Best Practices

What are Best Practices?

Best practice is a working method or set of working methods that is officially accepted as being the best to use in a particular business or industry, usually described formally and in detail:

  • a model for best practice in the treatment of diabetes
  • a best-practice policy/programme

Best practice is a method or technique that has consistently shown results superior to those achieved with other means, and that is used as a benchmark.

A best practice is a method or technique that has been generally accepted as superior to any alternatives because it produces results that are superior to those achieved by other means or because it has become a standard way of doing things, e.g., a standard way of complying with legal or ethical requirements.

This term is frequently used in the fields of health care, government administration, the education system, project management, hardware and software product development, and elsewhere.

What Does Best Practices Mean?

Best practices are a set of guidelines, ethics or ideas that represent the most efficient or prudent course of action, in a given business situation. Best practices may be established by authorities, such as regulators or governing bodies, or they may be internally decreed by a company’s management team.

Best practices are used to maintain quality as an alternative to mandatory legislated standards and can be based on self-assessment or benchmarking. Best practice is a feature of accredited management standards such as ISO 9000 and ISO 14001.

Some consulting firms specialize in the area of best practice and offer ready-made templates to standardize business process documentation. Sometimes a best practice is not applicable or is inappropriate for a particular organization’s needs. A key strategic talent required when applying best practice to organizations is the ability to balance the unique qualities of an organization with the practices that it has in common with others.

Best practices serve as a general framework for a variety of situations. For instance, in businesses that produce physical products, a list of best practices may be furnished to employees, highlighting the most efficient way to complete their individual tasks. Best practice list may also delineate safety procedures, in order to minimize employee injuries.

For corporate accountants, the generally accepted accounting principles (GAAP) represent best practices that typically govern the level of detail a company is encouraged to disclose in its financial statements, to ensure prospective investors can easily analyze and extract useful information.

GAAP also facilitates the cross-comparison of financial information across different companies within the same sector, which benefits both the investors and the companies they invest in, because it promotes transparency. After all, an investor who erringly buys stock in a company might skittishly dump his position, on experiencing the smallest unexpected disappointment, which could consequently depress the share price.

Investment managers may follow best practices when handling a client’s money by prudently investing in a well-diversified portfolio and adhering to a client’s risk tolerances, time horizons, and retirement goals.

A best practice tends to spread throughout a field or industry after a success has been demonstrated. However, it is often noted that demonstrated best practices can be slow to spread, even within an organization. According to the American Productivity & Quality Center, the three main barriers to adoption of a best practice are

  1. a lack of knowledge about current best practices,
  2. a lack of motivation to make changes involved in their adoption,
  3. and a lack of knowledge and skills required to do so.

What is the Purpose of Using Best Practices?

Regardless of the complexity of your best practices, the aim is to make whatever you are doing work out better, faster, and more efficiently with fewer problems and mistakes. That is why it is always a good idea to be aware of what the best practices are for what you are trying to achieve. It is a framework for success and the minimization of failure. The whole field of project management deals extensively with the subject.

Management Best practice

Management best practice involves:

  • the communication of a clear mission and strategy
  • leadership by example
  • the setting of demanding but realistic targets
  • an open and communicative management style
  • clear and careful strategic planning

There are several business tools that you can use to achieve management best practice, including:

  • benchmarking
  • forecasting
  • financial planning
  • strategic planning
  • performance monitoring

A very effective way of monitoring your business is to introduce key performance indicators (KPIs). These can be used to measure progress in achieving business objectives across a range of activities and enable you to identify areas that need attention. KPIs can be used to measure activities such as sales volumes, profitability, quality and staff turnover.

The KPIs you choose will depend on your specific business. They should, however, be related to your overall objectives, be clearly measurable and provide an indication of where improvements need to be made.

Tools such as benchmarking, business planning and performance monitoring will help you to compare the performance of your business with that of your peers and competitors and against your own business objectives. Where necessary, you can introduce new ways of working to improve competitiveness and business efficiency. Having accurate and up-to-date information about your business performance will also help future planning and change management.

Communicating your objectives and strategies is an essential part of management best practice. A good communications policy will ensure that everyone in your business knows the direction in which the business is heading, and understands their own part in its development.

Best Practice in Sales and Marketing

The right sales and marketing strategies play an essential role in the success of your business.

Developments in technology have opened up entirely new ways to market and sell products and services. Best practice now involves harnessing the power of the Internet, email and mobile telephony to increase the effectiveness of getting products and services to the customer.

Even the smallest business can benefit from having a website. Many organisations also use electronic newsletters (often known as e-zines), regular emails and SMS (text) messaging to communicate with their markets. The benefits of this kind of marketing include:

  • worldwide reach – a website can be seen by visitors from all over the world
  • lower costs – a website can cost much less to set up and run than a traditional store
  • a level playing field – small businesses can compete alongside the websites of much larger businesses
  • better targeting – emails are less likely to be opened by someone else, and opt-in mailing lists ensure that your message is read by someone who wants to receive it
  • new markets – a website makes it easier to target customers who were previously out of reach

As with all best practice, it is important to get the implementation right. Your website needs to be thought out carefully, and updated regularly.

You need to be aware of the legislation that applies to electronic business communications, including selling from websites.