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Manfaat Audit ManajemenPertemuan 15 s.d 20

Matakuliah : A0134/Audit OperasionalTahun : 2006

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Individual Assessment

• Executives are evaluated in relative rather than absolute terms.

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• Accordingly, the evaluating team does not sit in judgement about the fundamental worth of each individual. They concentrate rather on the individual manager’s relative skill profile and value in the current or planned position within the organisation.

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• For each key executive who is interviewed, an appraisal is provided of his managerial strong points; the company can build on these.

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• At the same time the need for further training and development is highlighted, and options for future management assignments are indicated.

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• A Management Audit provides a dual perspective. It assesses both the adequacy of existing management resources to implement the company’s strategy, and the individual career perspective.

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Team Evaluation

• An analysis is made of the pattern of interactions between various individuals within the team.

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• The actual power structure that exists is analysed and documented.

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• Each executive’s ambition is diagnosed, and then evaluated against the company’s expectation and the realistic career opportunities that are available within the organisation.

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• The perceptions of the client concerning strategy, structure and systems are compared with the management team’s evaluation; it is often found that the two are markedly different. Following these comparisons, there is reassessment of perceptions and synergies, which is then fed back to the management.

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• The benefits a company derives from a Management Audit team assessment include:– Interaction analysis– Understanding of ambitions– Reaction on mutual perceptions– Identification of possible greater synergy– Recommendation on team efficiancy

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• It is not unusual to find that members of a team who are meant to be communicating with each other are in point of fact failing to do so.

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• A relatively typical ‘communication’ profile is shown in Fig. 8.1 p. 118

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Evaluation of the Overall Organisation

• Recommendations are made to senior management about the career paths and career management of key executives. Guidance is also given on selection, promotion and rotation decisions.

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• Decision-making processes and the communication network within each business unit are related to executive and team efficiency.

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• The organisation’s capacity to innovate is measured and processes are analysed.

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• The roles and the implications of corporate hierarchy (Board of Directors), Executive Committee, Executive Office, Operating Committee, task Forces are all evaluated.

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• So where overall organisation is concerned, the Management Audit enables the company to focus on managing change rather than looking at individual elements in isolation.

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The Main Benefits of Management Audit

• Awareness of Strategic Options• Re-Evaluation of Operational Objectives• Adaption of Organisational Concepts to

Human and Cultural Elements• Changes in Organisational Structure• Concentration on Internal Resources• Establishing Realistic Expectations

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Awareness of Strategic Options

• Management Audit crystallises a company’s culture, making the management team aware of its strategic options and full potential. This is particularly true when the audit reviews several organisational and management layers.

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• In the course of the Management Audit process, individuals became aware of their own background potential and the importance of working together and it acted as a catalyst of a new corporate culture. After several months, individual executives commented on their feeling of greater identification, with the project, the people and the company.

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• As a result of the team patterns established, greater internal efficiency and cost effectiveness were achieved. This was in contrast to the period before the Management Audit, when the company concerned had faced dramatic cost overruns due to project delays.

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Re-Evaluation of Operational Objectives

• A large number of companies suffer from static behaviour; innovation is no longer an engine of growth.

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• Management Audit has helped before in the re-evaluation of operational objectives, encouraging innovative capability within the company.

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• The company had a manufacturing culture; marketing was only a secondary consideration.

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• The consultants discovered that the engineering talent was very important to the company, but that the necessary awareness of customer needs was lacking.

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• Little importance was attached to product applications. So the consultants helped the company acquire market knowledge and research product applications, a process which has been followed very successfully by the steel industry.

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• The company accepted the creation of a product manager’s position within the R & D department, in order link development with client needs. Knowing what their clients wanted from the product became as important as being an expert manufacturer: the focus of the group changed.

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• The conjunction of marketing talent and R & D capability led to considerable internal innovation, which proved to be of long lasting benefit to the group.

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Adaption of Organisational Concepts to Human and Cultural Elements

• Management Audit aims at increasing organisational flexibility. This is particularly necessary when acquisitions or mergers bring fundamental changes to a company’s structure.

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• A large Swedish welding manufacturer had acquired a Dutch affiliate from a major competitor. Although the Swedish client was the European market leader at the time, it had been incapable of competing effectively against its Dutch competitor on the latter’s home ground.

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• The group decided to entrust the management of the new combined operations in the Netherlands to the competitor’s previous management team, trusting their competence to ensure the success of the operation. When they found that the performance of the Dutch management declined following the acquisition, they commissioned a Management Audit. Annual sales had dropped, and even more alarmingly, key managers were leaving the Dutch subsidiary.

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• The problem was tackled by consultants from the Scandinavian and Dutch offices. They found that the trouble lay with a lack of adaption of management style following the acquisition.

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• Broadly speaking, Swedish companies are governed by mission statements, whereas companies in the Netherlands are managed by comprehensive and definitive strategy instructions.

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• Following the acquisition, the Swedish company issued a mission statement of the Dutch General Manager. He, meanwhile was still apparently waiting for a management directive as he was used to receiving one form his former (Dutch) Board. As he had not received this management directive, he was not able to pass on to his subordinate managers similar management directives. Accordingly those subordinate managers felt, incorrectly as it transpired, that the General Manager must know something that they did not know. They were anxious over the future of the company under the new Swedish management. They felt that if there was a firm future for them, they would surely have received management directives. In the absence of such directives, they voted with their feet to go to other companies.

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Changes in Organisational Structure

• Specific business situations often call for changes in organisational structure.

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• The consultancy firm was asked to help a large speciality food manufacturer bring about such a change.

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• The company had some unique products, but was incapable of bringing about the necessary market visibility as it lacked sufficient internal financial resources. This was partly as a result of a lack internal flexibility.

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• Fundamental organisational and human issues were raised by the consultants. The solution came from within, as a result of the multiple interviews in the Management Audit. This eliminated resistance to change, and created endorsement for a common project; the company now boasts several European brands.

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Concentration on Internal Resources

• The emphasis of Management Audit is on optimising the use of internal resources, not on generating jobs for external recruitment.

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• The management consultancy firm which pioneered Management Audit also has an Executive Search wing.

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• A Continental European group asked the latter to find at least 40 new executives, in order to strengthen the corporate management team.

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• The consultancy suggested that it would be difficult – if indeed feasible – to fit 40 new executives into what would then be a central management team of less than 250 people. So the consultancy recommended that prior to any consideration being given to commissioning specific Search assignments, a Management audit be conducted. This would establish whether the organisation already employed individuals who could match the profiles of positions for which Searches had been requested.

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• The senior management agreed to this proposal. As a result of the Management Audit, it was found that all but four the required places could be filled from promotions or repositioning of individuals already employed within the Group.

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Establishing Realistic Expectations

• Many companies still think that management talent is totally different from any other resource: they see it as unlimited.

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• Management Audit has played a vital role here, helping companies to set realistic expectations.

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