Tackling productivity and efficiency issues – why the CFO can help, and where they should start

Productivity and efficiency are unnecessarily pregnant terms – often used by executive teams in a disingenuous manner, and intended to cover a multitude of sins, they have consequently assumed an unwarranted mantle of foreboding. To bring clarity to this: it is not appropriate to say ‘efficiency’ when you mean ‘redundancies’, nor to use ‘productivity enhancement’ if you mean ‘contract change’. The one may lead to the other, but that does not make the terms interchangeable. Having got that straight, we should pause to consider what we do mean by those two terms and, in particular, what they ought to mean for a company’s financial leadership.

Claire-RichardsonWe are, of course, discussing the productivity and efficiency of a company as a whole here, rather than the personal equivalent, but it is also worth noting that the overall productivity and efficiency of an organisation is nothing less than the sum of how well each individual in the company is able to tackle their workload. Considering the success or failure of an organisation in this way – as a series of personal successes or failures – is an excellent starting point for tackling the overall smooth running of the organisation. As senior executives, we try as best we can to avoid becoming bogged down in minutiae. However, we must remember that others spend their working lives dealing with minutiae, and the better they are able to do so, the more successful the organisation will be.

So what might the leadership team of a business look to encourage, if it wishes to enhance productivity in a sustainable manner? Well, starting from our premise that organisational productivity is merely an aggregate of the productivity of many individuals, one ought to stipulate communication as the first requirement. Often, in the course of helping businesses with productivity challenges I have come across colossal sources of waste that are simply hidden from those with the power to change things, but are well-known to the end-users – reporting procedures, procurement processes and customer fulfilment can all be so inefficient that they would shock the leaders of the business, were they aware of the day-to-day reality of these processes. Finding opportunities to enhance productivity in this way means focusing on who does what, the processes they use to do it, and the degree to which those processes are adhered to; in short, that means gaining as much visibility as possible into people, processes and work.

There is, however, another imperative for senior executives to communicate as much as possible with front line staff, and that is the need for a business to address the needs of its customers. It doesn’t matter how efficient a company’s processes are, if your product or service does not meet the needs of enough potential customers, then all other efforts are wasted. Those responsible for the efficiency of sales and service must hear from those dealing with customers in order to know how successful they have been – complaints, ordering and fulfilment can be amongst the worst offenders here. Again, some of the inefficiencies that can be exposed would be shocking to the financial leaders of the business, were they aware of the actual situation. No-one in the organisation has more visibility of customers’ reaction to your product and services than your front-line staff, and they information they hold is a hugely undervalued resource in almost all businesses.

Information about internal processes and customer facing operations cannot be captured in an anecdotal or piecemeal fashion. It must be holistic comprehensive, and regular; that way it may be acted on with confidence. In an enterprise of any size, this means a relatively sophisticated IT infrastructure, with applications capable of capturing and analysing large quantities of unstructured information, and giving feedback in near real-time. That can offer the opportunity to identify and replicate the ways in which top performers in the company have achieved their status – so making processes more effective – or to persuade staff to adhere to processes as they evolve and are perfected.

With its expertise in the management and analysis of transactional data, the finance department is in a better position than any other to implement technologies that can make sense of the correlations (or non-correlations) between customer and employee information and the financial performance of the business. What’s more, they have the expertise to present their findings in a useful, accessible manner, and produce the kind of guidance that can help the rest of the business to make decisions based on facts, not instinct. Bringing such technology into the business may represent a considerable outlay, but it appears a great deal less significant when seen as an investment in the business’s ability to ensure its financial good health, rather than simply an effort to improve staff morale or customer service. The CFO is in an excellent position to advocate such changes, and so to make a positive impact on the business overall.

The acid test of any productivity or efficiency initiative is in whether it results in greater profitability for the company, not just tomorrow, but for the foreseeable future. With that in mind, a more appropriate internal reporting cycle would align with the actual projected purchasing cycle for whatever the company provides. FMCG has a monthly cycle, but mobile telecoms is 24 months, and consumer durables may be 60 months. B2B businesses are more complex, but the same principles apply – planning should take into account the purchasing cycle, as well as the fiscal year. Only once one whole cycle has passed can any initiative be judged a success or a failure, and thinking in this manner would be great step towards fixing some of the fundamental problems that can become engrained in the minutiae of a business’s operations.

Productivity and efficiency should not be euphemisms for cost-cutting and overwork; rather they should be the means by the senior management to help everyone in the organisation to do their job better. With their visibility over the inner workings of the business, senior financial personnel are in a position whereby they are uniquely capable of driving such a project.

Claire Richardson is VP, Workforce Optimisation Solutions, EMEA, at Verint

 

 

 

 

 

 

 

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