Most of us have probably heard the sayings, “Idle hands, idle minds,” or the more ominous “Idle hands are the Devil’s workshop.” I believe most people would prefer to have a job that challenges them rather than being board, and as an employer it is important to ask whether their employees’ work is always productive.
There is a cost factor to every task that goes on when an employee (even the practice owner herself/himself) is ‘on the clock.’ Many businesses actively quantify these activities by averaging the amount of time it takes to accomplish these tasks. By doing so, they can apply the costs which go into that work and compare it with the amount of income those activities either generate or support. In business terminology it is called “Activity Cost Analysis” (or ACA) and can provide extremely eye-opening information. This is actually not a new concept at all and many companies have changed entire corporate workflow procedures as a result of effective ACA.
IBM’s WebSphere Business Modeler1 website provides an excellent table, which simply explains the process and breaks it down for almost anyone. See below:
| Column name | Description | Calculation |
| Activity Name | Name of the activity | None |
| Average Revenue | Average revenue generated by the activity | Total revenue for all instances of this activity / number of instances of this activity (simulation generated values) |
| Average Processing Cost | Average processing cost for the activity | Total processing cost for all instances of this activity / number of instances of this activity (simulation generated values) |
| Average Idle Cost | Average cost of the activity while idle because it is waiting for a resource.Note: No value will be calculated for idle cost if you selected to run simulation without resource requirements. | Total idle cost for all instances of this activity / number of instances of this activity (simulation generated values) |
| Average Allocated Resource Cost | Average cost of allocated resources of the activity.Note: No value will be displayed if you selected to run simulation without resource requirements. | Total cost of allocated resources for all instances of this activity / number of instances of this activity (simulation generated values) |
| Average Total Cost | Average total cost of the activity, including processing cost, idle cost incurred while waiting for resources, and allocated resources cost.Note: No value will be calculated for idle cost and allocated resource cost if you selected to run simulation without resource requirements. | Average Processing Cost + Average Allocated Resource Cost + Average Idle Cost (calculated values) |
| Average Profit | Average profit of the activity | Average Revenue – Average Total Cost (calculated values) |
Although both this model and the website are geared toward software development, ACA can be applied to anything – even dental office activities.
So let’s discuss this in terms of everyday activities in a dental practice. Obviously, the faster you are able to perform any procedure (without negatively affecting the results of your treatment), the more productive that time was for your office. You can perform more treatment within the same workday. From a clinical perspective, I am sure every dentist knows this stuff backwards and forwards, but how many offices carry that level of ACA through to EVERY single task performed in the practice?
One of the biggest areas of uncertainty has to do with marketing support procedures that are clerical in nature. “Data-mining” your files for information that will help your marketing efforts can be excruciatingly time-consuming and BORING. Yet it is also one of the best ways to get information about people who already know you. The introductions have already been made, and treatment has already been performed – at least once. But how do you get that information to a useable status?
For instance, I happen to know of an office that is very well-known in its community, well-respected by their peers, has plenty of business but wants to be even more profitable. They have fairly standard practice management software, even though it is not the latest and greatest version. They also don’t really use its functionality as fully as they can and are just now flirting with the thoughts of using new media marketing (i.e. Social Media, email marketing, texting services, etc.) to grow and stay busy during some typically slower times of the year.
Here is the problem: while they collect all their customer email addresses on their written forms, no one ever enters them into their software and they never update it. (The owner is not very interested in the use of technology, so the business culture follows that example.)
Now that their marketing needs require the ability to build lists, they have two choices:
- Buy a list.
- Build it from existing records.
Both methods have pros and cons associated with them, and their effectiveness will depend on many outside factors as well. In my opinion, however, it does not matter whether or not they buy a list. Ultimately, having the information from those files in an electronic format that can be used and refined for future purposes will be invaluable to them.
There are ways to minimize the activity costs for these data mining tasks. Making the transfer of this data a major staff initiative will neither be a productive nor cost-effective activity for their highly-paid clerical team. One suggestion I offered this business owner was to have her high school age son (or one of his more responsible friends) spend time in the afternoons doing data entry in a minimum wage position. This can be augmented by her own staff when they were slow during less busy times – even if they set a simple goal of a certain number of entries per day.
Estimating the amount of time it would take to accomplish this, we discovered that the job could be done within a much shorter time frame than originally thought, with minimal impact on her own team’s primary responsibilities. In other words, everyone remains productive because…
the right people were doing the right work at the right times.
This is exactly what they are doing, and in the end, they will have a valuable list for customer retention and reactivation marketing that makes an appropriate impact on their overhead.
We have all probably worked with people who always seem exasperated and overloaded. At least, that is how they appear. If they are truly that busy, you might want to examine why. It may be totally justified, and they might be extremely efficient. However, they may be just running from one “fire” to the next with no clear understanding of how it affects the office profitability and their sanity.
How much more relaxed do you think your team would be if they were REALLY efficient because
they were focusing the appropriate amount of activity on the most important tasks?
From a purely customer service perspective, a relaxed atmosphere is warm, welcoming and soothing to your customers, especially the new ones.
There are so many examples of cost/benefit analyses that ACA can help you measure for your business, and now is the time to think about it. Even though the economy seems to be a bit better, I think most of us believe we will be in this slump for some time to come. Therefore, make 2011 the year you take control of your business expenses and truly understand your opportunities to make and save money. In the process you might just improve your team’s interaction with each other and your customers.
We are happy to discuss this with you if you wish, or simply point you in the direction of some fantastic experts we know who can provide you with expert analysis.
Reference Source: http://publib.boulder.ibm.com/infocenter/dmndhelp/v6rxmx/index.jsp?topic=/com.ibm.btools.help.modeler.doc/doc/concepts/analysis/taskcostanalysis.html
