Operational Efficiency Means Working Smarter, Not Harder

Operational efficiency is a measurement of the ratio between a business’s operating costs and the profit generated from these. Due to a corporate business’s scale, leadership can achieve massive savings when maximizing operational efficiency.

What Operational Efficiency Means for Corporates

Leadership can achieve massive savings when maximising operational efficiency. Large businesses save more money than smaller businesses with proportionate increases in operational efficiency. Equally, as corporates generally have larger workforces and more complex processes to manage these, they suffer substantial yet avoidable costs if operational efficiency is not addressed.

Corporate leadership’s promotion of operational efficiency has a positive systemic impact on diverse areas of business management, having further reach than more focused specific efforts.

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The Costs of Not Addressing Operational Efficiency

As with any complex system, positive and negative feedback loops have the potential to create immense and long-lasting effects. Unaddressed inefficiencies in the management of complex workforce processes, compounded over time, run the very real and frightening risk of developing into bureaucracy in business. As inefficiencies increase, information flow both up and down the workforce management chain become slow and frustrating, which across the board negatively impacts workforce operational output both in terms of quality and quantity.

Big Business Leadership’s Role

Leadership can similarly suffer in experiencing administrative inefficiencies. Missed opportunities, strategic errors and poor engagement with the workforce are typical outcomes.

Looking more closely at the positive feedback potential of maximising operational efficiency, the smoothing out of a workforce’s administrative experiences, improves the organisation’s internal processes and increases workforce happiness, in turn increasing operational output qualitatively and quantitatively. Simply put, when administrative processes are fast, effective, and trusted, the workforce can direct their attention and energy to their primary tasks, promoting retention and engagement.

The Link between Workforce Engagement and Operational Efficiency

Research conducted across 20 European countries in 2020 concluded that both individuals and their organisations benefited positively from subjective wellbeing, leading to higher productivity.

Clearly corporate leaders have a responsibility and opportunity to maximise operational efficiency in their area of authority and across the organisation collectively.

Production Pressure

A study on production pressure, using causal loop analysis, found a relationship in an industry between schedule delays, the redoing of work, and safety considerations. Schedule delays and rework emerged as critical variables affecting safety performance, in the study.

Simple Steps Business Leaders Can Take

Here are some practical first steps business leaders can take in enhancing operational efficiency:

  • Kill two birds with one stone. Engage with a cross-section of your workforce on the top 5 issues affecting their wellbeing at work, safety, and operational effectiveness. This maps out the territory and is a great starting point to letting your workforce feeling heard. Follow-through is important.

  • Learn from the experts. Your workforce will know the tricks of their trade, even ones they do not want you to know, like what shortcuts to take. Learning from their creativity in getting the job done often provides novel approaches which can be enhanced through formalisation, and/or translation into other contexts.

…and saving the best for last!

  • Work smarter not harder. Integrating technology into your business speeds up processes, collects actionable data, connects people immediately and mitigates the unavoidable limitations people bring for example people cannot work 24/7, and people make mistakes.

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