January 29, 2013

Discretionary Effort: Reducing Overhead the Easy Way

A friend of mine has a saying; the “soft” stuff is really the hard stuff.  In other words, some of the “intangibles” have the most direct impact on hard business results.  The intangibles can also be the toughest to manage.

Discretionary effort is one of those intangibles.  It refers to employees’ voluntary, “above and beyond” actions to make the organization succeed.  Discretionary effort typically happens without immediate recognition or coaxing from the boss.  Imagine what happens in your business at three minutes before quitting time.  Is it the norm to see employees logged off of the network, with coats on, chairs spinning and halfway across the parking lot - is that your norm?  What if that call is from a huge prospective client, ready to buy from you?  Will the prospective client get voice mail, or might the client get enthusiastic service from someone who is willing to stay as long as necessary?  In this case, the difference between voice mail and a new client is discretionary effort. 

Discretionary effort is a choice that your best employees make because they are emotionally committed to some aspect of the organization.  It could be the organization’s leaders, its mission or some particular goals; whatever the root of the commitment maydiscretionary effort be, it makes doing unrecognized work an easy decision.  Conversely, employees who are not emotionally bought-in to the organization do the bare minimum necessary to avoid being fired.  Emotionally uncommitted employees always cost more.

So, what does this have to do with reducing overhead?  Simply put, more discretionary effort means higher employee productivity.  Higher productivity means a higher return for the same investment in labor; who wouldn’t want that?  What every manager must know is…

  • A lack of discretionary effort means you are spending more in labor costs than you have to.

  • A lack of discretionary effort is a choice made by the employee.

  • A good manager can develop increases in employee discretionary effort.

Look for opportunities to recognize discretionary effort in your workplace.  When you find them and reward the committed employee publically, you will add real dollars to your bottom line without a comparable increase in costs.

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