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The Four Cornerstones of Effective Corporate Management

Perhaps you have come this far because you are wondering how to manage a company . Managing a company is not easy at all since to carry it out you must have a 360º vision of the entire business, surround yourself with a good work team and know how to delegate many responsibilities. The Four Foundations of Effective Corporate Management are what I’ll be going through in this article.

1. Clients and challenges to address are the basis for managing a company.

a business executive standing and discussing corporate management with his students

What does the company offer to the market?

To correctly manage a company, the first thing you must define well is what your product or service is.

What do you deliver to the market?

This is something very obvious but communicate it well because otherwise you will fall into generality and define your activity as: “…we offer solutions adapted to our clients to guarantee the highest quality of our service”.

What sorts of solutions are there? Who are these clients? How would you define quality?

I’ve seen several corporate websites where it takes more than 5 minutes to learn what items or services they offer.

I have also heard this type of definition many times from managers or managers of companies. When I hear anything like this, I wonder if they have clearly defined their product or service for the market.

Who is your customer/who buys from you?

In order to manage a company you must have a very well defined who your client is.

This seems another obvious but it is not at all. Knowing your client’s profile thoroughly helps you tailor your product or service to their needs.

Who buys your products / services?

Are you a natural person or a legal person?

If you are a natural person:

  • Do men or women predominate within your buyers?
  • What age range are they usually?
  • What is the academic level they usually have?
  • What purchasing power do they usually have?

If you are a legal person:

  • What sector or sectors dominate your clients?
  • What is the average size of companies is the usual among your clients?
  • Who makes the first contact to request your product / service: the person in charge of the company or a worker?

Read also : Importance of insurance for educational institutions

What problem or need does the client have?

This is one of the key aspects when you are carrying out a study of your client or an empathy map. You have to know perfectly what is the reason why they request your product or service. Behind this reason there will surely be a problem that the client has or a need to satisfy.

What motivates the customer to purchase your product / service?

What objections or resistance can they have to not acquire your product / service?

If you identify this very well and detail the profile of your average customer, you can be much more successful when designing your product or service and delivering it to the market.

What solution does your company offer?

If you have clearly defined what you offer, who your client is and what problems they have, I am sure that you will have a good product / service on your hands to deliver to the market.

The problem of many businesses is that they try to sell and place products / services on the market that people or companies do not need. And here all or almost all businessmen have made the mistake on some occasion (I also include myself).

Before introducing a product or service, it’s essential to test it with a small sample of clients to make sure it meets their demands.

2. Analyzing firm goals and procedures is essential for effective management.

Three company managers sat down to discuss business.

What goals does your company have?

In order to effectively manage a company, you need to determine in what direction it should move, what goals it should strive for, and what objectives the firm serves as an entity.

Moreover, in order to do this, one must first set goals for themselves. The objectives must be strategic and from there they will go down the level through the organizational chart until they become departmental objectives or areas within the organization.

The sum of all these small departmental objectives makes the whole, the strategic objective of the organization.

For example, if you set yourself as a strategic objective “to internationalize the organization with a presence and customers in other parts of the world”, it is very likely that other objectives hang behind that great strategic objective, such as:

  • Find a number of business partners in other countries.
  • Invest an amount of money in advertising.
  • Attend a certain number of fairs or events.
  • Etc

Behind these goals are additional, more precise goals or the actions the relevant parties must do. Be that as it may, what is clear is that working without objectives is like going with a ship adrift on the high seas, without a defined course.

When your organization does NOT work with objectives:

  • Employees feel less motivated.
  • You don’t care too much about reaching certain milestones in your organization.
  • Does not lead to continuous improvement within the organization

On the other hand, when IF you work with objectives:

  • There will be a goal, and everyone will work toward it (goals can be established in different departments or areas of the company).
  • Employees will feel much more motivated and will work harder to achieve the goal.
  • It encourages continuous improvement to exist within the organization.

When you define objectives, they should be achievable but also take into account the SMART characteristics that all strategic objectives must meet in order to set them correctly.

Read also : 10 Smart Business Ideas for Kids Who Want to Be Entrepreneurs

What processes does the company have to deliver the service/product to the market?

Processes are everything in a company. You will have read this sentence many times in this blog. You must have all your processes well defined in order to correctly manage your company.

The easiest method to define your processes is to analyze them and document all their operations. This is extremely important since the sum of all these processes form your work methodology and consequently your know-how to deliver your product / service to the market.

A very good exercise to carry out this process study is to carry out a process characterization.

Process documentation

As the administrator of your company, you must delegate this task to those responsible for processes in your organization.

If those responsible for the process have carried out a process characterization and have used a process file to carry it out, they will have a long way to go when it comes to documenting the processes in your organization.

Here the step is: from the process file, to the work procedure. It’s important that you keep an eye on the work afterward and that you get a written copy of the steps to review.

When you are presented with these documents ask them:

  • Is any of the processes you’re presenting automatable?
  • Is it possible to shorten any of these procedures without compromising their effectiveness?

Many of these questions will come up on their own if you carry out a good practice after documenting these processes: an internal process audit.

Appoint an internal auditor within your organization.

It must be a person with sufficient skills to perform this job. You must be an analytical person, who has the ability to deal with other people and, above all, who is assertive in the way you act.

The truth is that I don’t know why, but documentation of procedures often paints an unrealistic picture.

Consequently, the approach describes an ideal environment rather than the current state of affairs within the firm. When this internal process audit is carried out, this difference between the idyllic and the real will come to light because certain activities that are not carried out on a day-to-day basis will appear.

3. Work team, its competencies, motivations and delegation of responsibilities to manage a company

Job positions in the organization

Surrounding yourself with a good work team will help you in how to manage your company. Defining each person’s duties and responsibilities helps achieve this.

This is something that you have to do as the person who is managing the company. Clearly define each job position and what responsibilities it has, since these will be the activities that people in the organization will carry out.

In the detail of each of the tasks that each person must carry out, the middle managers of your company can help you prepare it.

Competences of the people who develop said jobs

Linked to the definition of roles and responsibilities is the description of the competencies that each job position must have and that must be developed by a worker in the organization. Each job requires certain knowledge, experience, skills, etc.

As a business manager, you must fill each job with the best candidate. Some middle management in your organization can help you to carry out this task.

If they detect that there are certain jobs in which there is a GAP between the competencies of the job and the person who develops it, it is the best time to plan a training plan .

Leadership and staff motivation

When we talk about leadership, on most occasions we come to mind a single person who is the leader of an organization and through whom a series of characteristics and ways of acting must flow to motivate staff and set an example. in the company.

I believe leadership should be at multiple organizational levels.

A middle manager can perfectly be a leader among his subordinates. And an operator can also be a leader within the group of his peers, a person whom everyone admires and respects for what he knows, says and does in the organization.

I believe that there must be such leaders within each company.

People always tend to have references to other people with whom we have a closer relationship. People with whom we do not identify for various reasons: their demeanor, their ability to complete tasks, their knowledge… 

As an administrator of your company, if you identify these people and verify that they indeed have a special charisma within your organization, it is time for you to grant them certain responsibilities and decision-making capacity to supervise, direct and motivate other workers in the organization.

Delegation of responsibilities

Managing a company is not an easy task as I indicated at the beginning of this article. Major functions of any firm require a sizable amount of support staff.

You can only do this if you are willing to delegate responsibilities and you know how to do it well. Choosing the right people to help you run the business is basic.

You will not be able to with everything.

This means surrounding yourself with people who are enthusiastic about the organization’s mission.

These will be the people who help you solve day-to-day problems or who will in turn be in charge of leading other workers in the company.

When you delegate responsibilities, make it very clear what you need that person to do for you, how they should do it, and how you want them to bring you summarized information so that you can analyze it and make decisions.

4. What to analyze to manage a company and make decisions

We arrive at a key part on how to manage a company: The analysis of results. Without analysis there will be no administration.

Nor does it improve the company. You should know the current situation at all times to be able to make decisions about it later.

Read also : B2B marketing strategy framework for startups

Result of income and expenses

It is the basis of any analysis within the work of managing a company. What income and what expenses exist to know what is the result of a year, a quarter or a specific month.

As you well know, the important thing when analyzing income and expenses is to see it as a whole, that is, to know what the benefit has been.

I have heard many times say “… such a company bills € xxxx therefore they are doing well”.

And before that I always ask: yes, but how many expenses do you have?

A company can invoice €1,000,000 a year, but have €1,100,000 of expenses and therefore have a loss of €100,000 a year.

Therefore, the important thing is the profit, not the income.

Obtaining income and expense information

If you have a third party handle your organization’s accounting, you should request a statement of income and expenses so you can monitor your progress.

In addition, with an income and expense account (an operating account) you will know in global terms what the commercial margin with which your company is operating. Taking into account all the fixed and variable costs of the business.

If you make this division you will have the commercial margin:

You obtain these data very easily from an income and expense account. If, on the other hand, the accounting is carried out by an internal department of your organization, it will be even easier and faster to obtain this income and expense account.

If, on the other hand, your company has a dedicated accounting division, obtaining this type of income and expenditure report will be much less of a hassle and take even less time.

When you have this information in your hand, you will be able to see in which accounting accounts the greatest expenses of your organization are produced (I anticipate that it is most likely the personnel costs).

In addition, you will also be able to analyze if the organization’s global commercial margin matches what has been proposed from the beginning.

Another good practice to manage a company is to carry out and keep updated a treasury plan which will indicate the collection and payment flows and the liquidity that you have planned in your organization.

Economic and financial ratios

Apart from knowing what the income, expenses and profit of your organization are, within the work of how to manage a company is to study other types of economic and financial information.

Economic analysis:

Through economic analysis you will study how profitable and solvent your organization is.

These data are obtained from the Profit and Loss account (income and expenses) of the company’s accounting.

Financial analysis:

The financial analysis analyzes to what extent the financial resources used by the company are the most adequate and if they are sufficient for the normal functioning of the organization.

When you do a financial analysis, you ask yourself some of these questions:

  • Do we have enough financial resources in the organization to cover long-term investments?
  • Can we cover short-term debts with the organization’s assets?
  • Do we have an adequate composition between long and short-term financial resources based on our investments?
  • What is the recovery time of the investments of the exploitation cycle?

Process performance

Managing a company implies worrying about doing things in the most optimal way possible. And you get that by studying, documenting, and measuring the performance of the organization’s processes.

The study and documentation of processes are detailed above. Now I am going to talk to you about how to measure the performance of your processes.

To measure the performance of a process is to verify if this process is achieving the result that is expected of it. For this you have to be very clear about the objective of this process.

With this clear concept, you can establish a metric that will help you quantify the productivity, the benefit, the utility (call it what you want) of that process. This metric is known as a management indicator.

Management indicator

A management indicator is a metric, a signal, an alarm that allows you to know in a quantifiable way if the process is achieving the expected result of it or not.

A management indicator can be established for any process. In a business consultancy like the one you are reading about, from the commercial process I can establish management indicators.

If I were to study this process “Initial contact and service request by the client”, I could measure the number of times I make a mistake when making a quote/quotation to a client and offer him a different solution than the one he has requested.

In order not to fail in this initial process, I use a data collection and record in it what the client wants. Therefore, the objective of this process is to have zero failures when designing a proposal for the client, adjusting it to what they have requested.

The result of this process can be measured in a quantifiable way by means of a metric such that:

(Number of erroneous quotes delivered as a result of errors in data collection / Total number of quotes delivered)

In this way I can make this process quantifiable and thus measure the result. But the important thing is to know if it is worth the effort that has to be made in collecting the data of a process to extract an indicator in comparison with the benefit that this can give us when knowing its result.

In this example that I am giving you, I do NOT measure this process through this management indicator. And I don’t do it because I know that I almost never fail in this process (perhaps I can make a mistake once every two years) because that’s why I have the data collection.

What I do measure is the result of the presentation of that offer/quotation to the client. That is, the metric for me within the entire business process is:

(Number of quotes accepted / Number of quotes submitted).

For this metric, it is worth collecting the data to know the times that I am accepted and that I am not accepted for an offer.

Within your business, you as an administrator must select which processes should be measured with a management indicator given their importance.

Result of internal process audits

As I mentioned before, carrying out an internal process audit is a very positive exercise for improving your organization’s processes.

When the internal audit report is delivered to you, as the administrator of your company you must analyze:

  • In what processes have there been differences between what was written in the document and what is actually done in the organization.
  • What will be done to resolve these differences?
  • Who will be in charge of doing it?
  • How to ensure that it is implemented correctly in the organization.

Customer satisfaction

Analyzing customer satisfaction is something that we can never leave aside. The problem today is that everyone uses the same method to measure customer satisfaction: satisfaction surveys.

I think both you and I are saturated with surveys and that’s why they don’t work. Unless you give something in exchange for completing a survey.

If you look at it from the point of view of each person’s available time, it’s a bit selfish to ask someone to give you their time and you don’t give them anything in return.

At least I think so. Therefore if you want to use surveys, you must give something back. However, I want to tell you that there are other ways to measure customer satisfaction.

Instead of taking a survey, you could:

  • Calculate the years of loyalty that your organization has with the main clients.
  • New products and/or services that current customers buy from you.
  • Claims or complaints that you have had to resolve.
  • Speed ​​to attend to claims or complaints.
  • Clients that you have obtained thanks to the recommendation of other clients.
  • Warranty hours offered.

And more variables that you could study. If you synthesize all this information, you can get a good report in which you study many variables with which you can justify the level of customer satisfaction with your organization.

Supplier Evaluation

In many businesses, the level of quality of the products or services of its suppliers is of vital importance for the final result of the products and services of the company itself.

Imagine a company that has the distribution of certain medical equipment in its geographical area.

If this equipment constantly breaks down or were not reliable as a result of its use, I guarantee that the distributor would have its days numbered as a distribution company since the market will know that said equipment is not of quality.

In the same way, a company that markets oranges must ensure the quality and flavor of the oranges distributed by its supplier throughout the year in order to offer a product that the market likes.

These two examples represent suppliers that deliver a product and that product the company makes available to its customers.

But imagine that it is an external company that contacts your customers directly on behalf of your organization.

This provider would then be even more important. Therefore, the main thing is to identify the most critical suppliers in your organization and from there to know what evaluation criteria to establish for each of them.

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