How casual is your business? Aside from uniforms or required dress codes, do you let employees get away with things they shouldn’t? Maybe you let them hand out free food or take home supplies, or perhaps you don’t enforce company policy often. If you’re doing any of these things, it’s hurting your profits in ways that might not be immediately obvious.
Although some companies are exceptions, like Semco, which had no rules, refused to track employee hours, and allowed employees to set their own salaries, most businesses need to run a tight ship to succeed.
When you run a tighter ship, you’ll be more profitable, period. Here’s why.
Unproductive employees cost you more than just payroll
If your employees aren’t productive because they’re too busy goofing around or you don’t have anyone to check in on their deliverables, your payroll dollars are being wasted. And it’s costing you more than just their salary. All the work they’re supposed to be doing isn’t getting done, and that means either disappointing clients, missing important deadlines, or just not moving forward with your projects.
This impacts businesses differently depending on the industry, but let’s look at software development as an example. If nobody is guiding the development process, checking in on deliverables, and reorienting the project as needed, there’s no telling when (or if) it will be done. The client who expects the application to be completed will be disappointed, and might cancel the project altogether. Or, they might get frustrated and never do business with that company again.
What could have been a 6-month project can easily become a year-long project just because there are no rules or systems in place to drive results. If a company can only take on one big project at a time, that cuts profitability in half.
Loose policies can result in lost inventory
Do you have a tight handle on inventory? Would you know if someone was stealing from the stockroom? Do you perform regular inventory cycle counts, making sure to complete full counts at least every three months? If you’re not keeping close track of your inventory, your employees might be taking advantage of you by stealing items and you’ll never know.
If you don’t have a strict inventory system, there’s no telling how much money you might be losing. Not just from theft, but also from carelessness. If you don’t have a real inventory system, you need to start using software to track inventory because manual counts and eyeballing your bins won’t cut it. Writing your inventory counts on paper is prone to error, and you also can’t automate orders unless you’re using a digital system.
Be cautious about policies that are too strict
Although it pays to run a tight ship in many regards, research shows that when employees are asked to follow certain policies that prevent them from doing their job efficiently, they will ignore those policies and do it their way instead. When pushed to stick to the policy or else, they either quit or remain bitter and their productivity will drop. Either way, you lose money.
Policies concerning safety should absolutely be enforced to the letter, like rules for keeping data secure and not tolerating sexual harassment. However, being too strict with other policies can lead to a lack of motivation and even resentment. The “do it because I told you to” approach doesn’t work and will only hurt you and alienate your workers. Be flexible and human while running your tight ship. Know when to back off and give your employees freedom, but don’t become so lax that you don’t have any structure at all.
One example of a policy that’s probably not worth being too strict about is employees using cellphones in the workplace. You can almost be certain that all of your employees are using their phones to check email, texts, and social media throughout the day. No, it’s not ideal, but unless you watch people constantly, you can’t make them stop. They are going to do it anyway. You may as well give them the freedom to do it with the expectation that they’ll wait until they’re done with their tasks.
How strict is a tight ship?
Running a tight ship doesn’t mean you have to be super strict about enforcing company policies. You just have to guide people into following a system that enhances productivity and efficiency. If that means prohibiting extra smoke breaks, but allowing personal cell phone use, do what works. It’s your company and it’s your team. Sometimes flexibility is the best way to get people to tighten up the ship on their own.