Survey on Process Management

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The present article is supposed to describe the research design of the process management survey which was carried out by the Institute for General Management and Organization, Graz University of Technology, in summer 2008.

The study surveyed Austrian corporations operating in metal and machinery industry with at least 50 employees. Firms were selected randomly and for every firm one executive (CEO, CIO or quality manager) was interviewed. A total of 150 organizations were interviewed (sample size n=150). The average firm in the sample employed 478 people. 68 (i.e. 45,3%) firms employed between 50 and 250 people, 82 (i.e. 54,7%) employed more than 250 people.

The telephone interview method was adopted to obtain responses to the study’s survey instrument. Although it was a resource intensive option, it was chosen over the standard methods of administrating paper or online surveys for various reasons: (1) to be able to clarify respondents’ queries; (2) to avoid the situation whereby a busy executive or senior manager delegated the task of filling up the survey to a secretary; and (3) and to ensure that most of the responses collected were complete and usable for data analysis.

All questions on process management were measured on a six point Likert scale (1=”fully disagree” – 6=”fully agree”). In order to facilitate interpretation, scores were aggregated after data collection as follows: score 1 or 2 = “Disagree”, score 3 or 4 = “Neither agree nor disagree” and score 5 or 6 = “Agree”.

Results of the survey:

Business Process Management Conference Europe 2010

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The Business Process Management Conference Europe 2010 will take place in London from the 27th to the 29th of September 2010. Interesting case studies – such as from Rolls Royce, Deutsche Bank, and adidas Group – are announced. For further details, please visit the conference website at http://www.irmuk.co.uk/bpm2010.

The Characteristics of Process Orientation. Part 8: People and Skills

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In a process-oriented firm, people who execute the processes need to have appropriate skills and knowledge. Furthermore, knowledge of certain process improvement, process redesign and change management techniques have to be present.

  • Do process workers have detailed knowledge of how their process is executed? Process performers must have appropriate knowledge of how to execute the process, otherwise they won’t be able to implement the process design. The organization’s employees must be able to describe their business process’ overall flow. Furthermore the employees have to know how their work affects subsequent work, customers and process performance.
  • Are process workers skilled in decision-making, process improvement and problem solving techniques? Hammer (2007) states that process performers need to have appropriate skills in order to be able to deliver high process performance. The organization’s employees should be skilled in problem solving, process improvement and decision-making techniques.
  • Existence of a process redesign, project management and change management experts cadre. According to Hammer (2007), a process organization must have some people skilled in, and with knowledge of, process redesign. In a process-oriented organization, an expert cadre is available including change management, process redesign and project management experts.
  • Use of process improvement methodologies. Improving the performance of business processes requires knowledge about, and usage of, process improvement methodologies (such as KAIZEN, Six Sigma, etc.)

The Characteristics of Process Orientation. Part 7: Corporate Culture

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Process orientation is also a matter of enterprise culture. The real problems when implementing the process orientation approach are of a cultural nature (Hinterhuber, 1995). The cultural fit is an important issue since people and processes must combine to produce output (Armistead and Machin, 1997). Only a culture based on teamwork, willingness to change, customer orientation, personal accountability, and a cooperative leadership style goes hand in hand with the process approach (Hammer, 2007).

  • Existence of inter-departmental teamwork. Process-oriented organization needs a culture which values teamwork, since business processes which cut across functions must be operated by people in a team (Hammer, 2007). Teams play an important role in process management, since e.g. a large process such as order fulfillment still requires working together across functional and/or geographical boundaries (Armistead and Rowland, 1996). Also, Hinterhuber (1995) states that a precondition for successful process management is employing empowered teams.
  • Customer-focused attitude of employees. Companies have to increasingly act and think in a customer-oriented way. It is often argued that organizations that emphasize functions and hierarchy fail to focus on the customer (Hinterhuber, 1995; Schmelzer and Sesselmann, 2006; Gulati, 2007). In contrast, in a process-oriented organization, each business process has a clearly defined customer who receives the result of the process (Schantin, 2004).
  • Employees’ accountability for enterprise results. Only organizations whose culture values personal accountability will find it possible to move forward with their degree of process orientation (Hammer, 2007). “Commitment to business success” is a cultural artifact exhibited by a process-centered organization (Hammer, 1996).
  • Employees’ attitude towards change. The lack of a change supportive culture is often named when process improvement actions fail (Tenner and DeToro, 2000). As business conditions change, process designs need to evolve, and it is the task of process owners to guide that evolution (Hammer and Stanton, 1999). A remarkable part of a company’s change-capability is based on its employees (Nyhuis et al., 2008).
  • Use of process language. Process orientation is a construct which becomes “real” through communication and interaction, i.e. the construct becomes real if it is communicated by means of language. By communicating about business processes and their design, process orientation becomes a reality (Gaitanides, 2007).

The Characteristics of Process Orientation. Part 6: Process-Oriented HR-Systems

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Human resources systems have to support the process approach (Hammer, 2007). In a process-oriented enterprise, the process design should drive job descriptions. Also, incentive systems should be implemented which emphasize the process’ needs.

  • Job descriptions based on process design: The process’ design should drive role definitions, job descriptions and competency profiles.
  • Reward systems (incentive systems) that emphasize the needs of the organization’s business processes: Old reward systems based on the functional model are no longer viable in a process-based organization (Armistead and Rowland, 1996). Traditional vertical management systems pull people in one direction, whereas they should work for the interest of interfunctional processes. Therefore, management systems also need to emphasize the process’ needs, otherwise conflict and confusion ensue, lowering performance (Hammer and Stanton, 1999).

The Effects of Process Orientation on Customer Satisfaction, Product Quality and Time-Based Performance

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This article is a brief summary of the paper “The Effects of Process Orientation on Customer Satisfaction, Product Quality and Time-Based Performance” by Kohlbacher M., presented at the 29th Annual International Conference of the Strategic Management Society in Washington D.C., October 2009 (http://dc.strategicmanagement.net). The work focuses on the question whether there is a positive relationship between process orientation and customer satisfaction, product quality, time to market, delivery time and delivery reliability. The paper also investigates whether these relationships depend on firm size or on manufacturing process type (batch/line vs. project/jobbing producers). The study uses a sample of more than 120 Austrian manufacturing companies. The findings indicate that process orientation has a significant positive effect on customer satisfaction, product quality, time to market, delivery time and delivery reliability. Another finding is that firm size does not moderate these relationships. Therefore, process orientation should not be branded as an organizational approach only for large firms as the positive relationship between process orientation and firm performance also holds for medium-sized firms. Neither does the manufacturing process type moderate these relationships, i.e. process orientation leads to better performance not only for batch/line producers, but also for project/jobbing manufacturers. The paper is available here.

The Characteristics of Process Orientation. Part 5: Process-Oriented Organizational Structure

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“Structure follows process”: In the process approach, it is the process which comes to the fore, and not the existing organizational structure (Becker et al., 2004). A process-oriented organization has adapted its structure to the process view. Several authors stress that the organizational structure should be aligned with the organization’s business processes (Schantin, 2004; Suter, 2004; Gaitanides, 2007; Osterloh and Frost, 2006; Kiraka and Manning, 2005).

The Perceived Effects of Business Process Management

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This article is a brief summary of the paper “The Perceived Effects of Business Process Management” by Kohlbacher M., presented at the IEEE International Conference in Toronto, September 26-27, 2009 (TIC-STH 2009).

The paper empirically explores the outcomes of business process management by conducting interviews with a total of 44 process-oriented firms. Organizations were asked about the perceived benefits of business process management (BPM).

The effects most often reported are:

  • BPM leads to better transparency: 18 respondents (that is 40.91% of the total respondents) stated that by applying BPM, the organization and/or business processes became more transparent and understandable. This leads to better identification of organizational problems and their causes.
  • Nine respondents (that is 20.45%) reported that process-oriented organizational approach leads to clear responsibilities because of the process owner role terminating many unclarities caused by fragmented and/or blurry accountability.
  • Eight respondents (that is 18.18%) refer to the gained efficiency/productivity due to BPM. Non value-adding activities are better identified and can be called into question.
  • Seven respondents (that is 15.91%) reported that BPM brings clear structure and organizational interfaces.

Other benefits reported include improvement of product quality, throughput time reduction, better customer orientation, etc.

The Effects of Process Management: A Literature Review

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This article is a brief summary of the paper “The effects of process orientation. A literature review” by Kohlbacher M., to be published in the Business Process Management Journal, vol. 16, issue, 1, 2010. The paper examines the literature to review studies that report about the influence of process orientation on organizational performance. Studies were classified into statements without straight empirical support, quantitative studies, and case studies. A total of 26 studies were identified that report about effects of process orientation on organizational performance. Studies where positive effects are obtained are predominant.

According to the results of the paper, the effects most often reported are

  • speed improvements (most often in terms of cycle time reductions), reported by 14 studies
  • increase of customer satisfaction, reported by 11 studies
  • improvement of quality (most often in terms of product quality), reported by 10 studies
  • reduction of cost, reported by 10 studies
  • improvement of financial performance (e.g. in terms of sales, profits or profitability), reported
    by 8 studies

Cascading and Segmenting: Two techniques of Designing an Organization’s Business Process Model

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The idea of process cascades (representing internal customer-supplier relationships between business processes of an organization) was originally developed by Tipotsch (1997), Schantin (2004), and Suter (2004). The idea is illustrated in the figure below. Process A, acting as an internal customer, places an order to Process B, acting as an internal supplier. After receiving the order, Process B deals with the order and delivers the result back to Process A. Cascading of business processes is an recursive approach, i.e. process B may itself place an order to another process, and so on.

Cascading business processes

The idea of cascading business processes

The idea of business process segmentation was also originally developed by Tipotsch (1997), Schantin (2004), and Suter (2004). Other authors refer to this idea as well. For instance, Osterloh and Wübker (1999) call it “Triage”, and Gaitanides (2007) calls it “process variant”. The idea is illustrated in the figure below.

Segmentation of business processes

Segmentation of business processes

Segmentation of a business process refers to the idea of creating process variants of a business process which faces heterogeneous market and/or customer requirements. The objective is that every process variant created can then handle homogeneous requirements. Some possible examples of business process segmentation are depicted in the figure below (segmentation by degree of business case complexity, customer type and customer location).

Business process segmentation examples

Business process segmentation examples