Improve Performance by examining
Effectiveness

Is your business performing at its best?
Discover the answer by taking a look at your processes.

 
To understand if we are being effective every process can be assessed by asking one simple question:

Are we doing the right things?

Profit is a great measure of how well a business is performing, but only looking at profit is sort of like never leaving the house and only seeing the world on a Black and White TV. By adding in some additional measures performance (and profit) can be greatly improved.

What is effectiveness?

Effectiveness of a process refers to the usefulness of the process output in relation to the expectations and needs of the end user.
The effectiveness of any process lies in being able to deliver exactly what is needed; at the right time, right way and at the right place and importantly at the right price too.
Effectiveness is usually measured by how happy the users are with the end result. Gauging ineffectiveness can become a really expensive and complex process of customer satisfaction surveys, staff surveys etc etc.
Never-the-less perceived difficulty shouldn’t be an excuse to simply avoid looking at how well your business is performing, starting with a higher level approach can achieve some really worthwhile results.
If I travel from London to New York by Friday as long as I get there by Friday I have met my objective and been effective; BUT if I traveled to New York from London via Sydney that would still be just as effective, but not as efficient.

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Efficiency versus Effectiveness

What’s the difference????
“Being effective is about doing the right things, while being efficient is about doing the things in the right ways.”[/box]

What happens when you just need a snapshot
– How do you do a quick check to identify ineffective processes?

If you are new to performance improvement, and don’t know where to start, then take a step back then begin. Instead of creating surveys and applying complex measures and formulas, start by breaking this down into a more simple and practical overview approach:
choose some key activities of your business and examine quality and quantity within any specified period.
 

How to Improve Performance

Firstly decide on a part of the business you want to assess and during what time-frame; then examine its effectiveness. I’m going to use Goods Delivery per Week as an example throughout the rest of this article.

Effectiveness – Are we doing the right things?

There are two parts to this, firstly setting the objectives to clarify “what things are the RIGHT THINGS” and secondly examining if the process “works” and therefore “are we actually DOING these right things”.

Step 1. Objectives

Start by asking the question: What is the objective/point of this process (What are the right things?)
Check your definition and make sure it mirrors what everyone involved in the process considers the objectives to be.
It may surprise you that this step needs re-doing quite regularly – a “set and forget” approach to process objectives is only beneficial if you have both a very stable business and a very stable market – changes will be needed as your business grows and develops and with market fluctuations such as the GFC. Some minor adjustments may seem obvious to a business owner but, if not communicated to the staff involved in completing the process, these adjustments will most likely never take place.
Misalignment at this stage will undermine both effectiveness and efficiency, therefore pretty much guaranteeing room for improvements.
Define EXACTLY what this process is supposed to achieve.
What are the desired outcomes? – Think of it like a job-specification for the process.
In terms of Goods Delivery – clarifying the objectives would include assessing:

* Initiation: when do we send this – on deposit or full receipt?
* Location: person to person or will a mail-box do?
* Time Frame: next day, three days or seven days?

This could result in an objective along the lines of:

We guarantee to deliver your purchase person-to-person within three days of full payment!







 

Step 2. Outcomes

Next ask the question: When we run this process do we meet these objective?
Check your definition and make sure the intended outcomes were achieved – this is only possible if you are really clear about what you want your outcomes to be.
Misalignment at this stage will indicate an issue either with the definition of your objectives or indicate some part of your process is broken.
Assess your outcomes both in terms of Quality and Quantity (“on-time” is a measure of Quality)
In terms of Goods Delivery during a week assessing outcomes would include:

* How many full payments were received in the last 10 days? (overlap period of 3 days)
* What percentage of deliveries made within three days of full payment?
* How many deliveries have yet to complete for sales made in the last three days?
* What percentage of deliveries failed to be person-to-person?

Either we are effectively meeting our delivery goals or we are not – what is acceptable and what is not will depend on your business – but if my business GUARANTEES on-time delivery then I would want 98-99% of deliveries meet this guarantee.

 
This method is quick and easy to undertake, and regular effectiveness assessments on any business process help maintain good business performance.
Remember improvements in performance will only occur if you follow the feedback cycle of:

  1. Plan
  2. Assess/measure
  3. Study and understand the issues
  4. Decide on a course of action
  5. Take action to deliver change
  6. Back to Step 1. Planning

 

Feel free to comment and share your examples of improving the effectiveness of some part of your business – so we can all benefit.

 
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About the Author

Why own a business post - Eve Blackall Smart Accounting image
Eve Blackall the small business answer to The Supernanny.
At Smart Accounting you work one-on-one with Eve who has already assisted hundreds of business owners increase cash-flow, grow profits, also ensuring those businesses fetch the highest price when it comes time to sell.[/box]