Business Efficiency: What is it and Why is it Important?

Systemize your business, empower teams and improve efficiency

“Efficiency is doing better what is already being done.”

As a concept, business efficiency is fairly straightforward. You optimize your internal processes to get the maximum return for the least cost. Business owners will know, however, that implementing efficient processes across a business can be a real challenge. 

From workflow optimization, to automation, to monitoring the right metrics, there’s a lot to consider. That’s why we’ve put together this guide to help you take practical steps that improve efficiency in any business.

Need to systemize your business and make growth easy?
Need to systemize your business and make growth easy?

What is Business Efficiency?

Business efficiency is a measurement of how effectively your business performs. It has many moving parts, from the materials you source to your labor productivity and the capital you invest. All the way to your products, services, and how you deliver them. 

Take a look at this diagram to get a better understanding of the flow of business efficiency.

 

business efficiency flow
If you’re having trouble picturing the whole, try reducing the idea to one part. For example, how much you spend on materials and production, versus how much you make selling the product you make out of them. 

This would be the simplest metric of efficiency, the one that means your business is viable. Even the newest small business owner knows that you need to make more than you spend.  

But if business efficiency is such a wide-reaching topic, how do you keep track of everything it involves? Agreeing what is the most important measure of your business performance is the first step. You need to measure the right metrics. Then, you need to use the reporting data to make meaningful changes.

Many businesses collect large amounts of data and create huge varieties of reports on performance. Yet, just observing the results isn’t enough, which are frequently hard to decipher. You need to make improvements to your processes based on those reports. Don’t fall into the reporting trap.

What is the reporting trap and why do I need to avoid it?

Need to centralise and optimize business process?
Need to centralise and optimize business process?
All businesses monitor their performance in some way. If you have a large business, then you’re likely monitoring performance by department. You’ll have customer service reports, sales reports, online performance and SEO reports, and more.

With so many reports coming in, it’s easy to view them all at only a surface level – to say “This report shows we are performing well, therefore I should focus attention elsewhere.” However, this can be a trap for business leaders.

Improving efficiency is a common goal for most businesses. Objectives such as doing more with less, reducing operating costs or improving the speed of delivery become quarterly targets that must be continually improved.

It usually feels sensible to associate hard numbers with the area that you are focusing on, by benchmarking a metric that will then become the goal to improve. Surely Without a strong method of measurement, you can’t measure the efficiency of a project

However, if that measurement becomes the priority, it can create more problems than it solves. Unless the metric is appropriately customer-focused, you could be failing customers while appearing to hit those metrics on the surface. 

Let’s say you run a service desk with a ten-minute target on first-line call routing – a seemingly beneficial KPI. But this time pressure can result in a poor diagnosis of the original issue, meaning calls become allocated to an incorrect status or the wrong department. 

So, you get the opposite of what was intended. Instead of happy customers with quick resolutions, you get angry customers who have to call back multiple times for a fix. Yet, your measurements would show the objective was being achieved. While operational efficiency may seemingly be improved, your cancellation rate will increase and revenue growth will be impacted.

It’s not just customer service this approach can impact. Another example might be reducing the amount of labor required to deliver a service. This might result in a cost reduction, but overworked departments are likely to deliver a lower-quality product again impacting revenue growth in your business. In deciding any measures in your business, it is important to make sure the customer satisfaction element is considered.

financial analytics

What happens when the scope of a business efficiency project changes?

In an extended project where objectives are still being agreed upon, goalposts usually change. This means the benefits of improved efficiency get delayed. It’s important to bear in mind that the problems of the reporting trap can be even more pronounced in this situation. 

A common goal might be to switch to real-time measurement of key metrics, so that you can better monitor the efficiency of your business. This can mean changing of software, alignment across departments, migration and implementation considerations. Just meeting the new reporting requirements has become an extensive project in itself. More teams become involved, with additional stakeholders and alignment needed.

Staff and management can become frustrated at a lack of progress, while resources continue to be spent without delivering benefits. This is a recipe for driving down motivation across your company. 

The long term benefits of such a project may well outweigh the challenges in implementing, but keeping a tight scope is important to realize those benefits in as realistic a timeframe as possible. While there is absolutely a place for metrics to support business efficiency, often the greatest immediate rewards are achieved by simply focusing on the basics of efficiency which we will now discuss.

These fundamentals apply to every department in your business, every employee, and are something your business can start implementing immediately.

What are the fundamentals of Business Efficiency?

It doesn’t matter what stage of the business lifecycle you’re at. The core business efficiency fundamentals are systems, engagement and people. Or, how you do things, how well those things are done, and who does them. Let’s look at each of these parts in more detail. 

For each category, there are several questions you should ask yourself. These will help ensure you’re getting the fundamentals correct before moving on with your efficiency strategy. 

Systems

A business system is simply a description of how things should be done, in a way that can be repeated. Normally, this is a collection of processes and procedures. Think about your training materials or your workflow documents, for example. 

Without a system, activity will be different every time, this leads to inconsistent service and inconsistent quality. It’s difficult to improve efficiency if results are this variable. Building a process library is an important first step. So ask yourself.

  • Do you have a system?
  • Is it presented in an easy to understand way?
  • If a change is needed, how easy is that to implement?

Engagement

Engagement means how well a system is being followed. This is highly associated with your consistency of output. When consistency is not achieved, it may mean your system isn’t being followed or isn’t being understood. 

A common scenario is multiple well-documented processes that bear no resemblance to the work that actually takes place. Perhaps this is because they are out of date, not fit for purpose, or people don’t know how to use them. So ask yourself this. 

  • Do you know when your processes are not being followed?
  • Are you confident steps are not being skipped without good reason?
  • When people performing the work change, does the quality degrade?
  • Are changes to the system effective, or are they forgotten?
  • Does management frequently have to get involved to maintain consistency?

Engagement has another effect too – if your staff aren’t actively engaged with their work, perhaps because it’s unclear, then they’re likely to do worse work, and not live up to expectations.

engagement-statistics

People & Perception

We call it  “human resources” for a reason. People are the heart of your business. Aspects of your system may become automated over time. Yet, people will always be involved and typically responsible for improvements. 

AI is great at defining solutions but rarely able to implement them alone. This means it’s important that your people and your systems work well together. You can make sure this is the case by asking several key questions.

  • Are staff regularly trained on the system?
  • How are improvement suggestions reviewed and implemented?
  • How do you delegate ownership of how things are done?
  • Can staff deviate if they find a better way?
  • How is that tracked?

Another important aspect of your staff is their perception of your systems and your performance tracking. Do staff view the system as a method of control, or as something that supports a productive and positive work environment?

Looking out for employee psychology is as important as physical healthcare. If your staff don’t like the way a system is used, or the way they are monitored, motivation drops. This will drive down engagement with a system over time.

The Role of Technology in Efficient Business

Technology can support your business efficiency initiative. But to meet your staff’s needs and to cover all three fundamentals, it should have the following characteristics.

  • Be easy to use with minimal training. System use should be designed with training and ease of use in mind. 
  • Be quick to implement, and show immediate value. Projects that demonstrate a quick Return On Investment (ROI) create a positive feedback loop that staff will respond to. 
  • Be fast to adapt, without requiring development resources. Any delays to continuous improvement significantly impact its benefit and your profit margins.
  • Create work focus. It must avoid obstructing work with a confusing interface or too much manual activity. It should help, not hinder, time management. 
  • Be accessible wherever people may need to perform work. Consultants and field agents will need access on their mobile devices, for example. Project management may need to switch between sites, etc.
  • Encourage collaboration and communication. A team that can positively communicate is more effective. Email overload is a chief contributor to work-related stress. Encourage fast and open communication. 
  • Balance flexibility with consistency. Avoid the “Computer says no” scenario by ensuring your staff still has some agency over processes. 
  • Capture opportunities for system improvement at every stage. It is the workers that have the greatest input on improved efficiency in work. Humans by nature will deviate, it’s important to capture those deviations and improve based on that information.
  • Provide reporting information. Capture the correct data points in the short term to help measure and guide future decision making in the long term.
efficiency chart

How to improve Business Efficiency

Need a better way to manage team tasks and workflow?
Need a better way to track team tasks and workflow?
Once you’ve established that you have your fundamentals in place, you can move on to improving your processes. These are the key areas to concentrate on for business and financial efficiency improvements.  

Automation

Automation is currently the holy grail of process improvement. It’s only logical that simple, repetitive processes are better suited to machines than people. It’s equally obvious that AI can process more numbers per minute than a human can. 

Remember, though, that automation must happen after a process has been optimized manually, Automating a poor process just makes errors happen more quickly. 

Take this example, you choose to automate your invoicing process. The system can automatically generate invoices with correct products, pricing, etc. and send them out. All without intervention. 

Yet, if your customer information isn’t up to date, or there are errors, then the whole process falls apart as the invoice emails go nowhere. The human factor is just as important as the automation in making this process run smoothly. 

Improve team communication

We mentioned above that email overload is a chief contributor to work-related stress. Cut out unnecessary internal emails to massively reduce this load. If staff have an easy way to communicate, like an IM service, tasks can flow much more easily. 

Many process tracking platforms have integration for chat services built-in. They’ll help you to track, monitor, and record communications automatically as well. Internal business operations will run more smoothly with this ease of communication. 

Relating communication directly to work activity makes it easier to find related information. With software tools, it’s easy to group and sort communication into channels. You can use system integration to collate your communication data for ease of access and reporting. 

Invest in Task Management Software

As we showed above, technology can help your team be more productive. Task management software is a great way to keep your workload organized and streamlined. Planning and organizing tasks in advance keeps everyone working toward the same objective. 

Tracking your tasks in this way will also help you identify areas of workflow that are developing a backlog. These are the areas you should focus on first for process improvements. There are only so many hours in anyone’s work day, plan them efficiently.

Hold a quick daily standup

A brief morning stand-up meeting can help keep everyone on the same page. You can even use it to replace lengthy, unnecessary meetings that drain time and productivity. If you’re outlining the day’s focus, you don’t need a one-to-one dialogue.

Encourage managers to communicate with decision-makers directly to adjust daily requirements. You can implement a similar process for remote working. Although it’s harder to ensure attendance, you don’t need to make every morning meetup mandatory.

meeting length

Avoid Multitasking 

Focus, focus, focus should be your mantra for business efficiency. Anything that increases the amount of time doing productive work vs deciding what work to do is a good thing. This includes tackling one task at a time.

Some job roles require switching between multiple activities. You can still narrow your focus by doing work in scheduled blocks. This decreases the time wasted switching between systems and work methods. Less multitasking, more single-tasking.

 

context switching

Own and stick to an established process

Create a defined system for how people should work on a task. Make sure that it fits with the way your teams operate. Work with employees who will be performing the tasks to refine these processes. 

Efficiency is something you can build into your company culture. Communicate defined processes clearly at all levels, from training materials to management guides. Make it a part of your culture and you’ll find that staff will come up with efficient process refinements themselves. 

Never stop improving

Corporation or startup, you can’t make one change for a more efficient business and stop there. Process is about change. Make those doing the work significant contributors to how to improve it. This is how you will get the most in-depth insight into how your processes are applied.

What are the main reasons people might be inefficient?

There are many reasons why someone could be inefficient. They’ll usually depend on the individual. Broadly speaking though, all of these reasons fall into a few categories.

  • Lack of training
  • Lack of motivation
  • Good ideas go to waste
  • Human error

If an employee doesn’t understand your process, they can’t perform it effectively. If they don’t see the importance of a step, they might ignore it. If you don’t collect feedback from employees, their ideas for improvement go to waste. Any one of these mistakes could hurt your bottom line. 

Finally, everyone makes mistakes. When you’re relying on human input into automated systems, it becomes even more important. 

You need to catch these errors before they cascade into larger problems. One person inputting a wrong variable isn’t a big deal. If your automated system then uses that incorrect data as the basis for a task, that is a problem. 

Need to centralise and optimize business process?
Need to centralise and optimize business process?

How beSlick can help boost your business efficiency

beSlick has been built specifically to improve business efficiency, by integrating your system and the work within. Importantly, it empowers employees to own the improvement of their daily activity. So, everyone is working towards the same goal of improving efficiency.
efficiency booster

Everything in one platform 

beSlick uniquely integrates process, workflow, tasks and to-do management in the same collaborative platform that encourages change and improvement. Everything is time stamped and tracked, and employees are notified when they need to take action.

Easy to use with minimal training 

In beSlick, you create templates for repeat activities that have the training embedded directly within. So, a new starter can be effective as quickly as possible. The interface is simple for users but powerful for management, to create a system their teams will work to. 

beSlick uses task tracking, flags, categories, notifications and many other familiar and easy to use tools. If your team members can use social media sites like LinkedIn and Twitter then they can use beSlick, it’s that simple. 

Quick and easy to implement 

Implementing a new workflow in beSlick can be achieved in minutes rather than days, allowing you to empower staff and create innovation even more quickly. The drag & drop interface is simple for non-technical users to pick up and implement positive change quickly.

Creates focus 

The first screen every user sees when they log in is what they need to do. They can then start completing, prioritizing, snoozing or reassigning to make sure things are moving forward efficiently.

Collaboration and communication 

Comment and @mention on activity in the same platform as the activity itself, even providing feedback on potential system improvements.

Balances flexibility and consistency

Gives clear visibility into success and failures but allows flexibility in the overall objective of a Task (Can still be completed with any deviation tracked for review). beSlick can be used on a laptop, PC or mobile, wherever there is internet access.

Capture Reporting Information and Improvement Suggestions 

As all activity is tracked and timestamped, it is clear for auditing, compliance and reporting purposes exactly how well your business is working.

A simple inbuilt mechanism notifies process owners when there are suggestions to improve, so they can be immediately implemented and make a positive impact on staff work efficiency.

improvement suggestions

How to start improving Business Efficiency with beSlick

Overhauling an entire business can be a significant undertaking, and we provide services to help you achieve this. Our range of implementation options usually start where the biggest ‘pain’ is in your business to create immediate value, and champion that success in your business to make the smooth adoption across the rest of your business. 

We can either act as a coach to your internal resources or provide all the way through to a complete ‘done for you’ service to systemize your business and improve business efficiency. For more information on our implementation services see here.

As every business leader knows any worthwhile change in a business is not achieved overnight. It is important to demonstrate immediate value, by focusing on a pilot team or specific pain within the business. 

The success of this project will provide the internal knowledge you need. Allowing you to make the rest of the steps in your process efficiency journey much easier to achieve.

Conclusion

Using the correct software options is vital to efficient business processes. All-in-one platforms and software that make integration easy are where you should focus. Starting with a solid foundation is critical to an efficient business.

And one more thing, having a clear mission statement and values in your business is fundamental to success. Metrics might measure results, but it is employee motivation that starts everyone’s day with a full tank of fuel. Harnessing that motivation with alignment, so that everyone is swimming in the same direction, creates magic in your business. 

The number one thing you must do is make sure that your mission is clear. That your vision is understood and shared by all. That applies if you are the CEO of a business or the manager of a team.

When your vision is clear, individual decisions collectively pull in the same direction. If people are confused, the opposite happens and everyone will pull in different directions.

When you hire, you make that mission understanding and belief part of your hiring process. Then you will have a business team aligned around the same vision, motivated to do a great job. 

Provide those people with the systems and technology to achieve it, and you will have an efficient business. The results will be self-evident.

Author , Author of The Dirty Word & CEO of beSlick

Alister Esam is a successful entrepreneur and investor, having bootstrapped his fintech software business eShare to international status operating in over 40 countries and servicing 20,000 board directors, before successfully exiting in 2018.

He now invests in a variety of startups and on a global mission to make work, work.

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