Implementation of change is sometimes strategic and sometimes more tactical in nature. Managers in most organizations have a general responsibility to control, and often reduce, costs and improve performance. Understanding the responsibility to do that is more common than managers knowing how to do that.
The first trigger of the need for performance improvement for most managers is a report indicating performance that does not meet expectations, usually the budget. In that regard, many managers use financial reports to manage operations. The problem with financial reporting for operational performance management is that many organizations do not budget at a detailed enough level to be useful for most operational management. As a result, many managers find that costs, either material or personnel, are higher than expected, on a gross or per-unit basis, and must start an examination of the operation to identify the real, root cause of the problem. Many managers have neither the training or experience nor the time to successfully perform such an analysis.
Many organizations collect data and keep it in inaccessible forms, often paper. To successfully identify root causes of problems, or even identify the actual rather than the perceived problem, organizations need ready access to historical operating and financial data. Ideally, organizations will develop and maintain an electronic data warehouse that provides easy access to every piece of data that the organization collects. For too many organizations, nearly 30 years after the introduction of the PC, the only data warehouse they maintain is a decentralized set of filing cabinets.
Almost 30 years since the introduction of the personal computer and the subsequent introduction of a plethora of networked devices, too many managers of private and public, large and small enterprises seem to rely on non-timely, accounting-dominated data, rarely in the form of accessible, actionable information, for management decision making. Why?
One of my first managers, somewhat tongue in cheek, used to tell me that he liked to let small problems become big ones because he liked to solve big problems. That was not Bud’s only philosophical oddity. Many managers, by design or by default, effectively operate like Bud. Sadly, not only is it generally ineffective, it is also stressful and expensive.
In 1985, I created my first management dashboard for a client, the general manager for a textile plant in South Carolina. The dashboard provided him with daily and week-to-date comparisons of actual versus planned performance for each of the plant’s operating and support functions by shift. In 1986, I provided the head of another processing facility in North Carolina with a similar dashboard. Neither of these dashboards were true balanced scorecards, formally introduced to the management vernacular by Frick and Frack in 199x, because in neither case did the view extend beyond the immediate facility to monitor, for example, environmental or customer metrics. In both cases, however, icustomer metrics beyond backlog and on-time delivery measures were beyond the control of the facility because sales and marketing reported to a separate, central location.
A recent Time article tried to make a case for companies essentially firing all their MBAs because MBA graduates in the workforce had taken the collective eyes of business in the West off risk, innovation, operations, and creativity. That may be a valid point. The bigger concern for and threat to a thriving and sustainable economy may be the apparent willingness of U.S. society to accept second place, or lower, and to condone degrees and certificates and diplomas that may increasingly be irrelevant, if not meaningless.
Over the past few generations, people in the United States have grown lazy and self centered. We look for the easy path. We check the box and see if we can stretch the lower bounds of the minimal require,nets and expectations in our academic and non-academic pursuits. As a consequence, degrees and diplomas are more uncertain in their meaning. Prospective employers and academic admissions officers find themselves in positions where they must either do a more thorough job of vetting candidates or risk accepting lower quality, less qualified, perhaps minimally prepared candidates.
It is not the MBAs who are the problem with American business and it not strictly our elected leaders. Rather, it is the lazy attitude of barely acceptable that is so endemic that drags us down. The educational system in the United States simply reflects what society and culture establishes as norms and values. If we want something different for ourselves as a destiny, or a future, we need to adjust our current norms and values so that our path is also different.
eProcesses Consulting helps clients implement strategic change. Since my start as a consultant in 1983, and full time since 1985, I have seen a range of approaches used by consulting firms to begin a client relationship. I have seen firms that basically had one tool or solution set and sold that tool as the appropriate solution for a client, even when it was not. As a Certified Management Consultant (CMC), I comply with the Code of Ethics of the Institute of Management Consultants (USA), which states that I will only recommend solutions appropriate to the needs of my clients. So, how does eProcesses Consulting determine a client’s needs?
The simple way for eProcesses Consulting to determine a client’s needs is for the client to tell us. Client disclosure has risks and benefits. The benefit is the saving of time and the client has emotional ownership of the scope of a potential consulting project. The risk is that the client’s perceived need may not address the root problems and opportunities.
Generically, an eProcesses consulting relationship, strategic change implementation, begins with what many firms call the analysis, assessment, or discovery phase. Having participated in many of these, the deliverable most firms leave with the client is a list of findings with a proposal to fix some of the identified deficiencies. The eProcesses approach is different from most. Because eProcesses wants to leave the client with something of enduring value that, candidly, we hope will set the stage for a longer term client relationship, we call the initial phase the Preparation phase and we expect to leave you with three valuable deliverables beyond a “to do” list and a proposal.
The following is a consolidated overview of the various mining industry projects involving eProcesses Consulting since 2006 in iron ore and gold mines in North America, South America, and Africa.
The project began with an analysis of the historic financial and operational data and the core processes. The analysis yielded best demonstrated performance, effective capacity, and average performance for each process and functional area. The analysis revealed performance gaps and a list of recommended projects.
Goal alignment assessed the extent to which executive level goals and objectives aligned with each level lower in the organization. A list of projects emerged as necessary for attaining the combined goals and objectives of the organization. Project management facilitated the achievement of each of the organization’s goals for the fiscal year.
Engineers and supervisors received training in Six Sigma, Lean, and Kaizen tools and techniques. The projects they did concurrent with the training added to the skill set of the individuals and contributed to the organization’s operational and financial improvement and goal attainment. The training prepared the organization to sustain a culture of continuous process improvement.
The improvement areas included increased equipment availability, increased yield per blast and blasts per shift, faster lab turnaround, better processing yield and capacity, and increased equipment and people utilization.
With the president of the client organization the primary contact person, a four-year series of engagements developed and implemented a new strategy for organizing and operating the clerical functions and improve white-collar productivity of a 23-location insurance company.
Overview of the Client
The client was a non-General Fund, quasi-governmental state agency that serves as the provider of last resort of workers’ compensation coverage for employers within the state. Although it is a state agency, the client competes freely with and is required to conform to all the regulation of conduct of other insurance companies. It insures approximately one-half of the eligible employers and between 20% and 40% of the eligible workers in the state.
The client is intended to serve a “regulatory” function solely by demonstrating superior performance in state’s workers’ compensation insurance marketplace.
The client can be thought of as an insurance company with both “home office” departments/functions and field offices that provide the vast majority of the direct contact between the client and both its insured policyholders and the injured workers of those policyholders.
Included within the scope of the Office Services project were all clerical activities in the field offices. These activities included: mail services; computer operations; personnel functions; policy coverage verification; word processing; filing; data entry and check processing; and bill paying. These activities are vital to the functioning of the field offices. With the exception of personnel, the performance of each of these activities by a support or clerical person is intended to allow the technical or professional staff to devote the majority of their work day to more highly-skilled job duties.
Competency Management defines and facilitates the management of the “way” work is to be done. It touches multiple organizational elements within a company or other entity. These range from operational units to training to human resources and hiring to essentially anywhere that people do or support the work of the entity. A good Competency Management system captures the details of work based on how “the best” people do their jobs. When optimally used, it becomes the “system” for increasing skills and know how among all people and positions included within its scope. In some organizations it can become the key to a big “pay off” from sometimes major investments in training.
The Purpose of Competency Management
The purpose of a Competency Management system is to maximize organizational performance. It defines the methods and techniques of top performers and provides a vehicle to systematically communicate and develop “Best Practices.” It helps to focus training on its greatest opportunities either based on gaps uncovered in the development of the system or through the use of the system. It also helps to focus supervisory attention to those areas needing that attention.
The Method of Competency Management
With the president of the client organization the primary contact person, an 8-month engagement reviewed the work processes associated with generating and managing the client’s cash flow.
Overview of the Client
The client was a non-General Fund, quasi-governmental agency which serves as the provider of last resort of workers’ compensation coverage for employers within the state. Although a state agency, the client competed freely with and conformed with all the regulation of conduct of other insurance companies. It insures approximately one-half of the eligible employers and between one-fourth and one-fifth of the eligible workers in the state.
Included within the scope of the Cash Flow project were five Home Office departments and the 24 field offices. The Home Office departments included: Insurance Services, Credit and Collections, Data Processing, Fiscal Services, and Underwriting/Marketing. These departments perform such functions as premium determination, premium billing, payroll report processing, payment processing, and cash management. At the time of the engagement, the client had 1,660 staff, supervisory, and management personnel assigned to functions or departments associated with cash flow (of 7,174 total non-Executive staffing).
The specific areas of study were:
- Application and initial premium processing in the districts, including sales and underwriting.
- Premium and payroll report processes in the Credit & Collections and Insurance Services.
- Payroll audit processes in the districts.
- Payroll audit processes in Insurance Services.
- Policy cancellation and collection activities, districts, and Home Office.
Project Overview
ROI, Not a Model, a Process At eProcesses we see most Cost Justifications and or Return on Investment documents for technology investments following the normal Rate of Return, Payback Period, Net Present Value, etc. model. Though sound from a financial point of view, there are underlying elements that are overlooked when it comes to new technology.
The chart represents a process where Corporate Strategies/Goals are the starting point for financial analysis. The process then moves to the departments/business units that are going to be involved in the new technology. The departments define their ‘Functional Objectives’ with the new technology and, therefore, capture the motivation for the investment and the business objectives that are to be achieved. These objectives and motives have value and provide direction for the ensuing project. It is up to the project team to quantify the value and include it in the ROI calculation. All of this is then moved to initial starting point of the technology project.
Integration of Business Processes and Human Behaviors with Technology To truly achieve the full benefit of your technology investment, eProcesses suggests there is another element to consider. eProcesses observes that companies usually invest in technology to achieve greater value from their Human Resources. But we rarely encounter companies who make the other investment that is required to realize the benefits, the real integration of the new technology into the processes and behaviors of the organization. The ROI that convinced you to invest in hardware or software throughout the company had an underlying assumption that you would change the way you do business. At eProcesses we help you change the way you do business. We help you realize the ROI you initially expected when you invested in the technology.
Technical vs. Process vs. People Integration Integration is a term that is commonly used, frequently without agreement as to definition. A dictionary definition of “integration” would say “the act of forming, coordinating, or blending into a functioning or unified whole.” It is commonly used, especially in association with technology, purely from the perspective of systems integration. In practice, however, even systems integration involves much more than integrating systems.
At eProcesses, when we speak of integration we speak of technical or systems integration but extend systems to include not only technology but business processes and people and their behavior. We believe that a company cannot realize the full value of its investment in technology, in business processes, or in people unless all three are integrated into a effective, efficient, well-tuned whole.
Technical Integration and ECR New technology is a common path that companies take to improve organizational performance. Rarely will a company make an investment in technology without the expectation of an appropriate return on investment. Companies understand that new tools or technologies may be required to improve the capabilities of their workforces and to improve the capacity of the organization. Technology is seen as a way to improve the efficiency of the workforce or the throughput of a plant or the service level that can be provided.
