Increasing business productivity is an essential task for an entrepreneur. If you succeed in making your small business more productive, your company will ship more value to your customers, will create better value with fewer efforts, and will have increased profitability because of the lower costs that it will make to produce and ship the value.

But, when we talk about small business productivity, we must talk about personal and system productivity. Your small business comprises different systems that enable everything to work as it needs to work.

Today, I want to discuss the system’s productivity. You can repeatedly use the steps presented here to improve the productivity of different systems in your company.

Let’s examine what you can do this weekend as part of your productivity improvement project.

Understanding Business Productivity

Let’s start with short introduction about what is business productivity and why is it important for your small business success.

What is Business Productivity?

Business productivity measures how much a company can create (output) compared to how many resources it takes (input). In simpler terms, it is a measure of how efficiently a business is using its resources to produce goods or services. This includes time, money, materials, and labor. The higher the productivity, the more output a company can generate with fewer resources.

The less time, technology, and team members required for each task, the higher your level of productivity will be.

For example, if it takes two employees ten hours to complete a project, and with the same resources you can now finish that project in five hours, your productivity has improved.

Why is Business Productivity Important?

Business productivity is important because it is frequently viewed as a key driver of success and directly affects your business’s bottom line. By increasing productivity, you can reduce costs and improve efficiency, which means more profit for your small business.

Moreover, improved productivity leads to better quality products or services, which can enhance customer satisfaction and loyalty. This, in turn, can lead to increased sales and revenue.

Ultimately, higher productivity can give your business a competitive advantage in the market.

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Set up the Foundation to Start Boosting Productivity

First, you need to set up the foundation to boost productivity. That means you have clear goals and objectives; you don’t want to start working on something without knowing what you want to achieve.

The second part of the foundation to continually improve business productivity is to choose the three most important systems in your business that will be part of the process.

1. Set Clear Goals and Objectives

Measuring progress and identifying areas for improvement is hard without knowing what you want to achieve. Setting clear goals and objectives allows you to focus on specific tasks and measure your success.

Start by identifying the areas of your business that impact productivity the most, such as operations, marketing, sales or employee training. From there set clear, big and challenging goals for individual departments, teams and employees.

Make sure these goals are measurable or SMART with specific metrics or KPIs attached. This will allow you to track progress and make adjustments along the way.

For example, to boost productivity in the customer support department, you can set goals like “reduce average time per customer call by 10% in the next quarter” or “increase customer satisfaction ratings by 15% in 6 months”. These specific and measurable goals will focus efforts and drive results.

You see, you already have performance metrics for those goals, average time per customer call for the first one, and customer satisfaction ratings for the second one.

Communication is key to boosting productivity, along with setting clear goals. Make sure all employees know the company objectives and how their work relates to them. Encourage open dialogue between team members and provide regular feedback on progress toward goals.

2. Select Three Most Important Systems to Improve Their Productivity

Each small business will need several systems to depend on for their everyday work. For example, you must have a sales and marketing system to achieve your desired income. You will have a research and development system to design products and services as a value for your customers. Also, there will be the production system, financial system, and supporting system.

In order to improve productivity in your business, it’s important to identify the key systems or processes that have the biggest impact on your overall business efficiency.

For example, if you select operations, marketing, and sales systems, you can focus on improving these processes to see the most significant improvements in your productivity. Let’s say you want to decrease production costs and bring new products quickly onto the market, which is the focus of operations systems. In such a case, you will work on the following:

• Improving production processes,
• Reducing waste and
• Simplifying the supply chain.

On the other hand, if you want to increase customer acquisition and retention rates, you must focus on improving your marketing and sales systems by implementing targeted campaigns, analyzing data to understand your target audience better, and providing excellent customer service.

3. Analyze the current productivity of the chosen system

Each system has its own productivity, which depends on its inputs, processes and outputs.

For example, your production system can have raw materials and time as inputs, different operations as processes and finished products as outputs. You can measure the productivity of the production system in different ways. For example, the number of completed products per employee’s working hours is one measure. Also, you can use the number of finished products per cost for raw materials. Or the number of finished products that do not satisfy quality standards per the total number of finished products, etc.

These are only examples of indicators. Your production system can have a large number of indicators that you can use to measure its productivity.

In this step, you analyze the system you chose in the previous step using different indicators to find possible places or system components where you can make improvements to improve productivity.

Keep in mind that you need to check if your system achieves the goals of its existence in your company. Look at the following 7-step framework to achieve all your business goals.

Improve Business Productivity of the Selected Systems

Now, when you choose the systems on which you want to work to increase productivity, you can start with the real work.

Here are the steps you can conduct to improve the components of the system and in such a way improving business productivity.

4. Breakdown Critical System’s Components

Define and describe all components of the system that have the biggest effect on the end results, or the outcome of the selected system.

Each system is composed of different elements that contribute to the overall productivity of the system itself. You need to define them and consider their role in the results you achieve in previous steps. Then, after you finish identifying them, you can start to describe all of them. Describe their role in increasing and decreasing the system’s productivity. Also, you can put the facts in numbers that will tell you why and how some of the components contribute to the results from previous steps.

For example, you will need to find strong correlations between employees and the number of products with lower quality to say that employees significantly influence the system’s overall productivity.

My recommendation is to draw your system on a piece of paper, or using some apps for process maps and flowcharts. There, you will put all the different components and make connections in the form of input and output from each other.

So, you will have a great tool where you can play with numbers as inputs and outputs. Playing with numbers, you will see their overall influence on the whole system’s productivity. Also, you can put all these components inside a spreadsheet, like in the image below, so you can easily analyze different KPIs related to each component.

To succeed in this, you will need to establish standard operating procedures. Only standardized processes will show you what can be improved.

5. Select Components With the Biggest Effect on the Overall System’s productivity

Now, you want to select the components of the systems as most priority elements that will need improvement in order to increase productivity of the system at all.

In the next step, when you already know what is working and what doesn’t work, and you see the priority of the components, you can choose three to five of the most priority components to be part of improvement efforts in your next week.

This project aims to involve you in the continuous improvement process, not some significant transformational organizational changes, and because of that, try choosing several things that you and your team will work on next week, among other tasks that you and your team will regularly need to work on.

6. Make a clear plan for improving productivity of these components

Now, when you know what you need to improve, it is time to spend ten minutes making a clear plan for improvement.

Because you already know what you need to improve and how you can improve it from the previous steps, in this step, you will need to make schedules and responsibilities for all improvement tasks that you will need to implement next week.

7. Identify and Eliminate Waste

Waste is a common problem in any system and can significantly impact productivity. Identifying and eliminating waste is crucial for improving system efficiency.

To start, you must identify the different types of waste in your system. These include overproduction, excess inventory, waiting time, unnecessary processing steps, transportation waste, and defects or errors. Read more on seven wastes from lean production, plus three additional for current times.

Once you have identified the specific waste areas within your system, you can begin implementing strategies to eliminate them. This may involve simplifying processes, reducing excess inventory or waiting time, and implementing quality control measures to reduce defects.

Eliminating waste not only increases productivity but also helps to save time and resources, which can be redirected toward more important tasks.

Simply, the steps you can conduct here are the following:

• Locate all possible wastes.
• To identify the sources of waste, consider the entire process from start to finish. You want to eliminate waste and its sources so you will never have them again.
• Eliminate or minimize time wasting activities that slow down the workflows of the system.
• Remove unnecessary steps and simplify processes to reduce resources spent on non-value-added activities.
• Take steps to eliminate activities that are not adding value.
• Remove all unnecessary meetings.

8. Use Technology to Boost Productivity

Implementing technology can greatly improve productivity and reduce defects in the manufacturing process. Automation tools, such as robotic arms and sensors, can help to streamline operations and minimize human error. Additionally, data analytics software can track and analyze production data to identify patterns of defects and allow for corrective action to be taken quickly.

Next, you can automate repetitive tasks and simplify currently complex processes to free your employees to focus on more innovative or important projects.

For example, using chatbots can drastically improve employee productivity in your customer support department. Many repetitive tasks can be done using AI, AR and VR technology.

If the work of your business is based on projects, you can also use project management software to simplify workflows and improve collaboration between your team members.

Increase Employee Productivity

It is not enaugh to improve only your system’s productivity. You must also include the human factor because many times I have seen that the systems is not the problem, but employee productivity is something that will require specific actions.

9. Analyse Employee Productivity in the Workplace

The first thing you must do here is to analyze how employees spend time in each of the systems’ components you have worked on in the previous steps. This means using employee utilization KPI to measure the amount of time employees spend working on productive tasks:

Also, you can measure the average number of tasks performed by employees:

Task completion rate is also important in order to check the percentage or the number of tasks completed in a specific period of time:

10. Analyse the Reasons for Low Employee Productivity in the Workplace

When you conduct the analysis using productivity indicators in the previous step, you now need to analyze the “why” part of the results you get.

This is an important step because without knowing the reasons, you can not develop strategies to increase their productivity. If it is poorly engaged employees, you can develop and implement strategies to increase employee engagement.

If it is the low level of managerial support or scarce resources you can implement strategies for supporting employees. In such a way you will provide your staff with all management tools and resources to complete tasks quickly and seamlessly. You can also offer support as needed to increase employee efficiency.

Or, if the lower productivity is because lower competencies of your employees, you can train them to develop new skills to become more productive. Provide training sessions on a regular basis to increase productivity. Also, you can conduct different initiative to encourage employees to prioritize tasks and manage their time effectively for increased productivity.

To increase productivity in the workplace, employee well-being can have a strong impact. So, analyze and ensure that employee well-being is on the highest possible level if you want to increase productivity.

One of the best way to measure the satisfaction of your employees and their well being is to collect employee feedback regularly. Employee feedback is an important tool in your hands to collect information about possible improvements related to your employees’ workplace productivity.

11. Motivate Your Team Members

Employee motivation is also an important part of managing time and increasing productivity. A motivated team is a productive team, so it’s essential to find ways to keep your employees engaged and motivated.

Rewarding Employees

Recognize and reward employees for their achievements to boost motivation and job satisfaction. In such a way employees feel valued and will always give you their best to achieve your business goals.

Employee Career Opportunities

Providing opportunities for career growth and development can also be a strong motivator. Employees are more likely to feel motivated when they see a future for themselves within the company. This could include offering training programs, mentorship opportunities, or promoting from within the company.

Create a Productive Work Environment

Positive work environment means more productive workplace. Ensure that the work environment is conducive to productivity by providing necessary resources and tools, encouraging open communication and teamwork, and recognizing and addressing any issues or conflicts promptly.

More productive work environment ensure increased productivity of the employees working there. So, ensure you promote a positive work culture that supports physical and mental health.

Promote Work-Life Balance

A healthy work-life balance is crucial for employee well-being. Encourage breaks during the day, flexible work arrangements, and offer support for personal obligations. This will not only result in happier employees, but also improve overall job satisfaction and retention rates that will increase your overall business success.

Minimizing Distractions and Time-Wasting Activities

To increase workplace productivity, you can install tools and apps to block distracting websites and minimize notifications. Simply, you want to encourage employees to stay focused on high-priority tasks.

Boosting Productivity through Better Communication

Encourage open and transparent communication throughout the organization if you want to maximize productivity. You can use communication and collaboration tools to encourage teamwork and knowledge-sharing between employees. Remember, how much better they become, more increased productivity you will achieve.

Follow these guides to become more productive in your small business’s messy business environment.

Question: Do you have experience improving productivity in the systems that exist in your small business? Can you share some interesting stuff from your experience with us?