Small Potatoes are Harder to Peel
Insurance Experts' Forum, July 20, 2011
Have you ever tried to peel a small potato and still leave enough to eat? It’s the same with a small department trying to trim the "peel" from a budget and leave enough "meat" to get the job done.
Many companies are facing budget cuts during our down economy, and the typical formula is an across-the-board cut of a certain percentage. With materials and supplies being a small percentage of the budget for most financial services companies, staffing reductions are usually inevitable. Managers of large departments can normally shed positions without cutting into too much of the "muscle" because, typically, multiple employees do the same work. If a position is eliminated, other employees absorb the workload through increased productivity. However, the manager of a small department faces a much more difficult task when only one person in a designated position performs a given set of tasks.
Managers in this predicament must be more creative in their actions, with the desired result being little to no impact on service and quality. If employee cuts are necessary, the manager will have to look at how work will be redistributed to other employees who might be unfamiliar with the tasks. Here are some helpful hints if you are, or know, a manager in this situation:
1. Make sure metrics are in place throughout the department. If you don’t know the reasonably expected standard for each task, you have no way of gauging productivity. But if you know how long it should take to complete each task, you can determine how many staff members are needed to perform the department’s core functions. Establishing metrics in a department will have the added benefit of increasing productivity. How so? It is a proven fact that once employees know what is expected of them in a day, productivity will rise with absolutely no changes to the processes. If you have your doubts, Google “The Hawthorne Effect,” a study conducted in the 1950s.
2. Discuss with your employees those tasks that add minimal or no value. This value analysis will uncover those tasks that employees have always questioned the importance of, and it might yield suggestions for improvement, including elimination.
3. Many times a task is a holdover from a previous process, and holdovers are sometimes better suited to other departments. There may be areas where an employee is initiating or completing a task for another department. To gain efficiency, consider transferring the task back to the originating department.
4. Question report and data development. Do your employees spend a lot of time compiling reports or collecting data? Again, question the value. Question the reports or data you ask for, and query other departments about the value of data and reports being generated for them.
5. After conducting a thorough review of the work performed in the department and determining what can be improved or eliminated, use the department metrics to develop a staffing model to calculate how many staff members are needed.
A manager may complete the above steps and conclude that the budget cuts demanded are not realistic if the work is to be up to the company’s service and quality standards. After having done the assessment, at least the manager will be better equipped to present the facts to his or her superiors.
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