OPERATIONAL EFFICIENCY

Example: Allocation of resources

Challenge
Companies add value through enhancement of products and services before offering them to their customers. Effective and efficient companies are more productive and add more value. Efficient and effective utilisation of skills and resources is the result of their correct allocation. An organisation which mis-allocates typically has wasteful processes or wastes its human capital and is uneconomical. Companies increase their productivity by allocating capital to the most promising projects. In times of ever-scarcer non-renewable resources, investing in the development of renewable substitutes is one example. But developing employees and staffing them so that their skills are put to best use is another way of enhancing productivity.
Markets are better at allocating resources effectively and efficiently than governments and productivity is thus an imperative that follows from a company’s role in society. Productivity is therefore also a measure of a company’s societal responsibility. And with the growing scarcity of natural resources, human talent, environmental quality and even quality of life, markets will prefer companies that do better and more with less.