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Business Management 101: Operations Management

Thursday, August 11th 2011
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Summary:

Do you frequently wake up at 3:00 a.m. in a panic, wondering if you missed a deadline or if a client is happy? If so, you might be in operations management. In this article Jay Arnold and Jeff Lower, co-founders and managing partners of 3K3 LLC, discuss some of the key areas where operations mangers can improve operational efficiency, and limit the number of sleepless nights.

Do you frequently wake up at 3:00 a.m. in a panic, wondering if you missed a deadline or if a client is happy? If so, you might be in operations management. It is difficult to run an efficient operation and also maintain “client delight.” As an operations or program manager, you have the profit and loss (P&L) responsibility, you must oversee and direct project managers, and you must achieve and maintain client delight. This article will discuss some of the key areas for improving operational efficiency, which will help to limit the number of sleepless nights.

Communication

One of the most critical factors in running an efficient and profitable operation is communication. This communication is both internal, with your team, and external communication with the clients. For operations managers (including chief operations officers, program managers and project managers) there should be at least two communication rules:

  1. As an operations manager, you should never be able to tell a client something about his/her project that the project manager has not already told him/her.
  2. As an operations manager, a client should never be able to call you with an issue that the project manager has not already told you about and is actively mitigating.

These two rules will help internal and external communication from the project managers, and help to make sure issues are identified, communicated and dealt with effectively.

Another communication topic is the method: phone, e-mail or face-to-face. You should understand the method of communication that your client prefers. If you truly know your client, then you will know if he prefers to communicate via telephone, e-mail or text message (and yes, there are some who use Facebook as their preferred communications channel). So if your client is a phone person, don’t bury her with hundreds of e-mails. You should also recognize that an e-mail sent does not equal a message received. This can sometimes be a problem with rookie project managers who hide behind the digital shield of e-mail. The recipient may not read the e-mail for days, or the content and context of the e-mail may be misinterpreted.

Harmless e-mails can be misinterpreted because they can be taken out of context. Be careful when formulating an e-mail. Be short, concise and make it easy-to-read. A boss of mine once told me during a follow-up call that he had not read a long, detailed e-mail I had sent him. At first, I was a little upset that he had not taken the time to read my e-mail, but his explanation made sense. In a business world where we are all expected to multi-task and perform 20 things at the same time, my boss had simply put my e-mail aside since he knew it would take a long time to respond. He was chipping away at e-mails that he could easily handle, and planned to get back to mine when he had more time. The problem was that the easy e-mails never stopped, and he did not have time to get back to me. After that experience, I made sure to make my messages shorter, to the point and easy to answer. Some helpful hints for keeping e-mail more readable:

  • Ensure the topic in the subject line matches the text in the body
  • Limit the topic to one or two specific issues
  • Read and edit your e-mail draft before you click the “send” button
  • For e-mails with a long list of recipients, address individuals by name within the body if there are specific action items for them
  • Include due dates and also times (and time zones if working across regions) in your action items (for example: “John M – please provide your final edit by 5 pm eastern standard time on Monday, August 1, 2011.”)

One final point regarding e-mail and communication is that there are general rules for e-mail etiquette. You should address in the “To” line only individuals you expect will respond. Individuals in the “Cc” line are included for information only. This holds true for responding to e-mails as well. If you are in the “Cc” line, you are not expected to respond. That is not to say that you cannot respond if you have critical or significant input. Love it or loath it, e-mail is here to stay. So, you have to manage it and not let it manage you.

No Surprises

Good, bad or ugly, there should never be surprises for clients. If you have an issue on a project, deal with it and let the client know what is going on. It is much better for a client to know there was an issue and how you resolved it than it is for him to find out after the fact or once it has become a crisis. Bad news does not get better with age. You can’t be afraid to pass on bad news, because it only gets worse as time goes on without communication. Even good surprises can be bad. We had a project where we delivered early, and upset the client because they were not aware the deliverables were coming early, and had not prepared their resources to accept the data.

Another embarrassing example of a surprise was on a short list interview with a federal client. We had a newly added manager “sit in” on the call, only to listen and be in the loop, and that person ended up asking a question to the interview panel. The problem was that this person had not been introduced, so we surprised the customer with an unknown person asking a question. This experience led to developing detailed guidelines for team interaction on short list interviews. Fortunately, we were still awarded the contract and refined our process for interview interaction.

Pricing

Another important factor in running an efficient and profitable organization is that the program and project managers understand the difference between price and cost. Price is what a customer is willing to pay us, and cost is what we pay to complete the work. With effective cost tracking and management, the final cost should be less than the price, and therefore a profit should be made. Employees need to understand the cost of doing business. I have heard many times someone say, “We made enough to cover my salary so we must have done okay.” Without taking into consideration all the costs of doing business and the burdens (overhead, fringe benefits such as vacation, sick leave, insurance, educational assistance and profit-sharing, general and administrative costs – the money spent to pay corporate management and operate the business activities as opposed to the money spent to produce products and deliver services), people don’t get a good sense of what it takes to run a business. Everyone in the organization has cost responsibility. Every minute a person takes at the water cooler costs the company money, and not just the amount to cover that person’s direct salary. Managers and other employees should be taught cost awareness, and managers should always be actively engaged in cost control.

Accountability

The only way to have a strong organization is to delegate responsibility as far down as possible, and then hold people accountable. When General Carl Strock was in charge of the U.S. Army Corps of Engineers, he issued a permission slip to Corps’ employees. The slip said:

Ask yourself:

  1. Is it good for my customer?
  2. Is it legal and ethical?
  3. Is it something I am willing to be accountable for?

If so, don’t ask permission because you already have it.

Obviously, the key to the permission slip is holding people accountable for the decisions they make. In order to grow a company, you have to be able to delegate responsibility. In the process, make sure those who take on more responsibility are accountable.

Business Development and Operations Interaction

Believe it or not, we all wear the same company jerseys and everyone has a role in the successful operation and growth of a company. The interaction between business development and operations needs to be smooth and frequent. Well-developed interaction will improve contract win probability and keep everybody on the same page and heading in the right direction. Some basic rules for the interaction between business development and operations:

  • Business development supports operations by developing the programs and projects.
  • Business development needs to understand the capabilities of operations, and should not sell something operations cannot deliver.
  • Operations should “buy into” an opportunity early, and should provide the support for technical writing, program management and resource identification.
  • Operations should understand that business development cannot sell something customers do not want.

Based on a Gallup Management Group study, only 27 percent of the American workforce are actively engaged in their work, 59 percent are non-engaged (or neutral), and 14 percent are actively disengaged. A Gallup manager in a workshop described the three engagement stages in terms of the reaction to a trash can being knocked over in the office. The actively engaged employee would pick up the can and clean up any mess, the non-engaged employee would walk by the can without doing anything, and the actively disengaged employee would be the one who kicked the trash can over in the first place.

With such a low percentage of the American workforce actively engaged, running an efficient operation is critical. So let this knowledge provide you an opportunity to improve your operation.


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