In the day-to-day activities of your business, it can be difficult to get a sense of whether the entity is functioning as efficiently and effectively as possible. Operational reviews are the perfect tool to help business owners and financial executives take an in-depth look at the organization, flagging any issues, whether it is communication, procedural, staffing, etc., that affect the company’s profitability.
Many executives and business leaders, however, may think that operational reviews are reserved solely for the largest companies. If you think that only the General Motors of the world can benefit from an operational review, think again! Organizations of all shapes and sizes can benefit from an operational review, particularly because they can help management answer questions like:
- Is the entity organized in the optimal manner to support its mission and objectives?
- Are day-to-day operations working efficiently, or as efficiently as they could, particularly in certain areas?
- Are the right people in place to perform the necessary tasks?
- Are sufficient resources available to allow employees to fulfill their responsibilities?
Be aware of the many triggers that can signal the need for an in-depth review of your company, or even a particular department within the company. Here are a few of those events and how an organizational review can help provide clarity during moments of chaos:
- Change in the organization: Has the organization recently experienced a loss of a long-time, key employee? This could be an ideal opportunity to assess functional responsibilities, reporting relationships and internal controls. Is there an opportunity to reassign responsibilities and modify procedures to gain efficiencies and improve overall performance?
- Stagnant financial performance: Is the organization falling short of its financial goals? An operational review can spotlight opportunities that may increase profit, augment revenue and reduce costs without sacrificing the quality of the product or service. The review can also evaluate the reliability and value of the information provided to management, and offer recommendations to improve management performance.
- Fraud occurrence: Has the organization incurred a loss due to fraud or misappropriation of the organization’s assets? An operational review can assist management to identify areas of vulnerability and strengthen internal processes and controls to mitigate the risk of future fraud losses.
The main objective of conducting an operational review is to increase the value of your business by identifying and prioritizing opportunities for financial and operational improvements. This valuable tool should be on the radar of all financial executives and business owners as an option. RKL’s team of business consulting professionals can help you gauge whether your company would benefit from such a review. Contact us today to get started.