How to improve productivity in your business

This month’s blog hasn’t been an easy one to write.  I find my writing and creativity is shocking when I have been stuck in the detail of something.  But I am committed to doing a blog each month as a minimum.  So here goes…

Covid-19 lockdown and productivity from the eyes of a HR Consultant.  Are you interested?

When people usually start chatting with me, often they say, ‘well you must be really busy with loads of employment issues with all this going on’.  My answer is, on the one hand yes and on the other no. 

Yes in that many people needed urgent wages subsidy and employee relations triage support during the first few weeks.  Particularly since the wages subsidy had a few key details missing and we had so much uncertainty.   Whatever steps business owners and decision makers had to take, many had the livelihoods of their people as a key consideration.  After all, the lockdown announcements essentially put many livelihoods at risk almost overnight.  There were quite a few hard conversations and heart to heart conversations going on. 

Then on the other hand no.  Once that craziness passed and Easter arrived, things quietened down. People were craving some quiet time and space to understand what this new way of living meant.  I am not sure about you, but I found the Easter period was a great time to recover from the overwhelm of emotions I had.   I also used this downtime to read a book – ‘Work the System’ by Sam Carpenter.  It is all about productivity and how to re-engineer your business so you can be like Sam and only work a 1 hour a week. Finished it in 4 weeks – that’s a record for me.  I highly recommend it, along with this no-nonsense article from HBR about measuring productivity.

Since Easter, our weeks have been slowly filling up.  Restructures and tidying up of HR practices are common requests.  But I have to keep our work time realistic as Emma and I are both working 3 jobs.  I have already resigned from one.  Being a homeschool teacher is not my strength.  Like many families, we are gagging to get to Level 2, and the kids back to school.  I am not sure how Treasury has calculated that NZ is operating at 75% capacity when so many of us are working two jobs.  Does this mean many kids are getting a lot of TV while the parents work?  Or are we working longer days to fit it all in?

Looking ahead, what makes me nervous are those businesses who don’t have a plan A B C sorted for the following weeks, or the next 1 to 3 months; or when the wages subsidy runs out there will be significant redundancies and people that need to be redeployed or retrained.  For those who received wages subsidies around the end of March, your 12 weeks will be up in mid-June. 

When I refer to wage subsidies running out and what next, some responses have been “we don’t know what level we are in or what money we will have coming in so we will have to see how we go.”

I cringe when I hear this statement, as it’s a fair comment given the uncertainty, but having a “watch and see” approach can mean you could be unable to quickly mobilise and take advantage of the opportunities.  Not to mention the extra stress it can create for everyone.  We will get 4 days notice of what level 2 looks like and then a minimum of 48 hours notice of the restrictions dropping to level 2.  If you need to re-engineer how your business operates to remain productive while also meeting the H&S requirements, that is not a lot of time to react.   Do you really want to leave it to the last minute?  Let’s instead start today.

Before Covid-19, NZ was not a country known for its productivity. She’ll be right is engrained in us.  Our government is more than aware of this. We maybe ingenious and have a number 8 wire mentality but that doesn’t mean we are productive by default.  NZ Treasury have specifically commented this when referring to Productivity as we work towards recovering from C-19 affects. 

“Raising our productivity performance is the biggest economic challenge facing New Zealand, and will require a sustained effort on a number of fronts.”    

They also explain how productivity is linked with the ability to raise wages and household income.  Check out their website as it makes for interesting reading and their commentary will help inform your planning. 

What does being productive and HR have to do with it?  Well where do I begin, and my friend Rob Bull from Plexus Consulting may say the same thing. 

Restructures, job design, employee engagement or culture are all HR things that can support better productivity.  We work with accountants who help with the numbers, lawyers to navigate the technicalities and other consultants like Rob who specialise in lean thinking; to redesign a team, business unit or key process so there more opportunities to achieve better results and be productive.  To get a business operating like a well-oiled machine and be a place people want to give their efforts to, takes a team.  You may already have an advisory board or group of “go to” people, is an HR Specialist in that group?   

To see how productive you are, you can do a simple calculation based on the number of outputs produced, divided by the inputs available (e.g. work hours).  Your measurement units could be the actual units produced, chargeable time, or the sales transactions made.  The best way to measure productivity is to take a multi-factor perspective – labour, materials and capital.  You want to find out how you are doing across your people and your products or services.  Also you shouldn’t be looking at one in isolation from the other.  It generally doesn’t end well if you do.   

For example, we have 3 key performance metrics (and key questions) that help me to monitor how the business is running at any point in time:

  • Our chargeable vs non-chargeable time (how are we tracking against our benchmark?)
  • The chargeable hours against total hours available (how have we utilised our time?)
  • Average chargeable hourly rate (are we valuing our work and time sufficiently?)

Did you notice that none of this information comes from our financial accounts?  While I do look at gross profit, these metrics are real-time and help identify how things are going from week to week, or day to day.  It’s easy to procrastinate when working from home or alone most days.  These numbers keep me honest. Without this information, it would be hard for me decide on how to allocate work or price projects.   

As we look to move into Level 2, it will not be back to normal.  It will instead be another new normal for a period, then level 1 will be another new normal.  If you haven’t already, it is a time for you and your team to ask the questions – what work is not flowing or getting done as easily, quickly or smoothly as we would like? What things give us a headache or stress, and we know there must be an easier way?  The answer will indicate where you need to starting looking and having an outsiders perspective is really valuable. 

I would like to leave you with this thought.  Did you know that when someone makes a mistake and corrects it, your lost time can be multiplied by 3?  The multiplier is 3 because there is (1) The person’s time to do it wrong in the first place, (2) the time for the mistake to be corrected and (3) the time lost that could have been spent doing something else while the person was correcting the mistake. 

If a person is earning the NZ average salary of $65,000 that is equivalent to $31.25 per hour.  The time lost due to fixing a mistake, double handling or re-work, will equate to a real hourly rate of $93.75 per hour, or $195,000 pa. Then this doesn’t include any revenue generation that could have occurred or was lost while the Employee(s) was fixing the mistake. 

Stapleton Consulting and Plexus Consulting are Regional Business Partners service providers We can provide you with fully or partially funded HR and Business Continuity Services.  If you need help with your next restructure or internal review get in contact with me to help get you registered and in line for your portion of the government’s SME business support package.

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