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Years ago the Canadian Government popularized the use of value for money audits to determine the effectiveness of spending and investing for Canadians. (Personally I was and still am skeptical that governments create and real added value over the amount of taxpayers dollars they spend)

After the value audits were appreciated they spread to the private sector and WESI used a comparable process to evaluate both large and small Financial Institutions. Actually after the past years of prosperity and growth in FI's this is an ideal time to establish a priority list of areas, programs and sourcing using a value for money audit approach. Good years normally at some point lead to a time for "leaning" the organization in all areas. The simplest  place to begin is with recently added programs to see if they are making original budgets and if there are shortfalls can corrections be made or do you abandon. The most political and difficult areas to assess are head office departments which one normally classes as essential overhead. The question is how critical are they and where is the return. Most organizations allocate these budgets to revenue generating profit centres but it can't be an open ended percentage for 100% recovery. Whether we are looking at credit, marketing, human resources, etc. there are logically ways to use a value audit process. Naturally, some of the solutions come from alternative sources option i.e. out-sourcing, co-sourcing, collaboration, coopetition, etc.

The value thread should always connect back to customers directly and indirectly but you can't stretch that connection to all support departments without identifying measurable contributions. When you find some slack or productivity gaps you can re-engineer resources or add new revenue generating impacts. Innovative thinking has to go with value solutions. Where leaders can't readily isolate the value shortfalls, they then take the tact of cutting, say 10% of resources. To us this kind of shock treatment has negative cultural impacts and you will cut the good and the bad.

Pat Palmer | Sunday, November 18, 2018 | Trackbacks (0) | Permalink


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