4 strategies to unlock hidden capacity in your operations
January is almost over, and statistically speaking, around 64% of you will be giving up your New Years’ resolutions. We know everyone has different reasons for their resolutions falling away, but a big one for many is that it’s hard to make time for your resolutions among the press of everyday life and the post-Christmas slump. A similar story is unfolding right now in the world of banking and financial operations.
Our latest research report into the preparedness of organisations for a recession has revealed that people are expecting operations to come under significant pressure to do more with less as the risk – and reality – of recession looms in the US, UK and Australian economies. Operations leaders need to make changes in order to weather the imminent turbulence, but much like a resolution to get out and exercise more, finding the space to make those changes is a challenge.
Happily, our research points to a solution. 57% of respondents believe that they have extra capacity hidden in their operations, but they don’t know where it is or how to access it. In this blog, we’ll talk about how you can discover that hidden capacity in your operations – and what you can then do with it to help you thrive even in challenging times.
What is hidden capacity?
Essentially, due to the way operations are traditionally set up and managed, every team will have capacity that goes unused. At ActiveOps we call this “latent capacity” and, contrary to popular belief, that capacity can be unlocked with the right approach to managing your operations. In fact, our customers have seen their capacity increase by anywhere between 10% and 50% - so we’re not talking about marginal gains, here!
Where do I find latent capacity in my organisation?
The simplest answer is that you’ll find latent capacity in any process in your organisation where productivity is tied to incoming workloads. That means that, when there’s lots of work on, productivity goes up, and when work doesn’t come in, productivity dips. That situation exists because organisations have traditionally encouraged teams and employees to specialise in a specific process, meaning their skillsets and focus are relatively narrow. They can only do the work associated with their process, meaning they can only be productive when work comes in. Operations leaders have also historically staffed operations to maintain service levels at peak times, which means teams are often under-utilised on quieter days, causing (sometimes, significant) dips in productivity.
This leads to one of two scenarios for each process:
- If processes are overstaffed, resources can’t easily flex to meet demand. Managers tend to react to the day-to-day fluctuations in workload rather than forecast and plan. They are mostly driven by the need to meet service and quality SLAs, and often encourage teams to exceed those SLAs, effectively creating even more latent capacity.
- If resource costs are high, processes are not overstaffed. Instead, performance priorities bounce between cost, quality, and service depending on which one is under threat at any given moment. This act of juggling in operations usually ends in one or two of these metrics being met and the other being missed.
With that knowledge, you can start to look for processes in your operations that show signs of latent capacity:
Areas where productivity fluctuates in line with demand
If teams become more productive when workloads increase, it stands to reason that they are a source of latent capacity when workloads even out. In an ideal world of 100% utilisation, everyone would maintain the exact same level of productivity because they aren’t tied to a single workload.
Areas where SLAs are often exceeded
Exceeding SLAs sounds great, but it can also be viewed as wasted effort – all the time and energy spent exceeding the SLA could have been spent on another task with no negative consequences. If a team or process is regularly exceeding its SLAs, that’s a sure sign that there’s latent capacity you can unlock.
How do you unlock latent capacity?
After all, identifying it is only half the job. As we’ve mentioned, often the root cause of latent capacity is that teams are tied to specific processes, meaning they can only be busy when that process has work coming in. So the key is to break that link between workload and productivity. Does that sound counter-intuitive? Let us show you what we mean with a few strategies that you can implement:
Use low productivity times to upskill, cross-skill, and engage
Any time workloads back off from their peaks, managers can load teams up with skills development and engagement activities. Both are productive uses of time. Upskilling allows staff to be more efficient and makes your workforce more versatile (more on that later). Taking time to keep employees engaged and motivated will also help everyone to feel happier in their work, which makes a huge difference to productivity in challenging times such as a recession.
Allow work in progress to rise and fall
Essentially, don’t be afraid to let the work back up a little when times are busy, in favour of keeping productivity more even across a period. As long as SLAs aren’t breached, this tactic keeps the team working at a more sustainable rate, reducing the risk of burnout, and eliminates those periods when workloads and productivity shrink together. Having the right amount of work in progress ensures resources are busy when volumes dip.
Review your SLAs
This strategy helps make strategy 2 more feasible if you aren’t regularly exceeding your SLAs. Often, SLAs have been created without considering productivity. Ideally, review your SLAs to provide a level of service that the customer accepts, while also helping you stabilise (and then maximise) productivity.
Transfer staff between processes
If you’re really serious about unlocking latent capacity this is what you want to aim for – but it won’t happen overnight. Firstly, you need to broaden your employees’ skillsets from those relatively narrow areas I mentioned earlier, making them more versatile so that they can actually learn, perform and excel in other types of work. That cross-skilling needs to be done carefully; if you cross-skilled a team to help with a different process that’s subject to the same peaks and troughs as their existing work, the net benefit would be minimal.
Secondly, you need to foster a collaborative environment between managers, their teams, and whole departments. Operations are traditionally tied up with bureaucracy that doesn’t encourage this sort of flexibility; work will need to be done with senior leaders to help remove those blockers. If you can do it, though, you can really start to stabilise productivity at scale across your organisation.
Data makes it possible
Understanding your operations on a granular level is integral to unlocking latent capacity. With the scale and complexity of most organisations’ operations, gathering data on productivity and capacity is the only way to get to an accurate picture of what’s going on, from which you can plan and measure improvements. That data could also be shared with team members to help them take ownership of their own productivity and become active participants in the process.
Beyond the data, it’s also important to encourage managers to approach work differently. If they’re used to responding to workload levels, getting them to start using data to forecast and plan, and find other activities to keep productivity at an even level, will be vital. Ideally, managers will start actively managing their teams, making decisions based on data in the moment to unlock latent capacity.
What else can you do?
While we can’t help you make your New Year’s resolutions stick, hopefully this blog has shown you how you can respond to tricky times ahead by identifying and unlocking hidden capacity in your operations. Doing so will help make your operations more resilient and agile – a key part of a successful recession response, according to the operations experts we interviewed for our report. But there is more to do. The experts we spoke to made another four recommendations for how organisations like yours should be preparing for a recession. To discover them, download a copy of our latest report Are you recession ready? How to do more with less today.