Management holds a business together

The biggest challenge of businesses in Uganda is productivity. Stated simply, productivity is what you get out (outputs) versus what you put in (inputs such as labour, capital). 

This challenge is compounded by the fact that most businesses in Uganda are service businesses. It is hard to measure productivity or better still improve it in a service business.

Take the case of a barbershop. How many barbers can you hire? Perhaps two or three. But will you have the customers to sustain their wages? Also, how will you solve for people that are loyal to that specific barber? You also cannot really increase the speed of the haircut. A haircut takes 45 minutes to one hour. That means in a day, the most a barber will do is about eight clients. How much will you charge the client? Shs10,000? Shs15,000? Shs20,000?

If you charge highly, it also means you must command the ability to charge that highly. That means better towels, better waiting facilities. But it also means you must scout for the good barbers and pay them just well enough so they can stay and hope no one scoops them from you or better, hope they do not leave to start their own barbershop. 

How much electricity do you spend per haircut? How much water? How much inputs in terms of consumables? The sprays? What about the tools? How do you reduce theft and how do you keep those well maintained?

What if four people arrive at the same time? How do you convince the other two to wait? And how do you not rush the ones you are working on? Will you incorporate head massages? Shall you hire a masseuse for that? 

The productivity challenge is quite often solved through better management. Yes there is the labour component, that if you train people, pay them better, motivate them, they will do better. You could also invest in better tools and equipment (capital component). But the biggest improvements come from management improvements. 

The question of productivity in a business is better answered through improvements in management. When you find a failing business, quite often it is a case of poor management. Management makes the critical decisions around the labour versus capital mix. Management is the glue that holds everything together. 

For the salon business, it is management to solve the queuing issue. To come up with better waiting strategies, to deal with the labour upskilling. The quickest tweak you can make in any business is the management tweak. 

Ian Ortega is a consultant and managing partner | head of operations at Ortega Group