Operational Improvement and You

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From #104, January-February 2003

Operational Improvement and You

B Y   M E L   B R A V E R M A N

Once I asked a general manager, whose store had many operational and financial problems, how she decided her work priorities on a daily basis and for the longer term. She responded "I don't have to decide. I come to work and either my staff or someone on the phone let's me know my priorities." Having been a general manager, I understood her response--her priorities were the issues that were brought to her immediate attention. This is not unusual in a retail environment where we tend to react to what is in front of us. When there is a staff, customer, or vendor issue that is brought to us we try to resolve the issue quickly.

While this may make sense at the time (and at times it is very important to deal with the immediate issue), if we allow ourselves to be "manipulated" in this manner we may spend the majority of our time "putting our fingers in holes in the dike" without ever addressing the real issues that create so many holes. If we are content with working to maintain the status quo of our cooperatives this "what is in front of me" approach to priorities may prove adequate. But I can think of times when this approach would not even allow us to stay at current performance levels.

Early in my management career I was working at a store that had achieved significant financial success in a very short time frame. One day I was having coffee with a seasoned general manager who had been one of my mentors, and we were discussing how well my store was performing. When he asked me what my plans for the store's future were, I said I thought I'd just take it easy--things were going so well it seemed like a good time to relax. He hesitated for a moment and then said, "When things are going well, that is the most appropriate time to chart out future improvements." He went on to explain that when I have operational problems I probably will not have the ability to look to the future--I will be consumed with correcting the problems. I was a bit upset, since I thought I had achieved something and wanted to "coast" on that achievement. But as I thought more about it I realized he was absolutely correct in his stated approach.

I offer these two stories because the situations are so diverse--one store is experiencing significant problems and the other is experiencing surprising success. Yet neither general manager was looking towards the future and what could give their stores the greatest opportunity to obtain or maintain success. While the situations are different they both deserve the same response--a well-considered plan to improve the operations of their stores. If it is easy to understand the need for improvement when we are failing, it is also important to think about continuous improvement when we are experiencing success. In the first situation improvement is a necessity while in the second situation improvement is a golden opportunity.

Once we are committed to improving store operations, there are many reasons why we should spend time and energy in a planning process instead of just attacking the areas we feel would benefit from our attention. Some of those reasons are:

  • There is more than one way to accomplish a goal, and planning will allow us to choose the most appropriate course of action to achieve the desired improvements. Planning allows us to see potential impacts prior to their taking effect.
  • The planning process is an excellent tool to ensure that key personnel assist in formulating the improvement approach, which then creates greater opportunity for them to support the chosen approach.
  • Planning creates a roadmap to improvement so all staff may understand the direction the cooperative is moving and have the opportunity to offer suggestions to help create the best possible implementation approach. General managers must model the behaviors they want their staff to use.

Constructing an improvement plan is not very difficult if we use a well-thought-out approach. One approach I have used and recommend has the following four phases:

  • Assessing current performance.
  • Prioritizing areas you intend to improve.
  • Setting goals for areas of top priority.
  • Monitoring achievement and giving regular feedback.

One aspect of operational improvement not previously mentioned but that is very important: celebrate success! We may spend much time and energy formulating and implementing operational improvements. A healthy cooperative also spends time and energy appreciating its accomplishments and making sure the entire staff can feel good about the cooperative's achievements.

A four-phase approach to constructing an improvement plan

Assessing current performance

Assess general store performance. Review sales, labor, margin, turns and expenses. Are any of these areas cause for concern or areas you feel should/could be improved? List concerns with greatest (most critical or largest potential payback) first.

Assess each department's performance. Are any departments failing to meet their goals or in need of a greater challenge? List department with potential for greatest positive impact first.

Ask and answer the following four questions:

  • What part of performance am I concerned about?
  • How would it look if it were better?
  • Can my vision be achieved?
  • If not, what do I need to make it possible?

After these exercises, you have a general picture of what areas of performance may create the greatest positive impact if they were improved and what resources may be necessary to accomplish the improvements.

There are a number of tools available to assist in the assessment of your store's performance. Some of these tools are CoCoFiSt data, customer survey, CGA peer review, market survey, industry surveys, store projections, store staff, financial statements, and competition's performance.

Prioritizing areas you intend to improve

Review the two lists created above--departmental and store-wide--then crosscheck them and create one list of priorities for improvement. Priorities may be financial, customer service, efficiency, etc. The priorities will depend on your specific issues and desires. Work with your management team to create consensus on areas in greatest need of improvement: areas that would have most positive impact on store operations and areas in each department that would benefit from focused attention.

Setting goals for areas of top priority

A goal-oriented approach will ensure everyone knows when they have succeeded. In creating goals, work with the people accountable for achieving the goals, either individually or with the entire team.

Produce at least one major goal for each department. Some departments may need multiple major goals, but if resources are limited focus on the area with greatest potential payback. A well-stated goal has an action or accomplishment verb, a measurable result, a target date and agreement of those involved. Use the S.M.A.R.T. goal format to ensure your goals are structured appropriately:

S: Specific--to the point, precise
M: Measurable--can be quantified
A: Attainable--can be achieved
R: Realistic--based in fact/truth
T: Time Constraint--has a specific timeline

There are a number of resources available to assist your team in determining appropriate goals: CoCoFiSt tools (especially CoCoGap), financial statements, customer survey, industry surveys, staff feedback, and CGA peer feedback.

Monitor goal achievement and give regular feedback

All those responsible for goal achievement should produce short, regular written updates that are distributed to the entire management team (monthly or quarterly). The team can review each member's accomplishments during its regular meetings.

General managers must give regular feedback to department head and/or team. Positive reinforcement is a valuable tool in goal accomplishment. Critical feedback is essential in changing the direction of subpar performance.

Regular monitoring gives you the opportunity to understand the impact of actions being taken as they are happening and offers you the information to determine if changes are needed.

If the planning process is done well it can be a very valuable tool regardless of how many improvements the cooperative is able to accomplish. It can enhance staff knowledge of operational strengths and weaknesses, help department managers understand what similar departments in other stores are able to achieve, be a powerful team building tool, and become the blueprint for continuous improvement for years to come.

Another potential outcome of the planning process is the goals agreed to by each department manager can be used as the basis for their annual review. If each goal is monitored and both the department manager and their supervisor are communicating regularly about progress towards goal attainment, the annual review will hold no surprises.

The value of creating an operational improvement plan can be greater than the desired results of actualizing the plan. The need to improve our operations, whether we are basking in success or buried in problems, is constant.

Mel Braverman is a consultant working with Cooperative Development Services: [email protected].

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See other articles from this issue: #104 January - February - 2003