Since 2006, McGladrey, the tax and consulting firm, has been collecting information on the practices of “thriving” companies for its annual report on mid-market manufacturing and distribution firms.
McGladrey asks business executives to rank their companies as “thriving,” “holding steady” or “declining.” This year, 32% of executives said their companies were thriving, a drop of 7% from 2012.
As the company notes, thriving is in the eye of the beholder. Some executives think it mean growing faster than the industry average or achieving double-digit growth. Other leaders equate thriving with being able to turn business away.
However it’s defined, it is instructive to look at the practices that underpin the thriving group of companies. What are they doing differently, more consistently or just plain more of?
McGladrey identified five of the best practices these companies are employing to achieve above average results:
Continuous improvement – Thriving companies “consistently deploy process improvement and quality programs,” McGladrey’s research shows. In fact, 87% of the companies that identified themselves as thriving have an advanced culture of continuous improvement.
International expansion and exporting – Companies that pursue sales outside the U.S. tend to have better financial performance than those focused strictly on the domestic market.
Training and productivity – Most thriving businesses provide internal training and skills development programs, McGladrey found, a particularly vital practice as the workforce copes with more sophisticated technology.
Information technology – Thriving companies capitalize on their IT investments by developing innovative products, decreasing cycle time and increasing productivity. Information technology also provides top management with better information and insights into corporate performance so it can take action quicker.
Measuring procurement – Using strategic sourcing and tracking vendor performance, McGladrey notes, helps thriving companies ensure on-time delivery.