Ultimately, the aim of any business is to deliver on customers and stakeholders performance expectations, be it profit, market share, customer satisfaction or compliance – anything that will gain competitive advantage and add value to the organisation. Typically, a number of key measures are used to report on and manage the delivery of that performance. Too often, however, those measures only represent part of the picture.
Process-based management is built on the unders
tanding that functional silos, in themselves, cannot deliver value. It is the cross-functional flow of activities – business processes – that result in product or service delivery. Organisations that are aware of this align their processes to their strategic intent, measure the performance of the strategic processes, and are invariably in a better position to manage delivery on customer and stakeholder expectations. With that in mind, it becomes clear that organisational measures alone will not provide sufficient information to allow output-oriented management.
The reality is that only a handful of organisations measure process performance. Most are proficient at using some form of Kaplan and Norton’s Balanced Scorecard, but often it only includes functional measurements. The process dimension receives limited attention, to the detriment of overall performance management.
Improvement projects tend to include process measurements – fewer problems, savings, cost reductions, increased productivity, increased customer satisfaction, improved cycle times, etc. – but these often have a very narrow focus. End-to-end measurement of processes that deliver value to the organisation’s stakeholders is not common.
If we consider cross-functional processes to be the only way to deliver value to our customers - and we want to be in a position to convince others of that - quantifiable evidence is essential.
- Measuring process performance allows an understanding of cross-functional performance, and the contribution of each department or unit to the end result.
- Organisations execute their strategic intent via their business processes. How could you ensure that you are aligned to your strategic objectives if you do not measure business process performance?
- Process measurement enables prioritisation. Which processes are critical to achieving the objectives? How are they currently performing? What is the target performance, and what is the potential for improving process performance? Only measures can provide tangible criteria to judge which processes to focus on.
- The simple act of measuring process performance often drives improvement. People become aware of what is expected, and can pinpoint where action is required for non-performing processes.
- Over time, measurement will highlight performance trends. This enables the business to plan and prepare (e.g. contract additional staff during high volume periods). Without reliable data, managers will find it difficult to justify additional expenditure for these events.
- The capability range of a process becomes clear through measurement. It is possible to expect the impossible from a process – complete innovation may be required to deliver on expected performance targets.
- A balanced set of process performance measures will uncover problems – these are opportunities for improvement.
- End-to-end process performance measurement allows you to manage risk.
- Measuring process performance changes behaviour; the aim would be to ensure you are positively affecting behaviour. What is measured is important, as well as agreement on the target performance. We’ve all heard the saying ‘you get what you measure’. Salesmen are typically assessed and incentivised on the number of sales a month, not complete, correct paperwork. To drive sales and turnaround time, they may cut corners when completing detail forms. As a result, the delivery people are perceived as inefficient - they are forced to consult the customer several times to get a complete set of information. Throughput time increases and customer satisfaction decreases. This highlights the importance of a truly end-to-end process focus when defining measures.
In essence, we are blindsiding ourselves if we continue to only measure functional performance.