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1.2.1 Drafting the Operational Plan

Lesson Progress

1.2.1 Drafting the Operational Plan

An operational plan should exist for the same length of time as the strategic plan but should be reviewed regularly to make sure progress is being made towards achieving the objectives. If necessary, priorities can be revised.

The actual design and order of your plan may vary significantly from this, depending on the actual work that needs to be undertaken. In fact, in some organisations, they can be called ‘action plans,’ ‘annual plans,’ ‘management plans,’ or, as mentioned previously, ‘tactical plans.’ 

Additionally, your organisation may have a format of its own that they require you to use. If this is the case, you must comply. The business world can be a tremendously complex environment. When you consider that this environment is further complicated by continuous legislative change, the challenges of constructing, implementing and appropriately managing a plan over time cannot be understated. Seeking the advice of specialists can provide the knowledge and expertise that will assist you on the path to achievement.

Most organisations require that approval is gained before plans can be implemented. This approval may come from management teams, the board of directors or council. Organisations would also need to report to external authorities such as various regulatory or government agencies; for example, such as the Australian Taxation Office. 

Policies, Practices, and Procedures

Developing an operational plan begins with understanding the organisation’s policies, practices and procedures that directly relate to the OP. These could include purchasing policies, policies relating to preferred suppliers, quality policies and many others. You will find many business policies and procedures on the simulated business website of Bounce Fitness by clicking on either the Policies or Procedures tabs.

Parts of an Operational Plan

Usually, a standard operational plan would include:

Key Performance Indicators

Key performance indicators (KPIs) are an important element in your operational plan. KPIs are tools that are used to provide a quantitative measure of performance against predefined targets. They represent the critical factors that must be met for a project to be considered successful. The actual measures that you use may vary significantly from organisation to organisation, but there are some key measures which are commonly used, such as: 

  • Achievement of a certain level of sales 
  • Achievement of a certain level of customer satisfaction 
  • Achievement of a specific rate of return 

Your KPIs need to be an accurate reflection of your organisation’s mission and vision. Without this alignment, you may find that you are unable to conclusively show that your plan is actually working in the interests of the organisation as a whole. In terms of timeframe, KPIs are not one-shot or short-term; they are generally medium to long term in nature. They need to align with organisational goals, be measurable and consistent, and have an element of being time-based. Let’s look at each of these statements in a little more detail: 

  • Align with Organisational Goals 

Think about the overall organisational goals carefully. If your organisation has an overall goal of becoming a socially equitable organisation, you may have measures that examine charitable contributions reaching 5% of profit or environmental performance measures. An organisation whose principal focus is on being highly profitable will need measures of after-tax profit and shareholder equity. A non-profit will have different goals and indicators than a for-profit organisation. The KPIs must be relevant to the work the organisation is undertaking. 

  • Are Measurable 

The value in any KPI is its ability to show you where you are working well and where problems exist. This can only be done by ensuring that each measure selected is quantifiable and can actually be measured in some way. 

Saying that you want to be the most popular organisation in Australia is a lofty goal, but one which is not able to be easily quantified. Adding an actual measure such as ‘To have 95% of people in Australia recognise our logo’ is a goal that can be measured through survey methods. 

  • Are Consistent 

KPIs must also be consistent. You cannot change the way you define profit from ‘before-tax profit’ to ‘after-tax profit’ on a whim as this will make a huge difference when it comes to comparing your results from year to year. KPIs should change as little as possible from one period to the next. Any change should be minor; if you are continually moving the bar, the organisation will have difficulty in actually reaching it, as all the plans behind the KPI will have to change to meet the new goals.

  • Are Time-Based

Your KPIs must integrate the significant timeframes into their formation. These would include the long-term ones which concern overall goals and the short-term ones which are more project-based. There is no point in coming up with KPIs if these are not bound by time. If you do not have set deadlines for meeting your targets, you cannot effectively measure them. Therefore, you must give great consideration to time and factor it in as you write your KPIs.

Aside from setting KPIs that are SMART, you may also like to note alternative approaches for writing effective KPIs. These include:

After having developed an effective set of KPIs for your organisation – ones that align with organisational goals and are measurable, consistent and time-based – you can begin the process of measuring and evaluating your overall performance. The KPIs give both the employees and management within your organisation clear guidance regarding where you are headed and what you ought to do to be successful. They should be displayed prominently so that all staff are kept abreast of what they need to do to achieve the organisational objectives. This allows you to ensure that everything your team does is focused on meeting or exceeding those KPIs.