My shock and disbelief must have shown on my face. Paul burst into laughter as he stood beside me while I read the e-mail. I re-read it a couple of times to confirm that I hadn’t misread it. But I hadn’t. The instructions were quite clear and succinct:

“Hi Paul, you will still need to send in an empty envelope for audit purposes.”

Paul was one of my managers. He had been chasing up an expenses claim which was overdue for payment. Following his enquiry to the team in the Finance department that processed expenses reimbursements, he had received an e-mail asking if he had sent in the formal white envelope normally used to attach receipts to expenses claims. He replied, clarifying that his claim was for mileage only and, hence, he had no receipts. The subsequent response he got was what I now held in my hands.

Paul himself had been so astounded by the e-mail that he had printed it off and handed it to me moments earlier, saying, “Hey Sigi, take a look at this. I bet you didn’t realise how messed up we are when you joined the company!”

He was right. I didn’t.

I had joined the organisation as supply chain director a few weeks earlier, and the period since then had revealed a catalogue of problems I hadn’t expected to find in a FTSE 100 business.

The e-mailed requirement to send an empty envelope was indicative of the sort of challenges to be addressed with many of the business processes. The expenses process wasn’t our biggest priority, but it had me thinking all the same.

It’s surprising how many established organisations limp along with ineffective business processes. Sub-optimal processes have ripple effects in an organisation, creating further ineffectiveness and inefficiencies that drain resources. It’s not a coincidence that robust business processes are one of the defining hallmarks of best-practice organisations; second only to effective leadership and progressive people-management approaches. These organisations understand the severe impacts ineffective processes can have, some of which may not be apparent.

Paul’s frustration, masked by a healthy sense of humour, is an example of the debilitating impacts poor processes can have on employees.

This adds up with other sources of dissatisfaction at work, and people eventually get fed up and demotivated. Such influences damage the psychological contract between employee and employer, and, in the worse instances, employees leave. Especially the good ones. Those that don’t, simply stay to ‘turn the handle’; demotivated staff never give their best.

Poor employee morale and low productivity are just two by-products of ineffective business processes. More significant is the poor product or service quality that customers may experience as a consequence. This is listed as one of the most common reasons for business failure by the UK Insolvency Helpline. Also, Accenture’s Global Customer Satisfaction survey identified service quality experience as the leading reason customers leave a provider; more important than price. Products and services are outputs of business processes, and ineffective processes will always create such undesirable business outcomes.

The empty white envelope may have cost only a few pence. But a hundred of these make a pound, and a hundred of those hidden in various nooks and crannies of an organisation’s operation add up to massive waste – whether it’s envelopes, raw materials or man-hours. It’s a cost no organisation should carry.

So what can businesses do to avoid such costs? Process discipline. Pure and simple. Effective and efficient operations are only sustainable with effective and efficient processes.

Consultants and software houses that peddle process management or business improvement systems are forever promulgating the need for “Process Excellence”. But most business processes do not need to be ‘excellent’. All that is required is understanding and effectiveness in process thinking, and discipline in defining and enforcing processes.

Oh, yes, and a massive dose of common sense.

When a Purchasing Manager in an organisation can approve purchase orders to the value of £100,000 but contracts for £50,000 need to be approved by the Finance Director, that’s a lack of common sense, not a lack of process excellence.

Such senselessness plagues many organisations and routinely creates waste and other intangible problems.

Of course, process discipline is not appropriate for all situations. For example, a small entrepreneurial business ramping up growth through creativity requires a more fluid modus operandi; process discipline could stifle growth in this situation. But for mature businesses, process discipline in the key areas of an organisation is a pre-requisite for sustained success.

Organisations should start by identifying what those key areas are. They may not solely relate to the company’s products or services. The empty envelope indicates how other areas may be just as important, especially those related to employee or leadership issues.

Process-mapping should then be applied to each critical business activity, starting with a clear definition of the desired process outcome: “What do we want as the output of this process if it works well?” Based on that, the process definition can begin, covering;

  • The specific process steps
  • Organisational responsibilities for each step
  • Key inputs and outputs of each step, and the related acceptable standards, and
  • Any associated systems or technology enablers.

It may also be necessary to specify the Process Leader – a single individual in the organisation responsible for the overall process. This is particularly useful for multi-functional processes or organisations with unclear lines of accountability.

Many process definition efforts fail to deliver the robust processes desired. One of the chief reasons is that the personnel involved get too carried away and start adding process steps that add no value to the defined process output. Case in point: sending an empty envelope adds no value whatsoever to the desired outcome of reimbursing Paul for his business expenses.

Process definition must be ruthless to be effective – only activities that actually add value to the defined output should form part of a process; all ‘nice-to-have’ elements must be canned as they are wasteful and, thus, drain value.

A critical step in developing good processes – one often overlooked – is to walk the process. This means simulating the process flow as it would operate in real life. For example, pretend you have a real sales order to test out your draft order management process; or a real production works order to test out your draft manufacturing process; or real materials order to test out your draft kitting process. And even when you think your process is pukka, don’t rush to implement it; instead run a real-life pilot first. These last two steps usually flush out process flaws that would otherwise go unnoticed. 

Documenting the process in a formal ‘Process Specification’ is the final key element of robust process definition. Process specification documents should be communicated to people in the organisation who are impacted by the processes. Process specifications should also be document-controlled, with recorded issue numbers, dates of amendments and issue authorisation. Best-practice process management demands that process specification documents are stored electronically, in a central location accessible to all relevant personnel. This ensures everyone always views the same latest version.

Some important tips for successfully defining and implementing effective business processes;

  • Processes should always inherently reflect the pertinent organisational policies, strategies and values. And adherence to defined processes should be rigorously enforced across the organisation, augmented by appropriate leadership behaviours. This ensures operational practices are in line with the organisation’s ethos.
  • Process development efforts should involve the key stakeholders impacted by the process. The people doing the job are usually a key source of tacit knowledge that may be lost or overlooked. But the process development effort must not become a democratic activity; ultimately someone, usually the process leader, must make key decisions on the process design when there are opposing views.
  • Keep it simple. People find it easier to understand and follow simple processes. Most ordinary folk are turned off by process specifications that contain too many formal flow-charting jargon or fancy symbols. This can be another effect of process development personnel getting carried away with the task and forgetting the objective of the task.
  • Widely publicise the launch of a new or amended process, so people are fully aware.

Even after all this, an organisation might still be beset with problems. Why? Because effective processes are not a panacea; they simply optimise an organisation’s operations and working practices.

Designing out Paul’s empty envelope from the expenses process would not save the business from the ravages of the economic downturn. Neither would it save the business from losing market share if its product or service started to become less valued by the customer. And it would not stop Paul from leaving for another job elsewhere if he really wanted to.

These examples of factors that affect business performance are largely beyond any organisation’s control. However, effective processes can usually help businesses foresee or negate the impacts of such events.

In the end, having robust processes is just one aspect of building and nurturing effective and efficient organisations. Sadly, it is an aspect many businesses still overlook.

© Sigi Osagie 2010

Adaption published as “How To Fix Inefficient Processes” in International Federation of Purchasing & Supply Management Ezine, Jan. 2011