GAP Analysis & Organisational Efficiency
Published on : Tuesday 30-11--0001
Business Process Re-engineering (BPR) is a solution focused area for reducing costs of the existing process along with increase in performance. Leveraging best practice has become the important factor of process benchmarking and BPR. Accurate knowledge of the gaps between best practice processes and an organisation's business processes is essential for the redesign of business processes. It considers three major areas for improvements which includes improvement in business efficiency, improved techniques and new requirement.
There are multiple possible approaches which are as guiding principles of BPR. One of which is hybrid approach. It has planning begins with a top-down view of the big-picture strategy. Bottom-up research is performed to understand the current functionality and define the processes in use. This process starts by grading what you have as a good, average or poor and then comparing it to what you want – it is a GAP.
Objective of Gap Analysis
Charles Kettering, the famed inventor and head of research for General Motors, once said, “A problem well-stated is half-solved.” The gap analysis tool can help any organisation to define problems and identify areas for process improvement in clear, specific, achievable terms. In simple words, it can also help the organisation to define where it wants to go and how it is going to get there. The gap analysis helps organisations realise and achieve their full potential. It allows organisations to make the best use of their resources, improve overall performance, maintain inventory control, and more easily reach goals.
Figure 1
For an example, let’s say that your organisation’s customer service department is currently taking 50 calls an hour but their expected volume is 75 calls per hour. Gap analysis can give you the tools to identify why this gap exists and help you identify ways to bridge it.
For any organisation specific standards are mandatory. Guidelines provide assistance on how to implement those standards and there are various tools and/or techniques which provide steps to be followed. Auditor must use professional judgment while applying the guidelines, tools and techniques during gap analysis. Gap analysis cannot avoid legal and regulatory requirements which most of the times are more important to check than standards being followed. Also, security of information is integral part for any process now days. During gap analysis it is important not to compromise with crucial requirement of Confidentiality, Integrity, and Availability (CIA).
Gap analysis consists of five basic steps as shown in diagram. Gap analysis can also be cyclical, returning to the first stage to seek further improvement once the initial analysis has been done and the action plan has been implemented.
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Where Gaps Occur
Typically, gaps can occur in three areas. A successful gap analysis looks at each of these areas to see how it affects the current and future state of the process being examined.
1. People
If people do not have segregation of duties, do not have the right skills, are not properly trained, and/or do not have proper leadership in place, gaps can be created between their actual and desired performance.
2. Processes
Effective, consistent, measurable processes are another key ingredient for success. This includes the way that work is performed as well as the processes used to manage staff and the business.
3. Technology
The final element of success is having the right tools in place to support the work being done.
Few Common Gap Analysis methodologies
When it comes to gap analysis tools and methodology, there are a few different models which gap analysis Auditor can use:
1. McKinsey 7-S framework
The McKinsey 7-S framework is a high-level view of a company which helps in narrowing down which areas of the business are meeting expectations, and which ones aren’t. It starts by analysing the business from seven different groupings:
(i) Strategy (ii) Structure (iii) Systems (iv) Staff (v) Style (vi) Skills (vii) Shared values. Among these seven elements, three elements are known as "hard" elements which are strategy, structures and systems. These are relatively easy to identify, and management can influence them directly. Rest four are known as "soft" elements, which are bit harder to describe, less tangible, and more influenced by your company culture.
Figure 3
2. SWOT analysis
SWOT stands for (i) Strengths (ii) Weaknesses (iii) Opportunities and (iv) Threats. It’s a 2×2 matrix. The SWOT approach allows organisations to more readily see their strengths, and also threats to avoid when implementing solutions. It also clearly outlines where your organisation stands compared to the competition.
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3. Nadler-Tushman Congruence Model
This gap analysis tool divides business processes into three groups: (i) Input (ii) Transformation (iii) Output. The inputs may include any resources, such as employees, raw materials, and operational tools to manufacture desired products. The transformation is what happens with those inputs – think things like team structures and workflows. And finally, output is the resulting product that your organisation plan to sell to the customers. This model helps identify how different pieces of your organisation and steps in processes work together.
4. Fishbone diagram
This diagram is also popular as the cause and effect or Ishikawa diagram. This diagram is focused on finding the causation of events. It’s a straightforward way to conduct a gap analysis. You start by identifying your organisation’s challenges or problems. Once those are listed, go through each and add all the possible causes. Keep asking “why?” at least five times, until you get down to the bottom of the issue. Here is a simple example of the five whys technique. Let me give you an example, consider “Q” as question and “A” as answer for that question. (Q-1) Why were you late for work today? (A-1) I was late for work because my car ran out of petrol. (Q-2) Why did your car run out of petrol? (A-2) My car ran out of petrol because I didn’t put petrol in it. (Q-3) Why didn’t you put petrol in your car? (A-3) I didn’t put petrol in my car because I didn’t have any money. (Q-4) Why didn’t you have any money? (A-4) I don’t have any money because I spent it all on the weekend. You can continue till you reaches root cause.
Figure 5
5. Burke-Litwin causal model
This model is based on the idea that gaps could be caused by both internal and external factors. It uses 12 categories - (i) External environment (ii) Mission and strategy (iii) Leadership (iv) Organisational culture (v) Structure (vi) Management practices (vii) Systems (viii) Work unit climate (ix) Task and individual skills (x) Individual needs and values (xi) Motivation (xii) Individual and organisational performance. This model helps organisation to identify the source of the need for change, and interrelation between each of these areas to each other.
Sources of Inputs Gathered for Gap Analysis
Before gap analysis, ideally sources of inputs for gap analysis are identified within any organisation. The organisation’s involvement to support gap analysis is must.
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Outcome of Gap Analysis:
Deliverables from gap analysis generally contains detailed report which indicates scope boundary where gap analysis is performed along with gap identified in each area considered under it. It also contains recommended road map which organisation can consider for implementation.
