As a manager, making sure your teams are both effective and efficient is a key part of your role.
Clear data and good management skills will be required to understand and manage performance. Often targets are used. They are a necessary part of all businesses but have you stopped and really thought how the target is structured, whether it is achieving the desired outcomes or whether it’s working at all. Can achieving a target, which for all intent and purpose looks like a robust and worthy measure, cost a business? Do you have processes that cost you more than add benefit? And, if so, could you remove them and get your team focussed on activity that really does add value?
Here’s an example:
Bob is an international business man. He travels a great deal and to many countries. He recently landed in London after a successful business trip to the United States. While away Bob made a few expensive purchases and when back in the UK went through the ‘goods to declare channel’ completed his customs declaration form, and paid the requisite tax.
Value of product converted from USD to GBP less taxable allowance times the appropriate duty percentage = tax payable. Simple!
Bob paid the calculated sum and then left the airport and completed his journey home.
A few weeks later Bob receives a letter from HMRC. This was posted to Bob in an A5 envelope and contained two A4 sheets of paper. The covering letter tells Bob that he used the wrong exchange rate in his calculations and that he has underpaid his tax by 19p!
Having removed the perplexed and somewhat humorous grin from his face Bob pondered the cost of telling him about this error, before calling HMRC and spending 8 mins on a call.
First Class postage £0.65p
A5 Envelope £0.12p
A4 Paper £0.05p x 2
Printing and production £0.10p
Bob generously assumes that this is a ‘systems generated output’ so decides not to add any ‘people’ costs to his sum, but even so Bob reckons it has cost at least 0.97p to write to him and ask him to pay 0.19p. That’s more than 5 times the cost of the unpaid! That is not good business sense and nobody could think otherwise – surely?
Bob and I discussed what might be the drivers for him receiving the letter…
- Maybe its a system threshold so all owed is chased. A small change could fix this. Surely?
- Or, maybe there is an internal target that looks at all overdue balances in isolation of the costs to recover. Again, easy to change?
Either way, costs and effort could be reduced. It’s tax, so it’s a matter of compliance not cost. OK, so we can debate this one, but there is still opportunity to change thresholds and save money.
By removing no value add activities, you could not only save costs but re-deploy your resources to more value adding activities.