What Is Operational Management?

All organizational functions are operations, and, at the same time, any management activity includes operations management. In this article, we will consider the common points of the concept of operational management.

Operational management as a component of the organization’s management

Operational management is the control of production processes, which are aimed at transforming resources into goods and services. The transformation process requires organization. Related to production, operational management is often called production operations management. Without an efficient and well-organized operational function, no organization can retain market leadership because it loses in delivery speed, price, or quality, and most likely in all three indicators.

The concept of “operation” involves the production of personal or industrial goods, contract work, and services. Therefore, the term “operation” is much broader than the term “production”, because the first of them means not only the production of goods but also the provision of services. Based on this, operations as activities should be understood as production, supply, transportation, service. The basis of operational management is the operating system.

The operating system is a complete system of production activities of any organization (object), which is a set of three interdependent subsystems:

    • planning and control subsystem;
    • processing (converts the input value to the output);
    • supply subsystem (performs the necessary functions of providing the processing subsystem).

How does it work?

Operations management is closely linked to quality, productivity, and information technology. Much depends on the company’s operational management system, as inputs are transformed into goods and services. Properly designed and managed operating systems and procedures largely determine product quality and performance levels. For example, Benetton is maximizing productivity from its distributed hubs through an extremely efficient and productive operating process. Conversely, ill-conceived operating systems are one of the main causes of low quality and low performance. They increase inefficiency and can increase costs and reduce profitability in various ways.

Typically, operations managers have to deal with important and complex issues in three areas.

      • Resources: Managers must decide where and how to buy the resources needed by the firm to produce products. The key solutions here are supply chain management and vertical integration.
      • Location: Managers must decide where to build office buildings, sales offices, and factories, what should be their planning, etc.
      • Logistics: Managers must choose transportation methods and inventory management methods.

Strategic context of international operations management

The central role of operations management is to build the capacity to increase the value of the firm. In other words, operational management is an activity that creates added value, and its activities are aimed at creating new or increasing the existing value of input resources so that it directly affects the results of the firm.

International operational management must be built in full accordance with the company’s business strategy. Indeed, the business strategy set by top corporate and regional managers affects all aspects of planning and implementing operational management activities, such as supply chain management strategies, location decisions, premises planning, and logistics. If the company pursues a strategy of differentiation, the function of operational management should ensure the creation of goods or services that are different from the goods or services of competitors.

Conversely, if a firm pursues a cost leadership strategy, the operational management function must ensure that the costs of producing goods and services are reduced to an absolute minimum so that the firm can lower prices while making a reasonable profit. In this case, the central role is played by costs and prices, and quality may be less critical.

Nonprofit Board Governance Mistakes

Modern conditions for the activities of nonprofit organizations are complicated by the dynamic development of the external and internal environment of functioning. In this article, we will consider the most common mistakes of the board management of nonprofit companies.

Board governance principles that determine the efficiency of the company`s activity

In the modern nonprofit board governance paradigm, despite the variety of specific formulations, preference is given to the human person, taking into account the processes of globalization and with an emphasis on knowledge management, on a network, partnership principles of interaction. In this regard, the author proposes to use several principles in the management of nonprofit organizations (NPOs):

  • The principle of partnership. The main idea lies in the need to build in a nonprofit organization a system of partnerships with state, and municipal authorities, business structures, the public, and other interested groups of people.
  • The principle of the priority of public interests, which has as its goal the satisfaction of spiritual, cultural, educational, and other moral needs.

The implementation of such principles determines the need to use strategic, innovative, differentiated, and optimization approaches in the management of nonprofit organizations, which will optimize management decisions, improve management efficiency and bring organizations to a new innovative development trajectory.

What are the common nonprofit board governance mistakes?

Not all boards of directors are effective or perform their duties properly. There are many reasons for this. One of the reasons may be that board members are too detached from the company and do not know what is going on, or do not want to take on their responsibilities. So, let`s consider the most frequent nonprofit board governance mistakes.

It is known that fundraising is one of the main activities of the NPO. We have gathered the list of the typical mistakes that everyone makes when raising funds for their idea:

  • NPOs often use too much text and few photos in their appeals, there is no explicit call to action. No visualization of the problem, a simple example: when we read the text, we simply realize that there is a certain problem, and when we look at the picture, we see this problem clearly in all its scales, we do not need more evidence that help is needed. It is important that your audience feel the seriousness of the problem and the need for help.
  • The second rule is inextricably linked with the first. Everything must be done in moderation. It is imperative to talk about the problem, but showing its seriousness, you need to remember that no one will give you money to solve hopeless problems, the sponsor can move away from an unpleasant problem, and we need him to give us the means to get closer to us. Therefore, it is still necessary to create a positive attitude. It is important to say: “Yes, there is a problem, but it has a solution. The situation is not hopeless, and you can help.” Show your donor how the problem can be effectively solved and he will not refuse you.
  • Fundraisers face the challenge of asking for money every day. For some reason, among many nonprofit companies, it is still believed that asking for money is shameful, ten years ago it was generally a scourge. They believe that people should guess for themselves that it would be necessary to donate. Come yourself, give money yourself, and then we will save the world. This is a big mistake.

Disadvantages of Virtual Board Meetings

Today there are wide opportunities for the use of electronic technologies for remote communications to ensure the activities of the board of directors. These digital solutions have pros and cons. In this article, we will consider the cons of virtual board meetings.

Online format as a good alternative to organize a board meeting

In the times of Corona, team meetings or board meetings on the Internet are a good alternative. During self-isolation, online events have experienced an accelerated evolution. If at the beginning of quarantine they were held according to the formula: “We are forced to hold our long-planned event, but now in this format”, now the idea of many online events arises based on the thought: “Now we can hold our events in an online format because the market already has all the tools for this.”

On the one hand, different technologies can now be tested. The tools for video and telephone conferences, whether Board portals, Webex, GoToMeeting, or Microsoft Teams, are web-based and are offered as software-as-a-service. So they can be canceled monthly. They now also offer many collaboration features. For external participants, the technology is neither time-consuming nor complicated.

The reality is that keeping all board members working in sync is often a challenge. It is also not always possible for every participant in a business meeting to be physically present, which increases the complexity of this task to another level. This is where board meeting software comes into play. This type of software helps avoid misunderstandings and ensures that everyone is in agreement and has up-to-date information.

Basic differences between two formats of board events

There are three main differences between offline and online board meetings:

    • The presence of imagination. In an online event, you must imagine how the viewer reacts to your messages, his emotions. Offline you see it, online you have to imagine it.
    • Offline, the moderator necessarily coordinates his actions with numerous technical services responsible for the final result. Online, this function is supplemented by the competence of a TV production specialist. The online moderator works with several cameras, monitors, laptops, gadgets and collects all these information streams into a single whole on the air. It is the prompt and clear coordination of interactions between the moderator and all broadcast services that guarantee you a high-quality picture that always appears at the right time and in the right form.
    • Online, the moderator also needs the ability to speak to the camera, the ability to communicate directly, so that the viewer has the appropriate feeling that they are talking directly to him alone, and not to the mass, as happens offline.

The most common disadvantages of the online board meetings

The online format of the meetings of collegial bodies has some negative aspects:

    • No matter how hard the reporter tries, the online board meeting does not achieve the same emotional connection as during live communication. And this is a very important aspect on which the effectiveness of the meeting depends.
    • Since the virtual board meeting is a new tool for conferences, many reporters accustomed to working with a live audience are simply lost in front of the monitor. As a result, the rhythm and drive of the performance are lost.
    • The right meeting management software will act as an effective communication tool between board members, while the wrong one will do more harm than good. So, choosing a good digital platform for online board meetings is a real challenge.