Framework for business excellence

A whole-of-organisation focus is needed to achieve sustainable business excellence, which is why the Australian Business Excellence Framework gives leaders the tools they need to see the big picture. 

In challenging economic conditions, small and medium businesses tend to focus on short-term goals and chase profits at the expense of operational sustainability. If the bottom line is being impacted by a common pain point like repeated processing errors or customer loyalty issues, much energy is expended on trying to solve the problem — to the neglect of almost everything else.

“If all you’re doing is chasing pain points, there is a risk that other improvement initiatives fall into decay,” says Business Excellence Australia (BEA) chair Graham Giannini GAICD. “You can end up endlessly chasing things blowing down the street and your business is no better off than when you started.”

Running a high-performing organisation requires a holistic focus on all the systems and processes that will deliver long-term sustainable outcomes. The Australian Business Excellence Framework (ABEF) is an integrated leadership and management system that sets out the essential elements for sustaining high performance, such as leadership, strategy and planning, as well as bottom-line results. “It enables you to assess whether you’re well-run today, and if you will be successful over the longer term,” says Giannini.

The framework was created in Australia in 1987. Its intent is to incorporate the basic principles of good management into running any enterprise. It consists of seven main categories, including leadership, strategy and planning, information and knowledge, people, customers and other stakeholders, process management, improvement and innovation, results and sustainable performance. These categories identify the considerations required to design integrated policies and processes for optimal business results.

“It’s easy to look at your balance sheet for a sense of what is happening within your business today,” says BEA board member Ravi Fernando. “You may think that as long as you’re profitable, you’re not breaking any laws and you’re meeting your major governance obligations, you’re going to be successful. But it is far more difficult to assess whether the business will still succeed in the future.”

An independent study of organisations that used the framework for between four and 12 years found that they had generated a 169 per cent return, which outperformed the Standard & Poor’s accumulation index benchmark of 113 per cent.

An indicator of resilience

International Education Services (IES) found the ABEF particularly helpful in determining resilience during challenging times. IES is a directorate of the South Australian Department for Education and as a member of BEA, received the framework for free. It also has access to business mentors and knowledge resources.

IES trades in international education markets, which are complex and often volatile. It used the framework to identify factors that could be used as levers to influence strategic outcomes. These include pricing and product costs, product growth and development of new products, adjusting delivery capacity and controlling expenditure. Despite facing significant headwinds, IES has achieved all-time highs in terms of student enrolments and revenue.

The ABEF is not prescriptive as far as change methodologies are concerned. It identifies areas of strength and areas that would benefit from further development for management to address. After identifying these areas for improvement, organisations can use tools such as Six Sigma or Agile to implement changes.

“It gives organisations a North Star to aim for in terms of what excellence looks like,” says Dr Shayne Silcox PSM FAICD, who implemented the ABEF while CEO of Western Australia’s City of Melville in 2008–18. “One of the biggest changes at the City of Melville was a cultural shift. Everyone in the organisation learned how different components fit together and began to work collectively as a team. I found myself being driven by staff, as opposed to me as CEO driving the organisation.”

The City of Melville won a slew of awards, including recognition from the United Nations as being the most sustainable city, plus planning awards from the WA Property Council. Senior leaders completed the AICD Directors Course as part of implementing the framework’s core leadership elements.

“The framework was fantastic in how it helped us to understand how the business was running holistically, as opposed to only focusing on how it’s doing financially,” says Silcox, who now helps other businesses implement the framework. He believes organisations should use the ABEF to self-assess performance at least every two years, to ensure sustainable performance despite personnel changes.