Business Analysis – Could One Size Fit All Companies!?

This is about the Idea to have a Performance Measurement System that is suitable for as many businesses as possible. But businesses are different!

You won’t find two companies, which absolutely work in the same way, even if they are in the same Industry. Every organisation has its own way to do business. Thus would it be possible to have a Performance Measurement System, which is able to compare companies as if they would be just one business?

Many Professionals would say no. But why? Most will refer to the differences between the organisations, as they may analyse things differently. Wait a Minute, enterprises measure things differently? But that would be the most important thing about having a Performance Management System that suites nearly every organisation.

As businesses are measuring things differently, they define the calculated Key Performance Indicators (KPIs) differently. So, that would only require to explicitly define the way how Key Performance Indicators have to be measured and calculated!

That would mean that for example the Business Ratio for Employee Satisfaction is calculated the same way among different businesses, thus making it possible to compare businesses, no matter how different these companies would be.

However, that don’t seems to be practical to define every available KPI precisely. Though the number of Business Ratios would have to be limited to a small number. Therefore only Key Performance Indicators would have to be used, which are used in many Industries. This would make it easier to create a Performance Management System that would fit most organisations. System.

By reducing the number of KPIs to a minimum, would also have the advantage that organisations could retrieve the values for these KPIs more easily.

That would make it possible to have a Performance Measurement System that fits nearly all enterprises. A Performance Management System like the one described above would suite a great number of businesses, no matter which Industry the businesses are operating in. Thus making it possible to compare enterprises with each other.

This brings up the question “What will it be good for to compare organisations with each other?”. Well, it would be a kind of benchmark, which allows to see how other businesses are developing. It’s correct that there are solutions on the market which provide benchmarks based on data of the year-end-close. But that’s not the same.

A Performance Measurement System should allow the comparison of enterprises on a regular basis, such as weeks or month. Beside the regular comparison possiblities such a System will avoid the backward oriented view which comes with analysing accounting data. As well as the problem of having different valuation methods used by companies for Year-End-Closings.

But the above mentioned question is not answered fully. Comparing companies will help to find out, if a specific business is underperforming or overperforming versus other enterprises of the same Industry. When you know that your business is underperforming, you are able to ask more questions, such as “Why is your business underperforming?” or “What could you do, to improve performance?” and so on.

Only focusing on the organisations own financial numbers is not enough these days. It’s like being an airplane pilot without knowing exactly where to go. So if the above is possible or not, it is important for enterprises to have a Business Analysis System.

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