Employee idle time in your back-office makes you look bad as a director of operations, and you should deal with the issue right away.
Not only does the lack of time being productive drain resources, idle time also makes workers bored and stretch out work that could be done in a shorter time, according to research from the University of Texas at Austin.
Even worse, if your employees sense you judge their worth by how busy they look (as opposed to how busy they actually are), then your team is incentivized to finish their daily reconciliation and performance reporting tasks slowly, which perpetuates the wasted resources and lower productivity cycle.
Of course idle time not only affects investment management firms. Nationwide, across the US in all industries, employee idle time accounts for $100 billion wasted in lost productivity, as published in the Journal of Applied Psychology.
When your operations team is sitting idle, it’s your job as leader of operations to make full and productive use of your staff.
Keep track of workloads over a period of time. Identify peak and non-peak processing times.
The back-office operations work for investment management firms has a degree of predictability. Often staff workload is heavier at the first half of the month, as monthly and quarterly reporting needs to get done. In the latter half, there is more time available.
If you’re a manager that determines how good your employees are by how busy they look, test your assumptions about their productivity by increasing their workload, and keep track of how long it takes them to finish the work. If you notice that your staff is getting overwhelmed by the added workload, then you know they have been genuinely busy.
But if you noticed that your team took on the additional work and finished everything in a reasonable time, then you may have identified idle time, as employees may have dragged out existing tasks just for the sake of appearing busy. In such a case, give them more work until you find their breaking point.
As you notice productivity increasing, you’ll get a better idea of the TAT (turnaround time) for a task, and you can better predict how much idle time there will be at certain points in the week, month, quarter, or year. From there, you can figure out how to fill the team’s schedule.
Once the time-sensitive reports are done and you have figured out when and how long you expect the team members to have idle time, you can decide what they should work on:
If you want to increase the versatility of your operations staff, and depending on their skill sets, they can also help in client servicing, marketing, or other administrative tasks.
Even after identifying the root cause of idle staff and assigning additional work to keep the back-office portfolio accounting team productive, you might notice that some employees are still under-utilized.
You could make them part-time employees, or if they already are part-time, reduce their hours so that their time spent in the office is worth it for your company.
If it makes no sense to keep someone around part-time or full-time, then you’ll have to let them go. In the future, you’ll avoid these uncomfortable moments of letting staff go by properly assessing how much labor you need for the work at hand.
Sometimes you cannot predict how heavy or light the reporting workload might be. There might not be enough additional work to fill up the employees’ open time, and keeping around idle staff drains your resources and profit margins.
If you’ve dealt with any of these issues, then outsourcing your back-office operations may make sense.
Wealth and asset managers benefit from fund administration outsourcing services providers because the advisories only pay for the labor they need and when they need it. The outsourcing provider can easily adjust to your firm’s requirements; they’ll add staff when you need to ramp up and they can easily remove the staff when things slow down.
Investment management operations outsourcing companies not only have the portfolio accounting experience and expertise to run your software, but they can prepare the reports overnight and at a lower cost than what your firm pays in-house.
Employee idle time is costly to your advisory firm and businesses at large, and perverse incentives like appearing busy in front of management to make it seem like everyone is working hard not only hurts productivity, but it covers up the idle time that needs to be exposed.
Fortunately, you can observe work trends and test your assumptions by adding tasks to employees’ workload. You can also assign specific tasks during what would be idle time, and even if there is no additional work, you should adjust staffing levels to fit the demand. If work levels are too unpredictable and you can’t bear the cost of idle workers, then outsourcing is a solution.
The reality is that work doesn’t always come in 8-hour daily increments; work levels are variable. As an operations manager, your job is to keep staff busy and productive for the time they’re in the office, and your superiors will judge your performance by how efficiently you run the back office.