How to Evaluate and Improve Business Processes
How to create business efficiency through simple evaluation of your existing business processes
Before we even start to discuss creating your plan let’s learn a simple equation for process planning and evaluation. It probably wouldn’t surprise you that a process with fewer steps and instructions has a much higher chance of being completed successfully. The higher the number of people that perform this process overall, the more this becomes true.
This planning equation is simple and easy. Take the total number of steps in the process and multiply that number by itself. For example, a six-step process would receive a difficulty score of 36 (6×6).
Now let’s evaluate it. The current process we seek to improve has six steps and receives a difficulty score of 36. Eliminating two steps in the process would greatly improve results and become more successful to perform. So we take the same formula (4×4) and receive a score of 16.
Now divide the original difficulty score (36) by the new score (16), which results in an answer of 2.25. Therefore, it’s likely that a four-step process will be completed successfully 2.25 times more than the six-step. This doesn’t mean it’ll be accurate 100 percent of the time; it just gives you the likely output of success.
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When you then divide the original difficulty score of 64 by the new difficulty score of 25, you don’t need to be a mathematician to see right away there is a big difference. Your five-step process is 2.56 times more likely to be performed successfully. You probably won’t ever have enough data to prove this exactly, but using this form of process evaluation makes the possible results easy to understand. It’s really just a quick and easy way to see how your current processes might be improved. Take this evaluation method and apply it to ALL of the processes in your business and you might uncover a roadmap to efficiency.
To recap, here are the useful questions to ask regarding your business:
o What process or action needs to be completed?
o What is the desired result if this process is completed properly?
o What plan or process, if any, exist now?
o How many steps does it take to perform this process?
o Who currently performs these actions?
o How long does the current process take?
o What do we gain if the process is performed?
o What do we gain by process improvement?
o How soon do we need to implement change?
o What happens if we don’t improve by a given date?
o Is this process even necessary?
o What would/could/will happen if this process is eliminated?
The last two questions are the most important questions on the list. Answer them as honestly and realistically as possible. The best possible process improvement is to no longer have to perform that process!
Another way to create the same result is to combine or streamline existing processes. To illustrate, let’s look at the following example: three people in your office record specific types of data as a part of their job. All three use their own spreadsheets to record sales, client data, and the status of orders. If these three workers are entering the same data in three different spreadsheets, you have inefficiency.
A solution might be as simple as using a free form of cloud sharing storage such as Dropbox, or a Google Document. You can then combine all three spreadsheets into one, creating a common entry form. Once a new entry is made after saving the spreadsheet, it would auto-populate the shared data. For those that aren’t self-proclaimed “tech people,” that might sound hard. IT’S NOT. It’s also pretty likely that someone already launched an app for your problem and that’s even easier. You’ll never know you need to fix it if you don’t evaluate.
Changes like this might appear little or petty, however, you would be shocked at how it adds up. If each of the three employees duplicates the others’ effort fifteen times a day and assuming that data entry takes one minute, you would have just gained thirty minutes a day or possibly saved in labor through this efficiency. To review the math here, one employee did the job required and it took 15 minutes, then the two additional entries are where your redundancy exists. Eliminating the unneeded entries creates your new efficiency.
If an employee at your business makes $20 per hour, you just saved $10 a day or gained thirty minutes in which you can accomplish other things.
There are 261 workdays in a year, so that is a $2,610 saving or a gain of 7,830 minutes or 130 hours, which is almost three work weeks. Think about what you could do if you did that with everything at your business!
It is also possible that there is some cost or learning curve associated with these changes. If that is the case, then you will need to subtract that cost or the amount of time it takes to create and implement the new routines. Therefore, returns are somewhat less if viewed on a short-term basis, but the long-term savings can likely result in large amounts.
