A leading global risk management provider that has audited thousands of organisations – from the ASX top 200 to SMEs – has revealed the most common reasons why organisations fail to meet the goals they set.
SAI Global is a trusted global leader in risk management solutions through its standards, assurance and training offerings
We have highlighted the most frequent audit failures because we believe Australia still has a long way to go to producing the highest quality services and products.
Problems associated with quality usually come from
SAI Global’s top 7 businesses failures, as revealed by its audits
The 7 most common reasons why
1. Lack of effective strategic planning
Audits by SAI Global seek proof of a business strategy, and proof that the strategy is being reviewed and followed, that the business understands its strengths and weaknesses, and
Audit failures here are more common among small-to-medium businesses. We find smaller businesses more commonly have less of a focus on strategy and direction. They are too busy running their business and don’t have
As such, they have less of an understanding of the competitive environment, are less able to compete, and often struggle to identify opportunities and grow.
2. Mid-level and junior employees are in the dark about the business’s objectives
SAI Global’s audits look for evidence that senior management has cascaded measurable objectives – and the necessary resources – to relevant functions in the
This leads to the ‘silo’ effect, where internal teams are working independently of each other. Businesses that fail this aspect of their audit commonly struggle to meet their objectives.
3. Important functions of the business are not monitored
Quality management audits look for evidence that the
For instance, a company might want to improve the efficiency of its customer-facing staff but is unlikely to achieve this if they don’t implement a scheduling system they can measure.
Our assessments of
4. Short-sighted leadership
Leadership is an area in which
Auditors often identify this problem by assessing the linkage of processes between sections and the flow of information and work.
5. Conflicting systems, processes and objectives
SAI Global’s audits frequently identify internal systems and objectives within individual departments that clash with the
For instance, an organisation’s call
6. Employees don’t receive support to develop competence
SAI Global audits also include auditing the qualifications and competence of employees in various roles.
When we interview employees, most tell us they were put into a role with very little mentoring and support. As a result, they have difficulty in fulfilling the requirements of their role, particularly early on.
7. Failing to identify and solve problems
Senior management often falls prey to using profit and loss statements as the only way to monitor the health of the company and make strategic decisions.
Basing decisions on financials without a focus on the quality of the organisation’s products and services happens a lot – and is not an effective means of identifying problems.
In the case where
When the ‘silo’ effect is occurring, problems are
David Smith, Principal Advisor in Business Improvement at SAI
Global,carries out training and certification for organisationsseeking to meet the ISO 9001 Standard for quality management systems.