As your business grows, you will need to change to adapt to new circumstances. You can experiment with different ways of working to see which suits your business best.
But this approach is inefficient and may lead you to make inappropriate decisions. A far more effective way of making changes is to look at how successful businesses operate and to introduce their ways of working into your business.
Evaluating how your operations compare with the most effective and profitable enterprises, and then using their most successful elements - the "best practice" in your own business, can make a big difference.
This guide explains what best practice is and how identifying it and introducing elements in your business can bring significant benefits.
What is best practice?
Best practice means finding - and using - the best ways of working to achieve your business objectives. It involves keeping up to date with the ways that successful businesses operate - in your sector and others - and measuring your ways of working against those used by the market leaders.
Best practice through benchmarking
Applying best practice means learning from and through the experience of others. One way of doing this is through benchmarking, which allows you to compare your business with other successful businesses to highlight areas where your business could improve.
Best practice through standards
Standards are fixed specifications or benchmarks, which are established by independent bodies such as the Canadian General Standards Board (CGSB). The CGSB develops both technical and management standards. Technical standards are precise specifications against which a business can measure the quality of its product, service or processes. Management standards are models for achieving best business and organisational practice.
Applying the appropriate standards to your business will enable you to apply best practice across the organisation, and to work against objective criteria to achieve manufacturing or service quality.
What are the benefits to my business?
A best practice strategy can help your business to:
- become more competitive
- increase sales and develop new markets
- reduce costs and become more efficient
- improve the skills of your workforce
- use technology more effectively
- reduce waste and improve quality
- respond more quickly to innovations in your sector
Management best practice
Management best practice involves:
- the communication of a clear mission and strategy
- leadership by example
- the setting of demanding but realistic targets
- an open and communicative management style
- clear and careful strategic planning
There are several business tools that you can use to achieve management best practice, including:
- benchmarking
- forecasting
- financial planning
- strategic planning
- performance monitoring
A very effective way of monitoring your business is to introduce key performance indicators (KPIs). These can be used to measure progress in achieving business objectives across a range of activities and enable you to identify areas that need attention. KPIs can be used to measure activities such as sales volumes, profitability, quality and staff turnover.
The KPIs you choose will depend on your specific business. They should, however, be related to your overall objectives, be clearly measurable and provide an indication of where improvements need to be made.
Tools such as benchmarking, business planning and performance monitoring will help you to compare the performance of your business with that of your peers and competitors and against your own business objectives. Where necessary, you can introduce new ways of working to improve competitiveness and business efficiency. Having accurate and up-to-date information about your business performance will also help future planning and change management.
Communicating your objectives and strategies is an essential part of management best practice. A good communications policy will ensure that everyone in your business knows the direction in which the business is heading, and understands their own part in its development.
Best practice in people management
Successful businesses are those that attract, develop, motivate and retain the best people. You will get the most benefit from your people if you have key strategies for doing so. These can include:
- involving employees in the development of the business
- communicating with employees
- adopting flexible working and policies that encourage equality and diversity
- setting targets and rewarding achievement
- offering employee development and training
Employees are often in a position to see where improvements to working methods can be made or when market demands are changing. Thus, production staff will be aware of inefficient production processes, while customer service staff will know common sources of complaints.
You can use this detailed knowledge by involving employees in developing improved ways of working. This is likely to make your staff feel valued, as well as gaining employee trust, commitment and buy-in when implementing changes.
Good people management should extend across all areas of your business. Recruitment, training and people development, working practices and the working environment are all areas which you should continually review to see where improvements can be made. People management systems such as performance appraisals, quality circles, cascade briefings, 360 degree feedback, and internal communications will help you to get the best from your employees.
Improving business operations through best practice
Most businesses have some operational issues that can be improved through the introduction of best practice methods, including:
- quality management
- stock control, delivery and supply chain management
- purchasing and ordering
- information management
You can identify which operational areas will benefit from best practice methods by:
- benchmarking
- internal analysis
- reviewing appropriate national and international standards
Areas for improvement could include the introduction of quality management systems such as Total Quality Management, automated stock control, just-in-time ordering and delivery and "lean" manufacturing and supply.
When you have identified the areas for improvement, you can implement changes. It is important, however, to keep your employees, suppliers and customers aware of what you are doing, and to make sure that the changes do not cause unnecessary disruption to your business.
Best practice in sales and marketing
The right sales and marketing strategies play an essential role in the success of your business.
Developments in technology have opened up entirely new ways to market and sell products and services. Best practice now involves harnessing the power of the Internet, email and mobile telephony to increase the effectiveness of getting products and services to the customer.
Even the smallest business can benefit from having a website. Many organisations also use electronic newsletters (often known as e-zines), regular emails and SMS (text) messaging to communicate with their markets. The benefits of this kind of marketing include:
- worldwide reach - a website can be seen by visitors from all over the world
- lower costs - a website can cost much less to set up and run than a traditional store
- a level playing field - small businesses can compete alongside the websites of much larger businesses
- better targeting - emails are less likely to be opened by someone else, and opt-in mailing lists ensure that your message is read by someone who wants to receive it
- new markets - a website makes it easier to target customers who were previously out of reach
As with all best practice, it is important to get the implementation right. Your website needs to be thought out carefully, and updated regularly.
You need to be aware of the legislation that applies to electronic business communications, including selling from websites.
Encouraging innovation
Fostering a culture of innovation and creativity in your business can help you stay one step ahead of your competitors by ensuring that your products and services remain up to date and in line with what your customers need. You will be able to react more quickly to changing markets, customer expectations and needs, and you are likely to see changes coming before others do.
Maintain a culture of innovation
Best practice in innovation involves constantly looking at your existing products, processes and procedures to see what improvements can be made to keep them at the cutting edge.
Innovative businesses often have strong, inspirational leaders and management, and well-trained and motivated employees. These businesses maintain a culture of innovation, constantly looking at every aspect of the organisation - not just its products and services -and asking the question "how can it be done better?"
Innovation may come in the form of small changes to existing products or services – e.g. increasing the number of megapixels on a digital camera - or in the form of a completely new product or service. The innovation may come from internal sources such as a product development team or be inspired by external forces such as customer requests or developments in related technologies.
Using IT to achieve best practice
It is possible to give your business a distinct competitive advantage by making good use of IT. High-speed telephone networks, along with the Internet, enable you to communicate ever more effectively and to distribute information quickly and accurately.
The Internet has revolutionised the way businesses communicate with customers and suppliers to market themselves, access information and buy and sell products. In larger organisations, intranets and extranets - internal and external communications networks - are used to communicate with employees, customers, suppliers and other stakeholders.
Broadband Internet access is much quicker than a dial-up connection and also allows everyone in an organisation to be online all the time. This improves business efficiency and, because it is available for a fixed monthly charge, it is easier to control costs.
Along with wireless networking and mobile telephony, the Internet enables new ways of deploying staff - hot desking, remote working and "virtual teams" are all possible initiatives, allowing increased productivity, improved communication and more flexible working methods.
Even in the smallest companies, integrated databases and systems can bring significant cost savings and improvements in efficiency.
IT security
In addition to improving business efficiency, the wider use of technologies such as the Internet, mobile telephony and wireless networking increases the use of security breaches. It is important, therefore, to adopt best practice for IT security. Ensure that you have appropriate safeguards for information access passwords, firewalls, and security software - and that all of your employees are fully trained in their use.
Original document, Best practice, © Crown copyright 2009
Source: Business Link UK (now GOV.UK/Business)
Adapted for Québec by Info entrepreneurs