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PROCESS MANAGEMENT

A professional process approach is a great opportunity for all organizations to enhancing the effectiveness and efficiency of business performance and realizing a modern professional quality management and assurance. This document highlights:
- how to integrate process management to be a seamless part of business management, and
- how to reach and deliver a profound understanding of competitive and innovative process management.

Topics include general guiding ideas and principles of process management, development stages of the process approach, business processes within the enterprise and networked commerce facilitating performance growth, process management model for realizing process management within business management, quality integration through processes, documentation for process management, process performance, people issues in process performance, process performance evaluation and improvement, and comprehensive enhancement of the business process approach.

General framework for the process management approach

Processes adhere to all daily doings or activities within an organization. In fact originally the process concept just denoted action or operation. Later structural questions of processes became an interesting management issue for increasing process efficiency. In some cases, however, there has been a danger that structural aspects are being over-emphasized in process management. Business structure and business processes are orthogonal issues to each other. Processes should be primary issues and structure, e.g. organizational chart, a secondary one.

Process management is a comprehensive business management issue. Today truly effective and efficient process management implies a radical change to the established management thinking and structures in the organizations.

Figure 1. Mental framework for developing an integrated process management approach

The mental framework (see figure 1) of a learning organization provides a good model for an effective understanding and development of process management as a company-wide approach. This framework consists of guiding ideas and principles, management tools and methodology, and managerial infrastructure for process management.

In general, business management is realized through process / project management. In fact, projects are singular processes for singular business tasks. Basic business processes imply continuously running business activities. A major challenge for the top management is to convert a traditional vertically emphasized hierarchical organization into an approach consistently and effectively strengthening horizontally interlinked and interacting activities (i.e. business processes). Both strategic and operational management levels are involved in this approach, the strategic one focusing on the network of processes (i.e. the whole business system) and the operational one on single processes and projects.

The modern business environments require especially understanding organizations as complex responsive processes of relating.

Development stages of the process approach

General development of the process approach within an organization starts normally from strong vertically organized functional business units, organizational "silos", and with a clear need to improve the effectiveness and efficiency and customer-focus of the organization. Development means movement towards emphasis on horizontal business processes for realizing products to the customers. Also the needs of the other interested parties or stakeholders are taken into consideration. This development is always in practice a long-term journey. 

Organization-widely networked processes

A comprehensive system of business processes covers the whole organization, and all work is done through processes. Thus, processes are the basis for the results, growth, and success of enterprises. In fact, the value-adding ("win-win") interaction and transactions between organizations and their interested parties take place through processes. The new e-business requires a more systematic methodology for processes than before. Even the quality of public services and quality of the society are originated in the processes of the different organizations within the society.

Figure 2. A strategic management process. It has a crucial role in business management.

Process management within modern business management

Business management is based on a vision (business leaders' dreams) and prevailing internal / external reality and aims at creating a business structure to realize the company's strategic and operational needs (plans) (see figure 2). Efficient action calls for suitable structure. According to the modern practices, this structure / action dilemma is solved appropriately with a systematic process approach

Process management as a management tool has a remarkable role in both "getting better" (strategic change) and "earning money" (operational run). It consists of planning, controlling, improving the operations, and assuring quality.
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Process management calls for responding to the realities of the modern business environments (see figure 3) and especially nowadays the needs for managing variety and agility. There are three
variety modes, mechanistic, organic, and dynamic, all of them inherent in every business process and its activities.

Managing complexity goes beyond simplistic tools, and the managing feedback loop needs to be much faster than the business system's response time. This is a key challenge to leaders and managers and to the quality professionals who support them. The business requirements include that all variety dimensions are addressed appropriately in a process network as a whole and in individual processes, although depending on the type of process some of the modes may have a clear emphasis.

Figure 3. Variety modes of business processes and their typical nature of activities

The process management model

The process management implies how business management realizes the process approach according to PDCA (Plan + Do + Check + Act) principle and gets planned outputs and results of work done in processes. The operations are managed by feedback through measurements (see figure 4). There are in fact three PDCA loops:
- one loop relevant to corrective actions
- another relevant to prevention
- the third relevant to real improvement through re-engineering

Figure 4. Process management practices

A company-wide Business Excellence Realization Model addresses how Quality Management principles are realized in the whole organization and integrated with business issues on four levels:
a) Corporate level (cultural and general normative issues)
b) Business level (strategic issues)
c) Process level (operational issues)
d) People and team level (human issues)

This model also defines the infrastructure for realizing process management. On a daily business level all products to customers are generated through processes. Prerequisites for effective and efficient process management include creation and maintenance of the process management model, the process structure and methodological tools on corporate level, and the commitment of employees and teams to process objectives.

A process-structure is always organization-dedicated solution. A corporate-wide business process framework may consist of four domains of processes:
- market processes,
- customer processes,
- management processes, and
- support processes.

Critical process chains within this framework are the chains of individual processes from-market-to-market or from-customer-to-customer. Each process-domain consists hierarchically of processes, sub-processes, activities, and tasks.

The basic lines of process management are:
- management of existing processes based on existing plans: process network and individual processes, and
- process re-engineering, i.e. improvement of process plans and structures.

Management of the comprehensive process network includes normal tasks of business management. It is essential that the business system is understood as a network of business processes instead of functional units (organizational silos). The scope of managing individual processes consists of process planning, control of the operation, performance improvement, and quality assurance. The basis for a process management is the process plan (see figure 5).

Figure 5. Process plan for defining the basis for a process management

Organization's process management model should be described in appropriate procedure documents and revised at regular intervals as necessary.

Quality integration through processes

Companies' quality efforts aim at competitiveness (excellence) of the business performance taking into account the needs of all interested parties (stakeholders). Thus, the business leaders have the principal responsibility for quality realization. All this is generally included in the concept Quality Management.

Quality integration means that all quality related activities are embedded within normal business management activities. Thus, according to process approach quality is in practice realized through business processes. That means also that distinct quality management systems are no more needed or not even justified. In fact, they may be harmful. This is also an effective and efficient way for applying the purpose and objectives of the ISO 9000 standards. Also quality assurance for creating confidence among customers and other stakeholders is in a natural way based on the performance of business processes (see figure 6). Quality assurance is essentially a communication issue.

Figure 6. Quality assurance through business processes

Documentation for process management

Documentation is intended to be a dynamic and high-value-adding activity. It is needed for achieving required business performance, for evaluating the chosen approaches and their deployment and related results, for realizing quality assurance for customers' confidence, and facilitating performance improvement.

Process documentation is an essential part of the whole business management documentation. Process management documents include general principles and guidelines for process management, process plans, procedure and method documents, operational records, and training documents. These documents also fulfill the needs of quality management and quality assurance and thus no distinct quality documents, e.g. quality manuals, are needed any more.

Requirements for documentation and supporting tools originate in strategic and operational needs of the business, and different user-groups' needs. Consistency of different needs of and within documentation is required. The most important documents for a process consist of:
- process plan (see figure 5),
- process environment description, and
- process flow diagram.

Process performance

Process performance is considered both from strategic and from operational point of view. Performance management of processes consists of strategy-based measures (e.g. through Strategy Scorecard methodology) and evaluation of the overall process performance.

Overall process performance is a fuzzy concept. Process performance evaluation consists of assessment of the whole business performance (process network) adhering to quality awards or business excellence methodology, and assessment of individual processes (process audits modified from the general ISO 19011 auditing standard). Also a scoring methodology can be included in process auditing (see figure 7). Assessment results are useful both for process improvement towards business excellence and quality assurance for customers' confidence (see figure 6).

Figure 7. Presentation of the results of the process audits

Needs of operational process performance measures for daily management are focused on diagnostics and analysis for corrective and preventive actions. Thus, the operational process performance management is very differnt from the strategic performance management, and different means are needed.

People issues in process performance and management

A critical issue for process performance is the operation of individual performers within processes (see figure 8). The most difficult question in practice is the clear understanding of roles of the process owners and line managers. In fact, there could be no process management without a process owner. Process owner's responsibilities should be defined in procedure documents for organization’s process management. There is always a potential risk of conflicting interests between the roles of process owners and line managers. The prerequisites to prevent and resolve these conflicts in an effective win / win-manner depend basically on the procedures of compensation, rewarding, incentives, recognition, and, of course, on mastering special skills needed to realize the right management strategy in a conflict of interest situation.

Figure 8. People issues in processes

All operators in all organizations are today knowledge-workers. Therefore managing both explicit and implicit (tacit) knowledge is a key issue of the process management.

Process performance improvement

Process performance improvement is carried out according to a systematic methodology including both breakthrough and incremental continual improvement according to the methodology described e.g. in the ISO 9004 standard. Also benchmarking methodology is used in this context.

Comprehensive enhancement of the business process approach

Comprehensive enhancement of the business process approach is carried out according to the principles of organizational learning and its framework that is also a good basis of quality management development (see figure 9).

Figure 9. A model for organizational learning

Superior improvement of process performance is a matter of strategic change. The domain of change calls for awareness and sensibilities, opportune attitudes and beliefs, and skills and capabilities.

The full-fledged utilization of process management is deficient as concepts, modes of thinking, and practices including management tools and infrastructures have not been properly internalized. Understanding the whole issue at hand is, however, a prerequisite for its utilization. Appropriate training based on the company's own systematic process management model provides a much faster way to understanding than an approach based on trial and error.

Conclusions

Practice proves that process management is an incredibly simple thing, but its implementation seems incredibly difficult because it always puts a strain on the company's leadership issues. Development of the business processes and their management is a long-term effort and should take into account realities of business environments in question.

 [This material has been presented in different forms in differerent seminars or conferences]

 



Juhani Anttila