The Management Cockpit - a management tool
The various IT systems provide management with a management cockpit with a myriad of information. This is nice, but like driving a car, you really only need a few key pieces of information to react properly. It's a similar story when it comes to managing a business.
Especially for smaller companies, it is necessary that the deviations from the target are quickly available and, above all, understood. Of course, comparisons with the budget are important in order to take action. But if the oil level indicator lights up in your car, you will immediately stop and call the towing service.
Where internal risks lie dormant
Last December, under the title "Using the results of the financial control units", I informed you about the use of common key figures. Today, however, it's more about critical variances. It is worthwhile to find out with your heads of finance, production, sales, personnel and IT where "black swans" or simply critical situations may exist in their areas. Critical situations usually arise from external events such as politics, currency distortions, severe weather, etc., although certain risks may well lie dormant internally as well. For example, I think of issues like: The sales racer expires without a successor product, the loss of the most important customer, operational data is stolen from the IT system or suitable personnel cannot be found.
"Common" and "less common" risks
Unanticipated but real risks must also be identified in the same way as "common risks". In order for the corresponding warning lights to light up in the cockpit of the management, the specific control questions must be answered and evaluated periodically. Only in this way can measures to prevent or reduce a possible loss be planned in good time and the partial work be included in the annual budget planning. Incidentally, this is also a requirement of the ISO 9001:2015 management system!
It follows from this: In the case of events that may arise from the risk potential of politics, the money market or natural disasters, operationally relevant measures must be planned and initiated well in advance.
Include internal risks as well
In my experience, however, risks are often suppressed because of the focus on achieving short-term goals. Although most companies have mastered the defined processes, measures against unexpected internal risks also need to be planned and included in the annual objectives. Some examples:
- An unexpected loss of customers is often due to the fact that the sales department was not able to respond sufficiently to customer needs or the development department handed over its new products to the sales department without having tested them sufficiently on the market.
- Are trade secrets known in the company and are they protected with the necessary care in the IT systems and in production?
- Due to the ever-changing markets, the recognition of future trends becomes more important in order to prepare employees for future competencies. Although HR employees call themselves business partners, the tasks and competencies have hardly been adapted. It must be the business partner's job to understand the technologies in order to work with the line to determine future needs and initiate the necessary training and recruiting efforts. This transforms HRM from an expensive control apparatus to a valuable aid to the successful implementation of corporate strategy. In this sensitive area, the management is well advised to demand reorientation from HRM and the line in good time and thus greatly reduce an internal risk.
Measures against unexpected internal risks must also be planned.
Control your company with defined key figures, but react to unexpected events in good time with the measures you have developed. Your "driving style" will create trust and confidence among employees and customers.
