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Thursday, June 26th, 2008

Business Audit Tools and Techniques ~ Part 3

This third article in our series on Business Performance Auditing examines the five main research methods used in corporate situations to carry out effective, successful audits.

The key to productive audit outcomes is the collection of accurate, comprehensive, and relevant data. The different methods of collecting this data all have advantages and disadvantages, and also correct ways in which they should be used. Available research tools and techniques range from the very rigid to the highly flexible, and each can be applied in a number of ways. Ensuring that the audit team members make effective use of the selected tools and techniques is essential to the quality of the audit process.

Selection Constraints

The choice of which tools and techniques, which research methods, to use in a particular audit will depend primarily on the objectives, the goals, of the audit. However, whilst the objectives are highly important, there are other factors that will influence the methods used, and by default, the outcomes of the audit. These include: Nature of the project Objectives – if the objective is to obtain the opinion or mood, for example, of a large population, then the choice of methods is limited, probably to large scale surveys; Timescales – for example in how much time is available for preparation, planning, and carrying out the audit. If the need for results is urgent, then the timescales will be short and the pace of activity will be fast; Funding – the amount of budget available is a critical constraint. If funds are limited then the range of options will be limited also. This immediately presents a dilemma between qualitative and quantitative research, whereby qualitative is usually lower in cost, whilst quantitative will provide more accurate information. The temptation to opt for quantitative, small scale research, and then to extrapolate the findings should be managed with great care, as this is not a wholly reliable method; Location of sources of data – if the sources are geographically spread widely, the financial costs of travel can persuade or dictate that the research is carried out by telephone, email or post: Language differences – in multinational organisations the regional or country language differences can influence the methods chosen, due to specialist researcher and-or translation costs; In-house or external expertise – if in house research teams are in place this can dramatically reduce costs but may lead to less objective findings, whereas external researcher-auditors may be more expert and experienced, and if briefed properly should present more objective findings, they will inevitably be more expensive.

We will now look at each of the main methods, highlighting the reasons for selection, the advantages, and the potential disadvantages:

Interviews

This is the gathering of data where the researcher-auditor interviews and questions an individual, face to face or by telephone. Interviews are productive when there is little existing data or information on the issue, topic, or problem, being audited, and-or where statistical or quantitative data is not available or inappropriate. There are a range of interview structures and approaches that can be adopted, and care should be taken to select an appropriate interview format that will produce the required outcomes. A high level of expertise on the part of the interviewer is essential.

Advantages and Disadvantages: interviews can produce high levels of quality data, especially on subjective matters, such as those linked to behavioural, cultural, or relationship issues. In these circumstances they are successful due to the personal attention given to the interviewee, and the depth of information that can be elicited. However, it is a time-consuming and expensive process. Also, it is absolutely critical that the interviewer is highly skilled in interviewing techniques and fully aware of the objectives of the interview from the audit perspective. As a result of these factors, interviews are often carried out by externally sourced specialists.

Focus Groups

Known to many as a marketing research technique, here we will look at it as contributor to the business performance audit process. Focus groups are made up of a small number of carefully selected participants, usually no more than 10 per group, meeting for a period of usually no more than 2 hours, who are asked to discuss, debate and give opinion on a particular issue, problem, or topic. The group is managed by a skilled facilitator who set objectives, moderates the progress of the discussions, guides the participants towards achieving the session objectives, and collates and presents the outcomes. Focus groups should be used where quantitative research is inappropriate or unavailable, for example in situations where the audit team is researching cultural, human behavioural, personal user views, or relationship situations.

Advantages and Disadvantages: focus groups can be highly valuable sources when qualitative data or information is needed, such as personal opinion, level of understanding, depth of knowledge, or strength of feeling. However, it is necessary to select group members carefully, to provide them with training, and to have a trained, expert facilitator to manage the group. Additionally, the temptation to take the focus group views and to extrapolate these as representative of the general population is dangerous.

Benchmarking

In simple terms, benchmarking is comparing an aspect of the organisation’s performance with that of another organisation’s performance of the same process, and identifying where lessons can be learned and improvements implemented. However, it can be equally valuable to benchmark against a process that is not the same but does have core elements that are similar to the core elements of the process seeking improvement. An example of this would be where a manufacturer benchmarks its supplier evaluation process against the supplier evaluation process of a local authority, or a bank benchmarking its customer counter process against that of a fast food restaurant’s process. The gaps in performance, in terms of, for example, processing time, quality standards, cost levels, customer satisfaction levels, and so on, are identified and action taken to integrate the (better) practices that have been selected, or to fundamentally change the process to match the best practice identified. It is interesting to note that benchmarking can be carried out between two or more different operations within the same organisation, for example where there are regional or country locations carrying out essentially the same processes but achieving different levels of performance.

Advantages and Disadvantages: done well, benchmarking is a valuable, highly effective performance improvement technique, but it needs thorough planning, a well trained team, carefully selected processes to benchmark and carefully selected targets to be benchmarked against. Most critically, benchmarking must be adopted as part of a continuous improvement process, not as a one-off attempt to fix a single problem.

Direct Observation

Although not always recognised in some fields as a formal research method, in the business performance audit process, direct observation has a major role to play. Known to many from the activities of auditors of certificated systems, such as ISO9000 and ISO14000, observation can be used to gather data and information on a wide range of workplace processes and behaviours. There are four main formats that direct observation can take: Obtaining evidence of performance by analysing residue, such as in measuring waste or returns, or in environmental audits examining erosion levels or pollution levels: Field observation, where the auditor observes interaction between individuals in a group, or the operation of equipment, or the interaction with customers; Participation, where the observer takes an active role in the process or activity, such as accompanying a sales person on a customer visit; Observing records, such as in financial audit trails, a method used frequently by accountants, or in quality audits where the external auditors examine historical records of internal audit findings and corrective actions taken.

Advantages and Disadvantages: In the situations described above, direct observation is a highly effective method. The only potential downside is that the observer must be appropriately knowledgeable about the process or activities being observed, in order to evaluate performance accurately.

Survey Questionnaires

A method that most of us are familiar with, mainly due to the fact that surveys are relatively inexpensive and easy to carry out. Surveys are the best method for obtaining findings from a large, general population. The most common two first level population groups are customers and employees, with these being then broken down into sub layers and groups. Surveys measure demographic data such as age, sex, income, education, attitudes, beliefs, opinions, behaviour, knowledge, and understanding. Analysts can then examine the relationships between these, and suggest ways in which the findings can be productively used, such as in drawing up customer profiles, or identifying trends in purchasing behaviour. Surveys are usually of three types: written, where the questionnaire is sent by internal or external mail and is completed by the individual; telephone, where a written questionnaire is used by the researcher to elicit responses from the person being called; face to face, where a researcher talks to individuals one to one eliciting responses to the questionnaire.

Advantages and Disadvantages: in terms of quantity of date obtained this is a low cost method that can contribute productive information to the corporate decision making process. However, the results can be influenced by the structure, order, and wording of the questions, by the timing of the survey; respondents may not all interpret the questions in the same way, especially if the survey group is diverse, for example in terms of age, sex, language fluency, culture; data gathered is often superficial, with deeper, more entrenched or subconscious opinion, behaviours, etc not visible from the survey responses; aggregating responses can be misleading; random sampling (it is impossible to survey the total population in most cases) can be unreliable when extrapolated;

Conclusion

The selection of appropriate methods of gathering data and information is critical to the success of any business performance audit. The methods discussed here are highly effective, but only if carried out by experienced, trained, fully briefed specialists, supported by sufficient human and financial resources, and by the visible support of management. With these factors in place, these tools and techniques will produce data that will enable performance audit team to deliver high quality outcomes and allow the management team to plan and take appropriate action with confidence.

The editor, CJ Williams, can be contacted at cjwilliams@consultuk.com

or via www.brightonsbm.com

Leave a comment » Filed under focus on management development by cjwilliams at 15:48.

Tuesday, June 10th, 2008

Marketing Yourself Successfully

This article is aimed particularly at the managers, professionals, and specialists who are studying on management development courses or professional qualifications, by distance learning or in the classroom, in order to develop their careers. It is designed to provide advice and guidance on strategies and tactics that will make them more attractive to current and potential employers, or to customers and clients if an entrepreneurial route is taken.

The Need To Be Marketable

Around the world the market for skilled people, for professionals, for generalists and specialists, is increasing exponentially. Ironically, at the same time the market is demanding only specific skills, knowledge, understanding, experience and qualifications, and these are often not the traditionally known ones. Remaining marketable in such fast changing and demanding times is now essential if an individual is to continue to be successful in their work. It is not enough to have traditional skill sets, nor rely on qualifications which have been superseded by more modern versions or completely replaced. To remain marketable it is essential to continuously, appropriately, and visibly, update your qualifications, skills, knowledge, and understanding. Additionally, in many business sectors you will need to demonstrate that your experiences are also current, varied, and relevant.

The Marketing Concept

Successful providers of goods or services adopt what is known as the Marketing Concept. This, in essence, is the producing or selling organisation focusing primarily on identifying the needs and wants of the customer, rather than the operational capabilities of the organisation. This customer driven approach ensures that the organisation is aware of current and likely future customer needs and enables it to provide products that it knows certain customers will purchase. Of course, other factors, such as competitor activity and background changes in the marketplace, are very important, and will be factored in to the strategies. It is this approach that must be taken by the individual seeking to be successful in their careers.

Applying The Marketing Concept

To remain marketable, to be successful in finding new opportunities, to make good progress in whatever field you have chosen, you will need to adopt the marketing concept to yourself. This means researching what your customers or clients want. If you are intent on staying within your current organisation, you must research and establish what are their current, but more importantly, future people needs – what skills, experience, expertise, qualifications, are they seeking from their key people. To highlight the importance of this, consider what an external applicant, applying for a post in your organisation, would do. Correct, research and present themselves in a way which matches the needs of the organisation as closely as possible. If you are planning to change organisations, or sectors, or to set up a business, the same applies – you must identify the current and future needs of your chosen target. If you do not, then it is highly likely that your profile will not meet their needs.

Researching Your Target Market

This is the most essential first step. You will need to consider which markets you are targeting, which customers. In other words, which business sectors and which organisations, or which clients and customers if you are setting up a business. This is not an easy task but it is critical that you do this well. If you are planning to remain employed then much information is readily available, directly from organisations and from business sector trade organisations, indirectly from sector reports, educational research, educational institutions who provide sector or profession specific courses, educational departments of professional associations, marketing companies, government departments. The danger is that many of these information providers may themselves not be up to date with the latest developments and trends, so you will need to cross-check most information. If you are planning to set up a business, then you will need to carry out market research on your potential customers or clients. Armed with information on the current and forecast condition and the current and future people or services needs, of your target markets, you can then move on to the next step.

Identifying Your Current Attributes

The essential second step is to carry out an analysis of your current skills, experience, qualifications, and ongoing development activities. The best and most simple tool to do this with is the SWOT analysis: identifying your strengths and weaknesses and then the opportunities available to you and the threats that face you. You can do this alone, but it is much better to seek help from others, such as a coach, mentor, human resource specialist, line manager, or friend who can give advice and support objectively. When you have identified your strengths consider how these can be enhanced. When you have identified your weakness (in relation to your target customer’s needs) you should plan how to reduce or eliminate them. In both areas, this will probably mean taking on personal and-or professional development activities, which we will discuss below. Opportunities will need to be assessed in two stages: firstly those available to you now, given your current profile, and secondly those that will be available to you after you have made yourself more marketable, by enhancing your strengths and taking positive action to eliminate or reduce your weaknesses. Threats are also best assessed in two stages: firstly those currently facing you, and secondly those that are likely to arise in the future. As you can see, identifying your current attributes is a major task, but one that is highly valuable and essential if you are to move forward successfully.

Identifying Transferable Attributes

As we are illustrating in this article, your most valuable transferable skill may well be that of being willing to continuously develop yourself. That aside, there are other attributes that will be highly valuable. Whether you are considering moving into another business sector, or setting up your own business, then in the process of carrying out the SWOT analysis, you should add a category where you can list your current transferable skills. These are skills, experience, qualifications, knowledge, that you already possess and which will be valuable in your new work situation. These attributes can range through the hard to the soft, and can include contacts, experiences, specialist expertise, passion for certain type of work, qualifications, internet skills, foreign languages, and so on.

Personal Development Activities

After you have completed the analysis of your targeted markets, and of your current skills, the next step is to draw up a development action plan that will fill identified gaps, enhance strengths, reduce or eliminate weaknesses, prepare you to take advantage of opportunities and equip you with the means to defend against threats. Preparing a personal professional development plan is a major task and should not be taken lightly. Advice and guidance should be obtained from appropriate sources, even if this is simply to research current best practice, by using the internet and-or textbooks. Your plan should be designed to develop yourself in a way which results in your profile matching that of the target markets. It is unlikely that you will achieve a complete match in a short space of time, but you must start the journey with that in mind. Considerable help is available, from professional associations, sector specific educational qualification providers, private business schools, public colleges and universities, and can be studied in distance learning, classroom, or on the job formats. Some development areas are widely useful, such as courses in general business and management, quality management, project management, and marketing, whilst other subjects can be highly useful if identified as a specific need, such as risk management, event management, financial awareness, strategic planning, and customer relationships. There are, of course, many more that could be essential development areas.

Promoting Yourself

In addition to the necessary personal development activity, there are other avenues that should be explored. These include: networking, which is seen in some sectors as a valuable marketing tool for employed and for self-employed people; building a presence by publishing articles, in relevant journals or internet directories or publishing a weblog, or even writing and publishing a book on your business specialism; taking on public speaking; joining and participating in local branches of professional associations. These are but a few of the many ways of promoting yourself, which can be explored in more depth through research on the internet.

Action Planning

The message here is very simple. You must take action. Whatever your marketplace it will be highly competitive and highly demanding. You will need to be actively managing your participation, your self-marketing, in order to be amongst the successful participants.

Danger Areas

There are some common pitfalls that can damage the process. The main danger areas are: Allowing current workload to prevent you from taking the action described here. You will almost certainly never be less busy, it’s the way of the modern business world that the amount and the pace of change is continuously increasing, and this translates into workload; You are tempted to focus on technical, operational skills, rather than broader, more conceptual skills, such as interpersonal skills, negotiation skills, or strategic approaches; You become committed to a position because it was easy to obtain. If this happens it is unlikely that the attraction of the post will last; You limit your opportunities by trying to match your existing skills with opportunities; You limit your opportunities by carrying out little or insufficient research; You limit your opportunities by not looking beyond your current business sector; You procrastinate and don’t take action. All of these are fatal mistakes. You must avoid them and take positive, realistic action, now.

In Summary:

Making yourself more marketable, more attractive, more credible, more interesting, is an essential skill in today’s highly competitive, complex, and fast-changing business world. The need to show evidence of continuous personal and professional development is no longer expected of the few, or in certain professions only. It is now mandatory in all business sectors, and in all organisations, be they private or public, commercial or non-profit making. The most successful individuals embrace this requirement and add it to the range of skills that they equip themselves with, and then develop it with passion and commitment. To make yourself more marketable you have to take that task very seriously, and commit appropriate effort and energy to it. If you can also add passion for continuous development and learning, the rewards will be considerable.

The writer, CJ Williams, can be contacted at cjwilliams@brightonsbm.com or via www.brightonsbm.com

Leave a comment » Filed under focus on management development by cjwilliams at 10:44.

Friday, May 30th, 2008

Continuous Improvement of Business Audits

In this series of articles on Business Performance Audits we have looked at the different stages of auditing performance and the best practices that should be followed. Here we discuss the need for a gradual, orderly, kaizen style continuous improvement approach to the auditing process, in order to ensure that the process continues to be productive and effective in an ever more complex business environment.

Key aspects of this approach are:

Best Practice In Maximising Audit Results

An effective audit process will mean that audit teams will be taking a systematic approach to gathering and interpreting data and information. In order to maximise the value of the outcomes of the audits the management should: Accept that the audit activity needs appropriate resourcing, including training of auditors, education of operational and management staff, and physical and financial funding. If any of these are inadequate, then the quality of outcomes will suffer. Accept that there will be limitations to the data gathered and the outcomes produced - not least because of the influence of the quality and quantity of resources allocated to the audit activity, but also because of the varying standards of judgement and interpretation that may be applied to the outcomes; Focus on trends – yes, take appropriate corrective action on specific issues, but look for trends and patterns that indicate underlying, hidden, problems that need addressing; Ensure that the auditing activity is flexible and adaptable, in order to make it compatible with the culture and structure of the organisation – rather than adopt a rigid, unchanging process which is likely to be inappropriate and producing inaccurate results; Challenge the findings – the audit process will not be infallible, and should be challenged continuously to ensure that it is, itself, performing effectively; Apply the highest possible standards to the interpretation of results and judgement on what action to take – this requires training, experience, expertise, awareness of the internal and external environment, and an awareness of the impact of proposed changes on the motivation and morale levels of staff and managers, and an ability to forecast the impact.on the operational and strategic objectives.

Threats To Maximising Audit Results

However, there are some dangers that must be avoided in order to maximise the effect of the audits. These include: Overload of data and information – the result either or too many audits being scheduled in general and-or the unnecessary auditing of areas of activity that are obviously performing well. This can be avoided by targeting the audits and schedules more thoughtfully; Overload of improvement recommendations – not in itself a danger, but the organisation can find it impossible to resource – in terms of budget, time, or human resources - all the improvements identified. The answer is to prioritise, focusing on those improvements that will bring greatest value to the achieving of the organisation’s objectives; Complacency – where results are apparently positive in most areas, there is a danger that management will become complacent. By adopting the kaizen continuous improvement approach to auditing, this should be avoided; Over-reliance on the auditing process – by leaving the identification and correction of poor performance to the audit process, rather than the audit process at least in part confirming that positive, continuous improvement activity is taking place; Managers ignoring the relevance of audit findings – the most damaging response. If managers do not take the audit results and recommendations seriously and refuse to implement, or only half-heartedly implement the required changes, then the value of the audit process is wasted.

Improving Poor Performers

Although the auditing should be scheduled to examine all processes and activity on a regular basis, there is a need for additional emphasis to be given to auditing poor performers. These are activities, processes, functions, systems, where problems are visible of suspected, but the causes are not certain and need further investigation. In these cases management should arrange for ad hoc audits, and-or for these areas to be given priority in current or imminent auditing activity. It is not acceptable to rely on a generic auditing approach. Not dealing with visible or suspected poor performers immediately will allow poor performance to cause immediate and possibly long term damage. Inevitably, the longer the problems remain unaddressed, the more difficult it will be to take corrective action.

Feedback Is Essential

There is a danger that management will see only the audit results and concentrate on the decision making as to what improvements to make, and how to implement these. However, management must remember that the audit results are drawn from the activities of people. This means employees, operational staff, managers, specialists, suppliers, customers, stakeholders. Feedback, shaped and delivered in an appropriate manner, depending on the target group, must be seen as an essential element of effective auditing and successful implementation of changes. Not informing people of the rationale, the purpose, the results, and the positive contribution made by auditing, will lead to low morale and motivation, dissatisfaction, and possibly conflict.

Focusing on Competitive Advantage

It is essential that the improvements generated by the audits strengthen the organisation’s capability to compete. In order to ensure this happens, management will need to be aware that: It will often be necessary for improvement action to be prioritised. Where this is the case, then those improvements that will contribute the most value to the organisation’s competitiveness should be given higher priority. This is a responsibility of management, who will need to be appropriately skilled in this task; The business sector and general external environment is changing rapidly, and even relatively recent outcomes and improvement recommendations may no longer be appropriate due to significant external changes. This requires management to be alert to such changes and to have the ability to interpret how their organisation should best respond; After improvement changes have been implemented these will have, by default, altered the nature of activities and processes, and will need monitoring, auditing, to ensure that the effect is positive. It is highly likely that most changes made will need adjustment, especially in the early stages after implementation. This must be an integral, high profile, element of the change process.

Focusing on Strategic Direction

Business Performance Audits are critical to the success of the organisation. The specific functional, process, and activity improvements generated by the Performance Audits are important and must be visible supported by the management. However, strategic and operational priorities will be constantly changing. Senior management must also ensure that the audit activity contributes positively and supports the strategic direction that the organisation is taking. It is the responsibility of senior management to continuously monitor the effectiveness of the auditing activity in the light of this requirement, and make appropriate changes if necessary.

Conclusion

To obtain the maximum benefit from Business Performance Audits the management must view them as a critically important element of the business. Appropriate resources must be allocated to the activity itself, to the interpretation of results, and to the implementation of improvements generated. Auditing must be integrated into the continuous improvement approach of the organisation. In addition, the objectives of the auditing process must be to generate improvements that contribute positively to operational and strategic objectives. If this approach is taken by management, then the organisation will benefit greatly from the continuous improvements that an effective auditing process can deliver, enabling it to continue to perform to the best of its ability.

The author, CJ Williams, can be contacted at cjwilliams@consultuk.com or via www.brightonsbm.com.

Leave a comment » Filed under focus on management development by cjwilliams at 15:58.

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Business Audit Tools and Techniques ~ Part 3

Marketing Yourself Successfully

Continuous Improvement of Business Audits

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