When looking at any business or operational environment from an Internal Audit and Management point of view, the landscape must be clearly defined by policies and procedures as well as training manuals and standard operating procedures (SOPs). This allows employees to know their function and how this relates to the overall product of the department and the business as a whole.
Once the employee knows his role and has been sufficiently trained in this role then it is expected that he will perform the role according to the guidelines set down for him. If he does not perform the role properly then action must be taken to ensure that:
- He knows what he should be doing.
- The areas where he deviated from what was required.
- Plans and corrections are put in place to ensure that this is not repeated.
It is as simple as that. Management must ensure that they have tools in place to properly monitor the performance and production of the employees. These tools should not only be subjective key performance indicators (KPIs) – the employee was friendly and got on with the team – and should mainly be based on the products that the employee provides. All departments, not only production or manufacturing, have products. These must be clearly defined and delivered.
There are a few key factors to consider in employee productivity. L. Ron Hubbard (a management expert) stated that “Production is the basis of morale. If one can get a unit producing and actually accomplishing worthwhile production, then their morale will rise.” It follows that the employee who produces a lot will be happy and satisfied with what he is doing. This production must be measured.
When production is measured on a ‘live’ basis (not only at annual performance reviews) then it is possible to fix dips immediately before they become slumps. This is one vital management tool that many businesses do not implement fully. In manufacturing and production, targets and outputs are measured but not so in other departments. The measurement techniques used are often sloppy “add-ons” or are not performed on a daily and weekly basis.
In the next article we will discuss the role that Internal Audit plays in monitoring the business landscape, the management controls and employee performance.