In their constant search for profitability, present-day companies seek to array themselves with all the managerial means necessary in order to maximize their net income, which results in a focus on performance and a few associated indicators.
By Liliane Held-Khawam, author of the book "Management through Professional Coaching: Learning to Cope With Complexity in a Globalized Economy"
Optimization and performance
Among the classical management tools decision-makers adopt in order to achieve profitability, business process reengineering seems to have the greatest favor. It aims to develop the organization through rationalizing processes and reorganizing functions in order to mitigate costs, stimulate energies, mobilize competencies, promote the company’s assets, etc. In spite of significant technical, financial and human efforts, malfunctions and stumbling blocks continue to appear in many cases.
The problem probably originates in the search for short-term performance rather than for a sustainable optimization of available resources. The focus on performance corresponds to a somewhat linear and ephemeral orientation. The optimization of resources provides a more global, realistic, exhaustive and integrative approach. It leads the company both to performance and to sustainability, thanks to a vision that combines the short and the long run.
Though they may sound very rational, the management tools and concepts that are presently brought to the fore (and especially business process reengineering) fail to achieve their goals, for they are based on an uncomplete vision of what the organization really is. The temporality of organizational change is only partially integrated and its emotional impact too often eluded. In short, the lack of a global vision and of a realistic temporality is presently dooming to failure every attempt at managing resources optimally.
Failed reengineering processes thus lead to diverse malfunctions, such as a sub-optimal rationalization of the existing processes, an unrealistic temporality, an ill-defined reference environment, or inadequate management tools.
Business process reengineering: a new fashion?
Business process reengineering is the management tool that is most frequently used when attempting to make a company successful. However, this tool also absolutely requires a global vision. Otherwise there is significant risk that it will backfire on its users, which can translate in a loss of their money, time and, most of all, credibility.
At the present moment, business process reengineering appears as the most serious cause of disturbances in the life of many companies. The trouble we witness is linked to how the new structure is implemented and to the failure to take certain components of corporate life into account, in particular the human factor.
The impact of business process reengineering on the organization
The implementation of a BPR process aims at a deep transformation of the company. However, changes in the organizational chart will be fruitless if the mentalities, habits and daily lives do not evolve simultaneously. As a consequence, all the components of the company, and in particular the human factor, should be included in the reengineering process. If we want to formalize this idea, we can make a distinction between the two organizational levels that are impacted by reengineering processes (illustration): the organizational structure and the human factor.
The organizational structure is the one aspect that usually gets the most attention during the implementation process. Yet, as we have seen above, it is only dealt with on a partial basis. As for the human level, it is often simply omitted!
Reengineering processes thus imply a transformation at all levels of the organization (illustration). It implies a true mutation. The company passes from one state to another and aims at an ideal that should allow it to simultaneously achieve stability and mobility, well-being and performance, serenity and dynamism. Yet, what is even more important, is to achieve sustainability.
Decision-makers should thus completely re-think their company. Yet, they should not do so until they have conducted a complete and global audit of the organization. This audit will give a picture of the present state of the organization (state A). Given this data, it will be possible to determine the ideal organization that will allow implementing the chosen strategy (state I).
In order to go from A to I, we notice that the global transformation process can be broken down into a series of sub-processes (schema). This approach is vital if the whole operation is to be successful. Should any one of these sub-processes fail to be implemented, the implementation of the chosen business process reengineering approach will not achieve the expected results.
In short, the global steering of a reengineering process requires designing a global corporate strategy with the aim of reaching a clearly-defined, exhaustive and well-structured organizational state (state I). In any case, it should include a distribution of roles, as well as a description of the possible impact on the organization of work.
This approach associates the human factor to the venture while taking care of the emotional impact (unavoidable and normal). The typical mistake consists in failing to take into account the many-year old corporate culture, which also needs to evolve and requires a longer timeline. Moreover, this coroprate culture (illustration) is the outcome of a synergy between the strategy, the structure and the human factor. Removing one of these elements causes the whole corporate culture as well as the organizational life balance to be destabilized.
This change in corporate culture leads to a redefinition of the management style, which itself relies on human beings, their experience and competencies. Such elements cannot be modified by decree. One needs preparation, training and time, as well as coach managers so they may develop the skills that will be required in the new organization.
In this context, communication represents a potential trap, as both a lack or an excess of communication are counter-productive. Communication should rather be based on a continuous listening process. It should include all the relevant data – but not more, and respect an appropriate timing. Thus, although it should be based on a pre-established action plan, the communication process should also anticipate unforeseen events, so as to be able, if needed, to defuse rumors, address sensitive questions, etc.
Finally, organizational change and development implies a certain time framework. The company should orient itself towards an ideal state that will only be reached in the future. All companies – and especially the ones that are facing troubles, should take some before getting into business process reengineering. Precipitation only makes matters worse.
Illustration 20: The components of organization X that will be impacted by the reengineering process. This model applies to a company, sector or team (also in a project management context).
A few organizational threats to reengineering processes
Some causes for organizational malfunctions during the reengineering process are of a structural nature. These are constitutive elements in the company’s structural life that are seldom taken into account when operating a reengineering process. Among these different elements, we can mention the strategy, the structure, everyone’s role within the organization, and the organization of work. Here are some of the challenges that are commonly faced in the context of a reengineering process:
The lack of coherence in the company's organizational strategy
Reengineering processes are supposed to start with the setting-up of a clear and structured strategy. The latter should imperatively obtain the adhesion of all members of the Board. It should then be communicated across all of the organization, in order to mobilize their people and avoid them getting stuck in the middle of the transformation process.
Unfortunately, we all too often witness an absence of a concrete strategy. Some companies get completely focused on short-term results and on competitors. They have become very reactive, making decisions based on immediate opportunities and dangers. Other companies have a strategy, yet they do not sufficiently communicate it, or even fail to understand it completely. In this context, it is difficult for managers to work as a relay for the Board’s communication. This can lead an organization to skepticism, or even a wait-and-see attitude.
Obstacles caused by a failing strategy perfectly illustrate the consequences of decision-makers doing the steering with a short-sighted approach.
The choice of an inappropriate structure
We may say that some companies display innovative structures, while others – a number of which are modeling their structure on that of the market leader – evolve at a slower pace. Unfortunately, a model that works for one company does not necessarily apply to the other! This is how some managers have failed to set up a structure that would embrace their company as a whole and thus be adapted to their reality. This results in a multiplicity of obstacles, ranging from technical difficulties to insufficient competence in certain areas, issues linked to the organization of production spaces, etc.
One of the dimensions that seem to be systematically occulted in the architecture of a structure is the emotional aspect. We all too often forget that an organizational structure is designed by human beings who possess pride, fears, jealousy, a need for acknowledgement, doubts about themselves and about their future. Such tensions do not necessarily emerge at the beginning of the project; they can develop as the project unfolds. Employees would need to talk about it with someone who could reassure and stimulate them. If such moods are disturbing when they affect grass roots employees, they become even more critical when they affect members of the Board or key-managers, the true architects of the reengineering process, whose moods can greatly disturb it.
The failure to attribute well-defined roles
It is impressive to see that so many employees no longer know exactly what their role is during reengineering processes. Considering that such processes can sometimes last for years, one may sometimes feel like congratulating the managers and teams who keep providing reasonably good results in such circumstances! When the introduction of a new, complicated and widely misunderstood matrix organization chart is added to reengineering process, some still wonder why there are so many obstacles!
The wonder would actually be if it worked, knowing that a matrix implies a system of double entries. This means that the organization is made up of two families of managers: line managers (classic system) and staff managers, who manage workflows that go through the whole organization. Some companies make it even harder on themselves by multiplying the number of entries! Managers themselves get lost and have a hard time understanding what is expected from them. In this context, how could they possibly coach their own collaborators?
Please note that we are not suggesting throwing the matrix model away. We should simply be aware that it is not easy to understand (even engineers may find it hard) and that its translation into everyday life activities should be provided to the people concerned.
In short, a clear definition of roles is essential to the success of any new organizational structure. It corresponds to the user’s guidelines of the new organizational architecture. If this definition is incomplete, misunderstood or fluctuating, it is quite certain that the company will dysfunction and that the human factor will be destabilized.
Disruptions in the organization of work
Changing organizational structures implies influencing the organization of work, an element that is critical to the achievement of the objectives of the human factor.
Passing from a pyramidal organization to a matrix organization impacts the organization of the workplace; it completely changes the way people work. Passing from the execution of clear directives to the autonomous management of a wide range of activities is a real upheaval for the management of everyday tasks. Managers are very much concerned, at the present moment, by this change, as they are expected more and more to act as little bosses, while a few years ago, they were still rewarded for their discipline, submission and respect of hierarchy!
The organization of work is going through a true revolution. Reengineering processes do not always take this dimension into account and may fail to prepare people for it.
We may say that a reengineering process, as well as any kind of organizational change, necessarily requires a reassessment of its implications on individuals and the environment they evolve in. Failing to do so represents an obvious act of "mismanagement". Decision-makers should thus seek to offer employees a certain period so they may prepare for the change that is about to take place. Failing to do provide this time and preparation amounts for managers to putting their team into a situation of failure even before the new process begins.
A clear example that we have seen of this is a highly computerized company that renewed all of its computers without even informing its personnel or training them on the new material! The Board was indeed showing good will, as it was investing, but the outcome was a disaster. How can we keep producing under such conditions? What can managers do in order to sustain and stimulate the motivation of their team in this context?
Malfunctions can, for example, result in:
A few human-related threats to reengineering processes
A company, by essence, is made up of a group of people organized around some common mission. However, the human factor is too often neglected during processes of reengineering, reorganization, merger, acquisition, etc. though we all know that its integration is essential to the success of such operations.
An explanation may be advanced. Managing people is a task that can make some analytically-oriented decision-makers feel uneasy, due to its complexity and emotional dimension. There may be other causes for that. However, the fact is the management of the human factor is too often neglected during reengineering processes. The repercussions on corporate culture, management and communication are immediate.
Leaving the organizational culture behind
Corporate culture makes up the vital thread that links the strategy, structure and human factor trio. It is the foundation on which the company will grow, and on which its image towards customers will develop. And it is this culture that is directly impacted during any organizational, strategic or human reorganization.
Too many decision-makers are unaware of the impact of reengineering processes on their organization's culture, and vice-versa. The whole mindset and philosophy of the company should change while passing from a pyramidal structure to a matrix one. Similarly, it evolves when a local SME is purchased by a foreign group.
As for mergers and alliances, we can witness cultural confrontations, balances of power and settling of scores that can even lead to the harassment of certain people. Employees can feel overwhelmed and even get paralyzed by such cultural issues, although the Board seldom deals with (and is sometimes perfecty unaware of!) them.
Similarly, corporate culture can be turned upside down by the reorganization of the Board. The shocks we observe in such situations within the Board or between the Board and the middle-management can be dramatic. Such divisions have immediate repercussions on the whole human factor in the company, and can even affect customers and partners.
Changing a corporate culture is a slow and long process, which does not unfold automatically. Managers have to coach their people so they may head towards the ideal culture that has been defined for the company (if it exists).
The cohabitation and confrontation of different cultures within the same entity should be avoided at all costs. We will thus spare ourselves conflicts, divisions, clannishness and a loss of time, as well as preserve our health and thus our success. The company’s performance and stability will gain from this.
Adopting an inadequate management style
The company’s management style directly proceeds from its corporate culture. It corresponds to the simultaneous expression of the organization’s strategy, structure and human factor.
Changing the company’s management style implies, first of all, that there is a structural framework capable of supporting it. Second, it is essential that the managers display the skills this change requires.
A relatively frequent example, at the present moment, is that of the transformation of departments into business units. Top managers are promoted to the rank of bosses (without being fully in charge!) and need to meet new requirements in terms of behavioral skills.
Another example is that of companies that wish to adopt a corporate culture that is based on empowerment (i.e. the delegation of management powers to operational teams). In this context, managers are highly solicited. They have to radically change their management style. But will they be able to do it? Have they really been prepared for that? Have they been offered a realistic time framework so they may adapt to this change themselves before leading others through it?
Thus, business process reengineering implies questioning one’s own management style. Moreover, depending on the new organizational structure that has been chosen, managers may have a hard time searching for the new attitudes and behaviors they will have to adopt in concrete situations, both towards their superiors and collaborators. Let us finally point to the fact, that every management style requires individuals to display specific personal skills, and to resort to their own experiences.
Trying to modify one’s management style because a new structure, strategy or leadership demands it thus requires both TIME and resources. At the present moment, however, everyone is in a hurry. As a consequence, the temptation to hire some highly gifted individuals may be strong. Unfortunately, such rare talents may not always possess the necessary technical skills, or a sufficient knowledge of the company’s line of business and organizational structures. In addition to this, their own management style may be radically opposed to the company’s organizational culture!
Trying to impose a theoretical management style on a company that is not yet ready to integrate it puts its very existence at risk. Moreover, every decision-maker should find a management style with which they feel comfortable and which suits both their structural and human environments.
Implementing an inadequate communication strategy
While some companies keep their change secret, most of them invest a lot in communication. Unfortunately, in spite of all the efforts made in this area, it often happens that many managers and grass roots employees remain highly critical of the whole process!
An empirical explanation to this could be that the communication process fails at two levels. First, the information it delivers is often incomplete and, second, it can come too late.
An incomplete information
A communication process that delivers incomplete information is one of the symptoms of a failure to integrate the human factor in one’s management approach. What is preventing people from adhering to the process is that they do not receive clear and well-structured information as to what their everyday life will be like in the future. Though some may be interested in the strategic and quantitative goals that have been set by the big shots, most people – including in the management – are actually asking themselves very simple questions, such as "What is going to happen to me?", or "What are the consequences for my job? Will my salary change?"… Some other reactions may arise, such as "They are demanding so much of me, but I have neither a sufficient budget nor the adequate tools" or "My people are just exhausted, they work night and day and fear for their private life"...
But who, in the company, listens to such preoccupations? Who dares to talk of personal needs in top strategic meetings? And even if these were to be formulated, who could meet such demands? Would such a person be able to bring in concrete solutions?
Although it is indeed a good thing to communicate about an ideal organization, concept or model, it is even better to inform the employees of the consequences the process will have on their everyday lives!
The communication process should thus aim to give people a global vision that is at once well-structured and pragmatic. It may be done through events and workshops, as well as individual interviews – a tool that has already proved highly effective.
The timing of communication
In the course of a reengineering process, a communication plan is often designed to communicate the main steps of the project. These milestones should obviously be laid down along a rational and realistic timeline.
Yet, even so, unforeseen events may arise between two meetings. Sorrows can – and do – develop and result in emotional reactions. This opens the gates to rumors gossip, which represents the main factor of destabilization in a company. The people in charge of the reengineering process should thus intervene without delay to defuse any misleading information. This is why we should tirelessly keep listening.
It is just as much important to refrain from communicating too much or from giving information too early in the implementation process.
Communication is made up of an alternation between phases of listening and response. One should find the right moment to listen, speak and keep silent. It is thus a continuous process.
Present-day management restructures the company or the group in order to give it an optimal organization and shape that should allow it to promote and develop its assets. The final goal is to achieve profitability and performance.
Yet, by focusing too much on performance, some decision-makers and managers act with precipitation and fall into the trap of an incomplete management of their companies. This puts them at significant risk of omitting structural and human components during reengineering processes. Tensions, high turnovers, blocks and delays thus multiply and penalize the operation that was supposed to energize their organization.
Managers should thus develop a global and realistic vision of their company or group. They need to prepare their professional future by building up the present. They are interested in everyday life and in the human factor, with its competencies, emotions and difficulties. They turn their employees into partners who, in collaboration with themselves, insufflate change. Exchanges of views are precise and frequent. Managers are constantly listening to their human, financial and technical organization. They can distinguish between the short-, middle- and long-term, and act accordingly.
Finally, decision-makers should resort to reengineering processes with realism and prudence. It aims at durability by being mindful of avoiding the traps of precipitation and un-structuring.