The efficiency of a company’s management is a crucial factor in determining how a business converts its resources into profits. This can be assessed by the financial statements of the business like turnover rates for inventory, fixed assets and accounts receivables. It is not enough to have high efficiency ratios in order for a company to be profitable. There are other indicators of profitability that must be examined, such as cash flow, net income and gross margins.
Efficiency and effectiveness are crucial aspects of management but they are more effective when used separately. While efficiency is focused on achieving long-term goals efficient processes help to achieve those goals in the most cost-effective way that is feasible. Efficiency improvements include the automation of repetitive labor costs or increasing yields using fertilizers.
One of the most important aspects to remember when trying to improve efficiency is that it’sn’t just about reducing time or resources, but also improving the quality of work. If two people are working on the identical task, and they do not communicate effectively, there is an abundance of wasted effort. Communication that is honest and open between employees will improve productivity, and also allow managers to spot and resolve issues quickly.
Employees are the lifeblood of a company and increasing engagement of employees can boost efficiency by reducing absences, turnover, and communication issues. Tools like Happieteams can increase engagement by utilizing short weekly surveys that provide the managers with direct, visual data to act on.