Efficiency gains through bureaucracy reduction: Less control, more revenue

Bureaucracy isn't only created by the government. Often, it's the companies themselves that burden their teams with excessive documentation requirements. Reducing this burden generates more revenue and retains employees, a recent study shows.

This article is part of the special feature on bureaucratic madness in the skilled trades.

In a chain of artisan bakeries with over 1.350 employees, sales staff were required until a few months ago to document daily how often they smiled at customers, maintained eye contact, said goodbye, and cleaned the counter . In addition, the sales staff kept the standard daily log used in the bakery trade to document information such as cash balance, sold-out items, orders, IT problems, or any unusual incidents. This log served as a communication tool between shifts.

That's not enough for the company. There are many more checklists and documentation requirements for employees. For example, they have to record how crispy the rolls are when they go on the oven. According to the company, each employee invests an average of more than five hours per week in documentation . This is not the 12,5 hours per bakery that is typical in the baking industry – which is already above average, because the sector already has numerous documentation and information obligations (risk assessment, food law, issuing receipts, working hours, etc.) and structural requirements.

What happens if documentation requirements are no longer required?

A team of scientists at the bakery chain analyzed what happens when documentation requirements are eliminated. The study, conducted by the team led by Matthias Heinz , spokesperson for the ECONtribute Cluster of Excellence at the University of Cologne, together with researchers from the Universities of Frankfurt, Konstanz, Munich, and Santa Barbara, concluded: "Companies that monitor their employees too closely harm their businesses."

During the study, the bakery eliminated two checklists for employees in half of its 145 branches that were perceived as particularly time-consuming and unhelpful: the one on which employees had to record their behavior ("operational list"), and the daily log. With measurable success.

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Compared to stores with full documentation requirements, sales in stores without checklists increased by an average of 2,7 percent. However, the effect varied by location: In stores where regional managers predicted that teams would cope well without a checklist, sales increased by an average of more than five percent. In stores where managers were skeptical, there was no effect.

The quality remained high despite the elimination of lists

Anonymous mystery shoppers rated the shopping experience similarly positively. In stores where checklists were abolished, employee turnover (often managers) decreased by an average of 35 percent compared to other branches. According to the study, highly qualified employees, in particular, felt harassed, monitored, and undervalued by the documentation requirements . Unskilled workers, on the other hand, tended to find the monitoring helpful.

According to team surveys, the decisive factor for the positive effects was not the time saved, but the tangible appreciation . Employees felt taken seriously, were more motivated, and more committed to the company. Matthias Heinz: "Reducing bureaucracy can help companies retain good staff in times of skilled labor shortages."

After completing the experiment, the bakery chain decided on a compromise: It retained the daily protocol and permanently abolished the other list of customer behavior, the operational list. 

Conclusion of the study: Many checklists can be harmful

Find the balance

Companies and institutions must find the right balance between necessary oversight and trust in their employees. Documentation requirements should be reviewed on a case-by-case basis, and the costs and benefits should be weighed: Are they really worth it to achieve the desired result (e.g., increased revenue, lower turnover, higher customer satisfaction)? 

Differentiation instead of blanket solutions

The key is where and for whom you reduce bureaucracy. Checklists aren't bad per se, but they don't make sense for all teams and work steps. Bureaucratic routines should be regularly evaluated.

More trust

Executive boards should give middle management more trust and more freedom to make decisions. They usually know their teams best and can assess in practice which measures will be effective.

Questioning routines

Instead of introducing new measures to increase productivity, it can be more cost-effective and profitable to question routines and abolish old structures.   

Source: ECONtribute 

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