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According to a study by U.S. Small Business Administration, ““Redefining Small Business Success” which assesses the survival rate of businesses, roughly only 66 percent of new businesses survive two years or more, 50 percent survive at least four years, and just 40 percent survive six years or more. Only 4 out of 10 businesses are able to cross a 10 years mark. The most common cause of a business failing is not external but internal. While external factors affect every player in the industry, internal factors are specific to the company.

Here we put forth the most common internal reason why businesses fail:

GRC Integration

The companies often neglect or bypass incorporating GRC program into their operations. GRC incorporates for:

  • Corporate Governance: Processes established by the directors or the top management that are reflected in the organizational structure towards achieving common goals
  • Enterprise Risk Management: Predicting, assessing and managing risks and reducing uncertainty
  • Compliance: adherence to mandated boundaries (laws and regulations) and voluntary boundaries (internal policies set by the company)

Integrating these into the day-to-day functioning of the organization enables the organization to achieve objectives, address uncertainty and act with integrity and trust.

Performance management

It is said that the human resource of a company is the greatest asset to the company. Managing them properly hence becomes a quintessential part of any organization. Most of the organizations either follow a flat structure or a hierarchical structure. Either structure involves delegating work at different levels, usually the approach being top to bottom. Based on the performance measurement, following rewards and recognition can tremendously increase not only employee retention but also retention of quality employees.

Quantitatively assessing the work assigned hence becomes essential to do away with any kind of cognitive biases. There are various IT tools available online to help you do the same without a hassle. All that is needed is for the assigner to type in the responsibility to an assignee and the rest is taken care of by the tool!

Silos

A very definite no-no in any organization is its departments working in an isolated manner (silos). This creates a very significant communication gap within the company, hindering the pathway towards achieving a common goal leading to frequent clashes and overlapping of work. This greatly affects the synchronization within the organization often giving rise to conflicts and disagreements. While this problem remains unseemly in a small organization or a startup due to few numbers of employees, it becomes rather significant as the companies grow.

To avoid this, companies must quantify the work allotment by decentralizing tasks and centralizing data. How this is achieved is by keeping all departments in the loop of the work taken up and keeping the heads of the departments/divisions/groups informed. This allows effective communication within the workforce.

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