employees' time and reduce productivity. Instead of long discussions, you can consider a short daily team meeting to improve efficiency. Known as scrums or huddles, these are short meetings, usually ten to 15 minutes and held in the morning, right before employees begin their work for the day. Scrum meetings help to keep the team updated on what other team members are working on, identify any potential bottlenecks and resolve any questions or problems of the team members.
Related: What Is A Bottleneck? (And Tips To Resolve One Successfully)
4. Use task management software to track and improve productivity
Task management software is a helpful business tool that allows employees to monitor and track critical projects, deadlines and other non-priority tasks. This software has a friendly and intuitive user interface that improves workplace efficiency by making it easy for team members to collaborate on tasks, even in different locations. It also helps send frequent reminders of an upcoming deadline, assisting employees in increasing their productivity and completing tasks on time.
Related: 10 Tips For Working Effectively And Improving Productivity
5. Streamline workplace communication
Build a workplace culture that promotes open communication amongst all team members, including top-level management. Ensure that employees feel comfortable sharing their concerns, offering feedback and asking questions. Open communication helps employees feel valued at the workplace, contributing to an increase in their productivity. It also prevents miscommunication and allows for sharing feedback and ideas, helping management identify flaws in the existing processes while pursuing available opportunities.
Besides encouraging open communication amongst team members, you can also improve efficiency by teaching employees to use proper communication channels. For example, an email is better suited for a meeting reminder, while brainstorming new ideas and solutions works better during a face-to-face meeting amongst crucial team members. By finding a healthy balance between in-person and online communication, employees can enjoy a better exchange of information and achieve optimum workplace efficiency.
Related: How To Overcome Communication Barriers: Benefits And Tips
6. Provide employees with a disruption-free work environment
Providing employees with a distraction-free zone to work in can improve their focus and efficiency. Ensure that employee cubicles are ergonomic and soundproof to help them focus on their tasks without feeling mentally and physically tired. Another effective strategy to limit workplace disruptions is scheduling long meetings on a specific day every week instead of conducting them randomly on all days. This way, employees get certain days to focus on individual tasks without disruptions and can allocate other work days to brainstorm and collaborate with other team members. You can improve personal productivity and overall company efficiency by providing employees with a distraction-free zone.
Related: 12 Ways To Improve Concentration At Work (With Benefits)
7. Encourage single-tasking
While multi-tasking gives the illusion of doing several tasks, it often has the opposite effect on productivity and efficiency. As opposed to multi-tasking, where you do multiple tasks simultaneously, single-tasking is the process of focusing on only one job until you complete it satisfactorily. With single-tasking, employees are likely to be hyper-focused on a particular task, helping them achieve more at the same time and improving the company's efficiency in the long term.
8. Follow tried-and-tested processes in real-time
Experimenting with new processes on an ongoing project can lead to inefficient or negative consequences. Avoid trying to speed tasks up by taking shortcuts or not following due diligence. Projects are often more efficient when team members follow tried and agreed-upon processes. If you wish to change a specific function, ensure that you do it only after discussion with all team members and analysing the benefits and drawbacks of the proposed suggestion.
9. Practice delegation
If managers try to do everything alone, it can lead to a loss of productivity, bottlenecks and delays. When managers micromanage, employees might feel undervalued at the workplace and not contribute to their full potential. Ensure all team managers practice delegation at the workplace by assigning tasks to the right team members. This frees up their time from menial tasks, and they can focus on higher-level goals while making team members feel responsible and empowered.
Related: What Are The Principles Of Delegation? (And How To Delegate)
10. Build trust
Building trust in the workplace helps form stronger relationships between team members and managers. When team leaders trust their teammates to do their jobs responsibly, it helps create a strong workplace culture where employees feel motivated to do their best work. When managers are transparent with their team members, employees are more likely to respond positively by providing valuable insights on critical tasks, services and products, contributing to the overall efficiency.
11. Focus on continuous improvements
Workplace efficiency is an ongoing process and requires a growth mindset. While efficiency is a personal trait, you can work on making it a part of the company culture by encouraging constant learning and continuous improvements at the workplace. Encourage employees to take risks and innovate, helping build a company culture prioritising efficiency and constant growth.
Related: A Guide On How To Build A Team That Is Strong And Successful
Different Types Of This Efficacy
Here are a few metrics that help you track workplace efficiency by reducing resource wastage and improving productivity:
Financial efficiency: It measures how efficiently a business converts operations into profits or uses its assets to generate income. It tracks financial metrics like profitability, fixed asset, receivables and inventory turnover.
Employee efficiency: It measures the output of the human resources in an organisation. You can track employee efficiency by using task management software to calculate how much work the employees complete on average per hour.
Operational efficiency: This measures the efficiency of the core business process. For example, the operational efficiency of a manufacturing company tracks the manufactured outputs daily, weekly or monthly.
Process efficiency: This measures the efficiency of a specific business process. Based on the results, managers and other team members can work on optimising inefficient processes.
Return on investment (ROI): It measures the efficiency of a business in relation to the initial investments. For example, it tracks how much revenue a company generates based on the infused capital.
Eco-efficiency: This measures the impact of a company on the environment. It tracks a business's sustainability measures, helping it impress customers and stakeholders with its credentials.
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