This is the Real Cost of Inefficiency in Your Business - and it’s More Than You Think
“We’re growing and recruiting fast to keep up - it’s a great sign, but everything just feels harder than it should.”
That’s the line I hear most often from founders and leadership teams when we first speak. It’s not panic or crisis, it’s frustration.
They know they have good people in the business; they’re working hard but progress just feels slower than it should. Decisions are taking far longer than they used to and the team seem stuck in cycles of overwork and rework.
The default assumption is that it must be a performance issue, but in most cases, it’s actually not. It’s inefficiency and it’s the type of inefficiency that causes your business to bleed money unnecessarily.
While it’s not exactly something that shows on your P&L, you’ll feel it in every corner of your business.
According to IDC, companies lose between 20–30% of annual revenue to inefficient operations.
That’s not down to dramatic failures or high-profile errors, it’s the result of everyday friction: duplicated work, unclear roles, miscommunication, inconsistent decision-making, and slow feedback loops. The sort of drag that rarely gets flagged directly but adds up quickly in missed deadlines, lost momentum, and unnecessary cost.
McKinsey puts it even more starkly. Their research found that poor decision-making processes cost large organisations 530,000 days of lost working time per year which is equivalent to $250 million in annual wasted labour.
That’s just one aspect of inefficiency; then you add in the cost of manager burnout, talent churn, and missed growth opportunities, and the numbers become even harder to ignore.
The real danger is how invisible it can be, because you don’t get a report saying “our structure is slowing us down.”, and instead you see delayed projects, fire-fighting managers, and meetings that go round in circles.
It doesn’t start where you think it does, either. One of the most common misdiagnoses I see is to assume inefficiency is caused by low motivation or poor individual performance - but it’s rarely the root cause. The teams are working hard but they’re working around obstacles the business has inadvertently created.
In practice, inefficiency often stems from three core issues:
1. Managers managing tasks, not performance – They’re solving problems themselves rather than building capability in their teams, which feels helpful in the moment but ultimately creates bottlenecks.
2. Structural misalignment – Roles and responsibilities have evolved, but job design, decision rights, and accountability haven’t kept pace.
3. Psychological drag – Managers don’t feel confident raising issues, challenging processes, or giving honest feedback, so problems surface too late, if at all.
These are all things that won’t show up in any report but they show themselves in repeated issues, strategic delays and leadership teams stuck in the weeds of the day-to-day.
None of these show up in your weekly reporting but they show up in repeated issues, strategic delays, and leadership teams stuck in the weeds. And the thing is, it’ll only compound as you grow if you don’t tackle it.
The Problem with Scaling
A few points of friction in the beginning becomes harder to ignore as the business scales because the structure and processes that worked when you were a team of 30 won’t work when you’re a team of 130.
And as the founder, you can’t be the glue any more. If your ways of working haven’t evolved, you end up paying for it through duplicated work, decision fatigue, and avoidable turnover.
This is what I refer to as the efficiency gap, it’s the space between what your people are capable of delivering and what they’re actually able to do, given the systems, clarity, and leadership around them.
It’s a mismatch between potential and process rather than a lack of talent or capability.
While you might have brilliant people on your team, if decision-making requires five approvals, if managers are stuck chasing updates, and if no one’s quite sure who owns what, then even the best talent can’t perform at their best.
The longer it’s left, the more capability leaks out of the business.
How we Tackle It
Efficiency often gets misunderstood as code for “doing more with less” but it’s actually about working smarter, not harder. In high-growth businesses, this is what allows you to scale without burning out your team or diluting performance.
So rather than pushing people harder, we start removing the friction that slows them down.
In practice this means designing clarity into the organisation, training managers not just to do the work but to lead performance by coaching their teams, not solving every problem themselves.
It means giving people real decision rights, rather than forcing everything through a chain of escalation, and it means creating psychological safety so that feedback flows up as well as down, and problems are raised before they become fires.
When we tackle this - it’s not only risk that’s reduced but it creates headroom for growth. You get faster progress, better decisions, and a team that can genuinely operate without constant intervention from the top.
If Something Feels Off
If you’re starting to notice that things feel heavier than they should or if your leadership team is stuck in reactive mode, pause and ask:
Are we clear on who owns what?
Are our managers leading or firefighting?
Are decisions moving at the right pace, at the right level?
Do we hear problems early or only when they’ve escalated?
Have our structures kept pace with our scale?
Most businesses have inefficiencies but not all choose to confront them. The ones that do create a real edge by building systems that enable them.
If you suspect your business has an efficiency problem but can’t quite put your finger on it, let’s talk.
I help leadership teams surface hidden drag, close the gap between effort and output, and create structures that make scale sustainable. Efficiency isn’t the opposite of ambition, it’s what makes it achievable.
