Kelly Clifford explains the issue of 'rework' - correcting mistakes and managing any fall-out with clients - and how to combat the damaging effect it can have on a business's bottom line
We have all likely been in the unfortunate situation where a piece of work wasn't done properly by you or a member of your team, work wasn't checked thoroughly enough or silly mistakes were made.
Often these are discovered after it has been sent to the client, which is too late in many cases - the damage is done. It then takes time to correct the work, redo it completely if necessary and to manage any fall-out with clients, which I'm sure you'll agree is never a nice thing to have to do.
You will know that in our world, when working with clients, time is money so every time this happens it is eating into the profitability of your business. So what is this hidden cost called? It is known as the ‘cost of rework' and many financial advisers do not fully understand the damaging impact it can have on their bottom line.
This cost of rework is principally related to not doing work thoroughly enough or properly the first time around. There can be a number of reasons why it happens, including such things as poor upfront scoping and planning, poor staff training, inadequate internal processes, lack of care or attention to detail and just plain sloppiness. It always amazes me how many financial advisers I speak with do not have an awareness of this issue and the impact it has on their business.
There are a number of consequences of excessive levels of rework although many of them are less tangible in nature. Apart from the obvious impact on profitability, rework can lead to lost credibility in the eyes of your clients. You may get away with it once or twice but if it happens too frequently, clients will start to question whether what you do provide them is correct or of sufficient quality. They will begin to question whether they can rely on what you produce - and by extension you!
Every time something needs to be redone, there is a time cost associated with it - whether it is your time or your staff's. It is unlikely this extra time will be chargeable to the client and, if it is, then it will soon annoy them as you are effectively making them pay for your inefficiencies. This in itself could be a catalyst for them to look elsewhere. Remember, it is not their problem to resolve, it is yours …
There are, however, some practical measures you can put in place to help reduce the impact of rework on your business. It is unlikely you will be able to eliminate it completely but you should definitely be able to get it under firm control. Tackle the issue quickly and head on, as any improvement you make here will positively impact your bottom line.
Five tips for reducing the impact of ‘rework' in improving profitability
1. Put in place a process of checks to ensure any work is done correctly the first time around. Use checklists where you can to ensure consistency.
2. Embrace technology at every turn to become more efficient and reduce costs, which enhances your profitability.
3. Systemise the routine; humanise the exceptions. It's all about reducing the risk of human error. Human error is the largest contributing factor to rework being needed.
4. Document your processes thoroughly and train your staff, if you have them.
5. Track the cost of ‘rework' in your business at a client-by-client level. What you don't track, you can't improve.
Kelly Clifford is a profit specialist and the author of The Profitable Professional (£14.99, Profit In Focus), from which the above is an extract. The founder of Profit in Focus, he is on a mission to help businesses to profitably thrive. You can find a free preview of his book by clicking here
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