The efficiency of a company’s management is an important indicator of https://otherboardroom.com/top-7-advantages-of-great-governance-for-corporations how a business turns resources into profits. This can be assessed by the financial statements of the company like turnover rates for inventory, fixed assets and accounts receivables. However, simply having high efficiency ratios does not necessarily indicate that a business is making money. Other indicators of profitability must be considered, like net income, cash flow, or gross margins.
Efficiency and effectiveness are both important aspects of management but they work better together than individually. While efficiency is focused on achieving goals over the long term, efficient processes aid in achieving those goals in the most economical way possible. For instance, replacing repeated cost of labor with automation or increasing yield by using fertilizers are examples of efficiency improvements.
In order to increase efficiency, it is crucial to keep in mind that it’s not only about saving resources and time, but also about enhancing the quality. If two employees are working on the identical task, and they don’t communicate effectively, it is a lot of wasted labor. Communication that is honest and open between employees will boost productivity and allow managers to find and fix issues quickly.
Employees are the core of every business. An increase in employee engagement will improve efficiency and reduce the amount of time employees are absent and increasing turnover. Tools such as Happieteams that give managers an overview of weekly surveys lasting just one minute, can boost the level of engagement of employees.