Business Performance Assessment Program Warning Flag 1 – Inwardly Focused Performance Assessments

StrategyDriven Business Performance Assessment Program Warning Flag ArticleOften practiced, it can be highly misleading to base the organization’s performance standards relative only to internally identified best practice methods and characteristics. While at times the organization’s performance does represent the highest standard, it is more likely that individual activities are performed more effectively and efficiently by other organizations, particularly those seeking to improve performance in an effort to compete with perceived industry leaders. Top performers recognize this trap and augment their internal search for effective performance with an outward examination of other relevant businesses.[wcm_restrict plans=”47796, 25542, 25653″]

Organizations that are too inwardly focused tend to lose sight of the business environment and often find aggressive, innovative competitors capturing ever increasing portions of the market. While not all inclusive, the four lists below, Process-Based Warning Flags, Process Execution Warning Flags – Behaviors, Potential, Observable Results, and Potential Causes, are designed to help organization leaders to recognize whether their organization is too internally focused when establishing standards of performance. Only after a problem is recognized and its causes identified can the needed actions be taken to move the organization toward improved performance.

Process-Based Warning Flags

  • business performance assessment processes do not require simultaneous examination of external benchmarks against which internal performance is compared
  • business performance assessment processes do not require the participation of team members from outside the organization or business unit being evaluated
  • business environment monitoring mechanisms do not include close examination of individual and process performance characteristics
  • lack or infrequent execution of external benchmarking

Process Execution Warning Flags – Behaviors

  • executives and managers do not promote the benchmarking and comparison of organizational processes and results to those of other businesses
  • resistance to performance comparisons on the basis that ‘our organization is unique’
  • frequent executive or managerial rebukes to recommended changes based on external benchmarks
  • ‘shoot the messenger’ admonishment is given to business performance assessment team leads and members when identifying performance shortfalls relative to that of other organizations
  • resistance to performance comparisons, particularly via a benchmarking, based on the perception that the activity’s cost (time and expense) would not be justified by its benefit

Potential, Observable Results

  • business performance assessment reports lack comparisons to the performance of other organizations
  • costs of like products and/or services are consistently higher than those of competing organizations
  • declining or smaller profit margins as compared to similar businesses
  • loss of market share

Potential Causes

  • lack of or low organizational accountability
  • fear of job loss if benchmarking reveals more inefficient methods for performing business operations
  • general discomfort with challenging the status quo, resistance to change
  • an organizational culture that resists change on the basis of ‘it was not invented here’ and/or ‘that is not the way we do things here’

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[/wcm_nonmember]Additional Information

The following StrategyDriven recommended best practice is designed to support introduction of external performance information to the business performance assessment process:

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