On 1st December 1913, Henry Ford set new standards for Productivity. His method was neither new nor path-breaking. It was nevertheless extraordinary, that changed the way mass production worked for the next several generations.
His goal was fairly simple. He wanted to build cars for the masses. But, how?
The Eureka moment:
It all started at a slaughterhouse in Chicago. The assembly line method, first used by the meat packaging industry, moved the suspended carcass past a line of butchers. Each butcher had to work on a particular part of the carcass. Unlike the assembly line method that we know of where workers assemble the parts together, the first assembly line did more of a disassembly of the carcass.
Henry Ford realized the efficiency of this method by introducing it in his factory for the mass production of his car, Model-T. The car had interchangeable parts unlike other cars of that time. Which meant, each car has the same engine, tanks, valves, tires, etc. These parts were produced in mass and were crucial to the success of the assembly line method. As a result, he broke down the manufacturing process into 84 different steps. Here, each worker was trained to work at a specific assembly line station.
As a result of streamlining the assembly process, the chassis assembly speed per vehicle fell to 1 hour 33 minutes from the initial 12 hours 8 minutes. The price of the car, which initially started at $850, came down to whooping $260 in 1924, thus making it a car for the masses.
On June 2, 1924, the 10-millionth model was rolled out. Henry Ford had achieved his goal.
Although Model-T lost its charm post1920s, assembly lines became an integral part of the manufacturing industry.
When Henry Ford started his business, he had only one thing in mind; Growth. He was willing to move out of his comfort zone. He was ready to adopt a new method that could help him grow.
Henry Ford believed in technology and its ability in enhancing productivity. He firmly believed that the right processes could bring about phenomenal changes to the work that one does. He showed us that automation is the way to efficiency.
Achieving Financial Productivity the Henry Ford way
Simply put, productivity is the measure of efficiency. However, achieving it is a different story altogether. The best practice is to always derive more from the less. While the circumstances got difficult to cope with, Henry Ford did not invent a new method for his goal. He was persistent. He hired the right set of skilled individuals who believed in his dream. He didn’t invent anything new. Instead, he made use of an existing process to increase the productivity in his company. Achieving financial productivity runs along the same lines. You need to identify processes that would enable your employees to efficiently execute your business goals.
In the financial world, numbers do the talking for you. You can measure your productivity in terms of revenue per employee, or operating income per employee. You can even compare it with similar companies in the industry. Although for achieving productivity, just like in Henry Ford’s method, it boils down to two things: Employees and Technology.
Bringing Automation into the picture:
The people you hire matter:
Back in the day, finance folks were seen as a bunch of people with papers all around, crunching their calculators all the time. They had only one motive; bring the company spending to a bare minimum. However, their roles have evolved over the years. It is not just about their number-crunching skills, but also about their interpersonal skills.
While the finance team has to identify areas where the company should no longer invest, they are also expected to work alongside the product team or the R&D team. They need to understand their requirements and think of ways to get them done.
An increasing number of companies have understood the need for collaborations. What’s more, They are also willing to invest their time and money for the same. In fact, according to a survey by The Economist Intelligence Unit, 47% of finance executives in the US and western Europe would like to launch or oversee an initiative to improve employee collaboration in the next two years.
Therefore, finding and retaining employees who have the right mixture of everything becomes imperative for the growth of the company.
Too many responsibilities? Technology to the rescue:
Finance teams play a crucial role in connecting departments across a firm. Additionally, insights from the finance teams can bring a turnabout to any department. For instance, including a finance person in the marketing department would help them gain better control of numbers. As it is, finance does not know how to measure the Return on Investment (ROI) on the marketing spend. But, by including them from the very start, will help them have a clear idea of the amount of work and planning involved in marketing. They will be able to identify where exactly the money is going and suggest methods to simplify the process. After all, both the teams have a common goal; ensure the growth of the company.
The same applies to the sales team, aswell. A common sight to see is that, Sales and Finance are always at loggerheads. For instance: Finance may not agree with the discounts that the Sales team offers to the customers. As a result, Sales teams see Finance folks as killjoys who do not let them close their deals easily. While this sheds light on the cultural aspects, processing sales expenses is another story altogether. Sales team has to travel all the time, incurring many expenses along the way. Starting with their airplane tickets, accommodation, meal and client entertainment expenses, the list is quite long. Invariably, this leads to more paperwork for the finance team. They are expected to constantly nag members from the sales teams to submit their expense reports. Additionally, they have to ensure IRS compliance and be watchful of fraud. It can be taxing, to say the least.
Why is there always a conflict between the Finance and Sales teams?
Most often, the annual goals of the finance team and sales team are different. Working as individuals components with individual goals, can hamper the overall growth and scale of your company. But, by joining hands, they can increase the profitability of the company. To help attain this grey area, they can finalize on a mutually agreeable goals, keeping their individual goals, limited to private team meetings .
In lieu, finance teams can prepare a fair pricing and discount plans for the sales team. Based on the account receivables data, the finance team can keep the sales team in the loop which will also help the company curb the churn rates.
How do finance teams play a role in the growth of the company?
The contribution that the Finance team can make to a company’s growth is immense. But it remains untapped.
The reason? Manual work.
You will find them drowned in paperwork. Tasks like, payroll management, bookkeeping, handling expense management keeps them busy. Most of the work is repetitive and time-consuming and doesn’t add much value to the company growth.
Given that the finance sector is entirely data-driven, there is a dire need for a process that helps with data transfer. Although finance teams handle data on papers and spreadsheets since time immemorial, there’s a scope for improvement. In the years to come, Finance teams are expected to do a lot more than paperwork. In the days to come, finance teams will play a critical role in business planning, as well. Strategic financial analysis, produce budget forecasting, and mitigate potential business risks, are some areas which need their valuable contributions.
Why do businesses need an automated expense management software?
An automated software plays a crucial role in streamlining business processes. some key aspects which can benefit from an automated solution are: business expenses, supplier payments, bookkeeping, financial reporting, payroll management, budget forecasting, risk management and more.
Benefits of Automated Software
Automated software takes the load off your finance team. It lets them get into the detail of each transaction, in a matter of a few seconds. It reduces the overall cost of service delivery. Features like analytics and automated financial reporting saves a lot of time. Processes like expense management, payroll, budget forecasting become seamless. As a result, finance teams can take a break from calculators and paperwork, and focus on collaborating and contributing to the overall growth of the company. Periodic analysis of data gives more visibility, resulting in a spotless audit trail. Also, since it is on the cloud, finance folks can access financial data remotely, thus avoiding the dependency on a single system.
Traveling employees need not carry their receipts with them all the time. Most of the Expense management tools are equipped with OCR technology that lets them take a photo of the receipt. The software scans the receipts and creates an expense for them. Employees can submit their expenses in the click of a button. As a result, finance team does not have to nag the traveling employees to submit their expense reports, the software makes it effortless. Many of them also have policy checks in place, alerting the finance team in case of policy violations.
In the future, technology is going to have a profound impact on finance. Finance teams need to evolve from being just mere book-keepers to key stakeholders in the company. To empower them, cloud software is your best bet.
Impact Work culture has on Productivity
On a related note, did you know the healthcare expenditure of a stressful work environment is 50% greater than other companies?
When it comes to managing a business, it is not just about achieving the bottom line. The work culture of your company influences employee productivity a great deal. That comes with a positive and stress-free work culture. Happier employees are more productive, therefore, employee happiness shouldn’t be the last thing on your agenda.
On the contrary, it’s crucial you determine the work culture you’d like to showcase and endorse, even before you start your company.. Once you have finalized these core aspects, acquire employees who can adapt to the work culture. Employees whose goals and values align with those of the company’s, are the secret sauce to growth and scale.
Your team needs to be aware that they’re apart of a team. More importantly, they need to know that their contributions are valuable to the growth of the company. Encourage them to collaborate, irrespective of departments. This helps foster transparency at work, making it a safe harbor for employees to share their opinions. As a result, employees will develop collective goals for the betterment of the company. Let your employees know that you are listening to their problems and needs. Celebrate their achievements and appreciate them for their excellent work.
After all, who doesn’t like appreciation?
Henry Ford wouldn’t have achieved what he did if he didn’t move out of his comfort zone. He had his heart set on growth, and was willing to implement what it takes to achieve it. The rest is history. After all, we know no growth comes out of comfort zone.
Achieving financial productivity takes time. Implementing changes, acquiring the right talent and leveraging technology, are vital. Employees who are accustomed to older techniques of managing their work would be slightly apprehensive of the new technology. The adoption rate might be quite slow, as people might not be open to change. But change is the way to growth.