The recent global economic downturn has heightened awareness of the importance of excellent process execution for company-wide performance. Companies worldwide have been forced to look at their current processes and improve them.
In order to substantially improve the overall company performance, managers must have an enterprise-wide perspective on process effectiveness. Process improvement must be linked to overall company performance and not just process efficiency.
Over the course of the past decade, many companies have embarked on various business process improvement initiatives and the majority of outcomes from these efforts have been non-satisfactory. The biggest challenge is coordinating the various processes that support different business units in different locations, drive business performance and increase growth potential.
According to a report prepared by CFO Research Services in collaboration with Genpact, “How well a company executes its processes – cutting wasted effort, streamlining data flows and hand-offs, and increasing communication can mean a difference between incremental cost improvements in isolated processes and best-in-class process and financial performance enterprise-wide.
Today’s organization has become too complex to manage. So how can managers improve process effectiveness in a complex organization?
1. Avoid A Silo Approach To Process Improvement: Organizational silos and corporate culture are the greatest barriers to effective process improvement. Target areas of process improvements include finance and accounting, non-finance administration, sales and marketing, operations, and management and strategic planning.
It is not surprising that you find these organizational functions working in isolation from the other. Why? Because most managers fail to understand the cause-and-effect relationships between these functions. These separate functions are the glue that holds the organization together. It therefore means that improving process effectiveness in one function will cascade down to the other functions, both directly and indirectly.
The Finance function can play a pivotal role in improving process effectiveness across the organization. Because of Finance’s ability to work with other groups and its enterprise-wide knowledge of business, the function possesses the change management capabilities necessary to overcome organizational silos and inertia that can impede enterprise-wide process improvement.
2. Benchmark Processes: Companies should make use of both internal and external process benchmarks in these process improvement efforts. This means appropriate metrics that tie actions to results should be designed to help guide process improvement efforts throughout the company. Care should be taken when making use of external benchmarks as failure to do so will result in disappointing results.
For example, avoid the temptation of duplicating metrics that are used by your competitors and apply them to your own organization. You need to first establish whether your chosen benchmarks are applicable to your own operational environment.
To successfully use internal benchmarks, a working knowledge of individual process or functions is of primary importance. Reliance on process owners/ internal personnel is therefore key to designing internal metrics. Sometimes it is better to deal with the process owners themselves than rely on all the information you receive from external consultants to make process improvement decisions.
3. Streamline Processes: Today’s complex organization utilizes a diversity of processes to meet its goals and objectives. These need to be streamlined and managers must improve communication between different groups to avoid duplication of efforts and resources. This consolidation of effort will ensure that resources are not wasted and are used for other profitable initiatives.