Governments seek New Best Business Practices to prevent Future Financial Crises

The current financial crisis is also a crisis in the management and governance of the corporations involved. While the US focuses on bail-outs for those who caused the crisis, European governments seek new best business practices to prevent future problems from arising within corporations and financial institutions. They want proper business management and control, so that management is aware of what is happening in the business and can prevent problems from arising. They want transparent reporting of the actual business, so that regulators gain an accurate picture.

Many arbitrary practices have been contrived over the years, but none are best business practices

Throughout the 20^th century, various practices for operating and managing the enterprise have been contrived and refined, becoming the conventional practices and structures used today. The problem is that the structures do not organize and manage the business, so none are best business practices. Instead, structures laid over the business organize departments and positions and manage functions, maps, accounts, processes, activities, tasks, scorecards, and numerous other entities. Leading to the financial crisis, arbitrary new structures were contrived for capital products and product management that were not well understood and could not be managed within the business context. Overlaid structures hide the business and compound management problems. Each structure uses different terms and definitions creating information complexity and proliferation of information systems.

Once an organization structure is laid over the business, the business can never be managed. The business changes, while the organization structure remains rigid, building pressure for reorganization and upheaval. Other structures for processes, accounts, human resources, performance management, etc are laid over the organization structure. The actual business lies hidden under a proliferation of structures. We improve management and effect change by laying new contrived structures over the structures in place. Even with all the improvements, we continue to have well-known unsolvable problems with re-organizations, intangible assets, accounting limitations, capital worth, investment returns, cost control, information management, alignment, project management, change management, and on and on. The problems are unsolvable, because they can never be solved by new or improved 20^th century management structures.

Result-performance Management (R-pM) provides the one set of best practices to organize and manage the business

Result-performance Management (R-pM) provides the one right set of practices to organize and manage the 21^st Century business, and leave problems with 20^th century practices and structures behind.

The business definition is “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. Existing management practices and structures do not identify and manage the three entities that comprise the business and must be managed as distinct sets:

• Results: Specific economic outputs of value and quality produced at any level from business performance
• Capital: Specific invested capital available as solutions of an investment cost and worth to be utilized in business performance
• Performance: Utilization of specific solutions to incur performance costs to produce value-added in specific results

These three entities are organized and managed in Result-performance Management to organize and manage the business. One business structure defines capital solutions available to the business, deployment and implementation of specific solutions for performance to produce specific results, and the results produced as outputs from the business. Results form result chains to manage value-added across the business.

The business organization changes naturally as results are added, changed, or closed; and with each new capital investment to implement solutions, redeploy solutions, or to close old solutions. Business organization unit solutions are deployed to be responsible and utilize their capital to produce specific results. Human capital solutions are deployed where they have the capability to manage and produce results. Other capital is implemented as specific solutions to produce specific results.

Management strategy plans strategic results and the existing and new capital solutions needed to produce the results in a strategic business structure . Result goals and performance expectations are planned by period to create the strategic result value. Proposed new capital and development must be justified by documented solution worth in the value to be added to specific results. Capital solutions are developed as results from investment projects to capture investment costs and are implemented to produce specific results. Investment costs are amortized in performance costs against the result value produced to manage result value-added and determine return on investment. Corporate governance manages the transition from the current to the strategic business.

Business data is captured on result volumes produced, result value, performance costs, result value-added, capital investment costs, unamortized investment cost balances, return on specific capital investments, and solution worth that cannot be captured today. Result value-added is managed to provide the return on capital solution investments and to provide the worth of solutions over their remaining useful life. All tangible and intangible assets are managed as assets of positive capital worth and as liabilities in solutions of negative capital worth to manage business net worth.

One set of consistent, accurate, and complete management information is provided on the actual business for effective and transparent business management. Business management has a clear view of capital solutions utilized in performance to incur costs and produce results across the business. Accurate business management reports can be provided to regulatory authorities for a transparent view of the actual business.

R-pM is the breakthrough needed for effective and transparent business management

R-pM eliminates the unsolvable problems and high costs of structures laid over the business. R-pM manages the current and strategic business for strategic value creation, result value-quality chains, transparent governance, innovation management, beneficial development projects, accurate financial and non-financial business records, cost and value accounting, capital worth management, managed investment returns, efficient IT utilization, result-performance optimization, business collaboration, solution-sharing, and many other advantages prevented by 20^th century structures.

If governments want to institute real best business practices and transparent business reporting, the only solution is R-pM

Governments that want to prevent future corporate financial, management, and governance problems should investigate a program to assist their corporations to manage the actual business with R-pM. Future reporting should require transparent reporting of capital worth, utilization of capital solutions in performance to produce results of value that lead to revenues, the performance costs to produce the results that utilize expenditures, and the value-added that leads to profits. The cost of the program will be paid back manifold in the increased competitiveness of the corporations and the increases in government revenues.

When we employ R-pM, we have the right best business practices to organize and manage any enterprise business for 21^st century management, and leave all the obsolete bad practices and unsolvable 20^th century problems behind. Learn more about R-pM at Result-performance-Management.com home page

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