1. Measure and benchmark your productivity
The first step is to assess your business’ productivity and benchmark it against organisations in your sector of similar size, structure, employee levels, located both locally and across a wider geographic region.
Productivity is measured as sales divided by the number of employees. To carry out an effective benchmarking exercise, consult a data analyst to assess the data and produce a report relative to your rivals. The St. James’s Place Entrepreneur Club provides an online benchmark report that includes a productivity assessment and uses comparative data from Dunn and Bradstreet. Its report provides a red-amber-green traffic light rating of the firm’s productivity and how it stacks up against similar rivals. Get in touch to find out more.
2. Focus on increasing sales and understand the value of your time
Increasing sales activity and turnover by using the same number or fewer employees is key to raising productivity. Sales is not all about winning new clients. First, it is vital to retain and grow existing customers and, by carefully nurturing existing relationships, this objective can be easier to achieve. You also need to win new clients, which means reviewing and assessing your sales process, offering and value proposition to deliver constant improvement.
For both approaches you need to evaluate how you use your time. The more time you can spend productively with clients, the more your business will grow; so, delegate, outsource, redesign or drop the non-productive, low-value parts of your work.
3. Establish a clear strategy and culture
Good productivity needs people aligned around the same, clearly defined strategic goals, and it’s important that everyone – not just the board – understands and engages with them.
However, for any strategy to succeed, people’s behaviours and values have to be aligned with it; a great plan with the wrong culture behind it is like having two engines working against each other. The Cultural Web is a useful business tool that enables you to evaluate your culture and create a new more relevant one for the organisation.
4. Ensure your team works well together
When everyone in the business works well together, productivity naturally increases. Porter’s Value Chain Analysis is an established business tool you can use to analyse the functions of your business and improve them to deliver optimum customer service and better margins.
The book, The Five Dysfunctions of a Team by Patrick Lencioni, says trust is the bedrock of any successful team and contains a useful model for assessing levels of trust and improving them. A team based on trust is better at having challenging discussions about productivity and improving it.
You also need your people to understand what numbers or key performance indicators drive the business and how they can be improved. Enable them to find their way around cashflow forecasts, profit and loss accounts and balance sheets – the more they understand the more productivity will improve.
5. Be ‘lean’
‘Lean’ is a set of well-established working practices devised by Japanese car manufacturer Toyota in the 1970s but the principles can be applied to any business today. Essentially, it’s a set of tools that help identify and eliminate waste to improve productivity and reduce costs. It’s probably best to consult a business advisor to help you devise and carry out a ‘lean audit’ to assess how to make your business ‘leaner’.
6. Use your leadership skills
Your leadership and passion for the business are absolutely critical qualities for driving productivity by engaging and motivating your people.
You can assess and strengthen your leadership skills through mentoring and coaching and by understanding good practice. Joining a Peer Board is a good way to gain and share knowledge, experience and best practice within your sector and others.
It’s also worth looking at UK Government initiatives that support entrepreneurs on leadership and productivity, such as the Small Business Leadership Programme, the Be the Business Mentoring Programme and Knowledge Transfer Partnerships.
Finally, as a good leader, you must be prepared to give your people autonomy and empower them for optimum results, because if everything has to come through you it will constrain productivity.
This article is written for the St James’ Place Entrepreneurs Club newsletter. The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management.