Yahoo Finance Businesses reveal their 7 most frequent failures
Aussie businesses are struggling to meet the goals they set, and a report has warned they’re a long way off producing high quality services and products.
Why?
According to leading global auditor, SAI Global, problems associated with quality stem from organisations failing to set realistic objects.
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On top of that, Aussie businesses aren’t effectively marrying their processes, systems and employee talent to meet those objectives.
Here are their top seven 7 most common business failures in Australia.
1. Lack of effective strategic planning
SAI Global’s principal advisor in business improvement, David Smith, said small-to-medium businesses are the biggest culprits of failing to strategically plan.
“We find smaller businesses more commonly have less of a focus on strategy and direction,” Smith said.
“They are too busy running their business and don’t have the resources to look at the bigger picture. As such, they have less of an understanding of the competitive environment, are less able to compete, and often struggle to identify opportunities and grow.”
2. Mid-level and junior employees don’t know about the business’ objectives
Businesses are failing to let lower level employees know about their measurable objectives, and provide them with the necessary resources to achieve those objectives.
Smith said this leads to the “silo effect”, where internal teams work independently of each other.
Ultimately, it becomes tougher for those businesses to meet their objectives.
3. Important business functions aren’t being monitored
Businesses should be monitoring performance at each level, but Smith said monitoring processes aren’t being developed, or if they are, they’re not followed.
If businesses are looking to improve the efficiency of certain functions, it’s unlikely to achieve that if they don’t implement a scheduling system that can be measured.
4. Short-sighted leadership
Small-to-medium businesses tend to excel in leadership, but in larger organisations, Smith said he’d seen section heads focus on their own area, instead of the entire organisation.
This also leads to the silo effect, which in turn leads to inefficiencies.
5. Conflicting systems, processes and objectives
Some internal systems and objectives within individual departments can clash with businesses’ objectives.
“For instance, an organisation’s call centre may have an efficiency targets that requires its operators to limit their call times with each customer,” the report said.
“This could mean that all of the information required from the customer to provide a quality service is not obtained and this can hinder the achievement of the quality service objectives set by the organisation.”
6. Employees don’t receive support to develop
Smith said when SAI Global interviewed employees as part of its auditing process, it often found they were put into roles with very little mentoring and support.
“As a result, they have difficulty in fulfilling the requirements of their role, particularly early on,” he said.
7. Failing to identify and solve problems
Senior management often use profit and loss statements alone to monitor the health of their business, but Smith said this isn’t an effective means of doing so.
“Basing decisions on financials without a focus on the quality of the organisation’s products and services happens a lot – and is not an effective means of identifying problems.”
When the silo effect is occurring, Smith said problems are sometimes hidden in individual departments, rather than financial statements, and this tends to have a negative effect on the entire organisation.
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