Business Excellence for Practices
Author:
Conal Kennedy
Most practitioners are aware that there are aspects of their business that need improvement. Some improvements are immediately evident. Clients may be a bit slower to pay than you would like and you may not be giving sufficient attention to marketing. Improvements in other aspects, such as employee motivation or client satisfaction may become apparent if you ask the right questions. However in the busy world of practice, how does a practitioner ensure that the time spent making changes is best directed? If people within your organisation are naturally resistant to change, how do you ensure that the most productive changes are made first and with the least pain? The answer may be to initiate a process of benchmarking.
The Xerox experience
Central to the process of achieving business excellence is the concept of benchmarking. The Xerox Corporation is widely credited as being the developer of benchmarking as a formal process. In the 1970s the company was the market leader in photocopier sales the United States. However, by the end of the decade it faced foreign competitors who could make better copiers at lower prices and still turn a healthy profit. In fact, Xerox found that it could have a Japanese competitor’s copiers delivered to its own warehouse more cheaply than its own production cost. When it assessed the processes of the competitor it discovered that the competitor’s copier contained half the number of parts, was designed and constructed by half the number of people in half the time taken by Xerox. The company addressed the issue by analysing all the key aspects of its business and investigating in each case why its competitors were outperforming it and then took effective action to address each issue. It also looked to companies outside of the industry to provide best practice examples of warehousing and other processes.
Key Stages in Benchmarking
The lessons learned through this process have been applied by a range of industries including Irish accountancy practices. For a practice, the process of benchmarking may be as follows. Firstly, appoint a sufficiently senior and experienced team leader to drive the process forward. Then, record the systems and processes of the practice. Compare these to those of the best in the field. You should at this point be in a position to identify what aspects of the practice would benefit most from improvement. Next you should formulate an action plan focussing on a few key improvements. Implement this plan effectively and monitor it.
Looking at the stages in detail, once the team leader is appointed, the firm should establish and document its baseline position, that is the current position for all aspects of the business. Record such things as the firm’s strategy, staffing policy, workflow management procedures and marketing. Try to be comprehensive. For a small or medium practice it should be feasible to record the baseline position for all aspects of the business as a single step. This provides a record against which best practice and future progress will be measured.
The next step is to consider how the same systems and process would look if they conformed to an excellent standard. Rank your results. What aspects of each process do you consider to be unacceptable, poor, average or excellent? Guard against complacency and be self critical. Is there really no aspect of a given process that could be improved? If this is true, would you be happy to present your process to your peers as an example of excellence. If not, think again.
The following are some key areas to be studied and some questions that could be asked in a benchmarking process. Again it is important to ask yourself whether your practice performs at the highest level in each case, and if not, to rank the process against a model of excellence.
Strategy
Does your practice have clearly defined strategies for success? Are your strategies practical, based on reliable facts and figures, and consistent with your operational goals? Have you identified the market segments that you want to develop? Have you ensured that you have the senior staff and strength in the partnership to make this happen. Have you made sure that everyone in your organisation knows your mission and strategy, and understands how their performance is vital? Small practices can get competitive advantage by being flexible, adaptable and quick to respond. Are you in a position to update your strategy quickly and to understand why it was necessary to change? How does your approach to strategic planning measure against what you would expect from the best in the field?
People
Your success ultimately depends on your people. Is your selection procedure sufficient to ensure that you select the best people that you can get? How do you measure this? After you recruit do you ensure that staff get the best training? Once again, how do you measure this? Are staff motivated to give their best performance? Do you listen to their ideas? If you listen do you act?
Do you measure all of the important things that you ask your people to do? If they do things well are they recognised? People generally want to be part of a successful organisation. Telling them when it is good is easier than telling them when it is not good enough.
Resources
If you want your people to do the best job possible, ensure that they have the means to do it. Poor equipment and work surroundings will hinder people from producing excellent results and will reduce staff morale. Again, unless you record and evaluate the current position effectively you cannot subsequently record and measure change and results of improvements.
Outputs
What do others think of you? Is your perception of your firm’s excellence matched by that of your clients? How good are you at measuring this? If you seek feedback from your clients, there may be a more focused or targeted way of obtaining this information. How good is your firm at acting on the basis of this feedback?
Improvement
Once you have recorded all important aspects of the business you should then focus on a few key areas for improvement. The process of benchmarking will point out those areas where a practice is furthest from the ideal and where a relatively small amount of cost and effort to change should produce the most dramatic results. The process should also identify those aspects that are critical to the business, and where the firm simply cannot afford to be second best. Taking these two factors into account, make a list of five or six key improvements for immediate implementation. Set down a realistic timeframe for improvements to be put in place including staged milestones. Decide how you are going to measure these improvements, so that you will know that you are succeeding.
Change management
The process of benchmarking will inevitably lead to change. People are naturally resistant to change which they feel is unnecessary and imposed. Change that is driven from the top may be met with indifference and scepticism. However, if the change is managed effectively through proper consultation and communication, people will be more inclined to welcome it. The objectives of the benchmarking process should be communicated at an early stage to those likely to be affected. The advantages of the process should be pointed out, and it can be demonstrated that the ideas are likely to work because they are used by the best in the field. Spend time and effort on presentations and make sure that examples used are practical and acceptable.
A continuous process
Benchmarking to achieve excellence is an ongoing process for two reasons. As aspects of a business improve, so other areas become targets for improvement. Also, you may expect the goalposts of excellence to move continuously. What was excellent five years ago may now be average or unacceptable. Be prepared to benchmark on a regular basis. Interim annual reviews and a full review of the process every three years may be appropriate.
A benchmarking partner
One approach to benchmarking is to select a benchmarking partner. This is an organisation whose processes you can study and from which you can learn. The learning process may go both ways of course. A partner need not necessarily be from the same industry, but should have processes that have been documented and can be analysed. If you are a member of a practice network it may be possible to source a partner through this route. You should establish what level of contact, including site visits is appropriate in order to provide you with sufficient input to your benchmarking process. It is important that you analyse and understand, rather than copying, the processes of your partner.
Need help?
You should consider whether it is best to carry out the process of benchmarking internally or to recruit an outside consultant to facilitate the process. The partners and senior staff of a firm have the most knowledge of the firm’s current processes, and may have clear ideas of where the firm should now move. On the other hand, an external person will bring new perspectives and rigour to the process. Sufficiently experienced consultants may be able to provide an alternative to a benchmarking partner by providing perspectives from a wide range of practices and businesses with which they have contact.
The Institute’s Practice Consulting team offers a Practice Development service to firms, which includes a benchmarking aspect, and we are building a fund of knowledge of best practice in all areas of practice life. There is an opportunity for practice recognition against the European EFQM Business Excellence Model. Members might find useful benchmarking reference data in the annual Practice Surveys recently published by the Institute.
Conclusion
Benchmarking has proved an effective tool for assisting practices in achieving excellence. Whether the process is carried out internally or externally, it is a route to the quick identification of cost effective improvements, and provides a framework for ensuring that change is measured and monitored. Benchmarking provides the means, but the will achieve on the part of senior management is equally important. Taken together the results can be impressive.
Benchmarking dos and don’ts:
-Do not attempt to copy your competitors or benchmarking partner. The benchmarking process involves analysing and understanding.
-Do not benchmark the best aspects of your practice first.
-Do not attempt to improve all aspects of your practice simultaneously.
-Do not impose change from the top without adequate communication.
-Do develop a positive firm-wide attitude to change.
-Do identify all aspects of the practice that require to be benchmarked.
-Do appoint a champion for the process, someone who has the authority and influencing skills to make the process effective.
-Do decide at an early stage whether you should recruit an effective consultant.
-Do measure what you benchmark.
-Do set a reasonable timeframe for achieving progress.
-Do consider using the new ICAI Practice Development Service. We are here to help.