Not so magnificent seven: why Aussie businesses fail

Global risk-management provider SAI Global has revealed the most common reasons Aussie businesses come up short.

Principal Advisor in Business Improvement at SAI Global David Smith carries out training and certification for organisations seeking to meet the ISO 9001 Standard for quality management systems.

He said: “Organisations that use our audits and certification want to deliver the highest-quality products and services possible. Our detailed audits uncover any issues in the business that would be a barrier to meeting this goal.

“We’ve highlighted the most frequent audit failures. We believe Australia still has a long way to go to producing the highest-quality services and products.

“Problems associated with quality usually come from organisations failing to set realistic objectives. They also come from organisations not effectively marrying their processes, systems and employee talent cohesively within their organisations to meet those objectives.”

SAI Global’s top seven businesses failures:

1. Lack of effective strategic planning

Mr Smith said: “We find smaller businesses more commonly have less of a focus on strategy and direction. They’re too busy running their business and don’t have the resources to look at the bigger picture. As such, they have less of an understanding of the competitive environment. They’re also less able to compete and often struggle to identify opportunities and grow.”

2. Mid-level and junior employees are in the dark about the business’s objectives

Mr Smith says this is one of the most common audit failures: “This leads to the ‘silo’ effect, where internal teams are working independently of each other,” he said. “Businesses that fail this aspect of their audit commonly struggle to meet their objectives.”

3. The business doesn’t monitor its own important functions

Mr Smith gives an example: “For instance, a company might want to improve the efficiency of its customer-facing staff. But it’s unlikely to achieve this if it doesn’t implement a scheduling system it can measure. Our assessments of organisations have found that they don’t always develop or follow their own monitoring processes.”

4. Short-sighted leadership

“In large organisations,” Mr Smith said, “I’ve often seen a section head focus on their own area, not the organisation as a whole. This can lead to the ‘silo’ effect and hence inefficiency.”

5. Conflicting systems, processes and objectives

SAI Global’s audits frequently identify internal systems and objectives in individual departments that clash with those of the organisation. This clash can inhibit the performance of the departments and of the organisation as a whole.

6. Employees don’t receive support to develop competence

Mr Smith said: “When we interview employees, most tell us they received very little mentoring and support. As a result, they have difficulty fulfilling the requirements of their role, particularly early on.”

7. Failing to identify and solve problems

“Basing decisions on financials without a focus on the quality of the organisation’s products and services happens a lot,” Mr Smith said. “It’s not an effective means of identifying problems.”

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