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Business Process Monitoring and Continuous Improvement

By: Jonny Baker, Senior Manager, Strategic Management Consulting Services

The following is part four of a four-part series on business processes, including the need for clarity, proper design, appropriate communication, and commensurate monitoring. 

Business process monitoring is often the key area of failure for organizational processes. People love to create, some people even love to communicate, but very few people love to monitor processes, and even fewer love to monitor employees. Why should we monitor business processes and our employees, especially when it comes with little to no reward and takes significant amounts of time? If you think you do not have time now, you’ll lose even more time if you don’t monitor your process and employees.  When monitoring is performed correctly, it will be much less about chasing your employees down and more about sharing in rewards with employees.

Our previous installment, part three of this series, reviewed the importance of communication to the new business process design and rollout phases. For the process change to be successful, appropriate monitoring of the actual process and those employees affected by the process must be planned, implemented, and maintained. Business owners are very good at identifying top talent from a skills perspective, but successful talent leaders also understand all three necessary process components; design, communication, and monitoring. These leaders must work to ensure all new processes are implemented appropriately without a heavy hand from upper management. This will be a hard task for those leaders, but it will be meaningful and will make a big difference in your organization and overall business functions.

CREATING A HEALTHY MONITORING ENVIRONMENT

Feeling the pressure yet? The monitoring process must be shifted from the notion of a high school principal chasing wayward students to an iterative and informative process where both management and employees can be open and honest without fearing negative ramifications. To do this, leadership must work diligently to create an environment where people are free to communicate authentically. They must be quick to reward those employees that vocalize legitimate concerns and beneficial ideas. This aspect of open communication is especially critical in the early phases of rolling out a new process change. Only by emitting encouragement, rather than admonition, will a leader be able to setup a monitoring process that will be successful long term.

IDENTIFYING THE PROCESS OWNER

The business process, no matter how perfect and well thought out, will not sprout wings and monitor itself. The process owner is the one responsible for ensuring that teams, systems, and performance follows in line with the process. Additionally, top management must identify the ultimate process owner as the individual with the authority and responsibility to enable him/her to successfully implement or monitor the process change. Similarly, if two people “own” the process, then no one really owns the it. Neither co-process owner will be setup for success, nor will the company. If your business process is too broad for just one employee to own, it may be worth revisiting in order to split it into areas where ownership is clearly defined over the separate aspects. This will allow the employees and teams affected by the process to have a clear and singular point of contact when faced with questions or concerns.

PROVIDING CLARITY AND DIRECTION

As company leaders, it is our responsibility to provide clarity and direction to our employees. A great first step towards providing this is to identify key performance indicators (KPIs) that allow management, teams, and employees to know what items will be measured. From there, dashboards and scorecards can be produced and used to identify how the process is performing against those measures. In the early phases of the new process, we often recommend that company management and leadership establish the processes for measurement, as this will lead to clarity across your company and teams. By simply defining these KPIs and agreeing upon them with the employees affected, you have created clarity and a tunnel of focus. In later iterations, we recommend adding incentives that allow your employees to benefit as the company succeeds due to the new processes implemented. This will allow the tunnel of focus to align with the rewards to follow, i.e. the carrot from our previous article part three.

THE RABBIT PRINCIPLE

One of the most important components of process management involves having big ears and a small mouth, or the rabbit principle. The rabbit principle states that management can do more by listening, asking, and coaching, rather than by stating, telling, or doing. As teams and your employees find new and more efficient ways to improve processes, management would be mistaken to not listen. If the organization can meet or exceed the initial control objectives through a reiteration to the process, leadership and employees should be open to this. As an employee, it is hard to think of a more frustrating situation than one where you are expected to bridge gaps and follow processes without a platform to voice thoughts or concerns. Good management and leadership will never put their employees in such a position where they have no voice.

REVISITING TO SAVE YOURSELF TIME

Even better, those charged with governance should monitor those monitoring. As part of this monitoring, processes and leaders monitoring those processes must be slated for review periodically. It is hard to definitively say how often processes should be reviewed. Frequency should be dependent upon how mission critical the process is to the success of your organization and, thus, should be slated for review accordingly. A rule of thumb in the business world is that no established process should be evaluated more often than every six months and no longer than every three years. If management reviews the process too often, the team won’t be able to find its rhythm. Conversely, if the review is to seldom, the business process may run rampant. If your company’s processes are outside of these loosely defined bounds, then they likely are not continual processes and will require being adjusted accordingly on your monitoring list(s). Often, we hear, “we just do not have time to monitor these processes,” but we have seen that organization executives really don’t have time not to monitor critical processes. Therefore, it is important to have process owners who manage the day-to-day aspects of the process.

KHA Management Consultants offers organizational optimization services that can help set the stage for cohesive teamwork and effective communication across your teams, both vertically and horizontally across the organization chart. We help pinpoint those key performance indicators for your entity and help develop the actions needed to review those processes to insure your company remains successful.

Thank you for reading part four of this series. We look forward to a new series on Strategic Planning next.

KHA Management Consultants, the consulting wing of KHA Accountants, PLLC, based in Flower Mound, Texas, is always looking for key clients ready to take their business to the next level. If you have a desire to improve, take the first step toward success with the process experts, contact us at 972-221-2500.

 

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Communicating the New Business Process

By: Jonny Baker, Senior Manager, Strategic Management Consulting Services

The following is part three of a four-part series on business processes, including the need for clarity, proper design, appropriate communication, and commensurate monitoring.

Most every successful business organization we have known from the last century has ceased to exist; what steps are you taking to make sure you do not make this list? As leaders, we must communicate the bigger picture of the organization to every person, and our business processes must be connected to that goal. Otherwise, the process will fail and possibly our people and organization with it.

Previously, we discussed process design and the importance of employee buy-in. If employee buy-in is handled appropriately in the design phase, the communication and monitoring phases will be easier. To successfully communicate a business process to the organization, we must ensure the entity is ready for the communication by answering some critical questions.

These questions include:

  • Do we have answers to our organization’s key strategic questions, such as, “What do we do?” and “How will we win?” “Can our teams reiterate the answers independently?”
  • “Has buy-in been obtained from all levels?”
  • “Is communication tailored to the organization appropriately?”

FIRST THINGS FIRST – BIGGER PICTURE

Typically, company leadership is good at seeing the big picture, while employees are good at getting things done. When these two groups are disconnected, unnecessary work is created for both. As a result, the business and its people are negatively impacted. These are the types of things that take away from the bottom line, the bonus pool, and the mission of the organization. Assuming the organization has answered the primary strategic questions and has aligned organizational goals to team and individual goals, the business process simply needs to be vetted against those preestablished strategic criteria. For example: if your organizational mission is to be a health-minded purveyor of organic goods, it might not be a good idea to offer genetically modified ice cream with 672 grams of sugar. Aren’t you glad we caught that potentially costly misalignment? You are welcome!

BUY-IN FROM ALL LEVELS

Before any new business process is to be implemented, a couple items must be finalized. First, we must ensure all teams affected by the process are on board and understand the need for the change(s). Also, employees must have a clear path to success as it fits their specific role: Also known as, what’s in it for me? To accomplish these objectives contextually, a series of individual meetings may be needed to review the specifics of the business process to allow those affected to voice concerns. Conversely, these meetings may be team meetings where concerns are voiced and worked through. A combination of both individual and team meetings is likely the best practice to ensure all valuable input is obtained before moving forward. People want to know how things will affect them. We all want to know this in some way and need to answer the following questions for each employee:

  • “How will this change affect the employee?” (Translated: How much more work is this for the employee?)
  • “How will this change benefit the employee?” (Translated: Is there a carrot at the end here?)
  • “What will happen if they choose not to follow this change?” (Translated: Is there a stick involved?)
  • “What will happen if they choose to follow this change?” (Translated: They like carrots, how many can they get?)

Even if the leadership team does not completely agree with the process change and rollout, they must be unified and aligned. If one divisional leader undermines the process to his team, do not expect that division to support the business process change or even value the change process. And, why would they? Employees have been given permission to misalign with company leadership or at least the objectives the executive team agreed to support. When applied correctly, disagreement and conflict can be healthy. Healthy organizations have plenty of positive disagreement and conflict. However, negative misalignment must be ferreted out, corrected, and timely remediated. Once the leadership team has decided to support the change, leadership must be unified in its support. We should have buy-in from all key affected groups and individuals, other than that one individual out there on the periphery that will let you know they did not buy-in. , we can chat offline about ‘that’ employee. We need to have a well-documented process, both visually mapped and written in a narrative form for when ‘that’ employee and any new employee comes around. Once these are complete, we are ready to communicate the process to the organization at large.

Communication is vital to the success of any initiative. After the team has done good work, the success needs to be lauded to the teams and organization at large. This will help reinforce a culture focused on the strengthening of controls, creating opportunities for efficiency, and saving its scarce resources. After all of this, many times a change team fails in the rollout space by not giving the revised process the space, context, or emphasis it warrants.

TAILORED COMMUNICATION (to communicate the importance to the team—create that team attitude—we are making this change because it will help all of us)

We must create space and context for the revised business process to be communicated. The appropriate communication for a business process is specific to each organization. The primary method of communication for the new business process almost never involves email. When a new business process rolls out, it is very important the affected teams are involved. Equally critical, the individual responsible for monitoring the process must deliver the communication, and other teams impacted must be supportive or at least expectant. Take the 30-minutes to do this right. Why would you spend all this time to watch the business process become less and less relevant as other things compete for attention in email inboxes? During this initial 30-minute meeting, which should be held in a space large enough to accommodate key employees, we should cover:

  • Why the change is needed,
  • Where documents will be located for future reference, and
  • What supporting trainings will be held to explain the new business process.

If the initial communication is done well, it can create excitement about the business process change that does not taper off. This will lead to continuous improvement in the organization that is driven by the most key employees of all, the end-users.

The newly launched business process is ready for monitoring. Process Monitoring and Continuous Improvements will be covered in our next and final installment. Thank you for reading this third installment.

KHA Management Consultants, the consulting wing of KHA Accountants, PLLC, based in Flower Mound, Texas, is always looking for key clients ready to take their business to the next level. If you have a desire to improve, take the first step toward success with the process experts, contact us at 972-221-2500.

 

 

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Business Process Design

By: Jonny Baker, Senior Manager Strategic Management Consulting Services

The following is the second article of a four-part series on business process management, which includes the need for clarity, proper design, appropriate communication and commensurate monitoring.

I remember a time when a construction company missed out on a huge opportunity because their credit approval process hinged on one person with limited to no oversight. The result:  The buyer went elsewhere because they did not feel valued – all based on the credit approval process, both in its administration and expediency.

At KHA, we help our clients out of these kinds of situations by advising successful business management processes. We begin our conversation with the question, “How have you designed, communicated and monitored your processes?” Please see last month’s article about the first step in process management, [the need for process clarity], where I discussed the need for clarity first before we can focus on process design.

If business process design is done right, we can eliminate company waste, internal control weaknesses and mediocrity across the organization. Process design is perhaps the most critical phase, as it all starts here.

When entering the process design phase, you may be tempted to think it would be easier to have something to start with and turn this project into a redesign. You would be wrong. A redesign is typically more difficult due to precedent that has been well cemented into the culture of the organization. For the rest of us who can only dream of starting a process design from scratch, we fall into the redesign bucket. This is what change management is all about, and if you have gone down this road before as a driver of the process redesign or as a participant, our sincere and heartfelt apologies go out to you.

Whether the process is from scratch or a redesign, both processes have three main stages: buy-in, comprehensive consideration of the current state and a well thought out future state. A good visual example of these states is Kurt Lewin’s Change Model.

OBTAINING BUY-IN

No process can change without a sense of urgency: why do you think people are so deadline motivated? Each of these redesign phases takes time, some more than others, and all those involved will certainly experience challenge, if not pain. From the CEO to the end-user, we must strive for clarity and obtain buy-in at every level to ensure the design, communication and monitoring of the process is commensurate to what is warranted. If we do not, we will be looking back on this as a fond memory where we learned how comical the workplace and its inhabitants can be.

MEASURING THE CURRENT STATE

“If it ain’t broke, don’t fix it.” Well, we are here, so it’s broke. But, how broke is it?  Great question, and to answer it, we chart the current state. To identify what we are up against, we typically perform walkthroughs and map every step along the way. A walkthrough includes physically observing the current process being performed with the team at all levels and mapping each step. This is also a fantastic tool for obtaining buy-in, and the leader here must listen well. One of the more critical components here is the visual process map, such as those that can be drawn in Microsoft Visio. Most people learn visually, and, even those that do not, love pictures. This map also helps us physically chart suspected weak points, overlapping duties and even possible ways to rearrange the process to better suit team and company needs. Measuring the current state in such a visual manner is a key tool to use to stimulate discussion and obtain buy-in.

FUTURE STATE: MELTING THE PROCESS

We know the current state and have considered it completely; we now look to change the process and shape the future state. Yes, it is time to begin melting the process. We understand the existing process and have heard from key personnel, including those involved in performing and monitoring. The melting process helps us identify weaknesses in the process such as inefficiencies, internal control failures and bottlenecks. These deficiencies are usually impossible to pinpoint in a sea of words but tend to pop out in that visual process map tool. Who said picture books were not good for us?

FUTURE STATE: CHANGING THE PROCESS – FACILITATION

It is time to dream again. If this process could be everything we want it to be, what would it entail? We are reforming the process here, identifying the critical pieces that must be included. (Of note: a key mistake that can be made here is to design the new process without buy-in from the same teams we visited with to understand the current or preexisting process.) Collaborative whiteboard sessions here are helpful, and it is useful for the consultant or project manager to have ideas, but they must remain objective and flexible. Otherwise, the team can smell your premeditated agenda a mile away, and you will be losing credibility. This objective leader must be able to take the ideas good and bad and filter them while maintaining a feeling of involvement and inclusion from key constituents. It takes a special ability to be able to objectively arrive at the right answers, while still engaging and including key players. It is typically easier for an outside third-party to do this; they have less bias.

FUTURE STATE: REFREEZING THE NEW PROCESS

Alas, we converge on what the ideal process should be, based on the systems, people and needs involved. The new process is mapped and tested extensively. Once the team is comfortable with the new process, and they are comfortable with test results, the visual map should be used to document an accompanying narrative. This narrative provides commentary that can help solidify and clarify each intended action item; eliminate the wiggle room, you say?  Documentation must be palatable and easy to understand for the end-user.  If not, expect yourself to be back measuring the current state soon. The process has now been refrozen in the improved state. Depending on the context, it is time to get the necessary approvals and set a launch meeting.

We are ready for the next stage – to communicate the process. This will be covered in our next installment. Thank you for reading, and look forward to part three of this series on process communication next. We cannot wait!

KHA Management Consultants, the consulting wing of KHA Accountants, PLLC, based in Flower Mound, Texas, is always looking for key clients ready to take their business to the next level. If you have a desire to improve, take the first step toward success with the process experts, contact us at 972-221-2500.

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The Necessity for Clarity in Business Process Management

By: Jonny Baker, Senior Manager, Strategic Management Consulting Services

The following is the first article of a four-part series on business process management, which includes the need for clarity, proper design, appropriate communication, and commensurate monitoring.

We meet with executives and owners of small to mid-size businesses daily, and often we hear things such as, “We have communicated the process, but it still is not being followed.” For instance, one department makes commitments without communicating to another department that is critical to customer delivery, leaving the delivery team disgruntled, overbooked, and frustrated, and the customer feeling the effects. Or, the collections process for past-due customers has continued to drag on, resulting in lost cash flow, even though management has reviewed the expedience of the issue at hand, ad nauseum.

When you work with people, you have processes not being followed. This creates inefficiencies and ineffectiveness that hit the bottom line both on the financial statements and company morale.  Some might say these issues are being driven by human behavior seeking the path of least resistance, and others might say the employee(s) should be let go. When consulting with our clients, time and again, we see that 99% of the time the problem is an operational issue and not a people problem. We have the solution: design it, state it, monitor it, and reward it.

A CLEARLY DEFINED PROCESS BRINGS THE PARTS TOGETHER

An organization is effectively made up of people, agreements, and processes. The fundamental driver of connectedness within any organization is a clearly defined process; when teams are disjointed, working in silos, or lacking clarity regarding company goals and mission, the process breaks down, and fingers start pointing.

The question we first ask our clients is, “How have you designed, communicated, and monitored your processes?” The answer proves quite informative, as it usually highlights where the process breakdown has occurred. Process breakdown is the overarching term to define a process that is not working, and the specific breakdown point can be identified within one of the three key categories–proper design, appropriate communication, and commensurate monitoring for process effectiveness.

PROPER DESIGN

The proper design requires the business process to be melted, reformed, and refrozen (Kurt Lewin Change Model- https://www.mindtools.com/pages/article/newPPM_94.htm). The initial or current process must be fully understood through performing walkthroughs with key team members and visual mapping. Both of these procedures allow us to understand where potential issues and breakdowns may occur. Next, the ideal process is identified, documented, and formalized; the new process is visually mapped looking for any potential holes created or any lingering issues from the initial evaluation that were not fully addressed. Finally, once the team(s) are comfortable with the revised process, and objectives have been met, it is time to refreeze the process in its newly minted condition. Before a process can ever be followed, scalable, or replicated by a team, it must be formally and clearly documented.  Many organizations are lacking formal documented processes, leaving the company in a high-risk situation if something were to happen to that key individual or if that key individual decides it is time to leave, possibly even for a competitor. Without formally documented processes that are referenceable, there is no hope of moving into the communication and monitoring phases effectively.

APPROPRIATE COMMUNICATION

There are other organizations that have process designs and schematics well documented and worthy of the Smithsonian museum; the problem is these processes are never followed or even respected. What went wrong? Likely, the schematic designer or process writer failed to obtain the appropriate buy-in from the team using the process, and thus ownership of the process fell to the individual who drew it, rather than to the end-user. Other times, the team has been considered and even had significant input into the design, but the communication process was mishandled. If the appropriate emphasis is not placed on the necessity for the organization and its constituents to follow the process, the best-case scenario would entail the team having had a good time meeting together. Oftentimes, the communication process is mishandled when the primary communication is handled over email, which is the worst form of communication for many things, especially for processes.

CONTINUAL MONITORING

Other times, the design is immaculate, and the communication is flawless from buy-in to rollout; but the excitement that once captivated the team wanes, and we find the team back where they started. What happened? It is likely that monitoring was lacking, or worse, non-existent. Without enforcement, including incentive, we cannot expect teams to follow processes that add internal control infrastructure, save them time in the long run that cannot be seen in the near-term, or allow their work to be easily followed. This does not have to be carrot or stick; dependent upon the company and process, the monitoring should be tailored accordingly. Sometimes the monitoring of the process necessitates daily review, other times weekly check-ins, or possibly a monthly deep dive team review; regardless, the monitoring process must be consistent and persistent so that expectations are clear for those involved.

There are many reasons processes are ineffective, and almost always the breakdown is in either the design, communication, and/or monitoring phases. It is the responsibility of leadership to take the time, allocate the resources, and set the expectations for their teams to be successful. A good start is to revisit the procedures in place for process management and ensure the proper design, appropriate communication, and commensurate monitoring components are included and followed.

We are ready to work on process design and redesign, which will be covered next. Thank you for reading. Look forward to part two of this series on process design next month.

KHA Management Consultants is a boutique consulting firm based in Flower Mound, Texas, and is always looking for key clients ready to take their business to the next level. If you have a desire to improve, take the first step toward success with the process experts, and contact us at 972-221-2500.

 

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