The 25 small failures that bleed your company’s finances

Sometimes companies look a lot at profits, and little at expenses and losses, except when they are large. As a coach of leaders in so many countries, I repeatedly hear mention of errors, some small, others larger, that go beyond the strictly economic, and that no one cares about solving them at their roots.

It’s like growing a garden where weeds grow. If you do not remove them in time, they will destroy the beauty of the landscape.

In small, medium and large companies, there is constant pressure to optimize resources and maximize profits. However, there are a number of common and seemingly insignificant practices that, when accumulated, can generate significant economic losses.

Generally speaking, there are things that are not measured much: time, energy and attention, for example, are three of the assets least considered in management equations.

Operational inefficiency: a constant since the 19th century

The loss of time in the business field is not a recent phenomenon. Since the industrial revolution, companies have struggled with inefficiency and poor management of time and resources. Frederick Winslow Taylor, American mechanical engineer and pioneer of scientific management, already in the 19th century, identified the importance of optimizing every minute of work to maximize productivity. Despite advances in technology and management, many of Taylor’s lessons are still not applied in modern businesses.

Recent statistics underline the magnitude of this problem. A study by software company Atlassian revealed that the average employee spends 31 hours a month in unproductive meetings. In Latin America, this concept increases up to 40% of the time. Imagine the millions that are lost every day due to issues that have never been resolved at the root, which not only affect productivity, but also represent a significant financial drain.

25 Ant Ways Companies Lose Money

Without being a financier or administrator, what I share here is based on analyzing the frustrations of hundreds of clients from dozens of different industries, in aspects, some soft and others hard, that can be corrected if they establish a business policy that supports it:

• Meetings without a clear agenda.
• Invite people who are not related to the topics discussed.
• Ask for proposals and budgets without clarity in the objectives.
• Requesting an excessive number of options to compare, because you don’t know exactly what you want.
• Procrastination in decision making.
• Lack of monitoring in projects.
• Duplication of tasks due to poor communication.
• End meetings without conclusions or an action plan.
• Inefficient use of technological tools.
• Expenses due to cronyism or without a prior strategy, in aspects such as advertising, marketing or public relations.
• Hire unqualified personnel.
• Do not perform preventive maintenance on equipment.
• Spend on non-essential services.
• Excessive staff turnover.
• Implementation of changes without adequate planning, and without having replacement teams.
• Underutilization of available resources.
• Waste of time on unnecessary emails.
• Delays in approval processes.
• Poor inventory management.
• Do not negotiate better prices with suppliers.
• Lack of clear and measurable objectives.
• Not analyzing the profitability of the projects and, in turn, of each area, and the cost that each person has in their job.
• Paying for dozens of courses, and not checking their practical application in the business.
• Losing clients and not working on their loyalty, in addition to attracting new ones.
• Waste of materials and resources.

3 simple suggestions to end these leaks of millions

Although they may seem hackneyed, these three suggestions are a good starting point to improve in significant aspects. Companies can set a time, for example, a year, to erase from their operational culture all aspects that involve losing money by pennies, which, in the end, will be a significant volume:

• No meetings will be held without prior agendas, circulated at least 24 hours in advance:
• Design a unified template to organize meetings in the company: includes all details, for example start and end time. I suggest that on follow-up issues, generally less than an hour will be sufficient.
• Define specific objectives: They must be raised at the beginning; They are reinforced in the middle, and recapitulated at the end, along with the commitments, responsible parties, and deadlines for each decision made. Yes: meetings are also about deciding.
• Invite only the necessary people: Avoid having people who don’t have to be there, because that only complicates the dynamics further, in addition to making them waste time and neglecting their roles.
• If there is no project planning or monitoring, they will not know where they are
• Use project management tools: starting with planning, which is, in simple language, what we are going to do, for what, in what time, with what resources, and how the project is prorated week by week, until the objectives are met. It is also essential to specify who is responsible; how each executed section is measured and how those results are shared (without holding meetings except those that are essential).
• Assign clear responsibilities: Here we must review duplicate tasks, the decision frameworks that are delivered and delegated to each person, the special issues that must be raised to a next level of management, and involve all people in the overall purpose of each initiative.
• Conduct regular progress reviews: Let’s be honest, no one sees the hundreds of reports that are produced in companies every day. Simplifies as much as possible reporting, and you will see how everyone will feel lighter in their tasks, and with more time to execute and think strategically. Additionally, I recommend including feedback as a regular practice, combined with feedforward.
• Democratize decision making
• Establish a decision tree for common situations: When the definition falls to one or two people, the company becomes bureaucratic and inefficient. It is necessary to provide decision frameworks according to roles, projects, budgets and all aspects to be considered. A “tree” of how far someone can and cannot decide, and what to do if something is out of their reach, will be of great operational help. Here those who lead need to learn to delegate.
• Train in productivity and decision-making techniques. In top-down cultures, the ‘chiefs’ want to control everything because they feel that they are in their domain. In new companies, which achieve very superior results, the individual capacity of key people is trusted, so that they have autonomy and emancipate themselves from the ‘higher power’.
• Encourage excellence, not perfection: On this physical plane it is not possible to be perfect, although it is possible to achieve high levels of excellence. Work on the quality of the processes, adequate induction, and detecting the talent potential of each person. There is nothing more expensive than hiring people and not letting them think and execute according to their experience and knowledge.

Facilitator and Master Executive Coach specialized in senior management, professionals and teams; mentor and professional communicator; international speaker; author of 32 books. LinkedIn Top Voice Latin America. ICF certified professional coach at the highest level, Certified Coach, Member and Mentor in Maxwell Leadership, the John Maxwell team.