Growth is a welcome and important part of the business and economic cycle but it is important to caution that it is temporary, and must be managed carefully to maximise the financial benefits while it’s happening. Recently I spoke to a business owner that told me in the past 18 months, his firm has acquired two smaller businesses and in the process doubled its headcount. While it may be a good problem to have, managing such rapid growth has been extremely difficult.
Investing in additional sales, marketing or production staff can be easily justified on the basis of the additional revenue each will generate, but adding administrative, financial or operational staff is another matter. Often, finance and admin teams are already operating at full capacity so there probably appears to be no alternative but to take on extra staff to relieve their burden and support the growth. Of course being in a position to create employment is always a positive, but it is not a decision that should be taken lightly, especially when you consider the substantial cost of labour coupled with the cyclical nature of growth.
Generally organisations face two strategic choices when managing growth:
- Invest in additional headcount and integrate these new resources into existing structures. The main advantage of this option is that it imposes the least organisational change and disruption. However, it requires a huge financial investment in recruitment, possibly larger business premises, IT and equipment. There is also a bedding-in period that has to be financed as it can take 4 – 6 months before new recruits become familiar with their roles and actually become productive. Most importantly, it requires continued and sustained growth to fund this investment or it could potentially reduce bottom line profit. And unfortunately additional headcount decisions also tend to be reversed during downturns resulting in further costs and disruption when downsizing.
- Enable existing resources to carry out their roles more efficiently and increase overall productivity. By investing in better systems, repetitive, manual and time wasting tasks can be automated allowing people to focus on the things that make a real difference to the bottom line. This strategy enables organisation to process more information without the need for additional head count. Productivity increases are immediate as you are enabling existing staff to do more of what they already know. And if, after you create these efficiencies you still need additional manpower, you will know that these resources are truly needed. Of course this option requires organisational change but it is this change that drives and maximises the financial returns during good times and minimises contraction during the challenging times.
In my experience, most organisations see the obvious logic and benefits in going with the second strategy but some organisations are reluctant to embark on this route because of the perceived effort, cost and distraction associated with investing in systems – especially at a time when they feel their focus should be exclusively on growth. To me this is a fundamental business mistake that creates waste and leads to greater disruption in the long term. Yes of course implementing new systems can be disruptive, but when managed correctly, systems can be deployed on a phased basis, with minimal interruption and in a very short timeframe. And when you consider the enormous organisational benefits these systems can have on your short, medium and long term returns, I would strongly argue that some managed disruption is well worth it.
For example, earlier this year I was contacted by a Dublin based company that recently invested a significant amount of time and money in new production equipment. This new production equipment would enable the organisation to double its capacity and broaden its product offering into new markets – A positive growth decision and statement of intent. However, in making the decision to invest in the production equipment, the business owners did not fully consider the knock on effects on other parts of their business when productivity is boosted to such an extent. In order to simply pay for the new equipment, it needed to be running at 80% capacity, 24 hours a day. This meant that they had to increase their overall throughput of orders by at least 70%, but because most of their processes were still manual, bottlenecks were forming and pressure building on existing headcount. Their proposed solution was to hire an additional 17 staff to cater for the new demand and process information that could be automated. Their final solution is still being determined but at a very early stage, I was able to demonstrate that by giving them basic tools such as document, workflow and email management systems, they could increase productivity within their existing workforce by:
- Processing orders faster
- Eliminating the need for paper
- Searching and finding correct information easily and every time
- Standardising how information and documents are created and saved just by what they are, without further need for folders
- Organising and saving emails to allow everyone to access them
- Automating business processes and workflows such as order and design approvals, purchase order requisitions and invoice approvals with a complete audit trail every time
- Accessing all their information on the move
- Using electronic signatures for both customers order and internal purposes
- Removing the requirement for manual entry of information
In conclusion, it really does not matter if you are a small company or large one. Any organisation operating in a more controlled manner will have the edge, and implementing a solution that manages company information and processes is a key step for any forward-looking business.
Written by Nik Healy
Consultant and Advisor; Document, Content and Workflow Solutions at Pawpear
If your organisation would like to find out how to improve existing business processes please contact me. You can email me at firstname.lastname@example.org or call 01 296 5180. Other recent articles as well as details of solutions we deploy by role, industry or use case are available on our website www.pawpear.ie