It’s not always black and white whether a company is running optimally or properly positioned for a healthy future. In a rapidly changing world, company owners and management teams should consistently ask themselves how they should expand their business or improve business performance — even if their company financial performance looks great at the time.
We often get calls from companies looking for an executive when trouble hits. Usually, it becomes apparent that the signs of peril ahead occurred much earlier. It’s common that months or even years prior to a business crisis, there are critical areas that aren’t identified or measured. Unfortunately, this blind eye to crucial business factors is the very culprit that contributes to the demise of a business’ future performance.
The second annual ranking of the 250 best-managed public companies in the US was recently compiled in a report by the Drucker Institute. The criteria used to gauge the business effectiveness of 752 companies from Apple to Amazon to Microsoft can serve as a guide to organizations insight into how well their company is truly doing.
How Can Customer Satisfaction Be Improved?
“To satisfy the customer is the mission and purpose of every business,” said Drucker, the godfather of the field of modern management who published more than 30 books, to identify the most effective management.
How often do you get fed up with long call wait times, or sites that are unbelievably hard to navigate? The days of monopolies where only big companies called the shots are quickly going away as consumers are looking for alternate options. Customers are demanding that companies cultivate a strong positive relationship with them.
Many organizations do not have customer satisfaction metrics in place. In today’s business climate, deeply understanding what makes your customers tick and motivates them is a necessity to stay competitive. To thrive in this economy, businesses need to take a close hard look at how customer engagement and how customer satisfaction can be improved. Whether it means conducting focus groups, managing a social media listening program, implementing IT initiatives to improve customer wait times, improved sales training, regular customer check-ins to see where your company stacks up is vital. Every company should have a customer experience program in place to get an idea of whether their business will be successful in the future.
Why is Employee Engagement and Development Important?
“The enterprise must be able to give [its employees] a vision and a sense of mission. It must be able to satisfy their desire for a meaningful contribution to their community and society,” Drucker said. Hiring someone who stays with a company 25+ years is quickly becoming obsolete, and oftentimes employees are looking beyond pay as an incentive to engage. They want to know their role and the impact they can make.
Too many organizations report low morale, lack of communication, or mismatch in roles and responsibilities. Oftentimes, this points to not engaging employees to your mission and vision. You can often see how well a business is doing by the drumbeat of the organization. Is there transparency? Accountability? Regular communication with the team? Are employees satisfied or are they eyeing the door? Every employee should know what you as an organization is trying to accomplish, why it’s good for the organization, why it’s good for them and how they can play a part in making that mission and vision come to life. How are you nurturing and developing talent within your team?
How Can Innovation Be Improved?
Every business needs to spend cycles to evaluate products, services, processes, and markets. They must prune ones that are no longer relevant, and build on the success of others to continuously improve or innovate.
No sector will be spared as technology and IOT changes how we interact with products and services. Case in point: Taxis have been around for over half a century, unchanged, until Uber disrupted the marketplace. Hotels were the de facto go-to until Airbnb hit the market giving consumers options to couch surf or find new, unique experiences that had not been formerly available.
To improve innovation within a company, oftentimes, bringing in a fresh perspective can do wonders. While extremely valuable expertise sits within a company in those who know the ins and outs of the industry and how it operates, the best thinking can come from other sectors.
When deploying interim executives to help fuel company growth or turnaround, we often say that industry is not as important, because that’s when change and innovation can be infused within a company. Even if things are running smoothly, that can look very different for your company in the future. Smart organizations spend the time and resources on R&D to learn what is working and what needs business improvement.
Are You Factoring in Social Responsibility?
The Drucker Institute report says that management must take responsibility for the impact of their organization and do what is genuinely in the public good.
Taking time to review how your company is socially and environmentally conscious, will often reveal if you are running your business as effectively as you can. What are your core values? Do people know those core values and adhere to them as to not exploit people and resources? How are you giving back to the community and your employees? This is an important item not only for internal alignment but from a customer’s point of view as well.
How Can You Improve Your Financial Strength?
Financial strength is perhaps the most obvious factor of corporate effectiveness.
“There is only one appropriate yardstick of business performance. This is the return on all assets employed or on all capital invested,” Drucker said.
Financial numbers alone do not paint a proper picture of a company’s management style or its health, but they cannot be overlooked. Look at your company’s financial performance against where you could be operating. Are you hitting your goals and metrics? Drucker explained, “to be a marginal producer is always dangerous.”
How Well Is Your Company Doing?
A well-run company is a sum of many parts, and the Drucker Institute report highlights the most important pieces you must assess to determine if your business is running optimally. A weakness in one area can easily have a domino effect, negatively impacting other areas of a business. Owners and management teams should conduct a business assessment to get a snapshot of the health of their organizations. If there is a lack of time and leadership resources, proactive businesses find an outside leader to conduct their needs assessment.
HBR reports that an organization has less than a 10% chance of ever recovering from a stall in growth whether it’s due to problems with execution or failing to pivot away from a core strategy that isn’t working. To avoid being one of the statistics, ensure you are in touch with where your organization sits, and what you can consistently be improving to charge into the future.