Recession - Is this the only time for efficiency?

How do you understand the concept of efficiency??

A few weeks ago I sat in a meeting with a major financial institution in South Africa and we were discussing the global economy and what actions the bank should take to deal with the challenges ahead. I asked a senior manager how many people stand to lose their jobs and after giving me the figure the manager added: "During the good times we've built in some fat, so I guess it's ok..." My immediate response to this was: "Why did you build fat in the first place?" The question I raise today is that many organisations tend to overlook the importance of efficiencies when the going is good, but when the going gets tough we go into crises mode and we want to retrench people...

In a time of recession many organisations find themselves in the middle of an economic storm, but I can't help to wonder how much "fat" has been "collected" over the good years. We had skill shortages during a time of growth and this was probably a contributor to the fact that our managers are not performing their management roles as effectively as they should. They have been performing technical functions because there weren't enough hands to get everything done. Management focus means creating value through increasing revenues through acquisition of new clients, new product development and minimising cost as well as improving efficiencies all the time! Managers seemed to overlook the importance of this important management activity.

In another organisation the impact of the commodity prices and the rand/dollar exchange rate is obvious, but in a recent meeting with senior managers of this organisation, they said that they could improve their overall efficiency by approximately 25%. Now imagine if all organisations in Africa and the Middle East can improve their efficiencies by 25%? It will have an enormous impact in the sustainability of those organisations, which will possibly help them through tough times.

A recent study shows that if an organisation improves their efficiencies by 10%, the sales, marketing and business development functions of the organisation will have to double their sales and new business in order to have the same bottom line impact. Doesn't it make sense then to focus on improving our efficiencies, unlock the creative energy of our people and get them to come up with ways to make the business more cost efficient and more protitable?

How does the efficiency look in your organisation?