Operations Review 

by Bryan Brown, MBA '69

Operations Review Overview

Many clients have sought assistance from ACT in reviewing aspects of their operational structures. It is important to any organization, whether nonprofit or for-profit, that its operations and its operational structure support its mission and objectives, and that its financial reporting structure mirror reality. Financial reporting has to parallel and report on what is happening so that management and the board have a clear understanding of the resources it takes to provide a specific service or program to further an organization's mission.

In general, there seem to be two types of operational reviews, which address the following questions:

  • Is the entity organized in the optimal manner to support its mission and objectives?
  • Are day-to-day operations working smoothly, or as smoothly as they could, particularly in certain areas?
Project Process

In an operations review, consultants will typically address the following questions:

  • Review an organizational chart, and compare that to the organization's strategic plan. Is there congruence? In other words, are resources as identified from the financial statements allocated according to the strategic plan?
  • Is the organization's structure best described as vertical, horizontal, a loose affiliation of semiautonomous units, a hub and spoke, or something else altogether? Is this the best structure to support the mission and objectives as set by the Board?
  • It's possible that some program or service has been identified as a "problem area." Why? Are the right people in place to perform the necessary tasks? Are sufficient resources available? Is it a case where neither the executive director nor the board of directors understands the delivery challenges involved? Most likely it will be something else altogether, or a mix of the above.
  • Interview key outside "influencers" such as customers/users. Major suppliers can sometimes be helpful. No organization exists in a vacuum, so it may be necessary to talk to civic action groups, a city or county or state governmental agency, an influential blogger, etc. Ask the client who has an impact on their operations for whatever reason, whether positive or negative, and then talk to those people/groups/organizations. Don't accept the client's suggestions for contacts as the last word. Do a little independent research to find others, particularly critics. Clients will tend to ignore critics, yet critics can be a useful source of information.
Likely Deliverables
  • Highlight any discrepancies identified by your investigations above. Few things are as helpful as bringing to light a mismatch of expectations.
  • If there is a problem, identify it and suggest alternatives (if possible!). The objective is to ensure that resources, and the necessary efforts to produce them, are ultimately allocated in accordance with the strategic plan for the organization.
Helpful Hints
  • It is critical to understand from the outset who is really wielding power for change within the organization. Maybe your point of contact is not the correct person to be dealing with if mission-critical or other substantive issues are concerned.
  • With respect to any presentation of your findings, highlight what the organization is doing correctly before making any suggestions. That will put any audience in a more receptive frame of mind.
  • If you have identified a specific problem and have suggestions to redress it, be cognizant of the sensitive nature of your suggestions. Address them to the key people ahead of time and get "buy-in" so those people can prepare the necessary groundwork for you. your ultimate objective is that no one be totally surprised by any recommendation or suggested outcome.
  • Talk to the outside auditors. Independent auditors tend to have a unique perspective:
    • They are intimately familiar with the organization.
    • They are equally familiar with similar organizations and can often point you in the direction of industry "best practices."
    • They understand organizations with different missions, and can draw parallels between them.
    • They are reluctant to offer specific advice directly to the client for fear of falling afoul of the rules that define "independence," so they are often looking for someone to listen to them. 
Model ACT Projects
Recommended Reading

The County of San Mateo provides a useful overview of the benefits of operations reviews and audits

Red Flags
  • It is not uncommon for a key influencer (executive director, CFO, board member) to have a specific agenda. Sometimes this agenda makes perfect sense. Sometimes it does not, and instead, the primary client contact is the "problem." It is rare, but it has happened. Don't take everything you are told at face value.
  • Resistance can be couched in a variety of forms, such as "I'll have to check with X." That means you should have been talking to X from the beginning, and now it may be too late. That's why it is critical to understand from the outset who is really wielding power. Maybe your point of contact is not the correct person to be dealing with where issues of change are concerned.
  • ACT's success ultimately depends on the success of the clients it serves. This means that your recommendations have to promote effective change at the client level. If you can't see that happening, then perhaps the project should be abandoned.