Un certain regard

Why have your operation audited by independent experts?

“An operational audit is an examination of the manner in which an organization conducts business, with the objective of pointing out improvements that will increase its efficiency and effectiveness.”

And there are various manners in which business can be conducted. They can all be equally effective and reach the same results with the same effort. But mostly they are not.

In casinos a good example would be procedures. Those of you who had the chance to work in multiple jurisdictions and for various companies, know how a simple procedure of paying out 105 chips on roulette can differ from one place to another. Is there a perfect way to do it? Is any one of these various procedures more effective than all the others? Probably yes. Does it matter? Probably not. Many times, the difference is not measurable and then we are just wasting our time really trying to invent the wheel.

At other times there might be a significant difference and a case for change which could mean improvement in revenues, reduction of costs or both, resulting in increased profits for the operation and eventually thicker bonus envelopes for management. Operational optimization is a phrase that many repeat but a very few practice. The nudge mostly comes from ownership and hardly ever from management. And when it does, it usually means an operational audit for starters by an outside company or consultant to point out possible areas of improvement that management hasn’t seen for various reasons. Not because they are incompetent or don’t care, but simply because running an operation can be rather overwhelming and there are so many facets of the business that need constant attention, that sometimes the big picture just gets blurred and priorities get distorted.

I remember the first time I had to face an outside auditor as property manager. I felt insulted and betrayed by the very company I did so much for. I ran the place as if it was my own, with care and lots of extra hours. My casino was doing extremely well, initial investment paid back in record time, all was rosy, so what is this guy doing here?

I got lucky, cause the person doing the audit was seasoned enough to see my anguish and walked me through the whole process and the reasons for which corporate management called him in. Then the whole thing started making sense. We were doing great, but there is always place for improvement. And did we improve on a bunch of KPIs after that audit? Very much so. The auditor was long gone when I was still the shining star of the company for being able to further improve on already brilliant results.

I learnt an invaluable lesson which I kept for the remainder of my management carrier. An outsider will see your operation with completely different eyes. He will see details, you don’t. Things that are natural to you and are used to happening a certain way, take on a new meaning and are seen in a new light through someone else’s perspective. It helps put more options on the table than what you would come up with on your own, so your choices increase exponentially. From then on, I regularly invited outsiders I trusted to take a look at my operations and give their opinions. I always benefitted; the operation always benefitted.

On a very recent operational audit assignment, while going through different aspects of the operation, I saw the same sad disappointment in the casino manager’s eyes in the beginning. So I tried my best to follow the example of my first auditor and assure him that all this will work out for his benefit. I am convinced it will. It must by default.

The information collected and analyzed by me and my fellow auditor together with our suggestions for improvement should help the property in question revamp the operation and achieve significantly better results. More than that, it will probably open the eyes of its longtime management to the need for constant revisions and keeping up with changing times to be at the top of their games.