Hidden Profits at the Front Line

Executive Summary

Most businesses can increase their profitability by 3% to 5% of revenue without any additional capital required. To achieve this, they need to pay more attention to how they manage at the front line.

Organizations lose up to 50% of the potential capacity of their key resources, such as labor or equipment, due to recurring operating problems. This lost capacity is not always easy to see or identify. Operating problems fall into one of three categories: process problems, planning problems and management behaviors. These problems are often interrelated and negatively reinforce each other.

Many improvement programs focus on only one of the three problem categories and therefore fail to adequately address their interdependency. Sustainable performance improvement requires a methodology that integrates process, management systems and organizational behavior. It requires a change in the way managers at all levels act and think. It also requires shaping the environment to support the new behaviors.

In this article, we discuss the five phases of a performance improvement methodology to help a company increase its profitability in a sustainable manner.

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