Effectiveness

With business, effectiveness is a concept that requires the owner to deliver the correct product or service in accordance with the customer’s order.

Business Principles – A Pyramid of Levels

Business Principles

There is no universal finite set of business principles.   In the aggregate, there are over several hundred of them.   Many of them are not applicable to every industry, on the contrary, many are specific to a unique business or industry.   The best approach to understanding business principles is to look at this in a holistic manner, i.e. overall doctrine down to a few rules specifically designed for that one business.

Operate Within Your Range of Production

Range of Production

One of the basic business concepts is range of production.  It means maximizing the capacity (range) of the assets in your operation.  When the business operation goes beyond the maximum production range, costs associated with the marginal production generally exceed the revenue generated with the marginal increase.  So to maximize profit in any business, operate within your range of production.

Develop a Position Profile

Position Profile

The primary goal of the Human Resources Department is to match the best person to the job in the company. This maximizes both effectiveness and efficiency for the company.  In order to achieve the best matching of resources to the positions in the company, the human resources director should develop a position profile. This profile identifies the job title, describes the job in detail, pinpoints the best hours of work, defines the duties, and sets out the skills needed to perform the job.

Find the Bottleneck

Bottleneck

In every business no matter production or service, there exists a bottleneck.  Your job as the owner or manager is to find it and fix the problem.  Once this one is found and resolved; move onto the next one.  There is always a bottleneck to find and fix.  What is important is to find the problem, identify the core issue, and then resolve the bottleneck.  This may sound simply, but it takes someone in a position of knowledge and experience to complete this task. 

The True Cost of Labor

Cost of Labor

I laugh at the definition of labor costs because in my opinion the so called experts only have it half right.  Labor costs are more than just gross wages and benefits.  It should include the costs of insurance, employer taxation, human resources management and incentives.  All of the costs associated with delivering the human element of service should be included.  Let’s explore these costs from the most expensive to the least.

A Story About Great Production

Production

What I learned was that equipment didn’t call in sick, it didn’t back talk me, it never got upset about how much it was paid and it just kept on humming.  It was making us money and I didn’t have to deal with personnel issues.  Boy, if only all production could be like this.  Turn it on and make money.

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