Why Is Selecting a Tool Based on the Five Factor Model Important?October 3, 2018
Why Do People Make Mistakes?October 18, 2018
Sam was a department manager who was plagued by customer complaints. At least twice a day he got calls from customers who had either received the wrong product or hadn’t received their order at all and it was already a day or two late.
As a result, Sam spent a large portion of every day researching what went wrong. What he generally found was a miskeyed address or order number. What he didn’t understand was how these errors were constantly being made and missed by the quality assurance team members.
Sam calculated that by the time each problem was resolved, it equated to over 6 hours of lost time and productivity, involved multiple team members, and resulted in additional shipping costs. If this continued, there was no way his department would be able to reach their financial goals.
All organizations use data and every employee must be able to deliver reliable and accurate data all of the time. No matter how many fail-safe systems we use (check digits, double keying, 100% verification), people still make mistakes with numbers and data. A simple transposition of two numbers can start a chain of misinformation that can take days, and sometimes months, to fix. Every error costs money and it can take a lot of time to find and correct errors. When you consider the additional cost of offending, irritating, and possibly losing a customer, the cost of errors is enormous.
What Do Errors Cost Your Organization?
Have you ever tracked the cost of finding and correcting an error? The groups we train typically have around a 3% error rate. What do errors cost your organization?
- Determine an employee’s daily error rate.
- Calculate the percent of time your employee spends each day re-keying erroneous information.
- Determine the percentage of time it takes to discover and research errors once they are in the system.
- Add up all of the percentages.
- Multiply that percent total by the employee’s annual salary.
- Calculate the cost of your department’s lost productivity due to errors (if applicable) by adding up each employee’s totals.
For example, based on Anne’s error rate:
Time spent making errors 3%
Time spent inputting correct data 3%
Time spent researching errors, reprinting, and resending materials 12%
If Anne’s salary is $30,000 a year that would equate to $5,400 to fix errors that could have been avoided. If you have 10 employees who do the same, it equates to $54,000.
Unfortunately, this is only the calculation for the errors caught internally. Don’t forget to add in the errors that directly impact and annoy your customer (i.e., shipping the wrong product, re-issuing checks, re-sending statements, etc.). Altogether, these costs can be enormous.
Although performance may differ slightly between organizations, we are confident that any organization completing Evoke Development’s Accuracy Training can achieve a Return on Investment (ROI) in a matter of weeks, and in some cases, days.