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At a time where costs are high and industries are competitive, the key to business success is to make the most efficient use of available resources. That's the basic premise of operational efficiency, but as many leaders know, finding, implementing and engaging people in cost-saving efforts isn't always easy.
Improving operational efficiency isn't just about survival. It's about modernising processes and building forward-thinking organisations.
To nurture this mindset, leaders must consider the value of employee ideas; in empowering the people who see inefficiencies everyday to suggest and implement improvements.
With this in mind, let's explore how to improve operational efficiency and motivate your employees to prioritise impactful change.
Operational efficiency refers to a business' ability to maximise output while minimising input.
The goal is to optimise internal processes to generate the most value using the fewest resources, helping to reduce operating costs, refine resource management and enhance productivity.
In simple terms, it's all about finding reliable ways to get work done more efficiently, both to limit waste and to keep production costs down.
When successfully implemented, operational efficiency strategies can help a business foster a culture of continuous improvement where everyone prioritises impactful change.
Learning how to improve operational efficiency empowers leaders to cut unnecessary costs and identify inefficiencies that make employees' lives more difficult. This helps to free-up funds for future growth while boosting employee productivity to create happier, healthier and more agile business environments.
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Efforts to boost operational efficiency bring about many benefits for customers, workers and business leaders.
The ability to identify inefficiencies quickly and consistently helps teams to improve products, create more attractive work environments and divert more funds towards sustainable growth.
When everyone knows how to improve operational efficiency, process improvements become a natural part of daily work. Employees are empowered to fix inefficient processes to improve their lives, which in turn boosts performance metrics and lowers operating costs.
As discussed in a recent episode of our Idea Exchange webinar, 'How businesses can react faster to change', it's like regularly servicing a car; fixing small issues at source to prevent breakdowns later on.
When business processes are functioning at maximum efficiency, time and resource waste is kept to a minimum.
Learning how to improve operational efficiency is all about identifying and acting on areas of waste in a timely manner, rewarding staff with more fulfilling and engaging work environments.
Inefficient processes cost businesses between 20%-30% of their revenue per year, with some losing as much as $1.3 million annually.
Introducing strategic initiatives to boost operational efficiency motivates everyone to think about cost management, outlining practical reasons for workers to eliminate waste.
When operational performance is improved, business operations run smoothly, as employees are given the freedom to tackle bottlenecks as and when they occur.
The less time employees spend dealing with frustrating, repetitive tasks, the more productive they can be and the more fulfilling their work becomes.
Some of the greatest value-driving ideas in modern business were first suggested by workers; take the Flamin' Hot Cheetos story for example.
Higher operational efficiency means products are produced to exceptional standards in as little time as possible.
By striking an optimal balance between quality and speed, businesses can gain a competitive advantage and find more funds for improvements, boosting customer satisfaction now and in the future.
Increasing operational efficiency requires a business to review and find reliable ways to improve almost every aspect of its operations. Making a change to improve one process will have little benefit if every other step is still inefficient; at worst, this can introduce new bottlenecks that further complicate things.
To enhance operational efficiency, leaders need to secure buy-in from all members of their organisation, as it's usually frontline workers who best-understand the connected nature of key processes.
If a small change to one task is likely to throw off something later, it's your frontline workers who can tell you why.
Employee ideas hold great value when it comes to enhancing operational efficiency, with platforms like Sideways 6 offering accessible ways to share value-driving ideas in popular tools like Microsoft Teams.
Employee idea management included, below are the key drivers of operational efficiency.
In its simplest form, operational efficiency is really all about finding the best way to perform any given task. Before identifying any strategies or securing employee buy-in, leaders must take a close look at how their organisation is structured, then highlight repeatable processes that could be improved.
Streamlining processes, whether guided by automation tools or workflow adjustments, is the ultimate aim. By breaking down operations processes into base components, mapping out how tasks influence each other and identifying associated people, resources and costs, entire operations can be optimised.
The next key driver of operational efficiency is resource management; finding ways to use necessary resources as efficiently as possible. With all business processes mapped out, leaders can document key resources and identify areas of waste to best-visualise avoidable costs.
In practice, this can mean exploring optimisations related to lean inventory management, data-backed resource allocation and as-needed scheduling. Which process improvements are explored and to what extent will depend on the company, its values and culture.
To achieve maximal operational efficiency, leaders must make sure all employees are fully engaged and motivated to ensure continuous improvement. To effectively reduce operating expenses, wide-reaching changes must be made to internal processes; changes that often ask a lot of key employees.
To engage employees in change, leaders must communicate the benefits of process improvements clearly. With this in mind, the real key to improving operational efficiency is to reframe cost-saving measures as efforts to improve employees’ lives. After all, this will be the outcome if everything goes to plan.
Leaders can't sell the benefits of change without knowing what employees want. So, the final key driver of operational efficiency is employee idea management. By providing ways for employees to share their ideas on improvements, leaders can help people to take ownership of and become fully-engaged in change.
The only problem is finding an efficient way to hear ideas. Manual collection is time-consuming and new tools can be slow to adopt, but there is another way.
Sideways 6 offers powerful idea capture, shortlisting and AI categorisation features to help highlight great ideas, integrates with communication tools like Microsoft Teams to simplify adoption and typically delivers a 7-15X ROI through employee-led improvements.
Using Sideways 6-powered idea management tools:
Working ways to enhance operational efficiency into internal processes helps to eliminate waste, boost employee morale and minimise costs. Ultimately, this can help to optimise business performance and raise profit margins.
Think of it like maintaining your own physical health; making smart adjustments to your exercise regime and diet to keep yourself in the best possible shape, no matter how the world around you might change.
With recent reports suggesting 33% of executives are prioritising cost reduction measures, and 67% are planning to reinvest savings to improve revenue growth, there's never been a better time to learn how to improve operational efficiency.
With this in mind, here are 7 actionable ways to improve operational efficiency.
Open communication and a business-wide willingness to collaborate are critical aspects of improving operational efficiency. Efficiency-driving improvements can come from anywhere, at any time, so it's vital that employees across all departments are empowered to share thoughts freely.
86% of professionals believe poor collaboration and communication are the main causes of workplace failures, stalling decision making processes and impacting operational workflows.
In real terms, you'll find teams across all levels of an organisation will struggle to implement continuous improvements if they have no way to share frontline insights with higher-ups, or feel unsupported in communicating resource-saving ideas.
To improve cross-departmental collaboration, leaders and project managers must both ensure people have access to the right technologies, and are working in an environment that encourages idea sharing.
Nurturing a culture of open, continuous communication is vital, with employees regularly recognised and rewarded for thinking about ways to boost operational efficiency.
Idea management tools like Sideways 6 can be invaluable in this regard. By empowering employees to share insights through platforms they're already comfortable using, leaders can raise engagement in cost saving initiatives and ensure employees feel heard.
Marks & Spencer took this approach and raised engagement in transformations by 75% in just one year, as did Discovery, who found 76% of staff felt more heard and involved when encouraged to share ideas.
You can't learn how to improve operational efficiency if you don't know how success will be measured.
Relevant Key Performance Indicators (KPIs) for measuring operational efficiency will vary depending on business goals and unique organisational structures. So, before collecting ideas and implementing improvements, leaders must review internal processes, analyse data and define achievable goals.
It could be that production and process KPIs like capacity utilisation or cycle time are identified as key markers of operational efficiency. In this case, project management might set goals related to time and resource waste reduction, exploring measures like process automation to achieve results.
No matter which unique KPIs and goals are defined, everyone involved in the process must be informed of their importance. It's not uncommon for people to feel resistant to change, so if you want new processes to stick, tangible benefits must be communicated to your teams.
In terms of improving operational efficiency, securing buy-in can be as simple as framing improvements in a different light. For example, if a change is framed only as a cost-saving measure, employees may not feel motivated to make it happen. Instead, try to focus on practical benefits like eliminating repetitive tasks to lessen peoples’ workloads.
To speak to the unique needs of employees and boost engagement in operational efficiency initiatives, feedback from across your organisation must be worked into proposed changes. When leaders adopt an open-source approach to change, engagement in transformations can be increased by almost 40%.
Improving operational efficiency is a long-term commitment. It asks everyone involved in a business to adopt a new mindset focused on growth, productivity and operational excellence. To achieve success, every team member must be encouraged to view their work as a process that can always be improved.
To foster a culture of continuous improvement, employees must see the benefits in sharing ideas for improvements. If ideas are overlooked, or ultimately lead to more work for frontline employees, people are unlikely to feel engaged in change or motivated to improve.
Setting a precedent for rewarding employees who actively consider operational efficiency can help shift people's mindsets towards continuous improvement. This helps to tackle the challenge of top-down structural change by exposing new opportunities to improve efficiency.
If you want everyone across your organisation to prioritise long-term growth, you need to encourage people to constantly consider and discuss efficiency improvements.
Smart digital infrastructure and automated systems help to enhance operational efficiency.
When teams are empowered to automate repetitive tasks, time and resource waste can be minimised, freeing people to spend time on more complex, fulfilling aspects of their work.
While the business case for automation may be clear, leaders must be mindful of how new technologies are discussed and implemented. Improving operational efficiency requires constant input from all areas of the business; if people fear for their jobs, they're not going to be motivated to suggest improvements.
The adoption of new technologies like AI, machine learning and automation tools must be approached with a view to supporting employees and making their lives easier. Sure, a benefit to automating a task may be to reduce human error, but long-term efficiency gains come from inspired human ideas.
In a recent episode of our Idea Exchange webinar, 'AI-Assisted Transformation in 2025', we heard from industry leaders about ways to help employees work with AI to raise operational efficiency. Greg Stortz, Director of Engagement at Interact, mentions the importance of maintaining human input when adopting new technologies, "making sure we're not replacing anything with AI to lose that human touch".
For an organisation to make operational efficiency a priority for all team members, leaders need to make sure employees have access to support resources at all times.
Promoting and maintaining exceptional team performance is reliant on skill development and training. Every collaborator across all facets of a team should be offered continuous training to remain agile in the face of changing industry best practices.
Oftentimes, efforts to enhance operational efficiency come hand-in-hand with the adoption of cutting-edge technologies, from analytical tools to help improve decision-making to automation tools to help reduce time and resource waste. Employees must be comfortable navigating new solutions right away.
To help ensure everyone across your organisation is invested in and motivated to adopt modern technologies, training programmes must be engaging and accessible. Leaders should take the time to hear employee ideas about skills they'd like to develop, then work these ideas into training programmes.
Continuously enhancing operations to boost operational efficiency requires a core team of employees who know your business inside out, making attrition and turnover enemies of progression. When leaders invest in their teams through meaningful training programmes, they offer employees tangible reasons to remain invested in growth, with 94% saying they're more committed to companies that invest in training.
To persistently boost operational efficiency, particularly in competitive industries, organisations need to create environments where employees feel empowered to think about ways to improve. If people feel stressed, anxious, unsupported or burnt out, they're unlikely to be motivated to keep raising the bar.
Employee engagement is a key driver of not only operational efficiency, but also productivity and agility. The more engaged people are in their work, the more pride they'll feel when things go well, and the more likely they'll be to take ownership of change.
Despite this, businesses around the world have struggled to engage employees in recent years, with only 23% of employees claiming to feel engaged in their work.
To improve engagement, leaders must speak to the unique needs of their teams and commit to helping people feel valued and respected. Effective ways to do this include employee recognition programs, regular team bonding sessions and, of course, efforts to factor employee ideas into business decisions.
Using a tool like Sideways 6, leaders can empower employees to communicate their needs openly and honestly through the communication tools they're already comfortable using. This can help frontline workers feel heard across all levels of the organisation to improve engagement in efficiency-boosting initiatives.
An important thing to keep in mind when learning how to improve operational efficiency is that the plans you implement now won't necessarily be effective forever.
New areas of time and resource waste will be uncovered and new efficiency-boosting solutions will be developed. To maintain and continuously improve operational efficiency, businesses must position themselves to adjust processes swiftly and proactively.
To help increase profit margins over time, solutions must be developed to track progress and measure results. Depending on the type of company and its core mission, key metrics to track may range from revenue per employee to cost of goods sold; metrics that accurately portray business health.
While the bulk of these processes will be performed using software solutions and data analytics tools, feedback from frontline workers should also be considered. Raw data may suggest an efficiency-boosting technique is performing well, but from a frontline perspective, changes could be making work harder.
Without employee insights, leaders may run the risk of increased turnover and attrition rates as people struggle to adopt new practices over time. To help ensure data-driven decisions don't negatively impact engagement and productivity, employee feedback should be considered and worked into ongoing plans.
Improving operational efficiency is a priority for most modern leaders, but finding and engaging people in cost-saving measures can be challenging. By working frontline insights into efficiency-boosting plans, leaders can raise engagement in initiatives and uncover new growth opportunities hiding in plain sight.
Ready to empower your employees and unlock operational excellence? Discover how Sideways 6 can help you capture and implement game-changing ideas. Our easy-to-adopt solution can be freely integrated into your existing communication and business intelligence tools, removing the barriers holding cost, time and resource-saving ideas just out-of-reach.
Your greatest cost-saving opportunities are already in your business, bring them to light with Sideways 6. Try our product with a free demo today.
