The Negative Impact of Business Process Silos on Productivity

What is the negative impact of Business Process Silos on Productivity?

When was the last time you lost something to the black hole of corporate paperwork?  Was it a vacation request that went from your supervisor to the department manager to human resources and back to you?  A prospective or current customer sales quote waiting days for approval, or maybe it was trying to get authorization for a purchase requisition to order more equipment. Whatever it was, the process was probably frustrating and time-consuming.

It’s not that people are trying to make life difficult.  They are busy doing their jobs and setting priorities to get work done.  The problem comes when a silo mentality becomes part of the process.  Silo mentality is a reluctance to collaborate with others within an organization.  Sometimes, silos are so ingrained that employees do not realize they are setting priorities from an us-versus-them bias.

For companies that struggle with business process silos, the move to a remote workforce only exacerbates the problem.  Unless organizations employ tools that help breakdown barriers and encourage collaboration, changing an existing corporate mindset will be almost impossible. The lack of cooperation can have a negative impact on a company’s bottom line.  A silo mentality can result in:

• Poor Customer Experience
• Employee Disengagement
• Higher Operating Costs

How productive is a sales department if it cannot get needed approvals from finance?  When do employees disengage because they are constantly waiting for someone to respond?  Slow approval cycles and response times can result in shadow processes resulting in duplication of effort. 

Poor Customer Experience

Have you considered how poor workflows impact customer experience?  Suppose a salesperson has worked with a customer for weeks trying to structure an acceptable purchase.  The customer is ready to sign, but finance needs to approve the terms since they are outside the company’s established policies.

With the right tools and mentality, the request for approval is sent to finance, signed, and returned with minutes.  The customer is happy, and the company gains a satisfied customer.  Alternatively, the salesperson emails the request to finance, who places it on the back burner.  Sales is always sending emails to finance about something.  The approval request can wait until the end of the day.

While waiting for approval, the customer has second thoughts.  If it takes this long to close a sale, how long will it take for the company to resolve a problem?  The customer decides to look at other vendors.  A delayed approval cost the company a sale and the lost opportunities that the salesperson could have been pursuing.  

Employee Disengagement

When employees feel frustrated at every turn, it wears on them.  They become more dissatisfied, which leads to disengagement.  Disengaged employees cost companies between $450 and $550 billion per year. Companies with an engaged workforce see a 41% reduction in absenteeism and a 17% increase in productivity. 

Think about salespeople who lose sales because the approval does not happen in time.  How many times will it take before they disengage and eventually leave?  It’s estimated that it costs a company 33% of a new hire’s salary in training costs.  That translates into a total first-year cost of $60,000 for an employee making $45,000.

Given that almost half of new hires leave a company within the first 90 days, it’s impossible for businesses to recover those costs.  Providing a work environment where routine processes work seamlessly throughout an enterprise contributes to a positive work environment.  Positive corporate cultures are crucial to employee engagement. 

Higher Operating Costs

Duplication of effort is a typical result of company silos. If a workflow requires interdepartmental collaboration, the cooperation may be forced, resulting in ongoing frustration and resentment. Sometimes, individuals from multiple departments develop a shadow process that is only valid as long as the individuals continue to work for the company. When the employee leaves, so does the process.

Implementing an automated approval routing and workflow process can reduce operating costs. Businesses can realize as much as a 15% increase in productivity and engagement.  If you’re looking for a tool to help breakdown silos and improve operations, consider our Data-Driven Approval Routing and Workflow Business Process solutions.  You’ll be surprised at how quickly these solutions can be implemented so you can begin to improve operations and put an end to unproductive business process silos.

Who we are

ISS Group has been providing IT Solutions and Services to the QAD User Community since 1995. Our primary focus is to deliver add-value Business Process solutions exclusively to the QAD User Community that improve the Flow and Control of QAD ERP related Business Process Requests.

Contact Us today to learn more about our family of QAD enhanced solutions, or to schedule a custom one-on-one demonstration at your convenience….!

Sources:

https://www.cmswire.com/leadership/5-signs-your-organization-is-too-siloed/

https://www.theceomagazine.com/business/management-leadership/identifying-silo-symptoms/

https://www.investopedia.com/terms/s/silo-mentality.asp

https://www.achievers.com/blog/10-shocking-stats-on-employee-disengagement/

https://www.bluleadz.com/blog/annual-digest-of-company-culture-statistics