Organisations exist to exchange value with stakeholders. They do this via a series of coordinated activities across a number of functional elements of the organisation – we call this a process. It makes sense to optimise these processes so that they satisfy the requirements of all stakeholders (process improvement). Taking a coordinated view of the performance of all of the processes by which an organisation exchanges value and optimises performance – that’s process management. Process management allows organisations to focus on activities that create the value exchange outcomes described by the strategy.
Strategy is executed via business processes.
Every time you contact a customer or address a customer complaint, develop a new product or service offering, provide reports to senior management or strive for a high performance culture more than likely you follow a certain set of steps. These are examples of business processes. Business processes can easily become ineffective, time wasting and resource hungry and have on-flowing effects of leading to disgruntled or overwhelmed employees, rising or high costs and missed opportunities.
So it is important to continually evaluate and improve business processes to make daily workflows more productive and create a positive work culture and environment.
According to Harvard Business Review, companies that have strong management processes far outperform those that don’t on high-level metrics such as; expansion, productivity, profitability and sustainability.
It begins at the top — with the CEO and other executives emphasising robust business process management. Ultimately, it makes a business more agile and responsive to market opportunities than its competitors.
Considering the clear value of operational excellence, why don’t more organisations achieve it?
There are three main reasons:
- To begin with, many businesses fail to recognise or acknowledge there are issues with their existing business processes.
- If they do recognise or acknowledge the value then they may not know where to start and take a back seat.
- Thirdly, businesses sometimes perceive the investment required to improve processes to be much higher than it really is — and the ROI much lower.
By failing to recognise and act on the opportunity to improve processes, organisations are placing themselves at a disadvantage.
In contrast, high-performing leaders know effective process management is key to operational excellence and business success — so they lead from the front and drive it through their teams.
5 Questions to ask
1. Are you and your leadership team committed to improving business processes?
First and foremost, your leadership team should be committed to outstanding business process management. Focusing on continuously improving internal processes sets an example for the rest of the organisation to follow.
Business process complexity is often a result of leadership decisions based on risk aversion, control and mistrust. Often not intentionally, leaders will create complexity with added steps, approvals, reports and meetings to address a concern or solve a problem and continue these actions as preventative measures, even when they may no longer be required or the additional workload outweighs the risk. This is often validated when new employees join a business and question the reason for a particular business activity and be told – “we have always done it that way.”
Next, examine your business’s culture and overall attitude. Ask yourself:
- Is it clear that our leadership is committed to operational excellence? How do our employees feel about this?
- What do our teams and customers think of the way we operate? Do we listen to – and incorporate feedback?
- How heavily do we depend on key individuals in order to operate effectively? What measures are in place in case one of those people goes elsewhere?
- What processes have we used in the past to respond to external pressures? Were they effective? Should they be improved?
- How are changes to processes reviewed, implemented and communicated throughout our organisation?
- Have we invested in optimising our operations in terms of tools, capabilities and incentives for teams?
2. Are all your current business processes aligned with your organisational strategies?
For many organisations, there is a significant disconnect between strategy and process, between the mission-vision-values statements or their equivalents, and the business process pathways that operationalise the strategy. Strategy development is inherently a top-down activity. Business process management and improvement is often conducted in a bottom-up or middle-out fashion. With the strategic view ‘coming down’ and the process view ‘going up’, there is a real chance that both fade to gray before they meet. In the resulting ‘gray zone’ the strategy loses its clarity and purpose, and process activity fails to integrate into holistic management practice.
Every business decision and process must consider the impact to all key stakeholders in both the short term and long term. Think of your stakeholders as a collective ecosystem where business processes are mutually inclusive.
For example, let’s take a field service business, who are currently operating at 85% labour efficiency (internal process perspective) – 85% of their time is on productive work. Productive work is deemed as revenue generating. This means that 15% of their time is spent on non-chargeable work. The business has set an initiative to increase their direct labour efficiency to 90%. At their team meeting, they identified a list of processes and tasks that would contribute to achieving this outcome e.g eliminate training, reduce meeting times, automate their manual tasks, install GPS systems in their vehicles, have spare parts readily at hand, etc. All these are great ways for this business to quickly reach its outcomes however at what cost or impact to its external stakeholders. Firstly, the customer.
A reduction of training reduces skillset (certainly doesn’t improve it) which impacts the field technician’s ability to quickly diagnose and repair equipment. This equipment downtime reduces customer confidence in the service team, increased costs to the customer and potentially loss of revenue. Reduction or elimination of team meetings removes open communication, collaboration and team harmony. Spare parts in vehicles means a field technician does not need to return to base or use couriers to despatch and deliver goods, but risks of damage and theft in vehicles may need to be considered.
Developing a more coherent view of the inter-relationships between strategy and process makes it more likely that the strategy will be executed and the processes will be effective, thus negating the need to consider the impact of your decisions across all stakeholders.
3. Do I understand what my people do?
It’s not expected that leaders know the exact details of what all their people do. This is not where your time should be invested, however to understand your people is where your time should be spent. Their behaviours, actions, how they make decisions and how they interact with others is the way to truly understand the business performance.
Observation is typically the best way to understand behaviour. Experiencing people in action, asking the right questions and, communicating with them and those they interact with, provides this insight.
Then consider that behaviours and performance that are indirectly impacted by the formal structures, processes and systems such as; policies, procedures, rules, measures, norms that are in place within your business. These influence the goals, resources and barriers to which people then adjust their behaviours. For instance:
- Departmental decisions that ignore the impact on other parts of the business
- People not believing they have the power to change the system – they work to rule
- Blaming others in the system
Do not introduce performance improvement initiatives without firstly understanding your people. They will not be successful. Consider instead changing the system that influences the behaviour of the people, not the people themselves.
4. Are we ready to automate our business processes?
If the business relies on a series of repetitive or complex processes and you wish to improve these processes to enhance productivity, save money, and free up time then more than likely you might be ready for workflow automation. Automated workflows are digitised business processes that eliminate paper-based, manual tasks for increased accuracy and efficiency.
While workflow automation can be a great step for your business, it’s important to ensure you’re automating the right processes. Any recurring business process workflow is a candidate for automation, but that’s not the only factor to consider.
To determine if one of your specific processes could benefit from automation, consider the following:
- Workflow automation requires a certain level of standardisation. If you know how many steps are in your process, you’re on the right track. On the other hand, if your process structure is a bit muddy and complex, you’ll likely have a hard time creating an automated workflow with specific decision points.Additionally, knowing how many steps are in your workflow can help you determine if your process is worth automating. Simple processes that require just a couple basic steps may not lend themselves to workflow automation.
- If your process involves action or input from multiple people, there’s a good chance you could benefit from automation. Why? The more people involved in a process, the more complex it becomes—and the greater the chance for it to get blocked or fail.
- If efficiency is of high importance for your process, automated workflows may be key. For example, if you have expense reimbursement requests that must be reviewed ahead of weekly payroll or time off requests that must be processed ahead of the leave period, automation can ensure these requests don’t get lost in a crowded inbox. One of the biggest benefits of workflow automation is its ability to streamline processes and keep them moving forward with little human effort. If your process is time-sensitive, this is crucial. Automated notifications and intuitive review and approval tools can cut significant time off a workflow.
- It’s not uncommon for a process workflow to experience frequent delays due to miscommunication or sheer lack of communication. If you’re working through a manual process, task visibility is likely poor, making it hard to keep track of where you are in the process. With workflow automation, you have a digital record of your process status. You can easily see the active step, who is responsible for completing it, and how much time it is taking. This not only streamlines the process and keeps everyone accountable, it also provides insights for future process improvement.
- A business process workflow that requires a lot of manual data entry can be riddled with errors. For example, if a team member is tasked with transferring multiple phone numbers from a paper form to a digital spreadsheet, there’s a high chance human error will come into play—especially if the team member must also decipher handwriting.Using automated workflows can significantly reduce process errors. All data is submitted electronically, so there is no handwriting to decipher and no chance of a transcription mistake. Additionally, when your process starts with an online form, you can ensure that all necessary information is captured, which eliminates errors associated with lost or missing data.
5. Are there hindrances in your business that prevent you from achieving valuable tasks quickly and reliably?
Of course there are. Corporate inertia, lack of clear prioritisation, underutilised resources and time itself all prevents businesses from simplifying the business processes and the workplace itself. The need for business simplification has never been more urgent. The arrival of digital business adds layers of complexity to businesses, as the business must adapt to serve evolving demands of all stakeholders in a variety of ways. To handle this complexity, the first tendency is to tack on a new business process. Suddenly, a task that may have taken minutes takes hours, and hours become days.
Business complexity is costly as it uses up more resources than necessary to achieve the desired outcomes. This is capital that could have been used elsewhere. Not only is it costly, but also has a negative impact on workplace morale.
The challenge is where and how to start simplifying and removing unnecessary tasks, low value tasks, declutter the work environment, remove blockages that’s just to name a few contributing factors.
In summary, in order to achieve our strategies and exchange value with our stakeholders, a focus on improving business processes is paramount. Reducing complexity and simplifying the work must be driven by senior management. It needs to be a strategic project that starts from the CEO level and gets the support formal levels and in all areas. Changing behaviour requires strong leadership and clear goals, metrics and incentives tied to performance. Not dissimilar to having a strategic framework for the entire business, a strategic framework for simplification needs strong consideration at a micro level. Simplification efforts will vary by business, but they all start with self-diagnosis. Businesses should gather micro data to inform management where there is excessive complexity in its systems and let the data drive decisions. Clear communication will engender trust within the company and build support. If people think that business simplification means they will lose their jobs in the name of efficiency, they will be less likely to cooperate.
In today’s global, increasingly digital organisations, complexity is a growing drag on productivity and workplace satisfaction. Managers need to develop simplification as a core leadership capability and a critical component of the business strategy.
For this reason, leaders need to embrace the benefits of simplification as it is also part of process management that is required to execute strategy. Leaders should set the vision and be the role model for the simplification behaviours they want to see from employees.