At this time each year, organizations launch many new initiatives, to improve their businesses in marketing, leadership, operations, and profitability.  The first step for each of these projects should be a thorough and comprehensive organization assessment – the business management audit – to provide a solid understanding of “current reality” in the firm.  I’ve received a number of questions recently concerning these assessments – how to approach them, who should lead them, what should be included, and such – and so today I’ll share my thoughts on how to best design, execute, and utilize the business management audit.

Again, the primary objective of the audit is to paint a clear and complete picture of the firm today – in its current reality. Ideally, we accomplish this by gathering information (facts, opinions, and ideas) from a variety of sources both inside and outside of the organization.  We employ a handful of approaches (tools) for gathering the data – including management interviews, group discussion, employee survey, client survey, performance benchmarking, and market research review – and then organize and synthesize this input into a meaningful analysis. The end product is an accurate characterization of the company at the present – its strengths and shortcomings, identified threats, and priority opportunities for growth and business improvement. The business management audit report then documents this foundational understanding, and provides a clear and consistent starting point for what comes next, in business planning and implementation of organization change.

Each year at J. Doehring & Co. we complete a number of these business management audits in various forms – some as a piece of a larger enterprise-scale project (i.e. strategic business planning), some as a part of a functionally-focused initiative (for instance, reengineering corporate administration), and some as standalone projects. And again, our business management audit typically includes the following information gathering methods:

  1. Management interviews – In-person interviews with individual managers (and other key staff) are a central tool of the professional services firm audit.  Not much trumps the simple sit down, face-to-face discussion with those charged with running and building the firm. Through this close interaction, the experienced interviewer builds a personal and trusting connection, explores the questions behind the question, and looks toward the deeper issues, the underlying significance, and the most important things. These face-to-face interviews also help in building the connection and trust necessary for the personal buy-in and commitment critical to the success of project planning and implementation ahead.
  2. Group discussion – Often the dynamics of the discovery process are enhanced through group (rather than individual) discussions.  This is true both of employee groups who can’t (lack of experience or expertise) or won’t (apathy or fear) share much individually. This technique works well for various types of teams.  Some examples we’ve used include: next generation principals, up-and-coming leaders, project managers, junior professionals, grassroots committee, and the corporate admin team.  As with individual interviews, it’s not just the questions asked, but the dynamic and flow of the discussion itself, orchestrated by the experienced facilitator, which often yields the important, primary insights.
  3. Employee survey– Usually time, logistics, and costs prevent the assessment team from speaking with every employee in the firm, though several may have valuable insights to share.  To address this, the business management audit should also include a vehicle for gathering input from the entire staff. We use a confidential, online, survey tool (Survey Monkey), which is easy to set up, use, and leverage.  To minimize ‘survey fatigue,’ we limit the survey length to five to seven short answer questions.  It’s a powerful tool.  Firm leaders should never underestimate the importance of inviting all employees to share their input, participation, and commitment to the change and improvement process.
  4. Client survey– Even firms who survey all their staff still haven’t captured a critical piece of input – the client’s. Asking the firm’s customers – about their perceptions of what the firm does well, not so well, where it can improve, what market and business opportunities look like ahead – provides many explicit opportunities for business growth. These client surveys are not the same as post-project feedback reports (also a good idea), or (frankly) any other feedback asked for and received directly by the organization itself. In most cases, clients simply will not provide to firm employees the sort of real, unvarnished, tell-it-like-it-is opinions they share regularly with the third-party assessor.  And, as with other exploratory interviews, it’s commonly not the first-order questions, but the follow-up (off script) questions and discussion that provide the rich nuggets of truth.
  5. Performance benchmarking– All types of interviews (with owners, managers, teams, staff, or clients) provide data which include facts, opinions, and ideas for solutions, and usually all mixed together. Benchmarking the firm’s financial and operational results against a set of intra-industry or inter-industry peers provides for a more fact-based comparison of the organization’s performance.  Important and useful benchmarking metrics include both quantitative and qualitative parameters, and these often help significantly in corroborating the information gathered from personal perspectives.
  6. Market research review – A review of current market perspectives and opinions from outside the firm adds a balance to the inside view.  Market research can reveal important information about the size, scope, performance, and outlook of certain target markets, industries, clients, and/or geographic regions. Market research can itself become a rather large project, so the market review included in the business management audit is commonly somewhat limited in scope.

With data gathered from several (ideally all) of the sources described above, the assessor must then set to making sense of it all, synthesizing what’s important while clearing out the noise.  A meaningful assessment accomplishes this by culling to just a handful (four to six) of priority points – those issues and opportunities that must be addressed by the organization.  Viewing these opportunities through the lens of the firm’s current state (strengths, weaknesses, competencies, capabilities, constraints) then shines a bright light on what can and should be done to improve the business of the firm.  The next step – developing strategy, or the “how to” of execution, flows directly from this robust business audit analysis.

Each business management audit can and should be tailored to the individual firm.  Tailoring can include both the audit’s scope (number of tools employed), and scale (number of interviews with each tool) of the effort.  Again, the point is to generate an accurate and thorough understanding of the firm in its current state – at an appropriate and manageable cost.  That said, smart firm leaders will not cut corners in this first and foundational step.  The return on time and effort invested in the business management audit can be significant – in driving to the heart of the issues preventing success, and in identifying the priority pathways to achieving it.

Many AEC industry firms are today gathering steam and momentum in the New Year.  Things are looking up.  If you haven’t done it yet, it’s time now to stop, look around, and take stock – and to prioritize your firm’s issues, opportunities, and plans.

Here’s your first step:  the business management audit.  Ready?


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