The Cost of Poor Process Management
Process management is vital to the success of any organisation.
Poor process management essentially means that you do not know how your organisation is working and it won’t get better by itself. In this blog we’ll be identifying the hidden and the not-so-hidden costs of poor process management and how to fix them.
Let’s dive in.
Time Lost on Understanding Processes
The clearest cost is the amount of time lost on understanding processes.
Whether it’s an employee spending time training or teaching new employees, analysts going back through previous processes, or even a current employee or stakeholder seeking to understand how things are running – this is valuable time that you are losing and spending on re-learning and understanding how your business is currently running.
Valuable time that might be better used elsewhere, slowing everything down significantly, resulting in less output and a higher possibility of unhappy clients.
We recently shared a deep dive into the world of process management for clinical trials. One of their biggest concerns is the amount of wasted time they have during each trial.
Because processes are not understood correctly, managers keep spending time retracing employee steps whenever anything shows up in the data that may indicate something was not followed as it should have been. With clinical trials, this is especially problematic as any divergence in procedure affects the overall data and results, which may mean the entire trial is tainted and cannot be used.
While this is a more extreme example, it paints a clear picture of the amount of time wasted on understanding processes, and the effects this may have on a business that is not managing them correctly. And it can happen in any business.
Plus time lost is simply the most obvious issue that stems from poor process management.
Other Losses of Poor Process Management
There are several other losses to your business that stem from poor process management, let’s go over a few:
Money
The clearest example of the cost of poor process management is loss of revenue – up to 20-30% in fact.
This is in large part because you are spending time understanding your process instead of being able to simply follow it as a company, since it is constantly being re-learned or re-taught or simply done incorrectly, resulting in no standardisation.
Such circumstances tend to slow down even the most efficient processes, leading to delayed product delivery and unsatisfactory services for clients. When clients do not receive products or services on time, it may cause them to be disappointed, and frustrated, ultimately seeking alternative providers. The results of this can be catastrophic for a business as they are likely to lose customers, clients, and revenue.
Businesses often tend to not realise the effect of poor process management on their financial status.
Wasted resources can build up over time, leading to significant financial losses. You might be investing in unnecessary tools, forms, tasks, or even inventory space which cannot be accurately developed or administered if the process management is not up to par.
This will increase unnecessary expenses, which can cause problems down the line leading to cuts in budget where partnerships will be affected and laying off of staff, which would be incredibly detrimental.
Lack of team unity and loyalty
Without a clear process, your employees do not know what and how theycontribute to the company. Being unsure of how their daily tasks relate to the company’s goals, they may begin to feel that their work is meaningless and has little impact. This can lead to a sense of frustration and disengagement, as well as a lack of loyalty to the company.
In turn, a lack of employee loyalty can quickly lead to high turnover rates, which is both time-consuming and costly. Continuously hiring and training new employees can be a significant drain on resources, and can also have a negative impact on team dynamics.
Additionally, successful businesses understand that team unity is a crucial factor in achieving success in the long run. Without a shared understanding of how individual roles contribute to the company’s overall success, team morale can quickly deteriorate. This can lead to a lack of collaboration, communication breakdowns, and even conflicts within the team.
Businesses must prioritise the development and maintenance of clear processes that demonstrate how each employee’s work contributes to the overall success of the company.
This includes setting clear company goals that are communicated to each member of the team, ensuring that each employee understands their role in achieving those goals, and providing ongoing support and feedback to help them stay motivated and engaged. By doing so, businesses foster a sense of purpose and understanding among their employees and achieve greater success and growth in the long term.
Mental health
Studies have shown that the work environment has a significant impact on employees’ mental health. The lack of a clear purpose and understanding of their contribution to an overall goal can lead to feelings of disengagement and unhappiness in the workplace.
This is especially true in workplaces where there is poor process management. When employees are not given clear steps to success, they can feel like they are constantly performing tasks with no understanding of their quantifiable goals, which can lead to a sense of frustration and hopelessness.
If employees feel that management is constantly criticizing them for not doing enough, it can amplify their negative thoughts and emotions, leading to a further deterioration in their mental health. Stress and anxiety can take a toll on their overall well-being, making them more prone to depression and burnout.
Furthermore, poor mental health can have far-reaching consequences beyond the individual employee. It can lead to reduced productivity and efficiency, increased absenteeism, and higher turnover rates. Companies that fail to address the mental health of their employees risk losing their top talent while also damaging their reputation as an employer.
It is essential for companies to create a healthy work environment that prioritises employees’ mental health and well-being via good process management.
How to Fix Poor Process Management
Fixing poor process management is not an overnight task, but it is achievable for any company. So it’s best to start as soon as possible by following some basic steps:
Take it back to basics
The first thing to do is to remove all the excess from your current processes and understand how you need them to work. It’s time to re-draw your process map and simplify what your goals are for each task.
This will help you re-center your thoughts and orient and align your processes with what the company needs to be successful at this stage.
Involve everyone in the process
As you spend time re-mapping your processes (or mapping them for the first time), it is crucial that you involve all employees. Not in all the processes, but in the ones they are a part of.
It will help you understand how the process is currently being run and working in their daily tasks, and also allow them to contribute and showcase their knowledge. This fosters communication and provides a clear purpose for teams to strive for.
Collectively find spots to improve
Having mapped out your processes, it’s time to find areas to improve on.
Once again, remember to involve the relevant employees per each process. They themselves may have suggestions or may remember a step at this point that takes them longer and a way to fix it. Additionally, this is a good way to provide them with a sense of purpose and agency urgency?? in their role, as their suggestions are heard and taken into account. They will realise they have the capacity to help make the needed changes to improve the company.
And, you will have found places in your processes that are slowing you down and affecting your success.
Make it a habit
Finally, you must make this a habit. You don’t always have to re-draw your process maps – in fact, with a process library you can save all of the existing documentation and re-visit it as many times as you like!
Process management software can now also provide you with built-in reminders to check in on how your processes are running, and how they can be further improved. No need to remember yourself, making it much easier to avoid poor process management and instead have healthy processes in place.
Conclusion
Simply put, inefficient process management will have a considerable impact on the success of your business.
Poor process management has a cost, and it is not one to take lightly.
To avoid these negative consequences, businesses should prioritise standardised process management, efficient delivery of services and products, and proper resource allocation. In doing so, businesses can ensure customer satisfaction while also maintaining growth and profitability.
At Skore, we hope to show all businesses how they can adapt their existing processes to avoid falling into the pitfalls of poor process management and instead achieve continuous improvement and further optimise.
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