Management is an integral part of any organization. How well an organization is managed under specific circumstances can make or break it. Hence, effective and efficient management is the sole reason for any organization’s success. It is imperative for an organization to strive for effective management.
Effective management practices are often an open-ended subject in conversations and are usually tailored to any organization’s specific needs and requirements. However, there are a few common parameters that are most often taken into consideration when assessing the reliability of an organization’s management, and determining how effective the management really is. They include company results, organization in the work environment, and employee development and satisfaction.
Inter-firm and intra-firm comparisons of company results are the most common and very effective means of assessing the effectiveness of company management.
Efficient planning and organization skills are other parameters that can be used to assess how effective company management is.
Employee satisfaction is another parameter that can be used to assess how effective company management really is. In addition to employee satisfaction, effective management will always make sure to keep the workforce updated with the changing technologies and work methods, and hence will ensure periodic training sessions and training courses for the same.
Effective Management: Company Results
Company results are the most obvious and basic parameter taken into consideration to assess just how effective the management of an organization is. Looking at the organization’s results over several years (and at those of several other organizations working in the same industry) under the existing management team is essential to determine whether it’s effective or not. If there is positive growth in the company’s results, it usually points towards the high effectiveness of the management team.
However, over the years, if there is only slight, if steady, growth seen through a long period, it could indicate that the management might not be utilizing its resources to its full potential. It might just be letting company operations work out at its usual pace, instead of introducing and trying out new techniques that might boost its results exponentially. Company results that can be looked at and can be compared are of a few different types:
1. Financial results
A company’s financial results are the most clear and concise indicators of a company’s growth and success. Financial analysis in the form of financial ratios, cash flow analysis, profitability analysis, and several others are very helpful measures indication of the effectiveness of management and the overall success and growth of the company.
2. Expansion and growth
Financial analysis is the most commonly used form of assessment. However, expansion and growth are also good indicators of how effective company management really is. If the company’s been able to expand its operations and diversify its business segments over the years, it’s a sign of growth and gradual success, as well as profitability, for the company. It is also a good indicator of how effective company management really is.
Effective Management: Organization in the Work Environment
Organization is key for business success. Without efficient planning and organization, the working environment is haphazard, and there is an air of uncertainty at all times. Therefore, efficient planning and organization skills are other parameters used to assess the effectiveness of company management. If there is a well-laid-out plan, the company is clear in its goals and is working toward achieving them. Hence, effective planning and efficient organization are essential for any institution’s success.
Effective Management: Employee Development and Satisfaction
Employee satisfaction is another parameter that can be used to assess how effective company management really is. It is a proven fact that the higher the level of satisfaction among employees, the higher is the level of performance. Hence, it is the duty of human resource managers to keep employee satisfaction in check. Periodic surveys and company meetings and outbounds are good means of evaluating employee satisfaction.
In addition to employee satisfaction, effective management will always make sure to keep the workforce updated with the changing technologies and work methods. The frequency of employee development and training sessions is a good means of assessing the effectiveness of company management. It is crucial to conduct training sessions to keep the workforce up to date with the ever-changing technologies and the work environment, which will always contribute positively to company growth and success.
CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional CFI resources below will be useful: