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Boosting Profits with Employee Efficiency

Updated: Jan 21




Clients often ask us, "How can I be more profitable?" That's a great question! There can be many different answers depending on the nature of the business, and what is already being done or not being done. An often unexplored answer to the profitability question that has a lot of potential, and that deserves more attention, is employee efficiency.


Employee efficiency can significantly improve profitability. Most often, bookkeepers and tax accountants won't delve into this with their clients, as it's not part of their scope of work and focus. They're there to manage your books and file your taxes. They're generally not there to spend time helping you identify leaks in how your operation runs and ways to monitor and improve those to increase profitability. That's part of what fractional CFO's and full-time CFO's can do. It requires a different level of involvement, analysis, financial planning and follow-through, and it's part of what sets CFO's apart from other accounting professionals. In this article I'll get more into what employee efficiency is all about, and how it can drive profit into your business.


What is meant by "employee efficiency"?:

  1. Employee efficiency refers to the ability of a worker to perform their job with the most effective use of time and effort, without compromising quality.

  2. Efficient employees perform more work in the same amount of time as less efficient employees, or the same amount of work in less time - or both!

 

Efficiency is important because it:

  1. Increases profitability, frees up capacity, and facilitates growth: Efficient employees perform more of the right kind of work (such as those that produce higher sales or increased production), which helps reduce the company's relative labor requirements and costs.

  2. Enhances employee morale: Employees who are efficient often experience a greater sense of achievement and satisfaction with their work.

  3. Reduces environmental impact: Efficiency often means less waste of materials and energy, which is not only cost-effective but also better for the environment.

 

To improve efficiency, consider the following strategies:

  1. Training and development: Ensure that employees have the necessary skills and knowledge to perform their tasks efficiently.

  2. Implement the right technology & tools: Equip employees with systems & processes that can automate or facilitate tasks and streamline procedures.

  3. Analyze and optimize workflows: Regularly review and optimize workflows to eliminate bottlenecks and redundant processes.

  4. Improve communication: Implement effective communication channels and practices to ensure that employees can easily get and share the information they need to do their jobs.

  5. Offer incentives: Motivate employees with incentives for efficient work, such as recognition and bonuses or rewards.

 

Advanced strategy - Maximizing Employee Efficiency Through Scheduling Activities:


It's important to make the distinction: efficiency isn't about doing more things - it's about doing the right things at the right time. In the bustling rhythm of day-to-day business, how can you ensure that every tick of the clock translates into value for your company? The answer lies in the proactive scheduling of activities.


Scheduling activities isn't mere calendar management. It requires the strategic foresight of planning for and scheduling specific activities to be performed, over a set period of time, in alignment with expected outcomes and business objectives. When implemented effectively, the scheduling of activities becomes a transformative tool, leading to enhanced productivity and, ultimately, a better bottom line.


Here’s how scheduling activities can elevate your team's efficiency:

  1. Strategic Time Allocation: By scheduling activities that are directly tied to desired outcomes, you ensure that both time and resources are focused where they can make the biggest impact. For instance, a sales team might block out a set period of time for its reps to make a targeted number of cold calls, if cold calls are known to be an important driver of sales.

  2. Clear Expectations and Structure: A well-structured schedule - complete with activity requirements - acts as a roadmap for employees, providing clarity on their responsibilities and deadlines. For example, an operations team might have well-defined expectations for how many units they are expected to produce within each cycle or shift. Clarity reduces confusion and empowers the team to perform with confidence and purpose.

  3. Alignment with Business Goals: Effective activity scheduling ties individual tasks to the broader goals of the organization. It's about making sure that critical business elements receive the necessary attention to drive success.

 

A Practical Example: Boosting Revenue by Scheduling Activities


Imagine a company aiming to increase its revenue—a clear component of profitability. The journey to revenue generation starts with a well-planned activity schedule at the beginning of the sales funnel.


Let's take another look at cold calling, for example. If historical data shows that one lead is generated for every 10 calls, and the goal is to acquire 10 new leads, a sales rep should be scheduled to make 100 calls in a specified timeframe. The responsibility then lies with both the sales rep and management to ensure this activity is carried out efficiently.

Schedule Activities to Drive Results

Measuring and monitoring the actual performance vs. the planned performance is a crucial part of the management process. What if the target isn't met? Analyze the root cause or challenge — for example was there a delay in accessing the call list? Or does the rep need more training? Addressing issues promptly ensures that the next cycle of calls will be more likely to meet the target.


Bringing It All Together: Focused Efficiency

Proactively planning for and scheduling the number and kinds of activities that lead to your desired outcomes allows you to channel your company's efforts towards achieving its most important goals (profit included). Employees who are guided to spend their time on impactful activities are the essence of an efficient workforce.


By embracing the scheduling of key activities, you're not just organizing tasks—you're crafting a culture of efficiency. You're ensuring that every action taken by your employees is a step towards the success of your business.


Take a moment to reflect on the efficiency of your employees. Is there an opportunity for improvement that will translate into bottom-line profits for your business? If not, take control of the clock and turn it into an ally in the quest for efficiency & profitability.


If you want or need help, reaching out to a fractional CFO would be a good place to start.



 


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