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04.12.2016 BoD & Startups

Managing Business Process Performance.

Managing Business Process Performance.
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The trigger for this article was a recent chat with an ex- colleague from Exxon and sort of a past mentor on Performance Management for Processes. We talked about how we both have seen -over and over again- people having either various (and often conflicting) views and perception on how you measure the performance of a process or even thinking tat performance management is something relating to employ performance and nothing more.

What "is" a Process (whether a business one or not)

Besides any definition you want to give to what a process is (let's please accept this one for the moment: "a process is a series of actions or steps taken in order to achieve a particular end"), a process has

1. at least one input per step/ action
2. at least one output per step/ action
3. an environment where it takes place
4. decisions /'criteria met' as to whether the next step will be executed or whether the previous step was successful

5. (usually) a feedback- loop mechanism to manipulate/adjust the input per step/ action based on the criteria above

6. possibly time- variable behavior; i.e. the 'behavior' of the process changes in time

7. a time 'element' from begin to end of a full successful process cycle

8. resources, yes resources; people do get assigned to processes

By the way, every process should have at least one Business Owner.

So, how do you manage process- performance?

Again please keep in mind that these concepts are generic ones and yes, they can and do apply to Employee Performance Management as well.

We manage processes so we can increase their output levels and/or improve (or even simply ensure) their quality deliverables, within a reasonable timeline; who would want to improve production or quality over a hundred years? Obviously we need to put both output /productivity and quality targets for every process. Sometime sit make sense to define both proactive and reactive 'activities' so tat we can achieve great process- outcomes.

Keep all your senior management and relevant process 'leaders' or other key- executives, involved in day-to-day decisions relating to (re)defining and evaluating performance targets for the processes they own.

And you must track performance/ 'progress' of a progress in order to control it/ manage it and optimize it. It all starts by defining what to measure and setting up a 'time shot' of these data- your 'zero- measurement' or 'zero- benchmark data'.

If you have enough historical data, when you can define a more appropriate set of benchmark points.

So simply put, create KPIs for all 8 'areas' mentioned above.

What should Process Performance Management be:

Formal: A clearly defined process, one that everybody understands and accepts

Relevant & Reliable: All process- information should be relevant and reliable.

Frequent & Timely Reports: Simply put, often and consistent information dissemination.

Accountable: Everybody should be held accountable for the performance of the processes they own; but they should also be given the right authority and tools to reach the set performance targets.

Feedback/ Continuous Process Improvement.

Operational: Your employees should ideally work together on 'variable' / changing processes, so they came take day-to-day operational decisions.

Most Common Pitfalls
1. Time- variable behavior.
In business, we usually tend to measure averages instead of real-time values in a time-series manner; and this does work fine for any business process not containing variability in time . But, averages will hide any critical business process behavior. If you were able to photograph a process, what can you conclude about it if you no idea what happened immediately before or after the click of the shutter? In 2016, you can definitely 'see'/ 'audit' all time variances of your critical business processes and that might give rise to new solutions that mitigated the extreme variability.

2. Metrics without Management
This is so common and it happens to organizations of all sizes: process metrics and KPIs tat ...nobody asked for them, nobody is accountable, nobody is in charge of process performance so nobody in particular wants to see these metrics or the data.

3. Wrongly defined KPIs.
Unfortunately, defining KPIs is an art of its own and one should also make sure that even the well- defined KPIs are not outdated and irrelevant in any sense.

And you need to have the right benchmark points in order to define great KPIs.

Tip: Avoid sinking in a irksome chaotic sea of too many KPIs

4. Eternal Perfect Process & High-Efficiency obsession.

I have seen it over and over and over again: people getting obsessed with optimizing a process been completely blind that no results are achieved besides waste of time and resources.

Simple Advice: Amplify the positive behaviors of your process and minimize the negative ones. Just minimize- don't get obsessed with eliminating them.

5. Quality vs Customer desires!
Yes, of course, no one will even agree against quality of your product of services. But are your products or services derived from a relevant process, meet the customer expectations and needs. You need to have 'meet the customer expectations' KPIs for almost all your business processes.

6. Improper Deployment of Process Management tools & methodologies.

Sometimes, the deployment is not done properly, or it is done without taking into account the maturity level of an organization.

7. No Process Architecture & Process Framework.

"Process architecture is the structural design of general process systems and applies to business processes (enterprise architecture, policy and procedures, logistics, project management, etc.), and any other process system of varying degrees of complexity".

A Process Management Framework approach will make sure that you measure an as comprehensive set of metrics as possible and will also enable you to have metrics that are complementary to each other as well those that are in conflict with each other.

8. Underestimating Costs.
Measurements need tools, people to perform them, and take time. Make sure you have a budget for it. The right one so your Process Performance Management effort does not put on hold for centuries or turns into a fiasco.

9. There are other pitfalls of course....

Are there tools for it?
Yes, plenty of methodologies and even software tools out there. Kindly start by googling SixSigma, TQM, BPM (Business Process Management is a 'huge area') Modeling, CPM (Corporate Performance Management), Balanced Scorecard (BSC), EFQM model, Value Based Management etc

They all have one dominating principle/ belief in common: If it cannot be measured, it cannot be controlled" .

I am not making any profit from it and I am not endorsing it in any way, but I personally love and have been using ARIS for Performance Management. And of course that is very subjective.

And some things from my 6Sigma Black Belt days, which I kindly suggest that you might want to google -please:

  • Cp= Process Capability. A simple and straightforward indicator of process capability.
  • Cpk= Process Capability Index.
  • Pp= Process Performance.
  • Ppk= Process Performance Index.

In Conclusion.
Make sure that you start by properly defining your business processes, understand their environment, carefully set the relevant benchmark points and the correct KPIs. Also assign Business Owners for every single process.

Provide workshops to facilitate discussion, acceptable, communication and improvement- work from all business owners.

Measure, measure, measure! But make sure please that your targets, KPIs and collected data are relevant and that they contain an equal number of Efficiency and Effectiveness Metrics. This is why a Process Management Framework approach will almost guarantee that you measure an as comprehensive set of metrics as possible.

This will also enable someone to include metrics that are complementary to each other as well those that are in conflict with each other.

All that aside, use your brain, exercise critical thinking in your Process Performance Management. I trust that you all understand that the electric light did not come from the human race's continuous improvement on candles.

Thank you and Good Luck,
About the Author: Spiros Tsaltas, a Top-Tier Management Consultant and a former University Professor (RSM MBA, CUNY, etc), is a seasoned Technology & Operations Executive. Spiros has hands-on experience on setting up all sorts of Startups both in the US and in Europe. He is an active transformational leader and strategist with extensive experience on Boards of Advisors & Boards of Directors. He is currently assisting a couple of Ghanaian and other West African StartUps and SMEs with the setup of their Boards and Strategy items.

Spiros welcomes any feedback/ comments/ remarks/ suggestions via your email message [email protected]

© 2016 Spiros Tsaltas.