“We have huge potential to save money there” – with these words the managing director sent his process manager to the Customer Services Department. The bone of contention: In this company seven staff members processed customer queries. That looked like too much work time, too much man power and too little value-add. The process manager rolled up his sleeves and got to work. From now on the service hotline was no longer manned by four staff members but by only two. Callers were no longer assisted directly but passed straight on to specialised departments – without first looking at their service request. Excellent service to the customer was replaced with the minimum of legally required responses. The true cost for these changes became clear after a year: Three positions were eliminated and 5% of customers lost.
Working faster at less cost: More and more companies want to streamline their work processes. However, they save money in the wrong places. Cheaper is not always better, when quality is negatively impacted and features of products are relinquished – or customers miss service departments which have up to now been busy as bees. That is why experts recommend to view the profitability of process changes not only through the lens of savings. “Again and again I advise companies to keep client needs in mind”, explains Michael Popp, a specialist for process management at next level consulting. Because winning back clients can sometimes cost much more money than an improved process is able to save. These are the seven common mistakes businesses should avoid when improving the efficiency of their processes:
First mistake: Saving money in the wrong places
Some processes are profitable to companies only in a round -about way. “They make only little direct profit”, explains Michael Popp, “however they retain clients – and that can be a real asset.” Cutting back these processes can lead to a rude awakening. Another “savings trap” is the rigorous retrenching of staff. Letting go of too many staff members also means a loss of know-how. Having such low staffing levels also has a negative impact on innovation. When everyone is busy with day-to-day activities no time is left to develop new products.
Second mistake: Focus on selected departments only
Many companies are caught up in thinking in terms of departments. Each department has its own budget, its own staff and its own savings directives. As a consequence each department thinks (and improves) for itself. This “thinking-in-the-box” is in the way of success of process management. On the one hand saving money in one department can lead to spending more in another, expanses are simply passed on. On the other hand customers don’t think in terms of departments. They expect good service for example – independently of which and how many departments are involved in rendering it. That is why Michael Popp recommends to look at processes as “value chains”, that go beyond department boundaries. “For example when filling a customer order typically sales, the warehouse, accounting and customer service are involved”, he explains, “Approaching a process with this bigger picture in mind can make the kind of positive impact that the customer can feel as well.”
Third mistake: No one is responsible for the whole process
In many companies no one is accountable for cross-functional processes. ”For effective process management companies need a responsible person with the right competencies and authorities to take charge of an entire process across all involved departments,” explains Michael Popp,” This person collects process performance indicators across all departments, develops improvement measures and checks if they have the desired effect.” This person is called a process manager. His role is different from that of the process sponsor who could be the executive director. The sponsor carries strategic responsibility for a process and expects value to be added through process changes. In practice this cooperation looks like this: The process sponsor realises that a work process needs to be improved for strategic reasons. For example customers may complain about the fact that quotations have become less reliable. The sponsor initiates change and charges the process manager with improving this process. “It is important that process sponsor and process manager have a good understanding of their respective tasks and work well together,” explains Michael Popp. Otherwise companies often fail to manage such a process switch or they lose the required momentum for cross-departmental changes.
Fourth mistake: Wrong indicators
Process management is meant to pay for a company, no question. However many companies see reducing costs as the ideal solution for higher profits. They only measure costs when evaluating processes – and land on the strategically wrong path. “Businesses should look at processes always also through the eyes of the customer”, says Michael Popp, “The most important question is: How can we improve the benefit to the customer?” Benefits can be improved time management, defect rates, quality, throughput rate or customer satisfaction. Indicators for customer benefits can put costs into perspective. It might pay to accept higher costs for a process – if the company will generate a higher turn-over through increased customer satisfaction.
Fifth mistake: Fuzzy or unclear process boundaries
Changing all processes at the same time – this will most probably spell failure. Extensive processes are hardly manageable. Professional process managers set their process boundaries wisely. They trim down the process that is being worked on to a size that is better to handle. However, Michael Popp warns of trimming the process too much because in that case the impact will be negligible. Referencing the customer can point to the solution: Which purpose and which benefits does this process offer from the customer’s perspective? Here is the example of the customer care hotline again: To only improve the process of accepting the telephonic complaint of a defective component will not be enough from the customer’s point of view. The customer wishes for a fast and competent response to his complaint. On the other hand including the whole process of repairing the component and the accompanying book keeping would be such an unwieldy process that it would be impossible to really optimise in one go.
Sixth mistake: Avoiding conflict
Not every process change will be greeted by applause by affected staff. Not only employees but also members of management resist change. “Sometimes process sponsor, process manager, staff and department heads just don’t find common ground”, explains Michael Popp, “For example heads of departments might reject planned changes.” Such conflicts should never be swept under the carpet by process managers – even when they cannot resolve this difficulty. “In such a case top management will have to make decisions and issue directives, on how work processes need to be adapted from a strategic point of view and how strongly each department needs to orient itself along the newly-developed processes “, says Michael Popp.
Seventh mistake: Picking the wrong strategy
Many businesses that kick-off a process management process are looking for a genius one-stroke solution: In one heave-ho process they want to turn almost all processes into more profitable ones in just a short time. Such big interventions can get a company moving and yield quick, tangible results. But: They can also leave staff rattled, their resistance then jeopardises the desired success. That is why companies should consider a strategy of many small steps: A sequence of small changes is more easily accepted by employees. It is also easier to experiment with small steps. In addition an organisation remains more flexible with this strategy. If small step process changes play out differently than planned, it is easier to take a step back and bring in corrections. “It is important that companies think long and hard about their strategy and then choose their approach with care,” explains Michael Popp.
Here you will find an overview of our training and further education offers.
The journey begins here
We regularly send you news on the topics of project, process, change and agile management.
