Do
you have any Margin?
By
Tom Pryor
Margin = Your Limit - Your Load
Do
you have any margin? Or are you in a deficit mode? If like most people,
your load exceeds your limit. Dr. Richard Swenson, author of Margin:
Restoring Emotional, Physical, Financial and Time Reserves to Overloaded
Lives, defines margin as “having breath left at the top of
the staircase, money left at the end of the month and sanity left at the
end of adolescence.”
The
lack of margin results in stress, declining health, debt, unhappiness and errors
in your life and your workplace. When load exceeds limit, you experience deficits:
sleep deficits, budget deficits, quality deficits and time deficits. Workload
is a result, not a cause, of the deficits.
Old
habits, not choice, consume your margin. Both personally and professionally. Use
the “Three D’s” to change habits and add margin to your life and workplace:
Three
D’s to Increase Margin
Drop
- Use Activity Based Costing (ABC) to identify and drop unprofitable products, services and customers. Add the savings to your profit margin.
- Use Activity Based Management (ABM) to identify non-value added activities that should be minimized or eliminated. Re-deploy the time and resources to margin.
- Eliminate
unnecessary duplication of activities across departments and sites. Use ABM activity
analysis, process mapping, shared services methods and business process reengineering
techniques to identify and eliminate costly duplication of administrative activities.
Defer
- Classify
activities as “Required” or “Discretionary”. Defer the discretionary to immediately
add margin.
- Benchmark
your frequently performed activities with a best practice organization. If they
have a better way, defer to their methods to reduce your cycle time and cost.
- Defer
to your suppliers’ and customers’ recommendations on “how to” reduce process cost,
cycle time and complexity. Use ABM process reports and ABC bills of activities
to facilitate the discussions.
Delegate
- Routine
and repetitive activities that cannot be automated should be self-managed by employees.
Re-deploy management time to margin.
- Managers
don’t have to come up with all the cost improvement ideas. Instead, delegate improvement
to the employees who perform the activities. They typically have the best ideas
and enjoy the involvement.
- Aggregate
and move activities upstream to their point of origin so that one employee, one
department or one supplier has end-to-end accountability.
When
asked to think of the future, most people picture next year as “the present without
anxieties”. Anxieties caused by the lack of margin will not disappear until you
change the approach to your life and workplace. Stop this week and take an inventory
of your personal and professional activities. Then do some dropping, deferring
and delegating.
Send your comments to TomPryor@icms.net.
Or, call someone at ICMS if you have ABM questions... (817) 483-6511
If this article has inspired you and your organization to cut costs this year, call us at 817-475-2945, or e-mail your needs to tompryor@icms.net.
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