Copyright

Evaluating the Impact of Your Business Decisions

Instructor: Darlisha Oliver

Darlisha has a Master of Science degree in Accounting

Managers are able to influence the overall success of the business organization and the teams being led by them. Let's take a look at the strategies used to evaluate the interpersonal, financial, and long-term implications of your business decisions.

Making a Business Decision

Mike is the new General Manager of Suits and Shoes Galore. Upon starting his new position, he noticed a few problems that were affecting the overall performance of the company. The employees were not comfortable communicating with him at all. In their minds, managers are only interested sales and profits. They did not feel that Mike would be interested in improving their work environment. Turnover was high and morale was low. Mike was determined to make some changes. Mike implemented new rules that included quarterly one-on-one meetings with each employee and the development of a customer rewards program to increase sales. Mike planned to assess the results of these new strategies every 3 months. How would Mike evaluate the results of these strategies to determine whether or not the intended goals have been achieved?

The first step to effectively evaluate the implications of his business decision is to collect and analyze information related to the decision that has been made. The collection of reliable and relevant data will allow Mike to focus on the results of his decision. Once this information is collected, he needs to identify how much of the data is directly related to his decision and how much is related to some other factor. Finally, he would need to assess the implications of his strategy. Was there a positive or negative impact?

Interpersonal Implications

As a manager, many of your business decisions will have an impact on employees and customers. Your decisions can affect an employee's learning and education, work-life balance, productivity, health, and their interaction with customers. Managers must be able to determine how their decisions impact employees and customers in order to identify problems and make timely adjustments. In Mike's situation, his decision to implement one-on-one meetings with employees was developed with the intent of encouraging positive communication and increasing the morale in the workplace. After a 3 month period, Mike decided to collect information from his employees as the first step to evaluating the impact of his new strategy. A good way to request feedback from employees regarding the results of a decision made by management is to encourage an open line of communication. Feedback can be obtained through surveys, questionnaires, or open conversations regarding the issue at hand. It is wise to establish a consistent way to document this feedback so that it can be analyzed and used to implement changes where necessary.

In Mike's case, he established a questionnaire that included questions that focused on how his employees felt about the new changes. A couple of the conversation points focused on factors that allowed the employee to open up about issues they may have that affect the employee outside of work such as work-life balance and the employee's daily commute. This piece of the conversation allowed the employee to build Mike's trust, and gave Mike insight on issues that are not related to his new strategies but that may still affect the employee's feedback. Each employee's response was noted on the questionnaire for Mike to read through once the conversation was complete. Mike began to notice his employees becoming more comfortable working and communicating with him. He also notice an increase in morale.

Financial Implications

Mike's new customer rewards program was well under way. His next item of interest was the financial implications of this new strategy. Financial statements are used to display the organization's financial performance for a given period or point in time. The income statement is the most widely used financial statement when it comes to evaluating the financial implications of a business decision. This statement displays sales and expenses for the period and often includes comparable information from previous periods. It is a good idea to review sales, gross profit, operating income, and EBITDA for the current period and periods prior to the implementation of the business decision in order to evaluate its impact.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account
Support