Efficiency & Effectiveness
“Efficiency is doing better what is already being done. Effectiveness is deciding what to do better.” (Source: Peter F Drucker)
In times of economic uncertainty organisations generally become very cost-conscious. Lots of time and effort can be spent on ‘efficiency programmes’; extracting as much cost as possible from the production of products and services.
Whilst this internal focus on getting things right is an important element of running a successful business, just being efficient is not good enough. Whether your organisation is in the private, public or third sector you must also operate effectively if you are to succeed.
Effectiveness is “doing the right things”
Effectiveness is critical to the success of every organisation. The key is having a good strategy; one that is well thought out and well executed. An effective business has the ability to produce the right products or services and introduce them to the market at the right time.
In order to be effective the objective or end goal must be met, therefore effectiveness must take into account any variables or parameters that may change during the course of production or delivery.
Efficiency is “doing things right”
Technically, efficiency is defined as the ratio of outputs to inputs and focuses on achieving the maximum output with the minimum resources.
An efficient process is one that can be repeated time and again with little or no variation. This focus on repetition can lead to inflexibility and an inability to be able to react to change.
This dichotomy between efficiency and effectiveness can be illustrated with an example based on an IT services company. The company decides it is taking too long to carry out routine maintenance tasks and engineers are getting backlogs of work orders. Following a review an additional testing by a co-worker was removed from the maintenance process. This change certainly makes the process more efficient; maintenance jobs are turned around quicker and the backlog disappears. However, the change results in more jobs going out with other faults that result in the customer having to log another support call. This creates more administration work and customers are dissatisfied because they would reasonably expect all issues to be resolved.
This illustrates how ‘doing the right thing’ can often be overshadowed by ‘doing things right’. Organisations need to find ways of becoming more efficient without compromising customer service, quality and innovation.
The Efficiency / Effectiveness Matrix
|
Effective |
Ineffective |
|
| Efficient |
The business thrives |
The business dies quickly |
| Inefficient |
The business survives |
The business dies slowly |
Most businesses do not operate at these extremes; those that do show brilliance in either their strategy or delivery often only do so temporarily. Very few organisations thrive for sustained periods, particularly in dynamic environments.
So where does your business sit within the efficiency / effectiveness matrix? Is your strategy as effective as it should be? Are you operating efficiently in all areas? If not then Solitaire Consulting can help.
The Changing Times – November 2011
Here is the latest version of my consulting networks newsletter “the changing times”.
This month the main feature is an article by Rod Hare on “How to find growth in a flat market”, which provides some useful tips for all types of business.
There are also articles of Efficiency and Effectiveness, Lean Philosophy and some interesting case studies by members of the network.
National Freelancers Day 2011
I only found out this morning that today (November 23rd) is National Freelancers Day 2011. It is the third such day with the aim of promoting the benefits that freelancers bring to British industry.
It’s all about Flexibility, Capability, Agility, Compatibility!
The term ‘freelance’ can mean different things to different people, but as far as I am concerned includes independent consultants (me!), contractors, sub-contractors and interims – basically anyone who isn’t employed in the conventional sense and provides a service to others.
To find out more, including research and free webinars go to the National Freelancers Day website by clicking here.
If you want to hear first hand how the use of freelance services can add value to your business contact me for a free no obligation appointment.
How technology can help with employee engagement
In my last post I described The Lamberhurst Employee Engagement Wheel which recognises that the question ‘are your employees engaged?’ is somewhat meaningless unless you also ask ‘engaged with what?’ The wheel identifies 11 facets of the business and poses the key employee engagement question for each one.
The segment titled ‘IT – intranet, work support systems’ asks ‘do you have effective IT systems that staff can use to the full?’ Whilst IT is now a critical component of nearly all businesses, how can we use IT to help keep out employees engaged? I believe there are several essential elements to this:
Knowledge Management
When employees can easily access the information they need to carry out their job they are more likely to remain engaged.
A well designed intranet portal can be a very effective mechanism for achieving this. However, a poorly designed and out of date intranet will do the opposite. How many of us have worked in organisations where the company intranet acts solely as the homepage, but is largely ignored apart, maybe, from accessing the internal phone list?
A modern intranet, based on Web 2.0 technologies, will not only act as a portal to other business systems, but will provide a number of tools to share company information in an intuitive manner. Knowledge management systems often integrate the storage and search tools of an electronic document management system with the presentation and usability of a website. An intuitive interface, with the ability to allow users to post their own knowledge items, add comments and edit items, creates an internal online ‘wiki’, which is a great way to enable knowledge sharing and keep procedures up to date. This is a far cry from outdated procedure manuals gathering dust on a shelf, which can be demoralising to the person who spent time writing them as well as to the user with a problem who finds the process has been changed since the manual was written!
The deployment of a content rich intranet is just one area where technology can help with employee engagement. I’ll be continuing this theme with other areas of IT supporting an employee engagement strategy in my next couple of posts. In the meantime drop me a line if you want to discuss further or have a look at my thoughts on how technology can be used to drive change.
Employee Engagement – what’s it all about?
Virtually every management book, magazine or blog is talking about Employee Engagement, but what’s it all about? Is this something new or just a new name for something we have been doing as managers for years?
Whilst there appear to be many definitions of EE what we probably all agree on is that it has become a major focus for senior management of late. It is not really surprising that ‘engaging with your employees’ has been shown to be correlated with superior business performance. However, there is no consistent definition of it and, while HR directors are increasingly being tasked with finding ways of improving Employee Engagement, there is often little understanding of what that means or how to go about it.
Clarity of thinking and an understanding of how it works in your particular organisation is critical. When provided with a request to ‘help me with employee engagement’, a good starting point is to ask ‘What is it that you want your staff to be engaged with?’ Every organisation is different so the answers to that question will be different.
Working with my colleagues at Lamberhurst we have developed a unique framework to help businesses develop their thinking in this area. It is summarised in the Lamberhurst Employee Engagement Wheel. Asking yourself the critical question in each segment is a first step towards understanding what your business needs to do to improve engagement. Lamberhurst can provide expert facilitators who can guide you through the process and also consultants in a variety of disciplines who can help you address major issues you have that are preventing your staff from engaging effectively with your business.
We have just started using the wheel so I would appreciate your feedback on its usefulness for your organisations. Either PM me or let’s start a dialogue.
The Changing Times
For the latest edition of ‘the changing times’ the newsletter of The Lamberhurst Corporation Consultancy Network please click here.
This month the newsletter includes a profile of yours truly as well as a couple of case studies and an article on Business Improvement that first appeared on this blog as ‘using technology to drive change’.
The Lamberhurst Network has now grown to over 50 consultants operating in the UK, Channel Islands and Europe. We all have our own successful consultancy companies and a pre-requisite to joining is a track record of working in senior positions in the public or private sectors. Using the power of the network we are able to tackle much larger projects than our individual businesses could cope with.
Please do contact me if you want further information on how Lamberhurst consultants can help your business.
Barriers to change #2 – Lack of Vision
In my last post I discussed how complacency can be a barrier to change in an organisation. I used the Jersey Trust Industry as an example. This time I would like to explore another vital ingredient to successful change – vision.
This may sound obvious, but if you are looking to change or improve your business then you need to define where you are heading. This needs to be more than just a vague statement of ‘we want to be better than our competitors’ or ‘we want to make more profit for our shareholders’. Whilst this type of statement may help to define the direction the company is heading it doesn’t describe the destination.
Spending time clarifying your vision is an essential step on your change journey. Ideally this will be agreed by the senior management team or main Board of the business. The vision should be clear and avoid ambiguity. It should also represent a ‘stretch’ from where the business currently is.
This is where I have a problem with some of the businesses I talk with, or more specifically the managers and staff within those businesses.
One of the challenges of living on an island with a relatively stable population and low workforce mobility is that people often stay in the same jobs for quite a long time. As well as leading to complacency as described last time, this also stifles vision. Or to put it another way people no longer have an awareness of ‘what good looks like’ and except mediocrity as their vision.
So if you want your business to succeed and be better than the competition then you must embrace new talent. A reasonable level of staff turnover helps to invigorate the business and bring in new ideas from other companies and sectors. If you don’t have the opportunity to bring in new staff directly look for other ways to widen your vision or experience. Consult with your customers or suppliers. They will usually be only too happy to help you and can identify areas of focus from their experience of dealing with other businesses themselves.
It may also help to bring in some external expertise such as a management consultant or business improvement practitioner. Many of my clients use the services of Solitaire Consulting because they need to make sense of the many sources of feedback and opinions they have internally. Someone from outside the business can apply an objective assessment of your situation and help you make the most appropriate decision about where your business needs to be.
Before you embark on a major change make sure you have adequately defined and communicated your vision of the future.
Complacency – one of the biggest barriers to change?
I’ve had several really useful conversations this week that have all pointed to the high levels of complacency that still exist in businesses today, particularly in the financial services sector. These are businesses that have survived the difficult trading conditions of the last few years but are seeing the increased levels of activity in the current market as reasons for not needing to change.
Although many have attempted to reduce costs to remain profitable there are still a lot of challenges ahead. Have a look at the graph below, courtesy of my friends at BankClarity Ltd, which shows how the costs per employee compare against profit per employee in the Jersey Trust Industry (Source: States of Jersey).
I’m sure this graph may also apply to other jurisdictions operating in similar regulated environments.
This tells us that making money in the 1990′s was pretty easy but for the last decade profitability has not increased at anything like the same level as staff costs. This clearly is not sustainable and something has got to change!
I believe the saying, “If you always do what you’ve always done, you’ll always get what you always got” is still believed in a lot of circles. Unfortunately this is only true when operating in a stable environment. So much is changing around us, for example: the general economy, increased client demands, regulations and technology to name but a few. Doing what you have always done will no longer produce the same results – it is a sure way to lose market share to your competitors who are changing.
So why isn’t there a huge demand for business improvement services to help improve profitability? Where has the innovation gone to take advantage of new technologies and new ways of doing business?
It seems to me that business leaders are far too complacent and very few are willing to embark on truly transformational changes to their businesses.
Fortunately I am lucky to be working (through my consulting business, Solitaire Consultng Ltd) with a few clients who aren’t complacent, are forward thinking with a strong desire to maximise efficiency and look for new ways to increase their profitability per employee.
How do we encourage others to do the same?
LinkedIn & Twitter Combine to Make a Great Team (via Mr LinkedIn’s Blog)
I too have been struggling with the relevance of Twitter and find these tips really useful.
