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Posts Tagged ‘tenancy’

To assess the gap between where the organization wants to be and what it currently can produce, I use the organizational process model shown in Figure 21. This tool helps me view the organization at the macro level and allows me to see at a glance what the organization is accomplishing from a task perspective. It helps indicate whether the work being done is consistent with the organization’s vision and mission.

Moreover, the model identifies any gaps between present processes and future plans. A credit card company I worked with had its genesis in the postwar boom of the 1950s and 1960s, enabling millions of consumers to buy electrical appliances. Although this company had been very successful for decades, competition for market share of appliances increased as the market became saturated. In addition, the spread of other credit resources began to squeeze this company’s profits. Soon the company was expanding into other kinds of businesses including dealer financing, retail space design, inventory financing, and even the financing of capital improvements for dealers. Each area now competed for the resources of the original credit card business, and the company found itself spread too thin. Divisions competed against each other for personnel and budget. And as the top leadership increasingly abandoned initiatives that didn’t produce short-term profits, the whole company’s morale spiraled downward.

3People from departments, branches, or any other unit can combine their estimates and analyze their group rating. Some may see themselves as being close to the future orientation end of the spectrum; others may see themselves at the opposite end. Assessing each department using a graph like the one in Exercise 11 should help identify prospective areas where readiness for partnering activities is evident—and indicate where more developmental activities are needed before the decision to create a partnership is made.

Articulating a vision that is consistent with the leadership’s actions and cultural readiness can motivate everyone to participate in its implementation. Goals such as sales targets, revenue growth, and market penetration are strategic directions that organizations should address in their mission statements. But without a vision to channel the ethereal energies of each participant, such goals alone are not compelling enough to break through to the creative zone.

Return on equity. One of the principal tests is how much money a business makes for its investors, who therefore pay considerable attention to it. It is calculated as net profit after tax divided by equity capital.

Ratios and suppliers Suppliers’ prices and performance can be monitored using ratios. Fluctuations in prices are measured by dividing a supplier’s current prices by its prices at a previous date. The time that suppliers take to deliver is calculated by dividing the value of outstanding orders with suppliers by the value of average daily purchases. An indication of a supplier’s reliability can be obtained by dividing the value of overdue orders from the supplier by the average daily purchases from all suppliers.

Ratios and employees

Productivity can be measured in a number of ways. Profit per employee is calculated by dividing profit by the number of employees. A more interesting ratio of value-added per employee is calculated by dividing sales minus materials costs by the average number of employees. Employment costs can be measured and monitored for a range of criteria. For example, training costs can be related to profit for budgeting purposes by dividing profit by training expenditure.

Price/earnings (p/e) ratio. The price/earnings ratio is simply the share price divided by the earnings per share (eps). It is the one that investors
and analysts focus on and it forms part of the valuation of a company during acquisitions and disposals. The higher the ratio, the more the company is deemed to be worth, although there are several points to vote. p/e ratios vary across industry sectors and in different countries, and are relative to those of competitors. They rise when the share price rises – for example, when there is speculation about a merger or takeover. They can also lag behind events, combining current share price with past earnings. A p/e ratio may, for instance, be too high compared with likely future growth.