Matakuliah
Tahun
: A0134/Audit Operasional
: 2006
Metodologi
Pertemuan 9 s.d 10
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Six Fundamental Steps
• The Management Audit methodology can be applied to any internal
fact gathering process. It is based upon an interactive diagnostic
process that enables both hard quantifiable issues and soft
qualitative issues to be identified.
• Psychological or psychometric evaluations can be used as an
additional assessment tool. In most instances, whilst their
contributions and value are recognised, they are usually
commissioned directly by the company and used to aid internal
assessment. Management Audit assessments are different.
• The Management Audit methodology takes the viewpoint of a Chief
Executive Officer. He has to make critical decisions relating to
resource allocation, organisational structure and strategic market
focus. The Human Resource department will provide invaluable
internal information to confirm or challenge some of the transitional
organisation recommendations that are made during the Audit
diagnosis.
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• Management Audit consists of six fundamental
steps:
– Step one: Problem definition and strategy briefing
– Step two: Documentation of current organisation and
determination f required skill profiles
– Step three: Multiple individual interviews of executives
– Step four: ICCJ Global Profile ® - systematic
individual, team and internal system evaluation
– Step five: Presentation of findings and suggested
implementations
– Step six: Feedback and follow up
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Step One
• The company’s goals and competitive business
position must be thoroughly understood by the
outside consultants at the outset of the exercise.
• Fig. 5. 1 p. 69 summarises the strategic market
position of a company and the possible
implementation approaches it can follow in order
to meet its challenges.
• The strategy of a diversified roup should aim at
maximising the Group’s long-term growth
potential. Successful implementation of such a
strategy requires as recognition of which
competitive position each company within a
group occupies.
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• The specific elements within this first step are:
– A strategic briefing. In a strategic briefing, the degree of realism
must be assessed. Strategy should be linked with the internal
resources of the company, to estimate what is available. In may
cases, internal executive talent is not even taken into
consideration.
– Outside input on industry dynamics. The danger in strategic
formulation is to conduct such a process in a vacuum.
– An agreement by both the client company and the consultants
on the strategic options to form the basis for the brief. The
consultants carrying out a Management Audit do not ‘look
behind’ the decision of the client company upon that company’s
strategy. They do not second guess the management; they
assume the client strategy to be well founded.
– Determination of the scope of the project. How many individual
executives in which division or divisions are to be involved in the
Management Audit? It is extremely important for the company to
identify the key areas which need to be addressed.
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– Preparation of an internal communication
regarding the Management Audit assignment.
This is a crucial element. The company
management must make clear to those
participating in the organisational review both
the reason for, and the purpose of, the
exercise.
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• The individuals responsible for the project
should consider conducting external
validity checks with industry experts. This
positions the average and top
performances of the industry as a whole.
The company and the individuals being
interviewed can then be appropriately
assessed against their peers.
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Step Two
• The next step is for the external consultants to document
the existing organisation of the client they also establish
the skill profiles required to implement the client’s
strategy. The documentation is based on the key
parameters which the client’s top management perceive
as essential for future business strategy. Hence it is
necessary at this stage for the consultancy to establish
an understanding of the present organisation and the
current degrees of freedom within which the executives
operate.
• This degrees of freedom model indicated in Fig. 5. 2 p.
73 evaluates the company’s internal decision-making
process within divisions, departments and operation
units. It helps to identify the all too familiar bottlenecks.
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• Taking the traditional industrial company,
with departments ranging from Research
and Development to after-sales service, it
determines how each individual units is
influenced by upstream and downstream
decisions and behavioral patterns. The
review process should also identify:
– The current and future fundamental
challenges for each department
– The skill requirements that are necessary to
face up successfully to those challenges
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• Step two enables a company to allocate resources and tailor the
organisational structure to meet its true strategic challenge –
manufacturing, marketing or otherwise.
• Fig. 5.3 p. 74 shows the ‘roller’ through which the existing
individuals, team and organisation of the client company are
processed.
• Fig. 5. 4 p. 76 shows how an individual’s key skills are projected
from that individual’s current strengths and development needs
through the dynamic challenges facing the position occupied.
• Start-up companies or very fast growing businesses usually have a
very active founder as their Chief Executive Officer. They run the
risk of not having adapted their management to the reality of their
newly created or enlarged business activities. A parallel can be
drawn between the traditional product life cycle and the evolutionary
process of an enterpreneurial organisation (see Fig. 5.5 p. 76)
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Step Three
• A sequence of individual in-depth discussions are undertaken
concerning each position’s specific contribution to future strategic
and operational effectiveness.
• These interviews communicate assumptions of an manager’s
individual strengths and development needs. They also
demonstrate the manager’s ability to meet current and future
business challenges.
• The fact finding process should be fundamentally similar to the
existing fact gathering and decision-making processes which a Chief
Executive Officer uses to make his normal day-to day business
decisions.
• The preparatory works calls on four sources of information about
each executive, as indicated in Fig. 5. 6 p. 78
• Fig. 5. 7 p. 80 shows the complex interdependence between
variables affecting the company’s strategic positioning.
• Like a military artificer, th Chief Executive Officer must know the
specific explosion that can have the maximum affect with the
minimum charge if strategically positioned.
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• Executive evaluation uses the manager’s track record as a
guarantee, or at the very least a strong indicator, of future success.
• Fig. 5. 8. p. 82 shows the outline of a tailored interview guide.
• Different cultures also tend to give different emphasis to the decision
making process and implementation timing. The Japanese will
spend about 75 per cent of time in the decision making process and
25 per cent in its implementation; Europeans will spend the time 50
– 50, while in the United Stated decision making is much shorter but
implementation takes much longer.
• Any evaluation has to be factual. Too much emphasis should not be
placed on trying to single out an individual contribution, as a
manager’s ultimate objective surely needs to be to offset his own
management team’s weakness, not put his own skills and talent
forward. With a highly autocratic management style, the team talent
composition may well be centred around the manager’s. It will then
support his individual drive rather than build a long-term platform.
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Step Four
• Management development has traditionally focused on independent
development.
• Most companies look at succession planning as a process linked to
new individual assignments, on an individual vertical line. A
manager is promoted and, ideally, they simply pull another one up to
his former post.
• A manager with X management style, defined as direct verbal
directive, will tend to create an unbalanced information flow with his
subordinates primarily through a strong hierarchical organisational
structure. This will go hand in hand with single point responsibility
and profit and loss approaches. Staff will have little role to play as
they will be perceived as adding cost and little contribution.
• In a Y management style, defined as being less directive and more
participative, with a relatively more collegiate decision-making
process, a more even talent distribution in the management team
should occur, with more collective performance evaluation criteria.
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•
•
•
•
Initiative
Competence
Compatibility
Judgement
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Step Five
• The consulting team candidly discuss their
evaluations and conclusions with the
client. The individual finding are crosschecked with the client’s previous
experience and past evaluation reord, and
are documented for individual feedback
along with the recommended development
programmes.
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• This step can be summarised as one which:
– Brings forth organisational issues arising from internal
Human Resource availability
– Gives rise to specific action recommendations
regarding organisation development, recruiting and
individual career management
– Effects co-ordination with the Human Resouces
department for systematic follow-up
– Agrees with senior management the extent of
individual feedback by the consultants to each of the
interviewed executives
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Step Six
• A professional Management Audit must stand
the test of disclosure to the individuals involved.
Participating managers benefit directly from the
interaction and feedback with the consultants.
• A Management Audit provides comprehensive
results. It offers sufficient details to assist senior
management in making faster and more
competent decisions concerning staffing and
organisation.
• The consulting team is also involved in the
necessary follow-up to ensure a smooth
implementation of the decisions reached by the
client senior management.
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