Building a Process Culture Understanding the politics of improvement and how to build a process-oriented culture

Status of Organizational Improvement Efforts The failure rate for total quality management interventions is upward of 75 %. 1 Of quality initiatives in place for more than 2 years, as many as 2/3 have failed. 2 Surveys show that up to two-thirds of American managers think that TQM has failed in their companies. 3 Evidence suggests that only about 20 % of the TQM programs in the U.S. and Europe have achieved “significant” or even “tangible” improvements in quality, productivity, competitiveness, or financial returns. 4 1 Spector and Beer, “Beyond TQM Programmes,” Journal of Organizational Change Management, Vol. 7, No. 2, 1994, pgs. 63 - 70. 2 Doyle, Kevin, “Who’s Killing Total Quality?,” Incentive, August 1992, pgs. 12 - 19. 3 Higginson and Waxler, “Communication, Commitment and Corporate Culture: The Foundation for TQM and Reengineering,” Industrial Management, November/December 1994, pgs. 4 - 7. 4 Harari, Oren, “Ten Reasons Why TQM Doesn’t Work” Management Review, January 1993. BA 553: Business Process Management

Why Improvement Fails A failure to recognize that to achieve successful improvement, the organization needs to develop a culture supportive of change A lack of knowledge of how to plan, lead, and implement improvement in a systematic manner A failure to include in the improvement plan activities that facilitate learning the capabilities needed for process management Results from a survey of senior executives in Fortune 500 companies showed failed improvement initiatives were due to: A lack of improvements in teamwork A lack of alignment between organizational strategy and culture Employee resistance to doing things in new ways BA 553: Business Process Management

Resistance to Change “It is the nature of man as he grows older to protect against change, particularly change for the better.” John Steinbeck “I can’t be bothered by any crazy salesman - I’ve got a battle to fight!” BA 553: Business Process Management

Why Employees Resist Change Fear that change may result in them losing their jobs Anxiety about their ability to learn new ways of working and to master new technologies Uncertainty on what the change will achieve, and whether it is really worthwhile Concern about how the change may influence the relationships they value within the company BA 553: Business Process Management

The Impact of Front-Line Employees on Improvement Success Achieving improvement involves improving the processes used to get work done Front-line employees are the ones who must implement the improved processes Therefore, the success of any organizational improvement effort depends greatly on the support and involvement of front-line employees This involvement requires the support of the organization’s culture and systems The organization’s culture and systems are the responsibility of management BA 553: Business Process Management

Factors Influencing Successful Change In poll after poll, technologies like robotics and computer-integrated manufacturing get low marks as quality improvement drivers, while relatively simple measures such as “more employee involvement” and “cross-functional teams” rank at the top of CEO priority. 1 In a survey of 582 CEOs conducted by “Electronic Business” and Ernst & Young, 76% of those surveyed believed that employee involvement was an effective method for improving quality. 2 Research based upon lessons learned from studying five Malcolm Baldrige National Quality Award Winners showed that the success of a total quality effort is largely based on the degree to which the organization’s culture supports total quality. 3 1 Higginson and Waxler, Ibid 2 Higginson and Waxler, Ibid. 3 Sirota, et. al., “Breaking Through the Cultural Wall,” Journal for Quality and Participation, March 1994, pgs. 74 - 83. BA 553: Business Process Management

“I won’t support it if my boss doesn’t …” Survival needs, particularly in fear-based organizations, cause employees to be reluctant to participate in improvement efforts if they believe their supervisors are not supportive of such efforts Where do employee beliefs about supervisor attitudes come from? They are based upon experience, as employees observe the reactions of middle managers to daily events in the organization For example, when improvement meetings are scheduled, a middle manager may continually find reasons why employees cannot be released to participate Employees observe this behavior over time and conclude that their manager is not supportive of the improvement effort BA 553: Business Process Management

The Impact of Middle Managers on Improvement Success The attitudes and behaviors of senior management impact the attitudes and behaviors of middle managers In any organization, middle managers have the most contact with front-line employees, and so have the greatest impact on them Therefore, the attitudes and behaviors of middle managers towards formal improvement initiatives impact those of front-line employees Senior management attitudes behaviors Middle Front-line employee Performance BA 553: Business Process Management

Support for Improvement Efforts Organizational improvement requires the support of ALL employees, especially front-line workers, because they use the processes to do their work, and so are best able to identify improvements and implement the changes needed. 1 Senior managers often support improvement efforts because they see the financial need. This is sometimes referred to as a “burning platform.” 2 Front-line workers often support improvement efforts because they believe it will give them a voice to help their jobs function better, for example, by eliminating “red tape.” However, middle managers often resist improvement efforts because they don’t see a role for themselves in the improved organization, and they fear losing power. This concern has a basis in reality, as over the past few decades there have been many efforts to “flatten the organization,” eliminating middle management roles. 3 1 Deming, W. Edwards (1986), Out of the Crisis, MIT Press, Cambridge, MA. 2 Peck, W. and W. Casey (2002), “Convincing employees to embrace change is no easy feat,” Denver Business Journal, November 29 edition. 3 Anjard, Ronald (1998), “Total quality management: key concepts,” Work Study, Vol. 47 No. 7, pp. 238-247. BA 553: Business Process Management

Middle Managers: The Balancing Act The middle management squeeze: balancing the needs and concerns of senior management and front-line workers Middle Management Top Management Pressures to achieve bottom-line results Front-line Workers Ideas for improvement, concerns, problems BA 553: Business Process Management

Gaining the Involvement of Senior Management Addressing the concerns of senior management: Show them that improvement projects can help the bottom line Determine the appropriate level of involvement by them in the project. In some cases, senior managers may want to keep their distance from the project so they don’t become associated with a failed effort. This is okay Involvement by senior management: Have them define the process area to be improved Ask them to define the boundaries for the improvement team (what are the boundaries of the process, what is our budget, etc.) Get some agreement from them on the support you and your team need to be successful in improvement. Examples include: agreeing to no layoffs during the project, or after the project as a result of improvements caused by the project giving the team the necessary time to do the project right (our experience indicates one day per week is about right) BA 553: Business Process Management

Gaining the Involvement of Workers Addressing the concerns of workers: Explain that they will really have an active role in improvement Help them believe that their ideas will be listened to Tell them about management’s commitment to no layoffs during the project or as a result of improvement efforts Show them how improvement will benefit them Involvement by workers: Have them agree to be at the meetings Let them know that this process will take about one day per week, and that other workers may need to put in more effort while they are in team meetings BA 553: Business Process Management

Addressing the Middle Management Squeeze In the long term, BPM will reduce the middle management squeeze, as it involves employees in implementing improvements to make the process more efficient In the short term, expectations need to be managed. There needs to be a recognition that building long-term capability may reduce short-term performance, but it is worth the investment All employees, from senior management to employees, have anxiety about the potential benefit of change and how it will affect them Recognizing, developing, and implementing a strategy for getting organization-wide support for implementing BPM is essential if the adoption of BPM is to be successful BA 553: Business Process Management

Research Into Middle Managers and Improvement There is much discussion in the literature on the importance of middle managers to the success of organizational improvement efforts. 1 There is also much discussion of the fact that middle managers often resist such improvement efforts. “The reality often observed is that managers act in ways that disempower employees and undermine opportunities for positive, contributive learning.” 2 There is also much written on why they resist, including lack of belief in senior management’s commitment (“program of the month”), lack of a role in the new organization, and conflicting priorities between improvement efforts and daily work So where does all this lead? 1 Owen, Keith, Ron Mundy, Will Guild and Robert Guild (2001), “Creating and sustaining the high performance organization,” Managing Service Quality, Vol. 11 No. 1, pp. 10-21. 2 Perren, Lew and David Megginson (1996), “Resistance to change as a positive force: its dynamics and issues for management development,” Career Development International, Vol. 1 No. 4, pp. 24-28. BA 553: Business Process Management

The Failure Process 1) Senior management operates in a traditional fashion, establishing a “command and control” culture 2) Middle management resistance to change impacts employee attitudes 3) Employee resistance to change blocks learning and slows the transition to BPM 4) Organizations fail to develop the capabilities needed for BPM 5) Resistance combined with lack of capabilities result in the potential of BPM not being achieved 6) Managers view the lack of progress as a justification to revert to the command and control culture they are used to 7) Repeat BA 553: Business Process Management

What is the pathway to success? The organization’s culture must be shifted to be more supportive of learning and improvement One way to get started is to shift the behaviors, actions, and attitudes of all employees Question: How do behaviors, actions, attitudes, norms and values change? Answer: By learning from new experiences that enable us to change our perceptions of “what works best” to achieve desired goals BA 553: Business Process Management

Memory’s Voice (1992), Alkon, D. L., M.D., HarperCollins, Canda. How People Learn Research suggests that existing memories cannot be overwhelmed or eliminated through an act of will or even a day spent in a training class Rather, a new model and its underlying theory must be understood and then experimented with We must gain enough successful experience with a new model to create new memories to overlay the old. These experiences are the foundation of learning Memory’s Voice (1992), Alkon, D. L., M.D., HarperCollins, Canda. BA 553: Business Process Management

Culture Transformation Process Establish a shared vision of the desired or “to be” character Develop new company vision with employee participation Foster behaviors and actions consistent with desired character Leaders change their actions, demonstrate the desired behavior Influence attitudes As in slide 9, behaviors influence attitudes Modify policies and procedures to align with desired culture Establish norms and values that align with “to be” character Desired culture BA 553: Business Process Management

A Process-Oriented Culture What does it look like? An emphasis on process as opposed to hierarchies, a process- oriented way of thinking A cross-functional culture focused on the customer rather than the boss An emphasis on teamwork and personal accountability Measures aligned with processes rather than simply outcomes (covered in session 7) Why develop a process culture? Aligns employees around delivering value to customers How can a process live up to its potential if the company measures performance as it has always done and rewards people for focusing on narrow, functional goals?1 1 Hammer, M. (2007), “The Process Audit”, Harvard Business Review, Vol. 85 Issue 4, pp. 111-123. BA 563: Business Process Management

The Importance of Culture to BPM Remember this slide from session 2? It explains the problem of trying to operate efficient and effective processes in an organization that is managed with a traditional culture. CEO Dept. 1 Dept. 2 Dept. 3 Dept. 4 Direction of Control Functional Hierarchy Direction of Process Flow BA 553: Business Process Management

How to Achieve a Process-Oriented Culture The focus on processes must be pervasive, permeating all aspects of the organization, including: Strategy: plans for achieving many of the organization’s strategic objectives rely on the implementation of process changes Information systems: information systems help cross-functional processes work smoothly rather than simply support departments (to be discussed further in session 12) Roles and responsibilities: managers oversee processes instead of activities and develop people rather than supervise them, and employees work in self- directed process teams (covered in session 8) Decision-making: decisions are made by front line personnel (and managers provide the support and information needed to accomplish this) Training: training for employees is process-based Reward and recognition systems: reward systems are focused on processes as well as outcomes Hammer, M. (2007), “The Process Audit”, Harvard Business Review, Vol. 85 Issue 4, pp. 111-123. BA 563: Business Process Management

How a Culture Shift Impacts Performance Increases personal responsibility, involvement and satisfaction Facilitates the learning needed to improve competencies and develop new products and services Increases the ability of employees who are closest to a problem to use their best judgment in resolving it Establishes an environment where information is made freely available to those who need it Motivates people to use their initiative and creativity to achieve the best they can achieve Creates a culture in which people can more effectively adapt to changing circumstances Provides the framework needed to better serve the internal customer Enhances people’s sense of value in being a member of the organization BA 553: Business Process Management

Example of Culture Shifts Created on Process Improvement Projects This slide and the next document actual changes from surveys completed by front-line workers on two separate projects undertaken by the professor. Organizational Culture Factor Change The readiness of employees to risk doing things a new way + 41% Employee belief that improvement efforts have the ability to really cause positive change + 42% The degree to which the organization takes time to understand the underlying cause of problems rather than the symptoms + 54% The degree to which the organization has driven fear out of the work environment + 29% The level of trust the members of your work group have in your supervisor + 39% The degree to which employees feel proud to work for the plant + 59% The degree to which employees are enthusiastic about being at work + 63% BA 553: Business Process Management

Example of Culture Shifts Created on Process Improvement Projects (Cont’d.) Organizational Culture Factor Change The degree to which you are encouraged to take risks and try new things at work + 42% Employee belief that improvement efforts have the ability to really cause positive change + 32% The degree to which your supervisor's communications are open and sincere + 41% The degree to which your supervisor works with your work group to establish the group's goals The degree to which the organization takes time to understand the underlying cause of problems rather than the symptoms + 46% The level of trust your supervisor shows in the members of your work group + 23% The level of trust between employees at your own level + 24% The level of respect your supervisor shows for the members of your work group + 27% The degree to which employees are enthusiastic about being at work + 35% BA 553: Business Process Management