Economic theories play a big role in businesses and dictate some of the decisions entrepreneurs make. One such principle that entrepreneurs absolutely need to understand is the one that affects how much of an investment they should make in particular areas. Ladies and gentlemen I present to you – The Law of Diminishing Returns.
Diminishing Returns Explained
This law states that for every additional investment in one area, the returns will start declining to the point that it will only incur losses as long as all variables remain static.
Let’s say, for example, you own a recruitment firm. You hire a recruiter to increase the number of applicants the business can process. In the beginning, you will most likely see a noticeable jump in processed applicants. However, if you keep hiring new recruiters without your company growing or making any other significant changes, thinking you’ll make the company run even more efficient, you will only find your office building crowded with recruiters fighting over space and potential recruits.
Now noting the fact that adding input to increase output will ultimately lead into a decline or inefficiency, as a business owner you need to know how to increase production without hitting that ceiling in output. The answer is plain and simple: increase productivity.
How to Increase Productivity
Productivity is essentially handling all available resources in an effective and efficient manner, effective being that they are used to achieve the goal, and efficient being that they are used in a way that accomplishes optimal results. Here are 10 simple ways to get started:
1. Ascertain Necessary Procedures
Your business needs to be able to satisfy customers demand to achieve any form of success. Meeting those demands usually requires many different tasks. However, there can be certain tasks that are either not being done properly, or they might only be serving to slow down the entire process.
As a founder, you need to make a review of all your operations to get a clear understanding of how exactly your company is achieving the ultimate goal of satisfying your customers. This preliminary action lets you know what needs to be done to increase productivity.
2. Pinpoint Bottlenecks
Employees can fail to reach productivity for seemingly shallow reasons such as not being able to access files in certain folders or print important documents. However, more often than not the real problem lies somewhere deeper.
To uncover underlying productivity issues, start asking your employees why they believe bottlenecks are happening. You might not have granted security permission to the entire team working on a project, or you might be asking for too many hardcopies of certain files. Once you’ve identified the root causes, then you can start fixing them.
3. Empower Employees
The people working at the very bottom of the ladder should not be mindless drones confined to their cubicles. Assigning multiple supervisors to constantly help employees out, when they can be working on more important company goals, is very inefficient.
Your employees have to be equipped with the right tools to deal with front-line concerns. By empowering them with adequate resources, they will be able to do so much more with their jobs, freeing up crucial time for mid-level team members to do more.
4. Educate your Team
Continuing the previous suggestion’s of employee empowerment, you also want to tap into their potential. They might be able to offer much more than the role you’ve assigned them to, and one of the best ways to unlock their abilities is to train them.
Offer lectures, online training and events and then have them apply their newfound understanding to exercises with proper guidance. Conduct workshops that will make them develop skills relevant to their jobs.
5. Batch Tasks
Diving head first into your workload with the mindset that you’ll deal with issues as they come along can prove to be inefficient. Every time something comes up, it can distract you from whatever you’re currently doing, leaving important work unfinished as you head off to “put out fires”.
Whenever there are multiple tasks that need to be done, compartmentalizing them into batches can help keep you and your employees focused. For instance, get all important calls done first before you start replying to emails, and so on and so forth.
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