Work processes, like road signs, should be clear and direct. They should evoke a series of concise responses to effect a specific, desired outcome. The problem is, humans are organic. We start out defining a new process that will make our work lives easier. The new process may look like our straight line here–simple, efficient and productive.
But then we’re asked to do more and more things. In an effort to meet business objectives, be more efficient and manage our time, we load up our processes with too many steps and too many desired outcomes. Unable to stand under the weight, our processes devolve. They morph into a convoluted string of manual tasks that everyone performs but no one understands. The result looks like this:
In the end, we hate the very processes we hoped would save us. But the underlying need for the processes doesn’t disappear. So, inevitably, the cycle starts again. We abandon the overgrown processes we have come to hate, clarify our business needs, and voila! A new process emerges. Sound familiar? This is proof you are not alone! Process pain and mismanagement are epidemic. They exist in all industries, in all organizations and with a wide variety of toolsets. To prove the point, let’s go back to our road sign analogy. Here’s a road sign that works:
When you approach a STOP sign, you know what the process is:
- Bring your vehicle to a complete stop.
- Wait for traffic to clear.
Are you ever confused by these steps? No. Do you ever think you should add additional steps to this process? Maybe get out and check your tire pressure or check to see if your brake lights are working? No. The purpose of this sign is clear, and there is no value in adding additional steps to the process. Now take a look at this road sign:
Are you confused? You’re not the only one. What are we supposed to do after seeing this sign? What’s our process? It looks like we should be sitting, but then do we wait to be impaled by a rectangle? I have no idea.
Now relate this back to the processes in your organization. Could you create a clear diagram or roadmap that outlines all of your common processes? What about stakeholders, key steps and end goals? All too often, our processes are nebulous. They don’t have a clear start, a clear end or a clearly defined singular purpose. As these inefficient processes grow in length and number, our employees start feeling boxed in (both literally and figuratively). They face a wall of work each day that keeps them from doing higher value-add tasks.
We also tend to forget the underlying cost of our inefficient processes. Every hour spent on a wasteful process costs your organization money. Money that goes to benefits, salaries, license costs, hardware costs, facility costs, etc. And let’s not forget the opportunity cost of having your time taken up with these arduous processes. Time spent circling the process drain is time you can’t spend on other value-add tasks. In many cases, that loss of time can result in a loss of revenue for your organization.
Calculating the cost of your inefficient processes
Every process in your organization has a dollar value. If you knew the dollar value of the processes you completed every day, would it change your perspective? Do you think your management team would want to “buy” those processes if they knew their true cost? For many of our required work processes, the answer would be a clear YES. Yes, we need to follow regulatory processes like HIPAA and PCI. Yes, we need to get payroll out regularly and file taxes. But what about all those processes with nebulous results and purpose? The ones that get bogged down with lots of additional steps that everyone follows but no one understands? Would your management want you to keep those processes if they knew their ultimate cost?
Here is a simple formula you can use to estimate the cost of your work processes:
Here are some definitions for this formula:
- Time to complete 1 iteration = The amount of time (in hours) it takes to complete the process one time end-to-end.
- # of iterations = The number of times per year the process is completed. For a monthly process, the number of iterations would be 12.
- Hourly rate = This is what an hour of time costs at your organization. I recommend working with your Finance department to arrive at this number. It should represent all appropriate costs, including salary, benefits, hardware and software costs, facility costs, etc. The rate should also be an average that spans all job grade levels and covers both full-time employees and contractors. (Having a single hourly rate to use in all process calculations will provide uniformity and enable you to easily compare process costs.)
Let’s walk through a simple example to show you how the formula works. Pretend you have a weekly process that takes 4 hours per week to complete. Let’s also say you’ve worked with your Finance department and determined that an hour of someone’s time at your organization costs $50. We’ll plug this data into our formula as follows:
Based on the data provided, this weekly 4-hour process costs the company $10,400 per year. Now for the key question–can this process be optimized? Can you use a tool like SharePoint to eliminate manual steps from this process, thereby shortening the 4-hour time frame?
Let’s say you were successful in optimizing this work process. You eliminated a bunch of manual copy/paste steps by moving the data to SharePoint where everyone can access it. You structured the data in a single SharePoint list and built a workflow that notifies people when they need to take action. You also built filtered list web parts to give employees a work queue. This enables them to quickly find the tasks that are assigned to them. In the end, you were able to cut the process time in half so now it takes only 2 hours per week to complete. When you plug these updated process numbers into the formula, you now get a process cost of $5,200/year.
If you take the difference between the BEFORE cost of $10,400 and the AFTER cost of $5,200, you determine that these process improvements save your organization $5,200/year. Now for the key questions–how much are your processes costing your organization? And can you use SharePoint to streamline them?