What Are Best Practices?
Let me tell you directly: best practices are a set of guidelines, ethics, or ideas that outline the most efficient or prudent way to act in a specific business situation.
These can come from authorities like regulators, self-regulatory organizations, or other governing bodies, or they might be set internally by a company's management team.
Key Takeaways
Understand this: best practices are working standards or ethical guidelines that point to the best courses of action in any given situation.
They can be set by companies, regulators, or governing bodies for businesses to follow.
Think of them as a roadmap showing you how to run your business and tackle problems that come up.
To set them, you research your industry and competitors, communicate standards to all employees, define metrics, manage change, and evaluate and refine them over time.
In inventory management, two common ones are 'just in time' and 'kaizen'.
How Best Practices Work
Best practices give you a general framework for various situations. For example, in companies making physical products, they might highlight efficient task completion methods for employees.
They can also cover safety procedures to reduce injuries.
For corporate accountants, generally accepted accounting principles (GAAP) are the best practices. GAAP is a set of standards that improve clarity, consistency, and comparability in financial reporting.
This allows cross-comparison of financial info across companies in the same sector, benefiting investors and companies through transparency.
Investment managers follow best practices by investing prudently in diversified portfolios, sticking to clients' risk tolerances, time horizons, and retirement goals.
Tip
Remember, corporate governance or a code of ethics can function as best practices for your organization.
Special Considerations
The term 'best practices' applies broadly across industries. In business, it covers everything from project management to audits, describing the most efficient way to complete tasks.
With new quality control systems, there's a need to apply measurable benchmarks and quickly implement standards of excellence organization-wide. You do this by identifying problems, quantifying them, developing solutions, and monitoring their execution to ensure they fix the issues.
Best practices can serve as industry benchmarks, where one company shares actionable solutions with others. For instance, a firm known for efficient product distribution might reveal they give fulfillment staff red markers to sign off on priority deliveries.
This leads to higher scrutiny for red ink orders, catching more errors as more people check them.
Important Note
Companies often share best practices routinely, but you should avoid revealing trade secrets that competitors could easily copy.
Steps for Developing Best Practices
- Do your homework: Research what companies in your industry do for best practices in areas like customer service, hiring, promotions, production, and more.
- Share your information: Once you've identified key best practices, communicate them to important people in your company so everyone's aligned.
- Define your metrics: Make sure your best practices are measurable to track progress, implementation, and accountability.
- Manage change: People resist change, so prepare for it and have a strategy to push forward with new practices.
- Modify and customize for your business: Adapt any best practice to fit your business's characteristics and goals.
- Involve everyone: Ensure the whole organization knows about best practices and agrees to follow them.
- Align business and customer needs: Get input from other businesses or customers to refine and implement your best practices better.
- Evaluate and refine: As your business changes, review and adjust best practices to match those evolutions.
Examples of Best Practices
Just in Time: This is a best practice for inventory that aligns supplier materials with your production schedule. The aim is efficiency and waste reduction by receiving materials only when needed. It cuts inventory costs but requires accurate demand forecasting to have the right supplies.
Kaizen: This Japanese philosophy improves productivity gradually. It means 'change for the better' or 'continuous improvement.' It involves all employees in ongoing operations improvements, like designing efficient workplaces, fostering team atmospheres, enhancing procedures, engaging employees, and making jobs more fulfilling, safer, and less tiring.
Best Practices for Investors
With countless stocks available, knowing which to pick for your portfolio can be tough. You need to know your desired portfolio look and keep that in mind over time.
As an investor, stay aware of daily news—not just for companies you're eyeing or invested in, but world and financial news that affect stocks. Reading news is your first step in stock selection. It helps you spot trending companies, promising sectors, and economic directions.
Then, compile a list of interesting stocks. For example, if new tech makes old products obsolete, look into those companies.
Research main players in your interested sector, or check ETFs investing there. Use screeners to filter by market cap, earnings, etc. Then, analyze financial statements for company health insights.
What Are Best Practices in Education?
In education, stay proactive by preparing your next teaching activity before the current one ends, keeping students engaged and minimizing disruptions. Encourage communication by varying how students answer—verbally, written, visually, in groups. Work backward from an end goal to plan how to reach it with students. Keep your resources like lesson plans to build on and refine your teaching. Be a role model by exemplifying the behaviors you want students to show.
What Are Best Practices in Healthcare?
Train your staff to deliver great service, prioritizing patient care and experience. Ensure patient education, which improves overall experiences—patients who understand their health and care are happier. Create a care-oriented environment with details like remembering names, smiling, listening, and follow-up calls.
What Are Best Practices in Customer Service?
Good customer service begins with good employees. Hire the best and incentivize them with pay, benefits, and a positive environment to stay.
Manage expectations: Be honest upfront to avoid disappointments, rather than promising everything will be fine.
First impressions matter, so make them perfect to set the tone. Collect data to help and personalize experiences.
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