- September 16, 2014
- Posted by: Cheryl Rybka
- Category: Blog
By: Tom Pryor
Margin = Your Limit minus Your Load
Do you have enough 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 unprofitable products, services and customers using Gross Margin Profiling. Create a simple P&L for each product line and customer. If you can’t raise prices or cut costs on an unprofitable product or customer, drop them. Contact Tom.Pryor@tmac.org to learn more about Gross Margin Profiling.
- Use Lean 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 Value Stream Maps, Activity Based Costing (ABC), or process mapping to identify and eliminate costly duplication of activities throughout the company.
- Classify activities identified in Value Stream Maps 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 Value Stream Maps as a point of reference to facilitate the discussions.
- 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.