Business management systems

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A business management system is the means by which an organisation plans and controls its operations so as to achieve its objectives.  In simple terms, a management system governs the way in which an organisation operates.  All organisations use management systems for activities such as human resource management, accounting, quality management, procurement, and many more.  These systems might not be written down or even consciously thought about, but whilst an organisation continues to function it is certain that some form of management system will be in place. 

The ability to coordinate activities and improve communications across the enterprise becomes essential when organisations reach a certain size, when operations become more complex and difficult to comprehend, and when the level of significant risks is increased; symptoms that suggest the need for a management system include an inability to identify costs, inadequate integration of activities, poor communication across different functions or levels, and difficulty in tracking performance or identifying potential areas of improvement. [9]  At this stage, managers often seek to improve matters and achieve more consistent outcomes by introducing a management system, ordering activities into a systematic, logical sequence that can be repeated in a methodical way. 

Management systems include two distinct types of activity: first, is the forward process of setting overall goals, developing strategies and outlining tasks and schedules to accomplish these goals at a future date – this process can be called action planning; second, is the preparation of detailed targets and budgets that are used to monitor, control and account for the results of past activities – this activity can be called performance management. [10]  When the two processes are joined in a continual cycle so that action planning leads to performance management which then feeds back into the planning stage, we have the Plan, Do, Check, Act (PDCA) Cycle - or Plan, Do, Study, Act (PDSA) Cycle - made popular by Deming in the 1950’s and by the Total Quality Movement in the 1980’s - see diagram on the opposite page.

Deming’s message was that the key to improving quality is to reduce variation through statistical analysis coupled to clearly defined, repeatable processes.  The PDCA cycle is an iterative process designed to achieve continuous improvement: Plan involves identifying a problem or a need for improvement and devising a solution; Do implements the plan, usually on a small scale or as a pilot project; Check or Study monitors the results and assesses how the results compare to the planned goals; Act involves making corrective actions where necessary.  The Act stage is particularly relevant to the topic of this paper: it is this stage which allows the organisation to ‘hold the gains’ by documenting planned solutions which have succeeded as standards.  Deming’s work focused on manufacturing processes but the PDCA cycle has since been transferred to other sectors.  The next two sections in this paper explore some limitations of the PDCA cycle outside manufacturing processes, whilst subsequent sections suggest modifications for its application to a business management system for property assets.

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