Corporate Best Practices
Best practices is a common industry term that many companies seek to integrate in their daily operations and is something that every professional should be aware of. According the OECD, best practices are any improvements in existing systems in terms of technological capabilities, monetary resources, or management skills. Best practices seek to increase efficiency, improve levels of reporting, and reduce transaction errors that contribute to the fulfillment of a company’s overall strategy. Best practices can link a company’s functions more closely together that results in better overall functionality and are the linchpin of successful corporate strategy.
Customer Relationship Building
Best practices should address the acquisition and retention of new customers, attracting and maintaining quality talent, and the various methods use to ensure corporate stability. Relationship marketing has taken precedence over the traditional transactional type of marketing that focuses on simply getting more business. Businesses today must focus on client objectives and develop personalized communication that seeks to build long-term relationships. The focus on customer relationship building transitions from a traditional mass type marketing that seeks to appeal to everyone and get as many customers as possible, to a specialized niche marketing with the idea to keep the customer for the long-term. Best practices implemented in relationship marketing should focus on client retention strategies built from the deep understanding of consumer’s profiles and loyalty programs.
Organizational identity ambiguity undermines institutional trust. Institutional trust can be identity based and exemplify mechanisms related to individual’s identification processes that result in a continued loss of trust following a merger. Institutional trust after a merger is undermined initially from the new organizations vague identity and that the institutional diminished trust can continue, most notably from employees that previously identified with their pre-merger institution. Continued institutional distrust is more likely to occur when the newly formed institution’s identity is vastly different from the pre-merger organization where there were originally high levels of trust and identification.
Best Practices Enhance Trust
Implementing organizational best practices can reduce post-merger identity ambiguity by circulating information about the newly merged organization as a great place to work through the communication of stories and propaganda where employee psychological contracts would be perceived as honored. The actions of the executives are closely monitored after a merger and are incorporated into how the employees identify with the newly merged company.
Newly merged institutions should be very attentive to the symbolism of major policy decisions and strategic changes since employees are very aware of them. Additionally, employees closely monitor actions that make sense in the post-merger organization; therefore, executive management must be ultra-attentive to the sense giving efforts that they promote. During episodes of strategic organizational change, management should be attentive when implementing strategic change in any context so it makes sense to employees.
Financial Crisis of 2007
The World Bank, showed how the financial crisis of 2007 highlighted the importance of consumer protection for the stability of the financial system. There has been an increasing role played by international and regional non-government organizations in financial consumer protection. The Association of Supervisors of Banks of the Americas has outlined best practices for financial institutions. There has been a consortium of international organizations involved with developing best practices within the banking industry.
Best Practices in Financial Institutions
As financial institutions continue to transform their operations, they should focus on driving efficiency/reducing volume, simplifying/standardizing operations around the world, and improving customer experience. There are five critical best practices that are common across all successful banking institutions:
- Customer-back process transformation which focuses on the few core banking processes that have the greatest impact. The best practices with this concept is creating a well-structured and consistent methodology to drive change and designing end-to-end processes based on client experience.
- Simplifying product architecture and technology. The best practices include minimizing customization where the client sees no value and standardizing processes and supporting platforms to drive digitations of client experiences.
- Digitizing front end client interactions and processes can further improve client experience and reduce costs. The best practices would include using digital media from better client interactions and forming partnerships with nontraditional service providers to build and deploy digital.
- Governance and performance management transparency includes the best practices of establishing and reinforcing clear accountabilities and defining goals and incentives that are aligned with strategic imperatives.
- Delivery operation models where best practices include integrating and aligning process-centric IT operations capabilities and increasing integration of third part providers into the delivery model to add variation to cost and build capabilities.
As regulations continue to change and grow more complex, banks are faced with more scrutiny about their practices, especially with consumer protection. Agency officials address the overall ideas necessary for financial institutions creating and implementing best practices which include formulating a plan, reviewing results from the last regulatory exams, keeping asset quality high, outlining the banks risk tolerance, ensuring quality documentation, developing a compliance committee, working with vendors, and investigating cyber risks.
Financial institutions have the responsibility to help create an efficient financial system that makes banking instruments available to greatest amount of people. Financial institutions have corporate social responsibility that concerns the effects of their actions on employees, customers, suppliers, the local communities, and the shareholders. The banking industry has developed business models for exemplary institutional practices and financial stability.
Mergers & Acquisitions
Beginning in the early 1990’s, the banking industry has changed dramatically and the consolidation that occurs has significantly increased with fewer banking institutions dominating the industry. The perception on the potential mergers evaluated from banking institutions must seek to satisfy the shareholders perception of the deal and whether the potential merger is economically viable. One of banking best practices that remains consistent with mergers is the communication strategies that attempt to sell the deal to the shareholders through corporate press releases, exemplifying the creation of synergies, and improved cash flows. Economic theory suggests that the ongoing market consolidation, which causes greater concentration, facilitates anticompetitive effects.
Limitations of Best Practices
Best practices have become commonplace, but is not without its limitations. Widespread utilization of best practices eliminates competitive advantage and could also legitimize behaviors that were once regarded as innovative but eventually become typical and constraining. Best practices should not simply be considered processes mandatory for policy but should be mostly concerned with people, learning, and overall improvement. Overall, best practices must address an organization’s function in society and its social responsibility to their stakeholders.
Best practices help identify the optimal ways to operate and help increase efficiency, improve reporting levels, and can reduce transaction errors that contributes to a company’s overall strategy. Best practices can link a company’s functions more closely together, which results in better overall functionality and solidifies successful corporate strategy. It is important to understand an organization’s best practices when working or considering working for them, especially for particular roles including project management, auditing, and software development where the best practices are typically clearly defined and is what will make you successful.
Dr. Phillip Gold is President/CEO of Empire Resume and has vast experience writing resumes for service-members transitioning from the military into civilian roles. He served as a Captain in the U.S. Air Force responsible for leading nuclear missile security. Phillip is a Certified Professional Resume Writer and holds a BA in Communications from The Ohio State University, an MS in Instructional Technology, an MBA in Finance, and a PhD in Finance.