As consultant for 19+ years for larger organizations in financial services, not-for-profit and consulting firms, I often provide various flavors of operational risk and controls services and have distilled my lessons learned into digestible small chunks for growing businesses.
The first one was an annual operational risk assessment and plan which I wrote about earlier this year. To read the 2 articles on operational risk assessment, visit our website at www.alliaconsulting.com
In this article, I will focus on process improvements and some top tips that’s gotten proven results in terms of effectiveness.
Once you have completed an operational risk assessment or review, it will be fairly easy for you and your team to know which are target areas of focus. It’s important to focus on a short list to get the most value out of your resources, whether that’s with your existing team or with an independent consultant.
Tip 1 – Ask about Roles and Responsibilities
Prior to interviewing process owners, it’s important to review the policies and procedure and the organization chart. Why the org chart you ask? The org chart gives you a sense of impact operationally very quickly by just seeing the number of people involved in a process or function. It’s also important when sitting with the head of the department or group to get a sense of who are his/her key players – these are people who will tell you how things work and likely point out the bottlenecks.
What if there is no documentation provided and you have very limited information prior to a meeting? The following question – “Tell us about your role in the organization and your primary responsibilities” — is a perfect starter. Since this is a relatively harmless question, it will set the interviewee at ease which means the rest of the interview will be much easier to conduct. When it comes to the primary responsibilities, it’s key to write out and confirm the list of responsibilities and even number them on your notes. If the person is the head of a group, it is preferred that you write the key responsibilities next to each person’s name on the org chart. Both specific steps establish with the interviewee that you have not only heard what they said but also care to understand! This will go a long way when you will have follow-ups later in the process.
Tip 2 – Inventory Inputs and Outputs
While it’s important to ask about the process and who is responsible, it’s equally important to understand the inputs and outputs of a process. These can be stated as follows: “list the information sources this process rely on, how often is the info provided, and from who?” and “list the recipients (people or systems) of specific outputs (reports, data feeds, etc.) from this process and how often.” While these can elicit some lengthy conversations, depending on the complexity and size of the process or a very high-level answer, it’s been our experience that the answers almost always yield some eye-opening “aha” with the process owner. This helps to initiate a self-examination by the process owner who is most involved with the process. Another benefit of inventorying inputs and outputs is so that we don’t miss an opportunity for big savings and can utilize the list to evaluate the most likely of time savings in the process. This process can be especially effective when faced with complex processes that have lots of upstream and downstream processes such as compliance and regulatory calculations, revenue and expense calculations, program/project budget and financials, and performance calculations and reporting.
Tip 3 – Assessing Impact and Feasibility
Once there is a list of potential process improvement opportunities, it’s important to assess the impact of the saving and the feasibility or work effort involved in implementation. Questions related to impact can include “How long does it take to produce the results, how many iterations are usually required, how much data/information do you require, Is there an example of an error in the past and how long did it take to remediate and were there other impacts such as downstream processes, financial fine, reputational or client services issues as a result?” It’s always most effective to for the high impact and high feasibility items first. Once those are addressed, the next opportunities are the high impact and low feasibility items. Since this is likely a low feasibility for your competitors as well, this can be an effective way of differentiating in a crowded marketplace. In thinking about this, lots of examples come to mind but one stood out. A client from my consulting career had a hunch about how trading prices were influenced by large players in the market. To prove this would have been a low feasibility effort and for most would have been a non-starter. However, for this client, it became the start of a new business and gamechanger in the industry!
Do you have thoughts and additional tips to share on process improvements from your experience? Please send me a message at Lshen@alliaconsulting.com or comment below.
