How to apply business performance optimization successfully?

How is your company’s performance optimization going? It is a question managers need to ask themselves often.

It is a technique that improves an organization’s results and rests on several pillars: measure, analyze, act and follow up.

According to a survey by Siteware, performance optimization still faces obstacles. For 56% of respondents, technical difficulty is the main one.

The same survey shows that lack of engagement inside the organization is a difficulty for 26% of executives.

This shows that performance optimization has to be carried out continuously. In this article, you will see how to implement it in your business.

What is business performance optimization?

Performance optimization means measuring every process in the company and creating corrective actions to use time better and reach better results.

Measuring processes has several stages. With performance indicators, you measure the productivity of each area and find the bottlenecks in each department.

By analyzing the indicators, you can see which ones are below the desired result and create actions to improve them.

Once created, corrective actions need to be tracked, to assess whether the strategy adopted is having the expected effect.

What is business performance optimization for?

Performance optimization makes processes more efficient, eliminating waste and delivering products and services in less time.

It also helps find bottlenecks and rework that make the organization’s products more expensive.

When a bottleneck is identified, the manager creates an action plan to eliminate it. The plan can be built with the employees tied to the area that shows the deficiency.

For example, a manager notices that one machine produces less than another and that this hurts final productivity. The manager can sketch a plan to:

• train the machine operator;
• buy new equipment to replace the old one;
• run maintenance more often.

Once the plan is defined, it needs to be tracked to check that the result is the expected one.

Want to understand what performance indicators are? Watch the video:

Why does performance optimization matter for companies?

The main reason to optimize performance is to eliminate rework and cut unnecessary costs, which are passed on to the product price and hurt competitiveness.

For that reason, optimization contributes to the company’s efficiency and to the customer experience, since the customer receives the order sooner and with higher quality.

As the market becomes more competitive, performance management stops being a differentiator and becomes a necessity.

To learn the main indicators, download the e-book How to build your performance indicators dashboard in 3 daysopens in a new tab (in Portuguese).

What are the benefits of performance optimization?

There are many benefits to implementing performance optimization in a company. The main ones are:

• elimination of rework;
• lower costs;
• better time management;
• elimination of production bottlenecks.

Elimination of rework

Rework has a financial cost for the company. It consumes time and physical resources that often cannot be reused.

With performance optimization, the company identifies where rework happens often and creates plans to avoid it.

Imagine an employee fills in a financial spreadsheet and sends it for review. The spreadsheet goes to a supervisor for approval and only then comes back for correction.

The correction could have happened right after the review, before approval, so the second pass is rework. When the process is optimized, tasks like this stop existing.

Lower costs

Performance optimization reduces the company’s costs, because it eliminates failures and avoids wasted resources.

With time better managed, the company produces more in less time, which lowers the direct cost of goods sold.

An illustrative example: a product takes 1 hour to make and the company’s hourly cost is R$ 10. The product costs R$ 10 to produce, and that amount goes into the price.

With optimization, the product is made in 54 minutes, a 10% reduction in time. The cost falls from R$ 10 to R$ 9 per product.

Better time management

Performance optimization improves time management, because it eliminates production bottlenecks.

Since the process is one of continuous improvement, managers create new arrangements that improve team performance and speed up execution.

The Eisenhower Matrix helps prioritize tasks by urgency and importance.

Identifying and eliminating bottlenecks

Finally, the bottlenecks that hurt productivity become easier to identify and, in a continuous improvement process, are overcome.

For example, on a production line, one machine produces 10 units per hour and another produces 9, because it is poorly calibrated.

The first one stops using its full potential. With a performance optimization system, the manager identifies the bottleneck and makes the improvement needed to use the machinery’s full capacity.

The result is more productivity in less time and more profit at the end of the period.

To learn how to assess your organization’s performance, download the complete performance appraisal guideopens in a new tab (in Portuguese).

How to optimize your company’s performance?

To implement performance optimization, the first step is to map the entire business process, department by department. A post on process mapping shows how to do it.

With processes mapped, define relevant performance indicators for each one and use them to measure current performance.

Based on those indicators, identify the points that need to improve and create an action plan for each stage.

The action plan should come with new metrics, which show whether the actions are working. If needed, correct the points that are off and repeat the cycle until the problem is solved.

How to sustain performance optimization

Mapping, measuring and acting is the start. What makes optimization last is follow-up: each opportunity handled with method, each cause analyzed, each action with an owner and a deadline.

Without that record, improvement depends on the memory of whoever led it. The bottleneck returns, the plan is forgotten and the company starts over in the next cycle.

In the Stratws routine and continuous improvement management solution, the opportunity is handled with method and the cause is analyzed with a tool. The action has an owner and a deadline, and the improvement is standardized for the areas where it applies.

With this, the manager sees what is in progress, what is stuck and what became a new standard, and performance optimization becomes part of the company’s routine.