8 Barriers to Organizational Excellence

Quality organizations are driven to improve, to achieve a higher level of excellence and profitability. All quality organizations are hindered in some fashion by the following barriers. To what extent does each barrier impact your organization?  

  1. Weak Processes for Accomplishing Goals - Weak processes lead to poor results. It is virtually impossible to create a high achievement culture without a solid track record in accomplishing strategic and improvement related (tactical) goals.

  2. "Chance for Success" approach - While we intend to have success with projects and initiatives, many organizations do little to ensure their success. There is a big difference between a "chance for success" approach and a "leave nothing to chance" approach.

  3. Lack of Commitment - It is far easier to get support for an initiative than it is to gain commitment. Many Leaders feel they have commitment from the stakeholders when in fact they only have support. Commitment means doing everything possible to bring about the success of the initiative.

  4. Lack of Accountability - Most organizations lack a strong measure of accountability. Goals are set and assignments made without a system of accountability.  Studies show that in world class organizations employees want to be held accountable.

  5. Procrastination - It is entirely possible for Leaders to go weeks, months or years wanting to work on their organizations-make changes and course corrections-only to continue to believe that the right time is anytime but the present.

  6. Lack of Effort - The "Effort Gap" is the difference between the maximum effort an employee can bring to their position and the actual effort they are expending. By meeting the minimum effort the employee has done what is necessary to avoid penalty. Any remaining employee effort is truly discretionary.

  7. Lack of Vision - Most organizations lack a clear, compelling vision that motivates all employees to give their maximum effort. A key part of a vision statement is the organization's courageous goal and descriptive future of what things will be like for everyone when the goal is achieved.

  8. Lack of Concentration - On average, employees are interrupted every 10 minutes during their workday. These interruptions become a barrier to achieving excellence and hinder an employee's productivity and performance.

 

Internal Control Isn't Just for Big Companies

Internal control is a very special phrase in the accounting profession. Tactically, it’s the set of processes that help a company produce accurate data throughout the organization, follow reporting requirements and laws, and maintain consistency and accuracy in its operations. Strategically, it’s an entirely new way of thinking and doing business.

Good internal control practices help to reduce organizational risk. A blunt way of putting it is internal control is what you put in place to avoid mistakes, intentional or accidental, and to control accuracy and quality. It impacts every aspect of an organization.

As a small business, you’ll want to be familiar with the concept because it can help you reduce risks you might not realize you have. Here are some practical examples of good ideas that support internal control:

  • When data is private and secure, provide access only to employees who need to know the data and restrict access of others.

  • Have someone check that your bank balance matches the reconciled amount in your books, and that someone should be different from the person who does the reconciliation. This is an example of what’s called segregation of duties.

  • Lock up paper checks and use the missing check number report to make sure none of the stock could be used for nefarious purposes.

  • Have employees sign in and out equipment that they take home. This is part of asset management.

  • Write and enforce a hardware and software use policy that includes items like employees should make sure their anti-virus software is active at all times, they should not bring in disks or CDs, and they should not download games or other unauthorized programs. This protects from computer viruses and helps to avoid catastrophic network failures.

There are literally hundreds of internal control procedures that should be implemented in small businesses as they grow into larger businesses.

Internal control is typically a big part of an audit or an attest function in accounting; it determines how many additional procedures an auditor needs to do in order to provide assurances about the reliability of the financial reports.  But it’s also just good plain common business sense to implement as many internal control processes as are cost-effective for your business to protect it at the level of risk you’re comfortable with. 

If you’d like to discuss the idea of internal control further, please feel free to reach out to Bob Nelson at your convenience.

 

Should You Have a Financial Dashboard?

 A quick glance is all you need to check your fuel gauge, speed limit, engine temperature, and RPM when you’re driving down the road. Your car’s dashboard is designed to focus you on what’s important and what you need to know to have a safe trip.

 Your car’s dashboard items, if they applied to business, would be called key performance indicators or KPIs. Unlike a car’s, the KPIs of your business vary depending on your business goals and what’s important to you. Common ones might include your cash balance, how fast you get paid, how much revenue is coming in, and whether you’re making plan. There are literally hundreds of them to choose from, and many of them are not derivable from your financial statements, such as number of orders, client satisfaction levels, and employee turnover. 

 Would it be useful to have a dashboard of KPIs for your business so you can know what’s working and get alerted to what needs focus? Here are the steps to creating a dashboard for your business: 

  1. Decide on the KPIs you want to track. Selecting 6-10 to create and track is a good place to start. 

  2. Select a tool that will provide you with the KPIs in the format you desire. There are many great add-ons to your accounting software that will instantly crunch the financial KPIs for you and present them in insightful formats, including charts, graphs, dashboards, and reports.

  3. Create any new processes to calculate the new KPIs and get them entered into the dashboard app.

  4. Hold regular review meetings to go over the KPIs and determine any action based on the review. 

There are many great KPIs available right in your accounting system, which might be plenty to get started with. And there are some real gems outside your accounting system that will take a bit of work to calculate. In any case, we can help you through this process.

 Feel free to reach out to us any time to discuss the possibilities of having a dashboard in your business.