by Merlin Hernandez  

A well-executed business evaluation provides a valuable planning instrument for the establishment of priorities and resource allocation for overall operational improvement and the satisfaction of customer needs. Evaluations also offer a measure of whether objectives and goals are being achieved, and whether the organization is effectively adapting to new environments, trends, and technological changes. 

Evaluations, however, can be a double-edged sword in that they often bare deficiencies in operations especially if there is a granular approach that does not recognize integrated efficiencies. This can become a disincentive to making the necessary improvements which may appear overwhelming if each deficiency is viewed in isolation. Cost is the most common deterrent and many smaller businesses may not be able to afford the time and expense of installing new systems and procedures. Evaluations can also bring some disruption to work routines which can impact short term goals. 

Business evaluations assess policies and procedures for coherence between systems and specific objectives e.g. measuring whether customer service policies actually respond to identified customer need. Evaluations allow the business to take an objective view of where it stands in relation to where it wants to go. The business might then leverage its assets to achieve its objectives through more informed choices about what systems work and what do not. 

Evaluations might examine organizational culture and structure, governance policies, work flow processes, KPIs, employee turnover, client satisfaction, and funding streams, among other inquiries. They also bare inherent and potential risks that will guide decisions about the design of business functions and the establishment of priorities. The elements of an evaluation are organizational objectives and goals, a needs assessment from end users of evaluation results, and a trained assessment team. 

These assessments can be done in anticipation of a strategic move to better position the company for success or as an exercise in assessing effectiveness. It is through the evaluation process that the most meaningful strategies are developed, improved, and refined. An evaluation provides the kind of insights that bring clarity of vision and purpose in building strategy. There are distinct advantages to an integrated evaluation framework that examines preparedness or efficiencies throughout the entire organization in order to maintain internal and external consistencies. An integrative evaluation takes a collaborative approach among both internal and external stakeholders so that findings dovetail seamlessly for an action plan that is strategically acquired. 

Key factors for a meaningful assessment are the organizational culture and decision-making policies, power hierarchies and centers of influence, horizontal communication, and a trained assessment team. It is often a good strategy to use external SMEs for organizational assessments since having line managers (internal SMEs) as evaluators risk introducing bias to the process through departmental agendas and priorities. But external evaluators can add to the cost and many medium and small enterprises may postpone or eliminate the evaluation exercise as a planning tool. One way to address the issue is to have line managers trained in evaluation techniques and expectations. 

But an evaluation is not a luxury that can be cut from the budget or postponed. It needs to be done from an assessment of a new venture’s potential to meet an identified market need, through an expansion of the customer base or to tap into new markets, to evaluating the resource capability required to achieve goals and objectives. Evaluations also enable the development of contingency plans that would mitigate an emerging risk profile to emphasize anticipation and preparation over after-the-fact response and crisis management.   

As the business plan evolves from the assessment and analysis phase, it is also good strategy to measure the proposed venture against industry best practices and the heuristic rules that apply. This is done from the perspective of process mechanics as well as change management aspects to arrive at a conceptual framework suited to that particular business in all its specific peculiarities in terms of cost, flexibility, work flow, time and resource constraints etc. Failure to conduct an evaluation when it is indicated can result in ill-informed decision-making, unrealistic expectations, poor appreciation of threats that can impair desired outcomes, and unpreparedness for contingencies. 

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