When procedure can interfere with efficiency

When Procedure Can Interfere With Efficiency

May 1, 2014 / by ReSource Pro Editorial Team

The most successful companies tend to be those that begin developing standard operating procedures early on and continue to iterate solid, well thought-out processes throughout their existence. A company without a strong commitment to good process will often lose time and money to waste. Even worse, most insurance organizations will find it difficult to directly identify this waste because of blind spots left by holes in its business processes.

The case for early business process improvement

A weakness in any one discipline can slow, or even reverse, the growth of a business, explained StartupNation. A company that fails to implement strong process management can reduce the efficiency of a discipline or compromise communications between disciplines, which can have serious consequences. A strong marketing push may lead to a significant uptick in sales, for example, but without the necessary infrastructure to deliver a higher level of product or service, a company can find its reputation tarnished.

StartupNation noted that many small companies develop procedures in response to errors and waste, rather than focusing on process management proactively. While many businesses today began by developing procedures according to this “reactive” model, this approach wastes time and money, potentially slowing a company’s development relative to competitors.

When should process improvement trump process standardization?

An established insurance organization likely has significant standard operating procedures in place, and may run fairly efficiently relative to its counterparts. However, process improvement still has a role to play, and the levels at which larger insurance organizations work mean that increases in efficiency can have an even greater effect on return on investment per employee.

Leader’s Edge Magazine cited an example in which a highly efficient employee is working on a large, complex account. The phone rings, and so she stops what she is doing to answer the call, per agency procedure. While the employee provides excellent service to the caller, the client happened to be one of the firm’s smallest accounts. When she returns to work, the employee is now forced to retrace her steps. This break in attention led to wasted time, additional stress and even a potential error.

While it is important to standardize procedures generally in order to avoid wasted time, in this case, process standardization led to waste. Freeing up more experienced staff from wasteful activity is crucial for increasing ROI per employee. Perhaps a less seasoned or less expensive employee could have taken the call, allowing the agent in the example to focus on the more valuable account, or perhaps the agency could have benefited from outsourcing operations that don’t immediately require their high-value employee’s expertise. Those businesses willing to commit themselves to operational efficiency will almost without fail become the most profitable.

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