Checking the organisation Pulse

“If you know both yourself and your enemy, you will come out of one hundred battles with one hundred victories.” Sun Tzu’s age-old adage from “The Art of War” is certainly familiar in business circles.

Yet, it remains pertinent advice that is often overlooked.  It is common knowledge that regular health checks are a precursor to good health—prevention is better than cure. In the same way, your company needs regular health checks to monitor internal and external wellbeing. How well is your company performing? How do you compare with your competitors? What are the key areas that need to be addressed?

The first step in assessing business performance is internal assessment. For some companies this assessment may be limited to an annual audit. Annual audits are a valuable diagnostic tool for identifying strength and weaknesses in performance. However, used in isolation gaps will remain—audits are often infrequent and don’t allow for rapid response to a situation.

Self-assessment, appraisals and ascertaining feedback should be utilised by managers on a daily basis. But there are many other simple business tools available to identify business trends and patterns.

Management technologies and Business Performance Management (BPM) processes are advancing rapidly. Today, generic programs are readily available to manage business information. This analytical software is often incorporated into computer business applications, such as those produced by Microsoft. Tailored programs can also be designed specifically for your company providing data integration, reporting and forecasting capabilities.

Key Performance Indicators (KPIs) are subjective and objective metrics designed to reflect strategic performance. Examples of KPIs are call rates and field visit results.

Key ratios can also be utilised as a financial measure to explore profit margins, debt-to-equity, turnover and collection periods. Both of these assessment tools are a simple and transparent way to measure staff and business performance.

Information gathering and analysis will build an internal picture. Strengths and weaknesses can then be addressed, enabling management to devise strategies to increase profitability and company growth. But this information will not automatically indicate market share or competitiveness.

For many companies, it is not possible to accurately gauge performance on the information provided by employees. Many service-type industries overcome this by using ‘mystery shoppers’ to provide consumer feedback. Industry awards and nominations are another means of comparison.

Business coaches and architects can also provide business performance audits, commonly known as ‘situation analysis’. They will use financial information and benchmarking to facilitate an understanding of industry positioning, market trends and strategies to improve performance.

Perhaps the most commonly used tool to compare your company with direct competitors is benchmarking. Business benchmarking evaluates business processes of companies within the same sector. This type of comparative analysis allows for more indicative observations.

Many local council and government websites provide benchmarking tools that can be easily accessed and simply applied. This is a good place to start. Alternatively, independent assessors are commonly employed to conduct comparative benchmarking.

Typically, surveys are completed confidentially by a cross section of the market place. Data is compiled and individual reports are then prepared for each company. Performance measures such as profitability, staff performance, salary levels and hours worked can be applied. The analysis can also take into account the size, location and type of business. The information provided in the reports can then assist your company to gauge areas of weakness and determine company direction.

In the end, regular and systematic monitoring of company practices and market share are crucial for business success.