The article was published in the online edition of Ekonomichna Pravda.
Increasing the efficiency of business processes is the first thing that comes to mind when a crisis hits. However, business owners should not forget about it at other times. After all, it allows the company to demonstrate better performance and grow faster.
This process is not easy and requires analysis, a structured approach and employee engagement. By taking it slowly and focusing on the processes that have the greatest impact on the business result, large-scale changes can be initiated.
Author: Andriy Marenchuk, COO of Ribas Hotels Group
The most common mistakes
Well-established processes help to increase productivity, reduce costs and improve the quality of work. However, there are mistakes that even experienced entrepreneurs make when improving the efficiency of business processes for various reasons. Let's take a closer look at them.
Saving on quality. It is often the case that companies cut corners on quality. However, if a company has a product, it must understand what is most important to its customers. In other words, if it provides a service or sells a product, it must understand what quality factors will make a customer come back to it. Therefore, it is important not to change what the product is based on.
Let me give you an example of premium cars. If Rolls-Royce customers are used to the fact that their cars have genuine leather seats, the company's owners cannot optimise this part, as it is a quality factor that is important to people. Similarly, if customers are used to the fact that natural materials are used in the car interior: wood, metal, leather, glass, the company cannot change this, as Rolls-Royce has been stating that it cares about the naturalness of materials in car interiors for 50 years.
A narrow planning period. Often, entrepreneurs do not plan beyond the crisis. But focusing only on how to survive the crisis will not yield the desired results. A manager should think 5 years ahead.
For example, when a company is offered to implement a certain IT solution that will cost a million, but will pay off only in 5-6 years, and it refuses, thinking that it is unprofitable, it is a mistake. These years will pass very quickly and in return, it can get speed, quality, etc.
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Companies that started automating business processes 5 years ago are now more automated and systematic than those that think they can start automating today. The latter have already lost 5 years to their competitors.
Savings on marketing. Marketing cannot be optimised during a crisis. But even those entrepreneurs who know this often fail to do so. The fact is that when the crisis is over, the company should ride the wave of it thanks to marketing.
We still see that even during the war, a large number of top companies are increasing their marketing budgets: Nova Poshta, Monobank, ATB. They are marketing trendsetters in Ukraine because they understand that even now, during the crisis, it is very important to maintain and enhance brand awareness and reputation.
Inadequate assessment of human capital. Human capital is the most important asset in all companies. A manager should always hold on to valuable staff. At a certain point in the crisis, the company cannot raise everyone's salary, so the owner must understand who needs to be raised and who does not.
In addition, during the crisis, some companies begin to optimise salaries not by targeting them, but by reducing them for all employees by 50%. This can be done because it's easier, but we, for example, delve into the assessment of human capital individually. The goal is to retain the core of employees in the company.
Photo: Freepik
Dismissal for the sake of optimisation. There are times when dismissal seems to be the best solution for a business owner to work with business processes. But there is always a choice not to do so, even by supporting the person by signing a partnership agreement with them, for example.
With almost every employee, we try to come up with a win-win story where you can be useful to each other. In addition, we have had experience when a person, thanks to his or her independent activities, with the support of the business owner, began to receive more money, and the company earned more together with him or her.
Let me give you an example. A company sees that its finance department is losing money, but it needs to preserve its human capital. In this case, the owner can offer his partner from another company to outsource the financial department to keep his books. And the income that the partner will provide will cover the costs, while preserving human capital in times of crisis.
Another way to increase the efficiency of business processes is to agree with staff to pay them only for the amount of work they do. We currently work in this way in hotels, paying maids for the number of rooms cleaned per day. The same can be done with waiters in a restaurant - hourly or in shifts.
In the future, Ukraine will face a human capital crisis. As of 21 June 2023, according to the Ministry of Foreign Affairs of Ukraine, 8 million 177 thousand Ukrainians were abroad.
Almost 63% of Ukrainians outside our country are adults, 22% are children under 18. The age of another 15% is not specified. Thus, about 20% of Ukraine's population will be abroad because of the war until 24 February 2022.
Therefore, the main task for each company today is to develop its business in order to preserve human capital.
The rest of the article can be found in the online edition of Ekonomichna Pravda.
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