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5 ways cutting red tape can increase efficiency

How to get your business running more effectively by reducing bureaucracy.

As companies grow from startups to small businesses, then from midsized companies and beyond, systems are inevitably required to keep order and control in an increasingly chaotic work environment.

Yet sometimes, all of that red tape works against success, creating unnecessary burdens to productivity, stifling innovation and slowing growth. In fact, a 2016 study by the London Business School and The Management Lab found that busting bureaucracy could add $3 trillion to economic growth in the US economy alone.

The researchers suggest that each added layer of complexity disempowers those that are bound by it, adding time and friction to processes while reducing the scope for initiative and innovation. Data from the American Bureau of Labor Statistics, however, suggests that the number of managers, supervisors and support staff has nearly doubled since 1983, while employment in all other occupations has grown by less than 40 per cent. In other words, more money and working hours are being invested in a process that ultimately kills innovation.

Here are five ways you can reduce red tape in order to increase efficiency at your workplace.

1. Restructure performance management.

According to the Management Lab study, 95 per cent of managers are dissatisfied with their performance management systems, while 90 per cent of HR leaders don’t believe those performance management systems even yield reliable results.

How red tape can hinder businessFurthermore, 59 per cent of employees feel that reviews are a waste of their time, which isn’t surprising considering that 56 per cent never receive feedback on their performance.

Part of the problem is that performance management is too often tied to financial results, which are a poor indication of day-to-day efforts. Instead, companies should supplement financial metrics with measures specific to each role or department.

While these additional measures could add a layer of complexity, they can often be tracked autonomously. Instead of using outdated manual performance management systems based on profits and returns, there are now a wide variety of software solutions that can provide customized appraisal forms and flexible workflows, automate feedback based on real-time progress, gather employee feedback and track performance analytics.

2. Consider budgeting differently. Seriously.

Budgeting is an activity that requires significant effort and meticulous planning — and is likely to be abandoned soon after completion. In fact, The Wall Street Journal reports that 60 per cent of companies abandon their annual budget targets by the second quarter of the year.

Management can sometimes even use the budget process to enrich their own departments, and funds aren’t always allocated where they’re needed. Furthermore, when budgets become tied to performance management it poses the risk of manipulation.

Instead of the standard budget practices, organizations should pursue more dynamic financial planning, allocating funds as needed and adjusting accordingly.

Also read: How to bridge communication gaps in the workplace that are more pronounced than ever.

3. Decouple bonuses from financial metrics.

Without performance management tools or budgets to rely on, organizations need to rethink their bonus structure, but doing so can further help eliminate bureaucracy and complexity.

Organizations that only define financial benchmarks and tie them directly to managerial compensation can tempt some into manipulating their own results or lowering expectations to increase their likelihood of earning a higher bonus.

How red tape can hinder business

Instead, companies should align bonuses with measured performance, decoupled from budgeting as much as possible. This often requires the identification of other metrics as well as the assistance of sophisticated software programs that can help track these more incremental achievements on a regular basis. But that set-up and systemization will pay off in spades with a great reduction of processing and ‘paperwork’ in the long-term.

4. Shorten delivery dates.

Transitioning from big annual projects with even bigger annual budgets to an approach that views those same projects in a more piecemeal manner can encourage team members to remain focused on the task at hand.

If that big project is a necessity, like a major conference or corporate event, split the planning up into segments that allow your teams to feel a realistic start and end date, which will allow a greater sense of accomplishment and motivation throughout the year.

Shortening delivery dates will also discourage any temptation of delaying a project that has a longer timeline than necessary, ultimately improving efficiency. Your team may even find ways to speed up the entire process as they work towards timelines that are closer in sight.

5. Do away with unnecessary meetings.

According to a report by The Globe and Mail, 45 per cent of attendees feel overwhelmed by the number of meetings they attend, and 73 per cent use that time to complete unrelated work.

Overall, the salary cost of time wasted in meetings is approximately $37 billion US per year. In order to help employees make better use of their time, ensure that meetings only take place when necessary, with only the participants that really need to be there. Then make sure they end as quickly as possible.


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Jared Lindzon

Jared Lindzon is a freelance journalist based in Toronto, covering a variety of topics, including technology, careers, entrepreneurship, politics and music. His work regularly appears in major publications in Canada, the United States and around the world, including the Globe and Mail, Fast Company, Fortune Magazine, Rolling Stone, Politico, the Guardian and more.

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