Here’s Why Increasing Productivity Should Be At The Top Of Your Business Agenda
The productivity of a company is fundamental to its ability to stay competitive and generate a profit in competitive markets. Increase your productivity levels, and you can expect to generate more revenue with the same amount of resources; it’s as simple as that. After all, what separates the most successful companies from the rest of the pack isn’t always some magic formula or an out-of-this-world product. Instead, it’s the fact that they can make the most out of their assets by boosting productivity and efficiency right throughout the organization.
With that said, getting the most out of company resources is no easy task, especially when it comes to human resources. According to Gallup’s State of the American Workplace report, disengaged employees are estimated to cost the entire US economy a staggering $605 billion in lost productivity per year.
To paint an even bleaker image, research conducted by VoucherCloud determined that the average office worker is only productive for two hours and 23 minutes each day, which means that there’s a strong chance that you aren’t anywhere near close to extracting the maximum value from your workforce. If that wasn’t enough to convince you, here are three more reasons why improving productivity across your organization should be at the top of your business agenda.
Lower operational costs
Companies that improve worker efficiency and increase organizational productivity usually benefit from a significant reduction in operational costs. This impact is easiest to observe in the manufacturing industry, where decision-makers try to understand the real cost drivers in their production processes before launching initiatives to optimize them. These strategies include things such as:
- Lean production
- Optimization of procurement
- Offshoring / Nearshoring
- Maintaining optimal inventory
Of course, even if your business is not in the manufacturing world, there are still plenty of ways to lower operational costs by boosting productivity. For starters, identify inefficiencies in your business process, either through an audit or purchasing software/technology to monitor your operations. Once you’ve highlighted problem areas, you can begin to cut down on unnecessary tasks and redistribute resources more effectively in order to achieve the same result with fewer costs.
In addition, while it may be apparent that you need your employees to pick up the slack and increase their output, sometimes cracking the whip isn’t always the way to go. Instead, look for ways to reduce employee burnout and manage stress levels across the organization. After all, roughly $500 billion in productivity and 550 million workdays are lost each year due to workplace stress, according to the American Psychological Association.
You can help avoid this becoming a problem in your company by allowing something as simple as an extra 15-minute break per day where employees can relax and play free, online strategy games such as solitaire, for example. Or, why not give members a chance to interact outside the office and boost morale? This will motivate them to work harder on their tasks, and most of the time, you will find that your kindness and generosity will be reciprocated tenfold.
The relationship between profitability and productivity is a closely-knit one. At its core, productivity is defined as the relationship between the output and input required to produce a product. Meanwhile, profitability is measured by the total amount of capital leftover once you factor in all of the expenditures that need to be paid to produce a product. Once again, there are many ways in which boosting productivity can help to increase your profit margins, most of which tend to center around optimizing resources and getting the most out of your working assets.
Whether you find a technique to increase worker efficiency or buy new machinery/technology to speed up your production processes, lowering the quantity of labor required to create the same amount of goods will provide you a fantastic opportunity to grow your enterprise. When this happens, you have two options: reduce the number of employees in your company (which will help you lower costs and increase profitability). Or, keep the same number of employees but enjoy a significantly higher production rate and bottom-line profitability, allowing you to scale operations rapidly.
Reduces waste and environmental impact
Unfortunately, inefficient organizations have a significantly detrimental impact on the environment. Think about it – when your business takes 20 hours of work to generate a product or a service that could have been done in 10, there is bound to be considerable amounts of waste that could have been avoided.
Waste comes in many forms, with the most obvious being general waste (trash) and overuse of electronics and utilities. However, there are plenty more ways that your organization could be losing out on productivity and negatively impacting the environment. Here are a few key examples:
- Defects in production
- Excess processing
- Waste of movement (inefficient supply chains)
- Waste of human resources (such as two people operating machinery when only one is required)
- Waste of waiting (employees or machinery standing by as they wait for other processes to finish, thus, not producing any value to your company)
All of these forms of waste will ultimately damage your bottom line while potentially causing harm to the environment. For example, inefficiencies within your supply chain could add unnecessary steps to your logistical processes, creating extra fuel demand. As a result, the carbon footprint of your company increases. The more productive and efficient your company is, the less of an impact it should have on the environment.
Taking the initiative to strengthen the productivity of your organization isn’t just the right thing to do for your balance sheet, it also helps to reduce the burden you place on the environment. This is because as you refine and optimize your business operations, you’ll be capable of delivering more products using fewer (or the same) resources, boosting profitability while lowering waste and other by-products. Finally, improving internal processes and implementing measures to promote employee welfare may help to increase productivity, which is a win-win situation all around.
Disclosure: This is a sponsored post but we don’t get any commission from sales made.
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