In Business Management, what is Continuous Improvement?

Continuous improvement in business management is a technique of improving processes, products or services through small gradual changes. The purpose of making small incremental changes is to prevent changes that can paralyze the workplace. It is easier for employees to accept small changes at a time, and small changes are generally easier to implement. Pursuing this type of policy encourages a "can-do" attitude in the workplace and keeps bottom-line employees involved and responsible for getting things done right.

Benefits of establishing a continuous improvement policy are reduced costs arising from defects, waiting, transporting, inventory, unnecessary motion, over-processing and over-production. Since managers and employees are keeping a close eye on inefficiencies to continuously improve processes, companies can eliminate wasteful spending. For instance, if a manager notices that an employee is manually entering data received from marketing, he might make a request to the Information Technology (IT) department to integrate systems so that it automatically is transmitted. This will reduce the time it takes for the employee to analyze the information received from marketing and decrease errors from manually entering data.

Businesses with continuous improvement cultures understand that errors are forgivable but changes must be made so that they don't happen repetitively. Since employees are, or become, experts in their jobs, they know what can be done to increase efficiency and reduce costs. Continuous improvement policies can result in the employees become the business’s main competitive advantage. Allowing employees to report problems and suggest changes to improve performance is quicker and cheaper than hiring outside consulting firms to analyze and provide these same recommendations.

Creating a continuous improvement framework requires time and careful planning. Communication barriers should be fixed so that employees can freely talk to managers about issues. Processes and decision-making should be set so that changes can be quickly approved and implemented. Guidelines need to be created as to what constitutes a small change versus a large change, and what steps need to be completed in order for managers to approve them. Employees must believe that their ideas and suggestions will be taken seriously if they are expected to continuously look for improvements.

Continuous improvement frameworks should be reviewed and measured in order to determine their success. Improvements should be defined in quantitative terms so that they can be measured. How long it took from an employee’s suggestion to become implemented and how its implementation helped or hurt the company should be examined. Decisions made by managers and necessary changes made in the guidelines or framework should be reviewed.