How to Improve Business Efficiency

Modern companies such as Amazon embed business efficiency into their fabric. Knowing that the more efficient they are as a business, the greater their overall success, they optimise and reduce waste in every corner of their business.

Improving business efficiency is crucial for growth and long-term success in today’s competitive landscape. Businesses that fail to address inefficiencies inevitably risk falling behind their competitors.

This article explores how to improve business efficiency and describes some strategies to consider.

An Overview of Business Efficiency

The scope of business efficiency can differ significantly between businesses. For some, it is an abstract phrase used to drive results through culture. For others, it becomes a more considered and measured series of metrics and qualitative assessments.

An efficient business delivers maximum positive outcomes from minimal resources. How well a company uses its resources to achieve its goals will ultimately determine its bottom line.

Across a business, there are different aspects of efficiency:

• Financial efficiency focuses on how well costs are managed and profit is attained. It seeks a high return on investment.
• Operational efficiency is how streamlined processes and workflows are. For example, route choices in logistics.
• Human efficiency establishes an optimal workforce that is highly productive and void of negative symptoms such as absenteeism and presenteeism.
• Resource utilisation refers to how well assets, including stock and raw materials, are used.

A business will often cut across a few of the above aspects to improve efficiency.

When tackling business efficiency, it can be measured:

• Quantitatively using metrics such as profit margins and inventory turnover.
• Qualitatively using techniques such as surveys and assessments.

Strategies to Improve Efficiency

Streamlining Processes and Workflows

Processes and workflows are ubiquitous within organisations. They are essential for efficiency, consistency and scalability. Without the structure they provide, operations risk declining into a series of chaotic activities that require consistent ad hoc management and become inefficient.

One of the most effective ways to boost efficiency is by streamlining processes. This involves analysing existing workflows, identifying bottlenecks, and eliminating unnecessary steps or problematic and wasteful areas.

Process mapping is a common technique for doing this. By mapping out processes and workflows, areas where time or resources are being wasted can be identified. Visual representations can act as a point of reference, create discussions, and provide a birds-eye view of the microscopic details needed.

Once analysis has taken place, standardisation and continuous improvement can support the changes in line with the organisation’s culture.

For example, consider the onboarding of a hybrid worker. Paperwork, in-person inductions and in-person team meetings can all offer the hindering start that remote workers and modern businesses want to avoid. The onboarding process can be streamlined by moving to an online digital system. Being cloud-based, contracts can be e-signed using tools such as Adobe Acrobat Sign.

Onboarding using a portal offering interactive training modules can negate the need to attend the classroom, and video conferencing and messaging can remove the in-person meetings (for now). As work commences, time and attendance software can be used by the hybrid worker and business to facilitate efficient time and attendance management.

This example will support a modern culture with a reduced onboarding time, a more motivated start for the new employee and less interruption for other staff members. Overall efficiency will increase.

Using Technology and Automation

Every business strives to understand how technology and automation can increase productivity and give it a competitive advantage. Of course, technology is not always a panacea and, on occasion, may cause more cost than benefit—particularly for early adopters at the cutting edge.

However, some well-established systems are now crucial to warrant early investment. Examples include project management tools (Trello and Asana), customer relationship management (CRM) software (Salesforce and HubSpot) and time and attendance systems (Egress Systems).

Some examples of leveraging technology include automating repetitive tasks such as invoicing and appointment scheduling. Further, solid cybersecurity and infrastructure can help maintain operational stability and avoid downtimes, thereby maintaining efficiency.

A time and attendance system spans multiple aspects of efficiency. Crossing process efficiency, automation, employee productivity, and others facilitate the automation of time management and attendance. It supports scheduling, holiday booking, reporting, fire safety, and many other features that can be integrated with other software, such as payroll and human resource management systems.

For instance, if a senior manager is working on a project to tackle employee burnout, they can very quickly report on attendance and absence for different departments, functions and levels of the business. As another example, scheduling accuracy can be reviewed by reporting on the number of actual shift allocation forecasts.

Automation is not the only benefit here. Standard processes for holiday booking, project and shift coverage, and many other aspects have been tackled. Technology supports a paperless office and a more controllable environment.

Empowerment can be achieved by adapting the system to support employee self-management, where employees can manage their own holidays, office attendance, and remote work or shift coverage.

Above all else, there is a single source of truth for the worker and business, leading to fast conflict resolution that can often burden payroll activity.

Employee Productivity and Training

Any business is only as good as its workforce. Enhancing employee productivity and culture will enable a motivated workforce to drive more efficiencies. Accountability and reward can play a part in this, but so can continuous professional development programmes and other initiatives that arm staff with the skills and empowerment to succeed.

Regular training ensures employees remain updated with industry changes, and utilising technology such as e-learning can make training more accessible and customisable. Examples can include time management, work management and communication skills.

Leadership and management style have a massive impact on productivity. In professional environments, negative motivation and micro-management are less well-received than agile outcome-based practices, where ownership and accountability yield efficiencies.

Training leadership and management to support different styles of working with different people can help them coach and mentor correctly, avoid and resolve conflict and make decisions under uncertainty.

In more modern offices, attention is being given to the overall well-being of all staff. Work-life strategies such as hybrid working, mindfulness and stress management are encouraged. Some modern tech companies, such as large social media platforms, fully embrace this mindset. Creativity and problem-solving hardly ever stem from individuals loaded with business-critical task deadlines.

The right mix of training depends on business goals, team challenges, and workplace culture. Knowing your business and its goals will help determine how much money should be allocated to training and productivity initiatives in the drive to efficiency.

Resource Management

Efficient resource use is crucial for business success. Consider inventory turnover. If a business has too much money tied up in stock, then less money is available for investment. If competitors do not have money tied up and allocate spare cash to attract more customers, they will gain a competitive advantage.

By strategically allocating resources, a business can improve efficiency by ensuring that human capital, financial assets, and technology are deployed in a manner that is favourable to the business’s aims, especially the bottom line.

A business can distribute resources by assessing operational needs to avoid bottlenecks and inefficiencies. This ultimately involves demand forecasting, capacity planning, risk analysis and task prioritisation. Critical path analysis is a tool that can help streamline this allocation. Advanced methodologies such as linear programming, resource levelling and just-in-time (JIT) inventory management will offer the optimisation models for resource distribution.

For example, resource scheduling techniques in project-based industries ensure that employees and materials are available when needed, preventing delays and unnecessary expenditure. Additionally, adopting flexibility into the allocation model allows businesses to dynamically adjust to changing demand, thereby reducing idle capacity and maximising utilisation.

Workforce Management and Productivity Optimisation

Human capital is a large resource pool, so workforce management significantly impacts business performance. Businesses can enhance productivity by aligning employee skills with organisational needs and reducing redundancy. Workforce planning, performance monitoring and skills development programmes all facilitate the optimisation of human resources.

Integrating automation and artificial intelligence (AI) in resource management can enhance decision-making by identifying inefficiencies and recommending optimal workforce distribution. Tools like Enterprise Resource Planning (ERP) systems are beginning to use these modern technologies to facilitate real-time workforce analytics, recommendations and decisions.

These systems allow managers to track performance metrics and allocate personnel based on competency and availability.

Sustainability

Sustainability is worth mentioning—it is on every business’s agenda with a focus on corporate social responsibility (CSR). Sustainable resource management contributes to long-term efficiency by reducing environmental impact and improving the business’s reputation.

Businesses implementing initiatives and practices like renewable energy utilisation, green supply chain management, circular economy practices and energy-efficient operations can reduce costs and improve business continuity while enhancing their brand reputation.

Financial Resource Management

Financial efficiency is a direct outcome of effective resource management. With a slant towards prudence, businesses can often ensure that capital is deployed effectively to generate maximum returns by implementing budgeting, cost control, and investment optimisation strategies.

Techniques such as activity-based costing (ABC) and cost-benefit analysis (CBA) help businesses identify high-cost areas and reallocate funds towards more profitable activities following a business financial overview. Net present value and internal rate of return can help with project appraisals.

Additionally, risk management frameworks mitigate financial uncertainty by assessing potential resource constraints and developing contingency plans. This is particularly relevant for capital-intensive industries where financial misallocation can lead to liquidity issues and operational inefficiencies.

Careful scenario planning at the strategic level can lead to greater insight into the financial impact of decisions. Modelling for the worst, most likely, and best outcomes can help leadership and management understand how their business could be affected, especially when dynamic models updated in real-time are used.

Key performance indicators and metrics offer value for reporting and planning. By providing clarity on an aspect of a business, they remove the guesswork and enable sound decision-making.

For example, inventory turnover is a ratio expressing the rate (in days) at which a company sells and replaces its inventory over a specific period. It indicates whether a business holds too much or too little inventory: too much inventory leads to increased costs and tied-up capital; too little and unhappy customers may appear.

Where to Begin

Improving business efficiency is an ongoing process that requires commitment, creativity and adaptability. Focusing on the areas described in this article can significantly boost businesses’ efficiency and competitiveness.

By continuously assessing and refining operations, areas of poor efficiency and targets for improvement can be identified. Sometimes, this will be at a strategic level, affecting many layers of the business, such as culture change; other times, it will be at the technical level of the business, where conscious workers make small changes.

Consider using a business framework that will support these assessments and changes. Monitoring efficiency is crucial because improvement cannot be focused or prioritised without the data and feedback to understand where waste occurs.

With today’s technology, many optimisations are available off the shelf. Software has already been written, tried and tested to meet the requirements of companies today. It can sometimes be adapted and integrated with other software applications. This means it can be relatively easy and inexpensive to trial changes in small sections of your business before rolling them out wider.

Also, consider hiring talent who specialise in business optimisation, organisational change and organisational behaviour. As they understand the mechanics of achieving efficiency with minimal disruption, they can help your business transition to a more efficient place with less risk.

The experts at Egress Systems can advise on how their technology can improve your business efficiency, so contact us to learn more.