How To Stop Inefficiency From Sinking Your Business

The inefficiencies that drown a business seem harmless at the start. For some, it might be a few sheets of unnecessary paperwork tacked on to rote transactions. For others, it could be wasted time in overlong meetings and undirected client calls. Each small inefficiency tacks a few minutes or even hours onto daily tasks, but the waste doesn’t particularly stand out at the end of the workday. Over time, however, those seemingly small inefficiencies can compound and become as dangerous as holes in the side of a boat’s hull: sinking otherwise sturdy ventures into inevitable failure.

Dramatic as it sounds, the metaphor fits.

As a serial fixer, I’ve helped patch up more than a few leaky businesses. Years ago, I was asked by the number one elevator company in the world if I could help improve the profitability of their new equipment venture in North America. When I started, the business looked to be running well. With one or two exceptions, of the 90+ locations, none seemed to be lagging or draining resources. We were still losing money; at the time, those working in the industry had accepted that you almost had to give away the elevators to sell your service contracts.

When I dug a little deeper, I found the root of the problem: inefficiency.

While each of the company’s 90+ local offices in North America seemed to be operating effectively, there was a wide range of results between one office and the next in terms of performance and installation efficiencies. An organization-wide disconnect between sales departments, installation crews, and customers had made on-site miscommunications and confusion a norm at most locations.

Work crews rarely understood the details of what the owner or architect expected, and sales had no formal process in place to facilitate this communication. Sales staff would make assumptions about the conditions workers would face on the job site—but had no protocol to document said conditions, much less communicate them to the contractor and ensure that the projects’ unique needs were met. The uncertainty and inefficiency of the sales-to-installation process added on countless extra working hours, slowed completion, and had the potential to add significantly to the cost of completing the buildings.

It was a time-draining hassle for all those involved. Worse though, was the painful financial cost those small inefficiencies leveraged on the company, general contractor, and building owner alike. Once the team and I had implemented more efficient processes, we not only saved the company tens of millions of dollars in cost but also put it in a position to take on additional market shares.

Regardless of business specifics, my first step as an incoming CEO is always to find and plug any efficiency gaps—and while this example is a specific one, I firmly believe that its lessons apply across all industries.

Process Can Make or Break Your Budget

If a business seems to be running effectively and is still losing money, there may be flaws in the way it conducts its day-to-day work. According to one productivity study conducted by Loudhouse in 2015, the three primary culprits behind wasted time in the workplace are inefficient processes, unnecessary paperwork, and extraneous meetings.

For the elevator business discussed above, the issue lay primarily in process: namely, how information traveled between departments and expectations were communicated. To rectify the problem, we needed to tear down dysfunctional protocols and rebuild entirely new expectations for external and internal communication.

The sales team began working questions about efficiency and construction needs into initial conversations with the customer so that they could provide the installation crew with both the basic information they needed upfront and the site condition details that would allow workers to prepare and operate efficiently. We then facilitated discussions between the customer’s general contractor and the elevator installation team so that everyone shared the same expectations from the start.

This approach empowered the workers on-site to start work immediately upon arriving, hold contractors accountable for conditions they were promised and save time they might have otherwise spent correcting miscommunications or decoding customer needs. The saved time, boosted productivity, and improved client service more than justified the effort of implementing a more effective communication system.

Efficiency Demands Engagement

The new protocols for communication were effective. However, they might not have been if the disparate locations involved had been less willing to embrace change and break out of their geographically-distinct bubbles. Worker engagement fuels business success just as much as disengagement prompts business failure. Business leaders can outline detailed communication plans all day, but their efforts will come to nothing if their employees opt to isolate themselves within their teams.

When employees or teams are “siloed,” they have reservations about sharing information with those outside of their department and tend to keep important details to themselves. This closed-off perspective tends to form in companies that already have significant problems engaging their employee base. The business might, for example, lack a unifying vision or struggle with a backbiting-prone office culture. Ironically, a “Silo Mentality” could even develop as the result of employees’ cynicism over company-wide inefficiencies.