Applying The Three Levels of Performance

How Does Strategy Relate to Process Redesign?

Introduction

There are a wide variety of models for strategy formulation, strategy execution, and process redesign. How do all three areas link together? 

How Would You Grade These Performance Improvement Programs?

To optimize performance, companies need to improve all Three Levels of Performance:

     1. The Organizational Level (where strategy is established)
     2. The Process Level  (where workflows are streamlined)
     3. The Job/Performer Level  (where individuals do the work)

Typical improvement campaigns (i.e. customer focus, process redesign, TQM, cost reduction, cycle-time reduction, Lean, Six-Sigma) focus on only one level. As a result, these efforts do not optimize overall results. In fact, they can do more harm than good if the “fixes” in one area create unintended, negative side effects elsewhere.

Breakthroughs occur when leaders address all Three Levels of Performance and manage the whole system, not just tinker with a few of its parts.

With that in mind, how would you grade the following four performance improvement programs? (The names of the actual companies have been changed) ...

Overcoming the Seven Deadly Sins of Process Improvement

Introduction

As with other performance improvement efforts (TQM, self-directed teams, Six Sigma, Lean, Just-In-Time inventory, etc.), most organizations can point to the results of their efforts: cost savings, quality improvements, and cycle time reductions. However, there has been more sizzle than steak, more activity than results. In our experience, most failures to realize the potential return on an investment in process improvement arise from committing one or more of the seven deadly sins.

Sin 1: Process improvement is not tied to strategic issues. One company in the food business was proud of its seventy cross-functional process improvement teams. When asked about results, executives mumble vague homilies about “culture change” and “empowerment.” Noble pursuits, no doubt, but what’s the increase in shareholder value? Almost every one of an engineering conglomerate’s dozens of business units has documented its processes. When asked how they’ve used these “maps,” they admit that they haven’t. Too many process improvement teams are convened to address self-selected “backyard” issues that are not  ...

The Right Way To Design An Organizational Structure

By Geary Rummler and Alan Brache

Designing an organization structure is more than naming, arranging, and filling the boxes on the organization chart. While clear reporting relationships are administratively essential, getting products and services to customers requires an organization structure that focuses on the nature and flow of work.

Toward this end, first determine what work needs to be done and how it currently gets accomplished. Next, design the way it should be carried out. Only then can a useful organization chart be created. Form (structure) should follow function (processes).

The One Thing You Must Do Well to Maintain Powerful Processes

Introduction

The right measures can trigger dramatic improvement in the performance of cross-functional work flows.

In fact, if you want to single out the one management act that can make the greatest contribution to successful and enduring process management, it would be developing and installing a process-based measurement system. Unless you do that-and do it well-you don’t have a prayer of maintaining powerful processes.

Good measurement is crucial for a variety of reasons. Let’s start with the fact that it signals what’s important. That positions people to get their priorities straight. It focuses everybody’s efforts on what counts the most. It makes it possible for them to evaluate their performance ... to make improvements ... to allocate their time and effort to produce maximum payoff ...

How to Develop Sound Measures

Performance—that is, output—should be measured at all three levels (Organization, Process, Job/Performer).

Follow this sequence when developing your metrics at the different levels:

1. Identify the most significant outputs of the organization, process, or job. ...
2. Identify the critical dimensions of performance for each of these outputs. Critical dimensions of quality include accuracy, ease of use, novelty, reliability, ease of repair, and appearance. Critical dimensions of productivity include quantity, rate, and timeliness. Critical dimensions of cost include labor, materials, and overhead.
3. Derive critical dimensions from the needs of the internal and external customers who receive the outputs and from the financial needs of the business ...

5 Key Steps in a Process Improvement Project

1. Determine the Critical Business Issue

You shouldn’t pursue Process Improvement because it’s conceptually logical or a noble objective; you should do it to solve a high-impact problem. The driving force of a Process Improvement project is a Critical Business Issue (CBI) that may be centered on revenue, quality improvement, cost reduction, and/or cycle time reduction. (Since most of these variables are in the mix, you need to agree on which one or two are the primary motivations for the project.)

Once you reach consensus on the CBI, the individual championing the effort should lead the Process Improvement project definition, which results in:

• Project GOALS, including not only metrics around the CBI, but other measures of project success (e.g., role clarity, systems installation, culture transformation)
• Process SCOPE (start and stop points)
• Project CONSTRAINTS, which are the guardrails within which the new process must function. For example, your headcount and safety policies may be givens. Or, perhaps the process must use the enterprise computer system that you just spent $4 million to install.

Balance The Three Process Components: Plan, Perform, and Measure & Manage

A process requires three separate but interdependent efforts. First, there’s the need for planning. Next comes performance, or execution. The third effort involves measurement and management support. The power of the overall process depends on a healthy balance between all three.

Historically, most of the effort invested in process improvement has been spent on component #2: Perform. Organizations polish their process execution to a high sheen. They eliminate unnecessary steps. They reduce the number of handoffs. They minimize the amount of time wasted on low-valueadding work. Eventually, the process itself becomes a work of art. Problem is, this bright and shiny process that’s receiving so much attention is more or less an orphan. Both the front-end effort (planning) and the back-end work (measurement and management support) are missing to a large degree. As a result, the process is misdirected . . . disconnected from the company strategy . . . or impotent due to a lack of follow through.

This tendency to over-focus on process execution is unfortunate. Organizations spend roughly 80 to 90 percent of their time there. But our experience suggests that the greatest opportunities for gain exist in the other two areas....

New Processes Require New Information Routes

A process approach must be supported by different arteries that facilitate cross boundary communication. Information has to cut horizontally across the system, instead of following the traditional pathways up and down the organization hierarchy.

Processes just don’t work well when the various functions are walled off from one another. If information has to struggle up through the chain of command in one department, make it over to another area, then dribble back down that silo to the people actually doing the work, the process is far too sluggish. So the vertical communication patterns must yield to more sideways give and take.

Word can get around a lot better moving laterally.

This means the slow-moving routes must be bypassed. Just as an interstate freeway cuts around or over a city’s clogged traffic patterns to speed travel, you have to help construct new arteries that accelerate and enrich information flow. Fast and accurate communication across the entire process, and between processes ...

The Strategic HR Department

We believe that an organization gets the HR function it deserves and an HR function gets the status it deserves. If HR is perceived as a “necessary evil,” it has earned that label through its failure to play a strategic role in the organization. The best route to a mainstream role is through a series of steps which HR initiates. The HR function that is waiting to be assigned strategic responsibilities should find comfortable chairs and some good magazines.

THE HUMAN RESOURCES FUNCTION AS A CORNERSTONE OF STRATEGY IMPLEMENTATION

We have found that HR can establish a strategic role if its staff members:

Learn the business. HR employees should devote time to understanding their organization’s strategy, the actions being taken to implement the strategy, and the work processes which drive the business.Link HR activities to the organization strategy and business plan. Every HR responsibility can and should be a critical component in strategy implementation...

Going Beyond Process Improvement

Question:
How do you know when an organization has gone from merely improving processes to institutionalizing process management?

Answer:
Each key process will have:

• A map that documents steps and the functions that perform them.
• A set of customer-driven measures, which are linked to organization-level measures and drive functional measures. In an institutionalized process management environment, functions cannot look good against their measures by hurting other functions and the process as a whole.
• A process owner.
• A permanent process team, which meets regularly to identify and implement process improvements.
• An annual business plan, which includes, for each core process, expected results, objectives, budget, and nonfinancial resource requirements. . . .

What's Next After Redesigning Processes?

Let’s say you’ve done some good architectural work on the process. You’ve got it designed to create value for the customer. And let’s assume that people’s jobs are well aligned with the process. Their performance goals position them to make meaningful process contributions.

Now what? 

Now’s the time to make sure you’re managing sideways. West to east, mainly, rather than north to south. Instead of supervising people, manage the white space. Keep your focus on the handoff zones. On results. Don’t get caught up in issuing instructions, policing people’s individual performance, or being too handy with helpful advice. That’s the old-fashioned vertical approach. Here we’re looking for horizontal management, and that means you don’t want people raising issues up through ...