Dr. Akmal Makhdum specializes in helping mental health facilities restructure and improvement. His first task when he arrives on the scene is to access the practice’s situation and how far it falls short from where it ought to be performing and one of his favorite business tools to use is the gap analysis.
What is Gap Analysis?
Put simply, a gap analysis asks questions about why an organization in any industry is underperforming. The term “gap” refers to the gap between where a company is and where it needs to be. Besides asking questions about why a gap exists in the first place, it analyzes methods for how the organization can course-correct and arrive at its goals in a swift and responsible way.
How Does an Organization Use Gap Analysis?
More important than knowing what a gap analysis is, according to Dr. Akmal Makhdum, is knowing how use it effectively in your industry. Poor leaders are afraid of the gap analysis, because it always seeks to find the problems. There are always reasons for gaps in company performance, whether they be mismanagement, inefficiencies, or industry changes.
- Setting Organizational Goals
Does the organization have set goals? If so, are they outdated? What is the mission of the organization? And what goals must be established to achieve the company mission?
While not all company goals need to be financial, at least some of them should be. Dr. Akmal Makhdum explains that all organizations need to be financially stable and profitable or else they run the risk of going bankrupt. If the organization is a not-for-profit, then the books need to be balanced so as to break-even (that is, income/donations/revenue should cover all expenses).
Often a business is using a gap analysis in order to fix low sales or high costs (or both). But there are other reasons to use a gap analysis. Is a product or service quality falling short of customer expectations? Are there internal issues among work teams? Gap analyses can address these problems as well by first establishing the goal, the desired outcome.
2. Defining the Size of the Gap
After establishing the organization’s goals, it’s time to figure out where the organization currently stands in relation to those goals. Careful investigation of tedious details related to company performance — or an audit — is often the best way to establish just how far away the organization is from reaching their goals. That “just how far away” piece is the gap.
3. Identifying the Reasons for the Gap
Often, the audit will reveal critical ways in which the organization is faltering and inefficient. Financial reasons for the gap might be poor revenue streams and/or out-of-control spending. Product quality reasons could be bad parts, manufacturing, and/or design. In the medical industry, the gap could be due to a lack of services offered or a large amount of competition within the field.
In many cases, reasons for the gap are common to many similar organizations. However, Dr. Akmal Makhdum notes that only the organizational leaders that make themselves fully aware of the reasons for the gap will be able to do something about it.
4. Plans to Fill the Gap
After the investigating and research, it’s now time for leaders to make plans for chance. Not all change needs to be drastic, but if experts agree that drastic change is merited, the leaders better get on board unless they want the organization to collapse.
The good news is that all companies and organizations fall short of their goals from time to time. Leaders that use tools like the gap analysis can easily get back on track and keep moving forward.