How Experts Pinpoint Productivity Problems
When things began to bog down for patients and doctors at the Chico Medical Group, the 28 physicians who own the corporation hired a productivity consultant to help them figure out ways to work smarter. Sharon Stone, medical group administrator, said the doctors called in the consultants because they wanted to improve patient service while keeping labor costs down.
“A productivity consultant gives you some statistics to make sound business judgments,” said Stone. “They don’t give you a magical cure for all your ills.”
For four months, an analyst from Western Productivity Group in Palo Alto spent about eight hours a day observing every aspect of life at the Chico Medical Group. Before improvements could be made, the analyst had to figure out how patients moved through the system, how they paid for their care and how the doctors and other health-care providers communicated with staff members.
“She asked lots of questions,” said Stone. “She and the others who worked with us explained that they were here to help us work smarter, not faster.”
Based on the $60,000 study, the medical group implemented several of the consultants’ suggestions, including improvements in the patient check-in area, billing department, medical transcription department and data processing. The consultants even recommended a change in the type of note pads used for telephone messages to ensure their getting to the right people.
Productivity consultants offer various services to small-business owners. Some firms specialize in analyzing specific tasks, such as how long it takes a secretary to type a report. Others take a bigger picture approach, studying how systems work.
Most consultants charge about $120 an hour, but the fees can be as low as $50 or $60 an hour. Ray Dillard, president of Western Productivity Group in Palo Alto, said the Chico Medical Group could save between $250,000 and $300,000 by implementing his recommendations.
For manufacturers, a productivity consultant can figure out how long it takes employees to do a certain task. Then the measurements are used to develop standards and to figure out how many people to hire.
“Because not every person can meet the standards, we try to look at the group doing the task and not the individual,” said Joe Lima, director of instrument operations at Lifescan, which makes blood glucose monitors in Milpitas, Calif.
Lima, who has worked with several productivity consultants through the years, said it is important for the consultant to work with employees to present possible solutions to management.
“The best consultants walk away with everyone thinking the consultant didn’t do anything,” said Lima.
Lima said small-business owners should choose a productivity consultant carefully.
“Be sure to ask exactly what will be delivered under the contract,” said Lima. “Ask if the consultant will supply the standards and train a trainer to teach employees.”
When interviewing productivity consultants, small-business owners should check references and call other clients for information. Then be sure to meet with the person who will be doing the actual work, rather than just the president or marketing director for the consulting firm. Dwight Shackelford, president of Shackelford and Warner Associates in Beverly Hills, is a “white-collar” productivity consultant who helps businesses solve their paper work problems.
“There are a lot of things that can be done to help small-business owners,” said Shackelford. He said owners can respond quickly to productivity problems if they watch for the symptoms. “Extensive overtime means something is wrong,” he said. “Other signs would be if paper flow is backing up and if workers are missing deadlines.”
Shackelford said owners should watch whether workers are walking around the office more than necessary. “If they are moving, they aren’t working,” said Shackelford.
Dillard said small-business owners can help boost productivity themselves by keeping a close watch on the company’s operations to spot trouble before it gets out of hand.
“You need to continually adjust your costs as your sales change,” advises Dillard. “Don’t wait until the end of the month for results; you need to have this kind of information at your fingertips.”
Dillard said a savvy small-business owner will listen carefully to what his or her salespeople are saying and then factor that into all decisions.
No matter how small your business is, you should keep close track of direct labor costs, indirect labor costs, fixed and variable overhead costs and general and administrative costs. According to Dillard, direct labor costs--the cost of keeping your employees-- should represent 10% to 11% of total sales.
“If sales drop and you don’t respond, this percentage could creep up as high as 20%,” said Dillard.
If sales drop and laying off workers seems too drastic, Dillard suggests asking your employees to work a shortened work week until sales pick up again. “A quick response to problems is the key to managing a small business,” said Dillard.
Poll Finds CPAs Bullish on State’s Economic Outlook
Business conditions look good for 1990, according to results of a survey released by the California Society of Certified Public Accountants.
Fifty-six percent of the 600 members interviewed said they felt business conditions were good, and 81% predicted that the climate would stay the same or improve in the next six months.
“California has a strong, broad-based economy,” said Stu Kart, a Sherman Oaks accountant who serves as president of the 29,000-member society . “I think California is where it’s at in the 1990s. We have a great deal of money coming in from the Pacific Rim and the general outlook is quite good.”
