What is Business Excellence and How Can You Measure It?

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Most of us have heard of business excellence but what does this really mean? And how is it actually measured? Let’s take a look in more detail in the article below.

Business excellence is an important concept, but one that many companies struggle to understand and quantify.

We all want our businesses to do well, but tracking their performance and translating day to day trading into clear metrics is not easy.

Many experts have come up with business excellence frameworks which aim to provide hard data and arm their users with measurable metrics and actionable best practices.

Measuring business excellence through these frameworks is the first step to improving the quality and sustainability of your business.

What is Business Excellence?

Business Excellence means achieving outstanding results in all areas of the business by using best practices at all times.

Companies that are working to business excellence have a set of fundamental values or key concepts that they aim to adhere to. 

Those concepts could differ from one business to another, as laid out in the Mission, Vision and Values of a company.

For example, one company may prioritise environmental sustainability while another company’s focus may be on supporting the local economy with how they trade.

Or the key value of the company could be to provide excellent customer service or continuous innovation.

Each company sets their own core values for what they want to emphasise with their business. Companies use business excellence tools to support their improvement goals.

They use models such as the Baldridge (MDNQA) or the European Foundation for Quality Management to guide their work, and can quantify and evaluate the improvements that are being made based on the guidance of those models and frameworks.

Aiming for excellence is not a “one-off” effort. Business excellence requires constant evaluation, change, and re-evaluation in much the same way that continuous improvement models operate.

Measuring Business Excellence

Business excellence is not a new concept. The idea was prominent even in the 1990s, however, back then it more commonly went under the name of ‘total quality management’.

There are numerous books and journals that cover the subject and describe different ways of assessing a company’s general performance.

The reason that the idea is the subject of so much debate is that there is not one simple measurement for a business leader to take. Every company is different in its structure, operation and goals.

Every business is different in how it is managed, and those differences need to be taken into account when measuring the performance of the business.

The core idea remains the same “building a sustainable business through the pursuit of excellence”. Essentially, doing things better to make more money.

Measuring business excellence means evaluating those improvements:

  • What is the ‘performance gap’ right now?
  • How much would it cost to close that gap?
  • What would the business gain if those improvements were made?

In the long term, the business should work out:

  • How operationally mature is it compared to other businesses in the same niche?
  • How much value has been gained through operational improvements in the last year?

Be Realistic With Your Evaluations

One of the challenges with measuring business excellence is turning the ideas into real-world figures. You may set goals for improvement, and on paper achieve those goals, only to find that in the real world the figures don’t add up.

If that happens, it’s clear that you have missed something with your evaluations. It is typically easy to figure out operational improvements.

If you run a gold mine and you are retrieving a gram per yard, but your output per hour is very poor then your goal would be to find a way to process more dirt without losing gold. That’s a simple and easy to quantify metric.

If you feel that your problem is more on the HR or customer service side of things, then it is more difficult to come up with a goal that you can measure.

You might decide that you need to “train all of your customer-facing staff to improve sales”. You train the staff, so you’ve met the goal, but sales are still poor.

Was the training course bad, or are you selling bad products that people don’t want to buy?

It’s hard to know for sure unless some staff are performing well but others are not – in that case, you have a performance discrepancy which you can evaluate and identify why one person is able to sell, but others struggle.

Business excellence can guide your company culture and can help you to identify areas of improvement.

It is up to you, as a company leader, whether you use the information that the business excellence frameworks give you to simply guide continuous improvement, form the core of your company culture and policies, or somewhere in between. 

The contents of your business excellence report can be invaluable for your annual report, giving key stakeholders an understanding of where your business is at performance-wise, and the measures you are taking to improve it.

Starting on the Path to Business Excellence

Both small and large companies can benefit from business excellence frameworks. There are numerous models and frameworks out there to suit any size, niche and type of business.

Don’t be put off by the complexities of implementing business excellence in your business. Business excellence and quality management are essential to shaping your business.

When you sit down and think about the state of your business and where performance improvements could be made, the insights will be invaluable.

From there, you are well on the path to making your company a stronger and more sustainable business.

If you are not sure where to start or would like someone with business excellence expertise to guide you as you build up a model for your business, then please do not hesitate to contact us.

At High Velocity Business Improvement Coaching, we are able to help you with setting up the processes that are best for your business, or coach you how to better use your existing processes.

We have many years of experience in Total Quality Management, quality frameworks, continuous improvement and business excellence.

Whether you prefer your feedback as hard metrics or broader concepts, we can help you to identify the areas of your business that need to be improved and communicate those improvements to your staff in a form that they will listen to. 

We also coach your business to understand your problems, the size of the problems and how to solve the true root cause of the problems.

This means you can fix minor issues before they become major problems and deliver a better overall customer experience for your customers.

Please contact us today to book a free consultation or for more information.

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