Improving Organizational Effectiveness: The Hidden Costs of Inefficiency

You may have heard that an organizational chart is an orderly representation of chaos, perhaps a bit of an exaggeration but not too far from reality in some cases. But let's be a bit more reasonable, shall we??

Let's assume there is no chaos, just a few organizational inefficiencies. There, I think we are all more comfortable with this concept? Chaos is scary, hard, if not impossible to fix. Instead, inefficiencies are imperfections that can be defined, assessed, and fixed and, by the way, are inevitable due to their human nature.?

In any human organization, structured or not, formal or informal, there are infinite sources of inefficiencies, ranging from bad communication, personal differences to unclear expectations or bad processes. Though they are inevitable, it would be unwise to ignore the fact that they can be spotted and eventually worked out, gaining some efficiencies.

Here are a few sources of inefficiencies that can drag down your organization's performance. They can lead to numerous unwanted side effects, such as low employee and customer engagement, higher costs, low productivity, internal conflicts, and excessive politics. Basically, they are bad for business!?

The importance of a shared vision

When an organization sets a course, it is a good idea that everybody knows where it is heading. Although this sounds obvious, it doesn't always happen. Often, senior management is well aware of where the company is heading, but it is not that clear throughout the organization.

The big shots have to recognize this, and even if they think everybody knows what is going on they have to make sure the message goes through and that it also means something for the different audiences.?

One of the premises of having engaged employees is explaining why we play the game. If, for example, you use the OGSM methodology (Objectives, Goals, Strategies, and Measurement), make sure that all in your organization understand: OBJECTIVES: Win the Championship, GOALS: Win the games, STRATEGIES: Play our game, the way we know, MEASURING: Keeping score, adjusting our game.?

And communicate, communicate, communicate. Starts during onboarding, and is repeated when the objectives are set, during the periodic reviews, meetings, and town halls. It is always good to emphasize how the projects are linked to the strategy.

Trust is fundamental

Big inefficiencies can result from distrust between people and departments. The reasons for distrust are multiple:?

Egos; thinking we can do better, or I don't want to share the credit with them, or it will take me forever to explain what to do to these morons. I am better off doing it myself.??

History; years back this was done by our department and we used to do it right unlike this useless new department.??

Lack of organizational understanding; Why should I ask IT to do this? I can do it myself.

Precipitation: Balancing sense of urgency with coordination?

Sense of urgency is usually seen as a strength, corporate culture praises it, however it can be counter productive when there is not good coordination with all stakeholders. You run fast but if you run alone, you need to remember to bring along the rest of the team. This results in confusion and frustration for the left behind and loss of time in going back and bringing the rest of the team up to speed. Sometimes it's better to walk together than to run alone. There are countless stories where a little more reflection would have prevented dramas.?

This can be resolved by using a project management mentality, and I am not suggesting a project management framework. Just make sure you scope your goal and take the time to assess the impact of your actions, who needs to be involved and on board.

Lack of Organization Clarity, expectations not aligned.

We often create functions based on our experience or because that's how it should be. We need a procurement function or a logistics function or a recruiting department and we might indeed need them but sometimes we neglect to connect them with the existing organization and define clear boundaries. We assume that they will fit right in and start interacting smoothly. If the new kids on the block don't have the opportunity to understand who does what, where they can get the inputs they need, what outputs are expected from them that will generate conflicts, tensions, overstepping… in one word: inefficiencies.?

Of course, this can also happen in existing organizations. One way to avoid this in new organizations is to anticipate and clearly define interactions, expectations and boundaries. Align with other departments and functions through expectations alignment sessions: What I expect from you then clarify what you can and can't do and then we do the same from me to you.?

Feedback is virtuous

The lack of feedback is well known to have negative effects however the one that applies here is the potential perpetuation of bad behaviors. If I am not aware that I am not doing what is expected, I will continue in my happy ignorance. This, at the individual and team level. Low performance or wrong performance of a person or a team disrupts the good functioning of the system. The higher the individual is in the organization the more damage and providing feedback at that level, involves egos, politics and I don't even want to go there!

To give and receive feedback is difficult but the cost of not doing it is far higher.

Micromanagement

This management style is usually practiced by individuals who are control freaks, perfectionists, or fear failure. It also happens when managers are inexperienced or plain insecure because they are themselves subject to micromanagement. Authoritarian leaders will also micromanage to try to control everything.?

This style compromises the proper functioning of the teams, killing initiative, creativity, and morale. Moreover, it slows down interactions with the rest of the organization, which is a huge source of inefficiencies. This is a tough one, but it can be mitigated by teaching healthy leadership techniques. If that doesn't work, consider replacing the perpetrator.?

These are some of the dynamics that are often ignored or underestimated and that generate inefficiencies. Sharing the vision, building trust, working as a team maximizing capabilities in a clearly defined organization will mitigate inefficiencies. If we have the will to identify and measure these inefficiencies in terms of hours, rework, missed opportunities, loss of business, or loss of talent, we will be able to quantify the significant impact they have on the bottom line.?

Isn't that worth some attention??