The key relationships in the future will be between a company and its employees and customers. Using traditional accounting information to influence and control those relationships can often trigger behavior that actually gets in the way of improving them.
Organizations today have lived through a revolution in information technology that now requires top managers to bring about the transformation in management practices called for decades ago by W.E. Deming. That transformation requires new measurement tools. Accounting information does not contribute to more responsiveness by building better relationships with customers and employees. It also does little to encourage more flexibility in the way the organization deals with them.
Information for Management Control
Today the best management control information comes from customers and processes. It is available immediately to those in the company who are doers. To delay its impact by having it complied and transmitted through accounting channels means the key advantage of being reactive is postponed and the organization is no longer quick to respond.
With proper training and development, employees in an organization can learn how to translate this fast flowing information into competitive action, a process much more effective than the inefficiency of waiting for managerial action. The competitive position established with this approach is nullified if decisions have to be run up and down the chain of command.
Measuring Performance
No general ledger accounting system today is capable of reflecting the value of people and time. Accordingly, organizations will continue to fall short of what they have to do to compete if they use the information from these accounting systems alone to shape the actions of people. Quality improvement mandates a move away from short term cost reduction scenarios and into long-term development of what it takes to be technically and systematically competitive.
Success comes from superior process performance so it behooves organizations to identify all of their process so they can be measured and improved. The focus is now going farther back upstream into the processes. In this scenario if the organization sees the presence of heroes or heroines fixing things it knows it is in trouble for a reliance on these superstars betrays a lack of understanding and appreciation of systems and processes.
Improving Quality
Quality improvement is all coming back to people and teams again because superior process design creates superior performance. That takes the right people as well as the right environment for them to work in.
Improved quality performance requires a centering on customers who don’t care about what the management structure is, or the strategic plan, or the financial structure, or even the corporate culture. They care only for the results delivered and the value created for them. Since it is the processes that produce these results, they will have to perform in a structure that centers on them and a culture that supports them.
Five Tips of Creating a Culture for Improved Quality Performance
- Don’t push for improved performance. Instead, remove the factors and barriers limiting it.
- Beware the symptomatic solution. Solutions addressing only symptoms of improved performance limitations, not fundamental causes tend to have short-term benefits at best. In the long term, the problem resurfaces and there is even more pressure for a symptomatic response. Meanwhile the capability for fundamental solutions can atrophy.
- In a sluggish system, aggressiveness produces instability. Either be patient or make the system itself more responsive.
- “Teach people to fish rather than giving them fish.” Focus on enhancing the capability of the company and each department to solve its own problems. If outside help is needed, helpers or consultants should be strictly limited to a one time intervention (and everyone knows this in advance) or be able to help people develop their own resources, skills, and infrastructure to be more capable in the future.
- Hold the vision. This will be particularly challenging in times of organizational stress so strong committed leadership is essential here.
