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Wednesday, April 17, 2024

Financial Services need good operational management. Here is how to do it

The business world is a tricky place. It is like a house of cards, where one misplaced card can cause the entire house-like structure to come tumbling down. In the business world, cards represent operational processes that help the company sustain itself in the long run. Factor in that the business works in a financial domain, and the stakes get higher.

In most cases, when a business grows, the management either opts for enterprise software, CRM software, or operations management software to optimize their workflow and streamline processes. However, economic and political influences, regulatory changes, and fast-paced markets pose a volatile financial firm environment.

Hence, operational process management for improved performance and output is something that they are constantly working on. If your business is facing the same challenge, read on.

Ways to Improve Operational Process Management

The answer to the question might seem simple, like hiring an MBA graduate with the right kind of experience in operations management. However, the reality of improving operational process management is more complex than it seems. That being said, the following are the sure-fire ways of improving it:

1.   Reduce redundant tasks

As an organization grows, the reliance on data automatically grows. For example, in a financial business, the same data can be needed by different departments. In a lot of small-scale industries, separate databases are maintained for individual departments. While it might be convenient initially, it is a redundant task for entering the same data in various places.

Instead, you should use a central database to access all the data from one place. To ensure that the data is not tampered with, the database software should implement restricted access to the employees at various levels.

2.   Automate repetitive processes

Just like redundant tasks, repetitive processes also take a lot of time away from achieving operational excellence. Processes like invoice and quotation generation are some of the most mundane and repetitive cycles of a business. Unnecessary manual data entry is another aspect that companies struggle with. All of these processes can be automated to save more time and improve operational efficiency.

3.   Support and Train the staff

In many cases, companies invest more in hiring a trained new candidate than training their existing staff. For example, in high turnover financial institutions, rehiring costs can account for up to 40% of the total business costs, which is a lot higher than it would cost for training the existing staff.

Training your staff in the process or operation they are a part of makes them more aligned towards the business goals and helps them be more productive. Furthermore, this helps in the reduction of defects if quality assurance techniques have also been deployed.

4.   Perform a time study for identifying gaps in the processes

The concept of time study is still a foreign concept for many businesses. In a fast-paced environment of a financial firm, time study can be instrumental. The time study aims to identify how much time it takes for a particular process and reduce it for better output.

5.   Applying the basic principles of waste reduction

With principles like Six Sigma, TQM, and Kaizen available, you can automatically identify where the processes and operations are generating waste. These can be overworking the strategy, redundant operations, and improper data handling in a financial company.

Applying the principles of waste reduction will automatically result in a more productive and more streamlined process flow.

6.   Defining the right job roles for the people

As a company owner or a senior executive, it is your job to define the roles of your staff correctly. To make sure you do that, you need to identify each person’s strengths and weaknesses and then utilize them to further business goals.

Assigning all the tasks to everyone vaguely will only cause confusion and mismanagement. With sensitive financial documents, you need a more optimized workflow and the right people for the job. So, it automatically becomes imperative to define the right profile for the people.

7.   Optimizing and streamlining workflow

The biggest job in operational process management is optimizing and streamlining the workflow. To do that, you need to conduct a SWOT analysis and then define a strategy to cater to the weaknesses and areas of opportunity.

The strategy should make things simpler and precise and not add any new layers of complexity. The more layers you add, the more there are chances of mismanagement. So, prepare a strategy that caters to the strength of your workforce to drive business goals.

8.   Improve inter and intra-departmental collaboration

It is a common practice among departments to assign blame or responsibility to each other for some work. And in that problem of to-and-fro, valuable time and resources are spent. And when you factor in the aspect of the financial domain, the importance of collaboration becomes critical. Therefore, you should create an environment for cooperation both within the department and externally.

Each department should function as per their defined roles properly, and the scope of work should be as such. Ultimately, a collaborative environment will also help make the product better, which is the ultimate goal in any business.

9.   Develop a financial strategy with higher margins

One of the tasks that operational managers fail to perform is defining a good enough margin of error and improvement. Instead, as has been taught theoretically, the margins for operational excellence and financial expenditure are kept tight, which overlooks the reality of the actual process.

Having a sound financial strategy helps in optimizing the processes more quickly as the resources are readily available. Additionally, your long-term economic viability will be jeopardized if you start defining smaller margins just to grab a client. And that will ultimately hinder process improvement for operational excellence.

Conclusion- Is Operational Process Management Important?

The financial world moves at a much faster rate than most other industries in the world. As a result, operational process management is essential to stay on top of things while improving your overall output and margins.

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