Like any living organism, companies evolve and change the organization of their processes. Regardless of the age, type, or industry in which the business operates, all companies have one thing in common. They want to survive and grow. As a business grows, changes, and evolves, different processes evolve. The same thing happens whenever a company launches a new product or service. As processes evolve, costs within the business that you cannot identify in any of the financial statements but which significantly affect your competitiveness and profitability also accrue to the business.
When a company is young, it is in a phase of complete creativity and optimism. At that time, survival is essential for the company, which is why it directs all its efforts towards sales. When the company reaches a certain level of maturity, it needs to define processes. It can successfully control them for many years. It happens that these rules start to accumulate and have a negative impact on your productivity. Bureaucratic rules have been established with the aim of increasing efficiency and facilitating communication.
Why is bureaucracy bad?
Bureaucracy is not bad at all, but it is bad when it exists only for its own purpose. Employees of the company should spend their time as effectively as possible on the performance of their work, which is certainly not bureaucracy. Ever wondered how much work time your employees spend on bureaucracy in sales, marketing, manufacturing, or the general sector? If this time is more than 20%, then the company creates double costs, while it should increase revenues and optimize business. Bureaucracy represents all reporting, internal communication, analysis, meetings, work planning,… Bureaucracy can also become a weapon between departments within the company to defend its fortress. Ineffective communication between departments greatly affects the cost of your processes and, consequently, the cost of your products and services.
One of the key criteria for a company’s competitiveness is value-added per employee, which, however, is greatly reduced through excessive use of red tape.
When does bureaucracy become a hidden cost to business?
Hidden costs are not visible in the company, which is why it is important to take a step back and look at your processes from a remote point of view. What to take a look at?
Changes are the only constant in business, but they also bring stress to employees. Every change brings a disturbance to their working rhythm. Changes require flexibility. Some changes may need to be made first to enforce the rules and later to be implemented. For those changes that are revolutionizing the market and significantly impacting growth, we often do not have the time to set the rules first. This requires courage, trust, and close monitoring, which should not interfere with the action. When making changes, the state of relations between departments is revealed. Each, in its own way, expresses its own importance by blocking the introduction of change through bureaucracy. Even when company proposals are reduced, it can be a sign of excessive bureaucracy that has repeatedly led to inaudible proposals or may require too much work to keep employees motivated to make proposals.
Very briefly, When meetings are too long and convened ritually without the right structure, they represent an activity that is costly to the business. Ever wondered how much meetings actually cost you? If you only add up the time cost of all the employees attending the meeting, you will quickly come up with a high number of costs.
Sales department reports are important because they provide the basis for planning in other departments. The question is, how many reports really serve this purpose, and how many are taking valuable time that should be devoted to sales?
So what are the reasons that costs accumulate in the company? Why do employees not use their potential due to poor communication, defending positions, fear of change, habits, or the need for control?
If you have identified any of the hidden costs or if you just suspect that they are hidden somewhere in the processes. Don’t hesitate to make an appointment. Start building your competitiveness and cost-effectiveness today.