The Hidden Costs of Inefficiency

by Sergio Del Piccolo on April 30, 2008 at 4:34 pm

There are literally hundreds of processes that we as employees partake in every day as part of our doing our job. These can vary from requesting vacation time, asset tracking, dealing with customer queries or copying information from one system to another, to name just a few. How we do each of these processes varies substantially from one organisation to another. The way in which we do some of these tasks can be improved, leading to a better work experience, improved productivity and a reduction in costs. 

Inefficient Processes

Imagine that we need to copy some data from one system to another - e.g. a paper form that has been completed that now needs to be entered into a couple of systems (a database application and a financial system). This task may only take 30 minutes a day, which doesn't seem like much. However, that adds up pretty quickly to 2.5 hours a week or 130 hours a year, and that's just for a single task! Automating this task so that it needs to be keyed in once and then entered into both systems at once can save at least half the time it would normally take.

Another common scenario is that there are many manual processes that are not documented and contained in the minds of a few employees. This is often the case with long serving employees. They then become a pivotal part of the process and without them no-one knows what is required or how to complete the process. The process quickly becomes dependant on this one employee.

Associated Costs

Many of these costs are hidden from employers. Top and middle tier management are usually unaware of the associated costs of these inefficiencies. It can require some complex analysis to come to an actual cost of wasted time. The cost includes accrued overtime, time spent finding people required to assist or time wasted in finding the person who is responsible for the next task. These costs may be hidden, but they are very real.

Some will say that this is what we pay our employees to do - spend time on completing these tasks. While I agree with that, there is more to it - as employers we should strive to make all of the tasks that our employees have to do as efficient as possible, for a number of reasons:

  • Decreased productivity. Saving your employee half of the time to complete monotonous tasks will free up their time to get other work done. In Canada today, employees are working increasingly longer hours and taking less vacation. This is a dangerous precedent that should be of concern to all employers. It is not a sustainable practice and can lead to employees burning out and quitting their jobs. When people are tired they end up making mistakes that should be avoidable. Their level of productivity drops and as a result their performance suffers.
  • Attracting new employees. In Canada today, there is a general shortage of skilled workers, plus the fact that the majority of the workforce will be retiring within the next 10 years, is an issue of grave concern. Labour costs are increasing and finding the right employee for the job becomes a time consuming and expensive task. Once you find the "right" person, are they going to come and work at a firm with outdated processes requiring tedious manual tasks? I would be surprised. If they did, you would have to ask yourself whether this was the person you wanted to hire in the first place.
  • Island of knowledge. With one person knowing all of the processes and how to complete the tasks, the firm becomes dependant on them. Should this person decide to leave or have an accident, the process comes to a complete stop. The time and effort required to complete the tasks is enormous and the chance of making mistakes is all too real.

Benefits of Process Improvement

With process improvement comes some valuable benefits.

  • Higher quality of work. With an automated task, the chance for errors to occur is reduced. Employees can deal with more tasks and time management becomes easier. Rules and validation can be built into a single location affecting all instances of the process. The process tasks and activities becomes standardised and the results are consistent regardless of the employee responsible for the outcome.
  • Reduced risk. The enterprise is no longer dependant on the process expert to be able to complete the task. Training of new staff becomes easier and the business can repeatedly complete all tasks within a given time period.
  • Process improvement.  Activities and tasks can be audited and it becomes easier to analyse trends and identify areas for improvement. Employees become accountable for their tasks. Escalations can be built into the process that will notify those responsible that some tasks are slipping and there may be a need for more resources to be allocated to certain areas within the process. Many of the process automation tools these days have the ability for people to set Out of Office notices which will re-route their tasks to others. This ensures that no task is left waiting while someone is on a well deserved vacation or out of town.
  • Process documentation. The automated process becomes a documented process - the steps of required activities can be viewed in one place and it is easy to resolve questions about what the next step should be. Some of today's process automation tools have documentation functionality included in the toolset. This can be a great way to get a formal process document started.
  • Easier to automate additional processes. Once a single process has been automated, the process to automate tasks becomes known and can be improved. This is especially the case once a process automation framework has been established. With each additional process being streamlined, the return on investment associated with process automation increases. Many of today's process engines provide scalable solutions allowing for the enterprise to grow without the need to hire many new resources. With the lack of available personnel and high labour costs, the firm's bottom line is better off as well.
  • Reporting. As soon as tasks, activities and process associated data can be tracked, it becomes possible to report on them. This is a huge benefit, especially to management, who can use this information to make informed decisions about business strategy and planning.

While some of these benefits are obvious, others are less so. Yet they are all key to the continued success of a company's ability to do business. Often, during the post-implementation debriefing process I've heard decision-makers question why this process streamlining exercise wasn't done sooner. While that is a good question, hindsight is always 20-20. It takes a certain amount of fortitude to ask "How can we improve the work we do?" and that can be lacking when we're working long hours to complete the tasks that we are required to do on a daily basis...regardless of how inefficient the process may be.

1 Comment

Jason Apergis (not verified)
Sergio, Great write up. I think the biggest thing I notice when working with K2 clients are the amount of business processes that sit outside of their ERP. Time and time again I hear about a business process (that is managed in email) that must be completed before someone is allowed to enter data. Whether K2 is a fully integrated by submitting that data or is used to manage the tasks for getting people to enter that data there are significant gains if these processes can be automated. Regards, Jason Apergis

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