In a small business as in any business, productivity is about the whole company not just operations or manufacture. As business consultants we advise our clients that the best measure is net margin per employee - this really focusses the mind on what productivity improvement is about.
Now I know I should not be blogging about this whilst on holiday, but on our first evening we were sitting in a sea-front restaurant we know well and I was struck by the capacity utilization of the waiting staff - there were 4 handling 35 to 40 covers each.
Although margins would be low, the whole business seemed to be set up to make as much money as possible out of the short holiday season - maximising sales and hence margin per employee.
And there was a great atmosphere, so they must have been doing things right from their customers' perspective.
What is it that determines productivity?
A good business process supported by good records, and well trained and motivated staff who work the process to deliver the results.
A good business process?
Marketing - generating enquiries; selling - enquiry to order; fulfilment - order to payment; and customer satisfaction leading to repeat business.
You can think of the restaurant having a core process that is operated by the customer-facing staff - the waiters: customer walks in, gets seated, gets served, gets billed, pays and leaves.
At each step there is an indicator or record to show the waiting, kitchen and till staff where each client is in the process: menu left with the client immediately on being seated and after the main course is cleared; and tickets with order details.
Effective use of this process information is fundamental to productivity. For example if the client is not given a menu on being seated, the waiting staff will have to think harder about where in the process the client is, and if the waiter has 35 to 40 people to think about that is a lot of unnecessary thinking!
Supporting this main process will be other process loops aimed at maximising the waiting staff efficiency, for example a menu, buying, preparation, cooking and serving process that gets the food to the customer when he or she expects it.
Training
We take it as read that our waiters are highly skilled in the basis - for example which cutlery for which food - you could not run a high-pressure restaurant if they were still learning those things.
What we do mean is training in the business process - how to recognise the stage each customer has reached and what they would want next; how to record their orders and convey the information to the kitchen; and how to know which table to deliver food to.
In our example the French waiters were so skilled at that - they were making decisions on the fly like highly trained fighter pilots - that things seemed to run like clockwork.
Motivation
And they get that of course from the satisfaction of a job well done under pressure and the little thanks and tips from their satisfied customers.
Continual improvement
Restaurants probably come second to yachts as ways of spending lots of money - it is said that owning a yacht is like pouring money into a hole in the sea. It is quite hard to make a decent living out of owning a restaurant, but some do it.
They have highly skilled staff and a well-worked process that makes them money, and they are always looking at where they can tweak the process to improve efficiency, to make more money. If they have good process records they can analyse them for improvement ideas - this is much harder to do if all you have is your memory.
Need help with your business processes? Contact us and we'll send someone out to talk to you - you get up to 2 hours free of charge on your first meeting. We are on enquiries@sussexbusinessadvisors.com.
How productive is that?
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