WHEN it comes to issues such as staff and skills shortages, the manufacturing industry isn’t alone. It’s an issue faced by all businesses; trying to get more done with fewer resources.
One of the key drivers in a service based business is ‘Personnel Productivity’; getting the most income earning capacity from production staff.
One way to improve the situation is to do less work but ensure it is more of the profitable or desirable work. You may have heard of the ‘Pareto Principle’, which is the 80/20 rule.
An example of which, is 20% of customers, produce 80% of sales and profit. The ‘Pareto Principle’ has proven valid since the late 1800s when it was discovered by Vilfredo Pareto who was an economist.
It follows then that we should concentrate on the 20% of customers, jobs, services, and staff etc that are producing the 80% of results.
In order to know who the 20% are we need systems in place for tracking results and who/what is achieving them. If you could do this then you would probably need less resources to achieve better results.
As a business owner/manager it can be hard to extricate yourself from the business for enough time to spend working ‘on’ the business rather than ‘in’ it.
If you can be disciplined enough to do this, it can pay big dividends, in terms of improved efficiency, personal satisfaction and lifestyle for the business owner, as well as better profit and cashflow. What you need to achieve these benefits are systems.
In order to set up systems you must get the ‘knowledge’ out of your head and into a format that staff can understand and follow.
You need to identify what are the most critical actions in your business; who is responsible for them and how they should be done.
Once you know these things, you can share this information with others and begin to do less of them yourself. Obviously staff needs to be trained and monitored in these actions, but a little time invested in this area, could pay big dividends down the track.
Staff who have systems to follow feel much more secure in their work and create less distractions for themselves and others.
Systems make it much easier to manage a business, as the manager doesn’t have to think of everything all the time; they simply point staff to the system. This leaves the business owner free to work ‘on’ the business rather than ‘in’ it.
Documented systems also create an environment for improvement. It gives staff the opportunity to contribute new ideas and see them incorporated into the system.
Systems can take many forms e.g. manuals or a web based method. Web based methods for many business processes are popular today. They enable owners to run a business remotely when necessary e.g. when on holidays or even just from home.
If a staff member has a question you don’t have to scurry back to the office to explain the answer. You can simply direct them over the phone to the relevant information and talk them through it.
*This article was supplied by CAD Partners, a team of advisors who work with business owners to realise the maximum return from a business. The company is offering a free ‘Financial Health Check’ session for MM readers, call 1300 36 24 36. There is also a free e-book on cashflow control, visit www.cadpartners.biz/e-book.htm.