Many small and medium size enterprises (SMEs) find it difficult to introduce efficiency in the midst of the hectic day to day trading operation. Larger businesses with little effort can dispense with huge swathes of their workforce or use their economic power to force suppliers to trim the cost of their goods or services. The SME does not have the luxury of such easy, albeit brutal, cost reduction techniques. Rather, in most cases, recruiting or retaining the services of competent staff or sourcing price competitive supplies is a challenge not a foregone conclusion.
Instead, successful SMEs find other less obvious ways to improve efficiency, often by paying close attention to areas specific to their particular operating environment. Some of these areas can be considered under the following headings:
Workforce Training
The SME cannot afford not to maximise the potential of each member of staff where adequate human resource is an ongoing problem. One of the key ways of ensuring this is through adequate training whether conducted through external providers or in house.
The need to adequately train the workforce in order for them to gain more skills or knowledge is often overlooked by SMEs who see the working hours lost as too costly and it is this, rather than the actual cost of training courses, that SME owners are wary of. Yet, the cost of lost working time is very often repaid many times over as a more aware; technically able member of staff is able to play a more useful role within the business.
Training is also not confined to staff. SME owners need to develop their overall skill set and finding time to attend suitable training courses is essential.
Appraisals
Staff ought to be aware of what is expected of them. Every member of the team should have a job specification that clearly identifies their responsibilities. This allows management and staff to conduct appraisals on a regular basis which ensure that roles and responsibilities allocated are appropriate to the skill set of the employee concerned. Training programs can then be devised to ensure that the member of staff is competent to perform their duties. Alternatively, the appraisal process may highlight the need to reallocate or change the job specification particularly if an individual’s skills could be better utilised elsewhere in the business.
Improve communication
A vital part of generating the maximum return from expensive labour costs involves communicating to staff the key objectives of the business owners. If staff have some understanding as to the direction being taken by the owners they will feel more involved and ready to play their part in helping achieve the objectives. Once good communications become a part of the culture of an organisation, employees are often empowered to take on more responsibility for the day to day smooth running of the business operation. A more informed workforce is one in which delegation can start to take place in a controlled and structured manner.
This often overlooked issue is one way, with little direct financial cost, to produce a better-motivated workforce that works harder and takes pride in their work.
Investment in technology
Investment into new technology is vital if the SME is to improve efficiency. Often this is discussed purely in terms of information technology (IT) but this often overlooks other key issues. For example; a search for alternative suppliers in the course of business continuity planning can lead to the discovery of a supplier who is more cost efficient than many of its competitors. This may have several benefits to you, the customer, not simply just from a lower direct cost perspective. If the quality of supplies is improved then customer dis-satisfaction will decline and your efficiency will improve. The adverse impact of customer dis-satisfaction is often greatly underestimated in SME businesses.
In terms of your own capital equipment and IT purchase decisions or usage, it is important to consider the organisation wide benefits or disadvantages that are likely to emanate from any changes introduced. Very often, changes in systems and processes have adverse impacts that could have been predicted, mitigated or even avoided altogether with a little more thought and planning at the beginning.
Review of consumables consumption
Most SME businesses expend a considerable amount of resources on consumables such as paper based stationery, postage and computer consumables, let alone the hardware printing equipment needed to produce an immense amount of paper documents. However, often the largest costs associated with such expenditures relates to the storage of the hard copy documents that are produced and the administrative time in handling and processing them.
Improvements in efficiency in this area are not always easy to obtain. For instance, workers may be resistant to changes such as introducing new electronic storage and retrieval techniques for fear of being unable to cope with the new technology or that changes will lead to redundancies. It can also take time for any new strategies to feed through into increased efficiency and lower operating costs, usually due to time taken by employees familiarising themselves with the new working methods or requiring additional training.
However, significant medium and long term savings can be achieved which will allow investment in other areas to further improve efficiency and develop a more profitable business. |