What value does a management system add to my business?

Various motivators might inspire an organisation to adopt a management system; some harder to quantify “return on investment” than others.

There is no doubt that the development and maintenance of management systems require investment, but done correctly, they add value to your business. Perhaps  some of the following apply to your organisation.

Added value may arise from Management Systems by:

Providing you access to larger and/or restricted markets.

In some cases the market (your customers) requires you to have a management system before they will even consider you as a supplier.

This benchmark or “pre qualification” the market sets, is effectively their way of restricting the pool of candidates to organisations prepared to invest in management system principles.

The market may or may not require that your system(s) be certified.

Removing or reducing organisational dependance on specific human resources.

Where process and procedure is not clearly defined and broadly communicated, even the simplest business tasks are dependant on the familiarity of the individual that performs that function.

But what happens when that individual is removed from that position? Often there is disruption to the business whilst the process is rediscovered or a new process developed. Small and simple businesses operations may well get by with minimal systems, but the more complex things become, the more value there is in a management system.

Another disadvantage of reliance on individuals is that they become “stuck” in that role. They become the expert or owner of that role and the more dependant the organisation is on that person performing that role, the less likely it is that they will develop into other areas of the business, perhaps with the end result of walking away to escape being “stuck”.

Technical expertise, knowledge and experience obviously reside with the individual, but how a business operates should be defined in the management systems, thereby reducing organisational dependance on specific individuals.

Adding the “financial value” of “business knowledge” to the value of the organisation.

Further to the above point, having a management system replaces “human knowledge” with “business knowledge”, which is valuable in two ways:

1. If the staff you employ have little or no knowledge, you can supplement them with “business knowledge”.

McDonalds is the age old classic example. What would a McDonalds franchise be worth if it weren’t for the processes and systems that support the business? Imagine opening a store and letting an army of teenagers cook and serve your customers according to how they see fit.

2. If someone you employ (or yourself) has knowledge that supports the value of your business, you should secure it as “business knowledge”.

Too many organisations, particularly smaller organisations, are dependant on the knowledge of individuals working for them (often the owner), meaning that if that person were to leave the organisation, the value/worth of the organisation is diminished.

A well designed quality system captures what effective individuals do within the business allowing staff to come and go, but retaining “business knowledge”.

And “Business Knowledge” has financial value!

Providing improved exit options and related financial gain.

Having good quality systems in place adds to the monetary worth of a business when up for sale.

Many people close their door because as mentioned in the previous point, the business is virtually worthless without them.

A good quality management system(s) will:

  1. Assist in demonstrating the business’s value to potential buyers,
  2. Attract a larger number of potential buyers, because the business comes with an “instruction manual”, and
  3. Improve the price because you have something more commercially viable to sell.

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