4 Overlooked Risks in Operations

Introduction

The world of operations is a crazy place, to say the least. It is normal to get into a normal routine of arriving into the office, attending a few meetings, putting out a few fires, and then going home to repeat the same routine the next day. Unfortunately, in the process of doing this, we lose sight of (bad) things that could slowly creep up on us and turn into major issues down the road.

Based on my experience in the businesses and teams I have worked for, observed, led, consulted, and helped out, there seem to be 4 issues that I see in most operations. Even the well-oiled businesses, seem to have these issues. I have documented here the Top 4 risks that are often overlooked or maybe a better way of saying it, are hidden.

One thing to remember as an operations leader is:

[Everything is connected.]

Unaddressed problems will eventually impact your business one way or another.

RISK #1

Poor Reporting

Most businesses have some form of reporting where a decent level of sophistication has actually gone into the design, coding, development, and delivery of it. Unfortunately, often that reporting is inadequate, overwhelming or the reaction plan is unclear.

To elaborate further, unclear means it is not obvious what is good and what is bad. In addition, if operations personnel can see when things are ‘bad’, often it is not clear what the reaction plan is. Let’s say you have a series of reports, where one of them shows you how many applications have gone through your pipeline that are 2+ days beyond the required window timeframe. Your operations personnel see that there are 5 applications beyond that window. Does that operations manager know what to do next, whom to contact, what the proper escalation channel is and what the timeframe is to close that out?

In my experience, what I have observed is that operations personnel can always provide some form of reporting, and proudly show me how snazzy it looks. However, when I start asking questions, is when we begin to realize how unprepared they are or it is when they begin to admit how overwhelmed they feel by their 20 or so pages of reporting. They simply do not know which ones to look at and how to ingrain that behavior into their normal routine.

‘Poor reporting’ represent the entire picture surrounding reporting, even establishing the habits and processes around when to even look at the reports. They typically are received via some automated email and it quickly finds its way into some folder growing in size of unread emails.

[There should be an established routine regarding the reviewing of reports, followed by a clear plan of action when triggers have been set off.]

2 Consequences

·     Wasted resources. Your reporting team put a significant effort into generating the reports and when they are continually delivered and not reviewed, it is a waste.

·     Too late when an issue actually occurs. If the reporting would have been reviewed and actionable, issues could have been prevented.

How to Resolve

·     Limit reporting to a few reports an operational manager is responsible for reviewing.

·     Design reporting, with a ‘preventative’ framework. Meaning that issues are caught before they occur.

·     Establish a culture where it is routine for managers to review their reports.

·     Establish a clear trigger level for each report, a clear escalation plan, and ensure all of the responsible parties are well-aware of their role in that escalation plan.

RISK #2

Hire Leaders Based on Experience

I see it over and over occur where someone with a significant level of experience and success, at the performer level, is promoted or hired into a leadership position based on his/her experience within that area. Often what you will see is that performer struggles because he/she fails to differentiate between expertise as a performer versus being a leader.

I understand, there is typically very good intention when doing this, let’s hire someone who was really good in this area and that person can replicate himself across the entire team. Most of the time, what ends up happening is the barriers to making the switch from performer to a manager are hard to overcome. The newly minted leaders struggle to turn off the individual performer hat and often try to show their people how it’s done rather than leading them through it.

There are definitely success stories where that star individual performer led the team to great success. But most of the time, it leads to a flop. I personally have made the mistake a few times in organizations I have led and paid for it. It is a sad truth to face. The objective of operations leaders at the highest levels is to reduce risk and lead strong operations, taking risks on unready individual performers is simply too risky when considering all of the responsibilities of an operations leader. This is likely an unpopular philosophy but the best leaders need to make hard decisions.

[Just because someone is a great individual performer, do not assume that person will be a great leader.]

2 Consequences

·     Poorly running operations. You will likely be required to get more involved with your ‘project’ than is necessary because that specific team may be delivering poor results.

·     Loss of confidence in you as the ultimate operations leader. You make the decisions of who manages the teams under you. A decision you made to move someone up that ends up flopping, could lead to a decrease in confidence in your decision-making ability. Not only from your superiors but also that team being led by a former peer.

How to Resolve

·     If you are set on really giving your star performer a shot, have that individual enroll in management and leadership training prior to being given the position. If that individual makes the case that he/she does not have time, then that should be telling enough to not proceed with that individual.

·     Give the person you want to give a shot to, a few informal ‘test leadership roles’. This such as leading a meeting for you occasionally or assigning that person to lead something outside of the work function and make your assessment from that perspective.

·     Hire people who display strong leadership skills into your leadership positions. It may actually be that star performer, but my main point is not to assess leadership potential based on individual performance. Often, what you will see is that those that show strong leadership skills are in other roles or potentially outside of your current organization.

RISK #3

Undocumented Processes

I have seen it so many times from people at all levels, that they cannot clearly articulate to me what the steps of their processes are. Even less, they cannot explain what happens in certain tough or unorthodox situations.

People get into a normal routine, come into the office, do what is in their job description, go to meetings, handle a few escalations here and there, and then go home. Without someone having formally and intentionally documented the steps of the processes, it simply will not happen. It is not in most people’s job description to document the process. If it is in that person’s job description, there is a good chance the people who actually do the steps in that process (who run the operations) don’t know about that documentation or signed off on it.

The documentation of the processes themselves are important, but it is the act of documenting the process that is most valuable. In the process of documenting, it is critical that the operations personnel are aware of what is being documented. Once documented, the information can be disseminated, challenging situations can be addressed, and everyone is clearly aware of his or her roles & responsibilities.

[If you cannot describe what you are doing in your process, then you don’t know what you are doing.]

2 Consequences

·     You will end up with inconsistent operations. Some groups may address situations one way and then another group may address the same situation a different way. What if your customer works with both? Then you will end up with a bad customer experience.

·     You will end up with tribal knowledge in your operations. It is normal for there to be new people coming in as people leave. When processes are documented, that information can be transferred to the new people. This leads to sustainability and a smooth continuation of operations. If not documented, you will need to hit the restart button, again and again, leading to longer on-boarding periods.

How to Resolve

·     Set time aside for your operations leaders to map out the processes end-to-end. If no one in your organization knows how to map a process, there are several free online resources available.

·     Make it a habit to perform an annual review of previously documented processes. You will be surprised how much processes change over time or you may identify new improvement opportunities.

·     Ensure all of your operations managers and leaders are well-aware of their documented processes. Engrain the behavior into the culture of your business to always refer back to documented processes for current and newly-hired people.

RISK #4

Don’t Meet Regularly with Frontline

What must be understood is that the heart of your business does not consist of your operations leaders and managers. Instead, the heart of your business is your frontline staff. They are the people who speak with the customer daily, they are the people who work on customer documentation, and they are the people who process the information/product that ends up getting into the hands of your customer. A hard thing to swallow is that from a Lean perspective, they are the only people who truly add value to the business because they touch what the customer is willing to pay for. 

Often, we end up putting all our focus on the managers of operations. What we miss by doing this is the source of all your operational solutions, problems, ideas, suggestions, and pulse of your business. It must be engrained in your culture, that frontline personnel is chief and those people should be given a high-level of respect. I have seen it too many times in behind-closed-door meetings where management and leadership is demeaning to frontline personnel. You must understand that without your frontline, your business is nothing. Keeping a clear line of communication both ways is an absolute must.

[Your frontline personnel are the only people in your organization that truly add value to your business.]

2 Consequences

·     You lose access to valuable information. Because your frontline staff is so close to your customer and repeats the same process over and over - they are the few people who truly know what is going on.

·     Risk establishing a culture of secrecy. At all costs, you want to avoid establishing a culture where people don’t share information and where there is a lack of transparency. This is the beginning of a downward spiral.

How to Resolve

·     Invest 10 to 15 minutes a day on a daily stand up meeting. I wrote an article on the daily stand up being the 15 most important minutes of your operations, check it out in the link.

·     MBWA (Manage by Walking Around). Make it policy and hopefully habit for you and your operational leaders to regularly walk the floor to talk to people, not only when you need something but as something routine. You will notice how (frontline) people open up to you and not only this but will end up respecting you and following you as their leader more as well.

Closing

These are only a few of the risks typically overlooked in operations. Often the operations part of the businesses is seen as the gritty and roll-your-sleeve-up type of people, and there is some truth to this. However, the reality is, when the operations fails the entire business fails. You can generate a great idea and invest greatly in sales/marketing, however, if your operations fails to deliver on time, cheaply, and with high-quality to your customer, you have no business.

These 4 operational risks are very important and should not be overlooked by your business. It often leads to downstream issues such as a poor customer experience, errors, delays, increases in costs, and rework.

TPM Consulting Group has a plethora of expertise, proven success, and the experience to help you establish sustainable operations as you grow your business. We can assist with any of these risks as well as identify the specific unseen risks embedded in your specific business operations. Grow your business with peace of mind, we are here to help you build sustainable operations!

Questions

• Is your business taking these risks?
• Any suggestions?
• Other risks you see that get overlooked?