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Want To Boost Profits By 10%? Modify These 3 Things

The downside of workplace complexity — daily frustration, red tape, reduced productivity — is no surprise to today’s leaders. But a study from the University of Warwick Business School in the U.K. estimates that complexity is actually robbing the average company of 10% in annual profits. Could simplifying in a few key areas offset the rising cost of complexity for your business?

As a CEO and workplace expert, I’ve guided leaders all over the world through the process of simplifying. Unlike the processes that clutter our work lives, simplifying reduces and streamlines with the goal of removing barriers to productivity and profits. The ideas below are immediately actionable and have helped companies like Citibank and Pfizer reap the rewards of simplification.

1. Simplify decision-making across your entire org. The failure to clarify who should make which decisions slows down hiring, product development and time-to-market. By pushing decisions down to the lowest possible level — also known as the principle of subsidiarity — leaders can focus solely on the decisions with the greatest business impact.  

Start by reviewing the decision-making processes in your organization. Challenge yourself and your colleagues to reduce or eliminate the number of people required to approve, review or sign off on certain decisions. Then, take it to the org: Task each of your direct reports to make two decisions this month that would normally involve your input or approval. By this, I’m talking about minor but incessant questions like “Should I invite Dinesh to the weekly business review  meeting?” or “Can I open a job position for regional sales director?”

Thirty days from now, gather your team and find out which decisions they made and  what other types of decisions they’ll commit to making on their own next month. Once people get used to decision-making, increase the number of monthly choices they’re making to four, eight, 10, and eventually 20.

At Merck Canada, a group of managers put this concept into practice. They collectively  decided to stop making decisions that their direct reports were already authorized to make — with powerful results. Employees who were known to slack off began taking responsibility for their own decisions. Overall, people made smart decisions and reported feeling more ownership over the outcomes. And the managers actually found themselves with several hours of newly freed-up time every month.

2. Hire simplifiers. Unlike complicators who block progress and poison everything in their path, simplifiers default to efficiency and embrace change that leads to better or faster outcomes. Their daily approach to work is free of minutiae or ego, and their efficiency adds tangible value to their organization.

As you’re interviewing people, look for examples of the candidates’ approach to simplification in their answers. True simplifiers can easily and passionately explain their philosophy and share stories about a process or task that they proudly streamlined or eliminated. They’re honest about the resistance they faced along the way, and can offer personal, detailed accounts of their experience. 

Conversely, beware of candidates who generalize or toss around business jargon in lieu of specifics. If you hear language about “minimizing bureaucracy” or “getting rid of red tape” without personal examples, you’re likely interviewing a status-quo complicator. If the only anecdotes they can share are business news stories or second-hand descriptions of simplicity in action, that’s also a red flag. 

3. Establish anti-complexity metrics. Connecting goals to metrics is the smartest route to measuring the results of your efforts. To track simplification’s impact on your company’s profits, introduce metrics that relate to areas like hiring, product-development and decision-making. Sample metrics could include:

·     Decrease in number of approval layers for hiring qualified candidates.

·     Number of steps/layers removed from our product-development process.

·     Number of monthly hours saved from distributed decision-making.

Before deciding on your goals for each metric, be sure to determine its starting place — your baseline — so you can see how far you’ve come a few months from now. With each metric, calculate where things stand today and where you want them to be. For example, if you currently spend seven hours a month approving, signing off or otherwise reviewing people’s decisions, then 7 is your baseline. Then, customize each goal with an eye on striking a balance between realistic and aspirational. Use these metrics as a guidepost and — a few months or a year from now — as proof of your simplification success.

When complexity gets in the way of profits, productivity or people, leaders must be empowered to remove it. Experiment with the three tactics above and adjust according to the outcomes. Establishing anti-complexity habits now is key to bringing your company to a nimbler, more profitable place in 2022.

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