Maximising the efficiency of every aspect of a business will probably have a negative impact on overall performance. That is not to say that measuring efficiency is a bad thing, it is just not useful if the measuring is not effective. Just to make it clear;
Efficient is doing things right
Effective is doing the right things.
Or, as Demming described it;
“There is no greater waste than efficiently measuring something that doesn’t matter”.
No process (and I include management processes) can produce outputs at a greater rate than the slowest activity; identifying and managing that “bottleneck” will have a much greater impact on overall organisational performance than will maximising the “efficiency” of all the other stages. In fact, the effect of maximising the “efficiency” of every stage in a process simply leads to an accumulation of work (I prefer to regard it as cash) at the bottleneck, and if the bottleneck constricts the rate of work passing to down-stream activities then those activities can never be “efficient” because they are starved of work.
What is more effective therefore is to identify the bottlenecks in an organisation and to measure how they impact overall performance and how their capacity can be increased; by doing so then the whole process chain becomes more productive, the organisation’s overall capacity is increased.
Once the existing bottlenecks have been managed then others become apparent, and they can then be measured and managed; this is the route to continuously improving effectiveness, the organisation as a whole becomes more efficient.
So, the good news is that you can stop measuring everything just because you are able. Instead, by identifying the bottlenecks in your organisation you can focus more effort on only those; the overall improvement in the business will be much greater.
It all depends on what you ask for, remember; “people do what you inspect, not what you expect”.
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