A car dealer once remarked that “it’s easier to fix the score than fix the store” and in my experience, that’s a true statement. The reality is there isn’t a performance metric that can’t be manipulated. Even profit, the bottom line, can be manipulated with special dividends, reserve adjustments and other accounting gimmickry. If you push metrics down to their base, it is all about time. If our dealer sold cars faster there would be time to sell more. If a business makes parts faster the business doesn’t need as much inventory, can react faster and have less capital tied up.
So how is this done? One answer is to push harder, but a better answer is to work smarter. Measure the business in terms of time and see where most of it is spent. Start simple and track time on a piece of paper or spreadsheet, but make sure it’s honest and do it for a couple of weeks to capture everything. Tracking it on paper avoids any of the heuristics the human brain uses and should provide a manager with a more accurate picture than just estimating it in your head.
The other time to consider is wait time. If there is a stack of loan applications sitting on a bank officer’s desk that counts as time. If the bank were to look at the time spent processing loans plus time spent waiting to be processed, they might find their average processing time is two or three times what they thought. If loan applications get through the system faster, then more loans can be reviewed and more good loans can be booked.
Consulting firms are masters of time management and look at time in way that few businesses do. Add to their time management skills that a client may decide the time spent was not value added time and decide not to pay for it. This diligence with time can apply to any business though. Review each process and ask if a customer would pay for it. Certainly there are steps that have to be done to run the business, but if there are things a customer would not pay for, then management has to wonder if it’s really worth doing.
The old adage holds true that time is money and reducing time in a business will make all of the company’s metrics look better.
