Friday, October 26, 2007

Keeping a balanced score

How do you measure if your business is travelling successfully?
For most, the answer would be the bottom line. For others it may be customer satisfaction levels.
But Professor David Gadenne, head of the school of commerce and the school of management at the University of the Sunshine Coast, told a business audience at Marcoola on Friday that far too many companies were focussed on narrow aspects of the business.
Instead, he said, owners and managers should be looking at wealth creation for all stakeholders, including customers, shareholders, the community and most importantly, employees.
“Some businesses are blind to the fact they need to look at all areas simultaneously to be successful ... they need to design and implement what’s called a balanced scorecard,” he said.
“And that scorecard should have an underlying premise of increasing value for shareholders.
"That means looking at processes from a customer perspective, from a financial perspective, from an internal perspective and from an innovation, learning and growth perspective.”
Mr Gadenne said human capital was without doubt the number one resource for businesses, adding successfully addressing issues surrounding that would improve results in other areas such as profits and customer satisfaction.
“Customers do not simply buy on price, so it’s very important to attract and retain the right people ... absolutely critical,” he said.
“How do you know you’re selecting the right people? Core competencies are important, things like education, knowledge, computer skills, training and experience, but more important are their people skills ... things like empathy and understanding, communication skills and a sense of humour. You don’t want people who will create conflict.
“Other characteristics like their values and commitment in areas like dedication, drive and persistence, as well as their imagination, are also important.
"If you employ people without imagination your business won’t do as well.”
Mr Gadenne pointed to successful entrepreneurs such as Richard Branson, and companies including Toyota, The Body Shop and Healthy Choice as examples of enterprises that valued human capital and innovation.
“Richard Branson encourages all his employees to talk to him about ideas they have about improving the various Virgin businesses, and even starting other ones,” Mr Gadenne said.
“Creating an innovative climate in business will lead to success.
“You should listen to new voices, have an open market for new ideas, incentives for innovators ... even a sense of higher purpose within the company.
“Businesses need to understand the competitive landscape is constantly changing. Employees must be encouraged to continually learn, innovate and improve.”
(TD, 17 Oct 07)

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