Business processes explained
I should say here that by “business processes” I mean the groups of related tasks performed by staff to operate the business day-to-day, week-to-week etc. Processes exist in a hierarchy. At the very highest level each should be describable in one or two words e.g. Buy, Make, Stock, Distribute, Sell, Invoice etc. Often every part of the operation can be reflected on one side of an A4 piece of paper. That’s all very nice you might think but so what? Well, apart from gaining a view of the
whole business which can be easily shared and discussed, this highest level picture is used as the starting point for the next level down and so on. The shared understanding of what’s going on in the business is continually checked simply by having to connect the levels of processes together in a single hierarchy. At their most detailed level, processes become standard operating procedures … step-by-step instructions for employees to follow when doing repetitive work.
Processes are not departments
Some process may start and end in a single department. Most are likely to span across different parts of the organisation particularly at the detailed level. Processes may move outside the business – to and from customers and suppliers – as they are executed.
Why good processes are fundamental to success
In short it makes great business sense. Well-considered processes, properly implemented, mean the business will operate efficiently and effectively. This gives it the best chance of achieving its objectives. Good processes positively impact both the top and the bottom line. It’s natural for customers to prefer buying from effective suppliers, rewarding them with loyalty and shifting the emphasis away from price. Also businesses operated efficiently have a lower cost base. Taken together that’s a double whammy on profit margins.
Flexibility strengthens the business
A business with its processes and procedures under control also becomes more flexible. For example, staff members can more easily learn about and take on new roles e.g. when they change job or cover temporarily for another staff member. Similarly when staff members understand their responsibilities and the authorities delegated to them, they will need to refer less often to management. This frees up managers to manage.
Selling or attracting investors
Where a business is up for sale or looking for outside investment, evidence of process control will be very attractive to prospective purchasers / investors. They increase the goodwill value of the company. During the actual transition, new owners and managers will be able to assume control more quickly reducing their reliance on (and cost of) the incumbent owners and managers.
Keep the work aligned to the company’s strategy
How to do it. My advice is to find a leader – perhaps an expert from outside the company – to set up a project team to do the work. Set realistic timescales. Start the analysis at the top level. Use workshops to discuss and map the operations. Work down the hierarchy to understand processes at increasing levels of detail. Prioritise the processes most important to the company’s strategy and/or to solving its current issues. For example a low margin, volume manufacturer or service company is sure to have “right first time” somewhere in its strategy because the margins will not be sufficient to absorb significant levels of rework. For example a company differentiating themselves on customer service will prioritise processes with customer touch points. Involve the appropriate managers and staff – they know the operations best and the ownership they feel through being involved will help at the implementation stage.
Look for improvements
Once you’ve understood the “as is”, look for changes and improvements that are always aligned to the company’s strategy. Analysing will reveal opportunities to streamline and/or to segment – ensuring operations are appropriate to the value generated by each area of the business. Streamlining will mean doing things in a better way e.g. remove duplicating steps, removing steps altogether (a legacy of a previous time which has never been removed), ensuring the right staff are doing the right job (e.g. shifting admin to administrators and away from managers).
Assign ownership and review and measure effectiveness
Consider what measures will prove the processes’ effectiveness. Implement the processes across the organisation, assign responsibility for ensuring that they are adhered to and reviewed on a regular basis.
Julian Rains is an experienced consultant business analyst specialising in business improvement.