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Do You Know Your Hidden Costs of Operations?


In our recent article, “Putting Muscle into Operations: Questions that Reveal Harmful Levelsof Frailty in a Critical Corporate Function” we offer a concluding recommendation that CEOs take an operational assessment. Akin to an audit, such an assessment examines some of the possible weaknesses our interim Chief Operating Officers, or COOs, helped us identify for the article, as well as help make forward projections for the company. Here are some of the facets of an operations audit:

1. What would your clients say about you?

One of the things the article recommends is that the CEO makes time for personal client interaction. However, with an operations assessment, an outside, independent individual would conduct confidential and anonymous conversations with clients – likely uncovering a treasure trove of information.

2. Are you always looking for a champion?

Do you have that “right-hand man,” the second in command, on whom you can rely? It is the opinion of one of our interim executives that this deficit is one of the major causes of the CEO executing his functions inefficiently, many times causing him to spend far too much time on internal company functions, versus dividing up his time effectively with external functions.

3. If you do have that company champion, such as a COO, is he capable of growing the business?

Both CFOs and COOs are natural choices for that second-in-command position; however, many times a CEO can be at odds with his CFO when it comes to growth – a part of the CFO’s job, after all, is to save and cut costs. A CEO may have to learn to glean out that aspect of the CFO’s responsibility when it comes to growth, or rely on the COO for a more balanced perspective.

This is, of course, a small sample – but an important one. As one of our interim executives states: “The CEOs I’ve helped admit that the biggest problems executing long-term strategies, is due to internal organizational problems.” These hidden costs of operations – the time a CEO is spending fixing problems that could have been avoided if a system was in place to prevent them– need to be weeded out so that a healthy system of operations can take root.

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