20 to 40% of the activities carried out in companies are completely unprofitable
Last year I celebrated 10th anniversary of entrepreneurship. Over the past years, we (Atria Group) set up some procedures that are still being used, although they should not be. Some things are done only because someone worked like that before. And if we go back to the very beginning, many of these activities were once urgent, and we had no resources, at that time, to create systemic solution. However, today we have resources, but there are quite few things that we do in the same old way like 6 or 7 years ago. With growth and development, we kept the activities that no longer serve us and we are not able to identify them effectively.
I would say that our team consist of hard working individuals and it would be great if we can learn to work smarter not harder. But how to do that?
When a student is ready…
At last year’s conference of our partner Persona Global, I had the opportunity to attend a lecture given by Robert Reinfuss on improving the profitability of companies’ operations. Most probably one of the most interesting topics for managers and business owners.
At the lecture, Robert presented the research data* that 20 to 40% of the activities performed, on daily basis, in companies are completely unprofitable. No one, internally or externally, has benefit from them. Sometimes these activities are performed by people who are brilliant, motivated, dedicated, worthy. On the contrary, the profitable activities are performed by people who are “half-hearted and brain” in the company.
Indeed, if we could identify those activities that are not profitable and cut them of, the overall profitability of the company would increase without any drastic changes.
Once he got my attention, Robert introduced a tool that can help us to measure the profitability of activities of any positions in the organization. ValueView®, awarded last year by Innovator 2018 by Business Academy WSB – Poland, gives management possibility to understand which activities are key to the success, and which can be reduced or eliminated.
How does this work?
The whole process has 3 phases. At the very beginning, we need to define positions for which we want to assess the profitability. I see this as important thing. We don’t assess profitability of a person but the profitability of activities per position. Once the positions are defined, on-line questionnaires ask executives (in these positions) to define what they are really doing in their work (not what the job description is, but what they really do) and who are internal or external beneficiary of these activities. In other words, what positions in the company (or outside the company) may have a problem with their work if they would stop doing that activity today. After submitting a questionnaire and receiving an answer from the executor, consultant needs to sort out data and merge similar activities. The end of the first phase is the list of activities by position with the direct beneficiaries.
In the second phase, attention is on beneficiaries. Through on-line questionnaires, beneficiaries answer to two questions: “Do I need this specified activity?” and “To what extent do I get it?” Based on the answers, software generates a profitability report, which is the basis for entering the third phase.
The third phase of the process implies restructuring of activities for positions, change of processes, proposal of changing the number of executors per position and proposals for development activities for each position.
What did I get from ValueView ?
The first important insight was that the most of my colleagues as a beneficiary of their daily activities see their direct superiors. Which should not be the case, there many other beneficiaries in and outside of out company.
It was especially interesting that some of my colleagues saw me as a beneficiary of their daily activities although I really don’t need those activities to successfully do my daily work.
The most important benefit for me was the insight that Senior Partner position is “bottle neck” at our company. The activities that Senior Partners carry out are very profitable, there is a great demand for them. This means that we need either to have more Senior Partners on boar or to transfer some of the Senior Partner’s activities to other positions in the company.
More info about ValueView you can find on this link.
* Research was done by Robert Reinfuss, Dr.Ewa Beck and associates, AGH University, Krakow