Communication: Clear lines beat an enemy within: BP is trying to cut out flaws that mar the impact of seven in 10 internal reports

Click to follow
The Independent Online
MANY companies struggling to make it through the recession probably believe that their greatest enemies are external - whether in the form of harsh economic conditions or steadily disappearing customers. If only they knew.

The oil giant BP has conducted research which suggests there is at least one real enemy within - serious flaws in most of its internally generated management information. BP concludes that, on average, only 30 per cent of internal reports meet the full requirements of their recipients. The other 70 per cent is either of poor quality, not timely, not relevant or unintelligible.

The Institute of Internal Auditors agrees with BP's conclusions. A spokesman for the institute, Ian Black, head of internal audit at ICI, said: 'Normally information isn't timely. Normally it doesn't link up to the strategic goals of the organisation. Usually it won't connect financial and non-financial information.'

Mr Black believes that many able managers in many companies produce internal reports that are 'inward-looking and encourage sub-optimisation'. As an example, he cites an accountant's internal report that recommended an increased use of resources to maximise returns despite a severe shortage of working capital in the company. The accountant was looking at only a narrow part of the accounting function rather than the overall health and welfare of the business.

BP has found that in a large international multi-site organisation, such as its own, there is great potential to duplicate work and under-utilise good management information. BP has found many examples in its own companies. There are instances of wheels being invented in one country when they were already second-generation in another. There are also examples of branches being ignorant of important management information because someone forget to add a name to the circulation list.

BP has brought in consultants Dent Lee Witte to help managers increase their information efficiency in those BP subsidiaries which believe they need help. Dent Lee Witte believes that companies are unlikely to achieve 100 per cent efficiency in their internal information but that they can raise the efficiency level from the standard 30 per cent to over 90 per cent.

Many of the solutions to information short-circuits can be surprisingly simple. For many problems, the solution can simply be adding a name to a circulation list or making a two-minute telephone call. 'We call these 'quick and dirties',' says Kevin McGrath, a consultant at Dent Lee Witte. Other information problems can reveal a need for fundamental changes - an organisational restructuring or retraining of staff.

But the key to addressing the overall information problem is to realign the company's information strategy with the organisation's business goals and chosen methods. Information technology is developing faster than most of the businesses it serves. Unless it is constantly watched, the servant can become the master.

BP believes that it has achieved some astounding results by introducing a programme to tackle these information problems. One BP subsidiary, BP Solar, reckons it has more than doubled both its market share and personal productivity in 18 months by using the BP/Dent Lee Witte programme.

The programme concentrates on pulling together the different strands of information needs and business goals in a series of senior management seminars and fieldwork surveys. Graham van Terheyden, BP's head of information management, believes that the process has huge potential for all sizes of company. He said: 'We are firmly of the belief that it's our smaller, particularly market-focused operations which are going to benefit the most.' Defining and agreeing on business objectives in very large organisations is far more problematic in practice than in smaller business units, he believes.

Dent Lee Witte believe that the breadth of BP's overall business objectives has, nevertheless, provided a necessary backdrop to the success of the information programme. BP has defined three vital elements in its development mission as profitability, market reputation and teamwork.

Mr McGrath said: 'If the whole business focus is on the p/e ratio, you probably won't achieve that because your staff won't be happy.'

(Photograph omitted)