Article

Oper­a­tional Excellence

Are your busi­ness process­es under con­trol? 5 warn­ing signs

April 7, 2021

Our Expert

David Ruiz

Country Manager Regional Country Manager

In our expe­ri­ence, when we ask our clients if they know if their busi­ness process­es are per­form­ing as expect­ed, they often answer: “We are not sure!” 

It is rel­a­tive­ly easy to iden­ti­fy flaws in pro­duc­tion process­es because they are vis­i­ble. One just needs to head to the fac­to­ry floor and observe it. 

Busi­ness process­es, on the oth­er hand, are “hid­den”. Instead of a prod­uct, infor­ma­tion (such as a pur­chase req­ui­si­tion) trav­els through process­es that run through var­i­ous depart­ments and employees. 

To com­pli­cate this fur­ther, employ­ees often mul­ti­task between var­i­ous process­es in the com­pa­ny, some of them infor­mal. As a result, man­agers are often obliv­i­ous to the per­for­mance of spe­cif­ic processes. 

We find that while many com­pa­nies have work­flows in place, they lack “con­trols” or “meth­ods” to mea­sure the effec­tive­ness of their processes. 

We call these meth­ods “man­age­ment con­trol sys­tems” (MCS). With­out well-designed MCSs, com­pa­ny process­es often fail to per­form as well as they should. 

What are the “symp­toms” of a com­pa­ny that has defi­cient MCSs? Here are the warn­ing signs: 

1. Siloed man­age­ment process­es  

It is Mon­day morn­ing and top man­age­ment is in a meet­ing. An idea emerges about stream­lin­ing the after sales ser­vice process­es in the company. 

Lat­er in the week, the after sales depart­ment receives instruc­tions, via email, to adopt the new process. 

“This will nev­er work. Man­age­ment has no idea how our organ­i­sa­tion oper­ates,” grum­bles a ser­vice agent. 

Sce­nar­ios like these occur in com­pa­nies around the globe. 

“When a com­pa­ny lacks well-built MCSs, man­age­ment often make deci­sions based on what they under­stand or from the feed­back of a few employ­ees instead of how the organ­i­sa­tion actu­al­ly works day to day,” says David Ruiz, Man­ag­ing Direc­tor (Oil and Gas) at Renoir. 

The lack of vis­i­bil­i­ty between depart­ments or an under­stand­ing of how busi­ness process­es flow togeth­er can result in a dis­con­nect between higher-level man­age­ment and employ­ees on the ground. With­out an MCS that rolls up issues, man­age­ment may risk los­ing or not ben­e­fit­ing from the organ­i­sa­tion­al knowl­edge that is held at the low­er levels. 

How an MCS can help: The vital inputs, pro­cess­ing and out­put mea­sures of all process­es, across depart­ments, are linked in a con­tin­u­ous man­age­ment infor­ma­tion flow. As a result, bet­ter deci­sions are made because over­all needs are con­sid­ered instead of just indi­vid­ual depart­men­tal priorities. 

2. Employ­ees do not under­stand how their work impacts busi­ness objectives 

Hav­ing a sense of pur­pose is an impor­tant human moti­va­tion fac­tor. Despite what some peo­ple may think, employ­ees do want to know what the company’s busi­ness objec­tives are and how their roles can help the com­pa­ny meet them. This should be com­mu­ni­cat­ed to them often and systematically. 

To do this effec­tive­ly, man­age­ment must deploy their busi­ness strat­e­gy through­out their organisation’s processes. 

For exam­ple, it’s not enough to just increase sales review­ing rev­enue – that is a reac­tive “out­put” mea­sure. We should also mon­i­tor “input” mea­sures such as num­ber of sales calls and “pro­cess­ing” mea­sures like order pro­cess­ing time. Dif­fer­ent mea­sures usu­al­ly involve dif­fer­ent peo­ple. So, by address­ing these we can direct­ly con­nect the company’s strat­e­gy to the workforce. 

How an MCS can help: An MCS links a company’s strat­e­gy to the dai­ly exe­cu­tion activ­i­ties that are the source of val­ue and/or efficiency. 

3. Too many ad hoc meetings 

If your com­pa­ny meet­ing rooms are booked sol­id two weeks ahead of time, the prob­lem may not be the lack of rooms but that your meet­ings are not achiev­ing their intent. 

In our expe­ri­ence, ad hoc meet­ings are set up to fin­ish off some­thing that wasn’t done cor­rect­ly the first time. Per­haps the right infor­ma­tion wasn’t avail­able at a pre­vi­ous meet­ing. Or a vital per­son was not invit­ed. Or anoth­er depart­ment had not weighed in yet. This results in inef­fi­cien­cies, lost pro­duc­tiv­i­ty and time. 

How an MCS can help: The right infor­ma­tion will always be avail­able to the right peo­ple at the right time, allow­ing for quick deci­sion making. 

4. KPIs that dri­ve wrong or no behaviours 

Con­sid­er these two scenarios. 

An insur­ance com­pa­ny had an incen­tive where agents were reward­ed for sell­ing 30 poli­cies per month. This incen­tive drove the wrong type of behav­iour. When agents achieved their tar­get of 30 poli­cies, they stopped sell­ing more poli­cies, and if they did, they “saved” them for the fol­low­ing month. The incen­tive was actu­al­ly a disincentive! 

On the oth­er hand, a telecom­mu­ni­ca­tions com­pa­ny intro­duced mea­sure­ments and a ful­ly vari­able com­pen­sa­tion incen­tive for their retail out­lets. Sales grew by dou­ble dig­its because employ­ees realised that the more they sold, the bet­ter the reward. 

“The wrong Key Per­for­mance Indi­ca­tors (KPI) may end up dri­ving the wrong behav­iours and steer employ­ees away from busi­ness objec­tives. Or, they may dri­ve change for a while only to have it drop off lat­er,” says Ruiz. 

KPIs may also end up being too much for an employ­ee to reach. For exam­ple, a com­pa­ny may have a huge dash­board with 20 things that the com­pa­ny wants to achieve in every region. When employ­ees look at that dash­board, they may end up won­der­ing how their work can help achieve that. 

“We don’t always know what behav­iours KPIs will dri­ve, so they must always be mon­i­tored and tweaked until they result in the desired behav­iours,” Ruiz adds. 

How an MCS can help:  Because an MCS is linked to exe­cu­tion activ­i­ties, the focus on cor­rect behav­iours is great­ly enhanced. 

5. Things are tak­ing too long to execute 

It takes longer to make cor­rect busi­ness deci­sions or exe­cute work on time when busi­ness process­es are spread out over many depart­ments and too many peo­ple. Fix­ing the com­plex­i­ty may improve process deploy­ment, but an MCS will give you clar­i­ty on where block­ages are occur­ring so that reme­di­al actions can be taken. 

How an MCS can help: An MCS brings trans­paren­cy on process per­for­mance. This is vital when process­es are com­plex and spread wide­ly across an organisation. 

Con­clu­sion 

As an organ­i­sa­tion grows, process­es grow with it. With­out consciously-designed MCSs, busi­ness process­es often grow com­plex and end up affect­ing an organisation’s performance. 

When set up cor­rect­ly, MCSs can do the following: 

• Set the expec­ta­tions for performance

• Describe the way things should be done 

• Mon­i­tor how well things are being executed 

• Mea­sure results 

• Analyse gaps 

• Improve future performance 

Learn more in our white paper, Prim­ing Busi­ness Process­es for Excel­lence.  

Our Expert

David Ruiz

Country Manager Regional Country Manager

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