Tuesday, June 28, 2011

A healthy organisation?

When I work with any organisation, I divide my attention into the 5 areas that determine health and sustainability and, among others, I ask the following questions:

1. Knowledge. How clear and focused are the vision, purpose, and objectives/goals of the organisation (both qualitative and quantitative) and how well are these known and understood throughout the organisation?

2. Strategy. In broad terms, how does the organisation intend to make its vision a reality – to attain its objectives/goals.

3. Non Human Resources. Does the organisation have the right resources to operate affectively and how does it ensure that the right resources are available at the right time and in the right place for the right people?

4. Structure. What is the decision making process? What is the lowest level in the organisation where decisions can be made and what are the repercussions of making the wrong decisions? What is the decision making environment within which the Executive Team operates?

5. Human Process. What are the labour turnover figures and how do these compare with your targeted turnover rate as set out in your business plan? What are you doing about any discrepancy? What are your recruitment processes and how could these be improved? How do you develop and maintain the requisite level of competence at all levels of personnel and how could this be done better? What process do you use to monitor customer/client satisfaction and how could this process be improved? How do you monitor the external environment that will or could impact on the organisation and what use do you make of this information? What is your relationship with the various trade unions / professional bodies that are represented in your organisation and how could these be improved? What process is used to get on-going, real time feedback from personnel on issues and concerns?

Providing cash flow is positive, these are the areas that will determine whether or not an organisation is healthy. Answering these questions will highlight possible “ouch” points that need to be addressed.

More information is at http://www.dglong.com

Monday, June 27, 2011

A "quick and dirty" health check

The other day I got asked about a "rule of thumb" check for organisational health.

When I’m called in to help a business assess where it is at and what it should be doing – a bit of a “medical” on the business – my first queries are simple:

· What is your bank balance right now – today?

· What are your receivables – the money owing to you?

· How much of that will you receive this week? This month?

· How much of it has been due for more than 30 days?

· How much money do you need to pay out this week? This month?

· How much of it has been due for more than 30 days?

· What is the value of your current “work in progress”?

· When will you be able to charge for this?

· When do you expect payment to be received?

· What extra payments will you be liable for before this work is completed?

The answers to these questions give me a “quick and dirty” indication of the health of the organisation because they give me an indication of current cash flow issues – and positive cash flow is the life blood of a healthy organisation. Based on these answers I can advise whether intensive care (talk to your Board and bankers/financial advisors “NOW” because your situation is seriously bad) is required or whether some other action is more appropriate.