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How Inefficiency Negatively Impacts Your Business

Take a look at the negative impact inefficiencies in all forms are having on your business right now. This way you will be prepared to get into sussing out the potential new inefficiencies that you may accidentally unleash in pursuit of greater efficiency.

Inefficiency costs money

Inefficiencies cost many organizations as much as 20 to 30 percent of their revenue each year. Imagine what your company could do it if had 20 percent extra funds to funnel into customer acquisition or research and development.

Sometimes people, equipment, or processes come at a premium. That’s perfectly all right — efficiency is not about paying your employees minimum wage and scrimping on product quality.

Inefficiency is when you spend more money than you needed to in order to arrive at the same result. Defective products that need to be discarded, excess inventory, and even long-distance phone call overage fees are expenses that only deplete your bottom line — so get rid of them.

Inefficiency wastes time

You may be able to squeeze every last cent out of a dollar, but there is no squeezing any additional seconds from a day. Every minute squandered is lost forever, never to return. Time spent waiting, whether for a process to finish or for a manager to tell you what to do next, is also time lost.

When it comes to efficiency, time is not just measured in minutes and hours, but also in potential output. A crabby, scared, or underappreciated employee is simply not going to create the same amount or level of work as a well-rested, satisfied, fulfilled one in the same span of time.

Employee sentiment has a great deal to do with making the most of your company’s available hours. Measures to make your workplace more enjoyable, cleaner, safer, or even simply less boring can go a long way here.

Inefficiency reduces quality

As process improvement methodologies Total Quality Management and Six Sigma remind us, every defect or missed quality benchmark is an inefficiency. Unhappy employees and older machinery tend to cause more errors than their more efficient counterparts. Subpar quality control processes don’t catch errors in time, resulting in defective merchandise potentially reaching customers.

Businesses don't usually want to produce quality results 82 percent of the time, and they shouldn't have to settle for such numbers after undertaking efficiency improvements. Correcting inefficiencies across a process can have a major impact on success rates in any business, and get those quality results up.

Inefficiency damages morale

Rote or error-prone tasks are frustrating. If you have to perform them four or even eight hours a day, you will not be particularly apt to go the extra mile or perhaps even to smile.

While it's true that replacing more than one employee with a piece of machinery or an Excel macro is sometimes the solution, a task that can be replaced with equipment was not particularly fulfilling or engaging. Further, eliminating inefficiencies doesn’t always mean letting employees go — they can often be redirected to more interesting and meaningful work (really!).

Know what else hurts morale? A lack of trust, which is the direct result of an inefficient project management process. When projects are announced only to disappear into the ether, when milestone after milestone is set only to go by unacknowledged, and when upper management touts dedication to goals that are not aligned with their actions, employees become all the more disenchanted.

An efficient workplace that delivers what it promises to high quality standards is a place where people want to work, and that can make all the difference for your sales, marketing, and customer service efforts.

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