3 Elements of Effective Business Management

The international business consulting organization Turnaround Management Association in one of its publications (Management Body of Knowledge) examined the most common causes of the bankruptcy of enterprises. The results of the study clearly show that the main causes of bankruptcies are problems within the organization. The biggest internal problem turned out to be management errors.

Business Management

So the question arises – what aspects should you pay attention to so that you don’t make common mistakes and don’t bring your business down?

Below are the three most important elements of effective business management:

Big Data analysis inside the company – well-used information

One of the most famous entrepreneurs in the world – Bill Gates has already talked about the importance of analyzing data inside the organization:

The numbers Gates mentions in his speech include data that is collected and stored in companies for many years – once analog, and now digitally using IT systems that support HR processes. HR systems store huge amounts of different types of data. In addition to information about the company’s employees, the systems also have data that enable the analysis of key processes in the company (e.g. vacation reserves). Based on the results of such analyzes, important management decisions are made. The following analyzes should be systematically performed in every well-managed enterprise:

Employee competency analysis – HR departments can effectively plan to staff of individual positions in the organization and employee training processes based on an analysis of employee competencies. Modern HR systems also allow you to examine whether the knowledge acquired during the HR training courses improves the quality of work of the people who participated in them. In turn, competence analysis combined with sales analysis (e.g. isolating the product that sells the least) can easily show where the human resource training course is most needed.

Analysis of motivational factors – Based on the examination of the effectiveness of incentive programs, the management board may decide to strengthen elements that, according to the analysis, increase employee effectiveness or eliminate motivators who do not increase this effectiveness. A good example of an analysis of motivational factors is the employee total benefits report (graphics under the article – employee total benefits report), which shows not only the management but also the employee what additional benefits he receives from working in a given organization.

Fluctuation analysis and succession management – Modern IT systems, such as, for example, Teta HR by Unit4 Polska, allow colliding information on increases, changes in positions, changes in grades, bonus policy with information on the level of departures and employment of employees in the organization. These data can be analyzed at the turn of many years, thanks to which the HR department is able to accurately analyze the fluctuation process and prevent any problems related to the shortage of employees in important positions

The problem that many large organizations still face is data collection in several (usually 3-5) HR systems. In this situation, it is very difficult to gather all the information you need in one place for further analysis (often the HR department has to do it manually, which takes a lot of time). Companies that find themselves in this situation should think about replacing their IT system as soon as possible with one that will be able to store data from many companies in one database, standardize them and enable their accurate analysis. The lack of implementation of such solutions may cause problems with data analysis, which in turn leads to serious management errors.

Creating a standardized Big Data database and managing it in the HR system is a complicated and time-consuming process, which is why many organizations do not decide to migrate all databases and transfer to the new HR system only data from recent years, which are mandatory in order to calculate e.g. employees. This approach can cause problems in employee service management. Data transfer is one of the most important stages of implementing a new system and it is important that it is carried out very accurately because even with the best reporting module the company will not be able to perform accurate analyzes if it does not have the relevant data available.

HR and IT management as a core business

In recent years, the prestige of personnel departments and their strategic role in enterprises have increased significantly. The tasks of the HR department are definitely more than just calculating salaries. HR staff increasingly cooperate closely with management, often joining its ranks. People in the positions of HR Business Partners help in planning the company’s strategy, which aims to improve the efficiency of the organization through good management of employees’ needs and goals. This approach means that HR departments are required to provide services at an appropriately high level, as well as from external suppliers.

HR departments are increasingly treated and accounted for as an external service provider – they are something like companies within an organization that are settled mainly due to the effectiveness of their personnel policy (e.g. management of employee diversity, ensuring adequate staffing, ensuring the best conditions for achieving goals) company).

The calculation of wages is increasingly outsourced. Even financial institutions such as banks decide to outsource this type of service. Payroll outsourcing is also increasingly appearing in the offer of business software providers.

Organization management of IT processes has also taken a new level. More and more organizations are deciding to buy software in the Software-as-a-Service system. This approach allows you to reduce the costs associated with the purchase of a license, server, database. Companies buy a service for which they pay a monthly subscription and under this subscription, they use the full functionality of the system.

Regular Feedback

It is known for a long time that periodic assessments demotivate employees more than encourage them to improve their efficiency. This thesis is confirmed, for example, by the results of the latest study conducted by Adobe on a group of over 1.5 thousand of its employees. As many as 2/3 of respondents claim that employee assessments in this form do not fulfill their function and are ineffective.

Motivated employees who consistently achieve their goals are the foundation of a well-functioning enterprise. So the question arises – how to build this foundation? The answer is a new trend in the HR industry – constant feedback. This is a completely new approach to managing employee efficiency, which is based on frequent and systematic meetings of the employee with the manager. During such meetings, supervisors can set goals for employees on an ongoing basis, as well as learn what aspects – including those related to personal development – are important to them.

Vishwajeet Kumar is a passionate and full-time blogger. He is the Owner and Author of this blog. He started his blogging career in late 2016. He loves to help people to get success in their online ventures.

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