Benefits of process-based management
A growing number of companies have implemented this system to “document what they do, and do what they document”
One of the most effective management tools to improve how an organization is managed is to implement process-based management.
A process is a sequence of activities aimed at generating added value by transforming an input into an output, which can in turn be the input for another process. All the activities within an organization, from buying raw materials to handling a claim, can and should be considered as processes.
At the beginning of the 20th century, the North American business owners Frederick Winslow Taylor and Henry Ford introduced initiatives in their organizations aimed at improving the processes and the results of mass production. However, process-based management took off in the 1980s. In 1987, it became one of the eight principles of the ISO 9001 quality management standard. A growing number of companies have implemented this system to “document what they do, and do what they document” (which is how the nature of this technique is usually summarized). Examples in Spain include Cepsa and BBVA, and the distribution giant Amazon on an international level. In addition, an increasing number of companies in Spain and the rest of the world have obtained ISO 9000 certifications or implemented process-based management.
All types of organizations can benefit from process-based management. The main advantages are:
- It provides a clear and global vision of the organization and of its internal relationships.
- An organization that is managed with processes is able to be more flexible than one based on hierarchies.
- Since processes are transversal and affect different organizational units, the interrelationships between people are improved.
- Each process is assigned individual(s) who are responsible for it. Everyone in the organization understands their role in each process and knows how to help reach the organization’s objectives.
- The work is not performed in an isolated manner and only focusing on having one part of the organization benefit. Instead, the goal is to work towards the common good.
- It allows optimizing the use of resources, thereby lowering and optimizing management and operating costs.
- Processes are measured, and objectives and indicators are established for each one.
- Of the metrics that are analyzed, the degree of customer satisfaction is very important. The organization is aimed at meeting customer needs.
- It fosters the continuous improvement of processes. Inefficiencies, organizational weaknesses, bottlenecks, and errors are identified quickly and methodically, thereby reducing risks.
The ultimate goal of identifying and describing a company’s processes is, without a doubt, to implement them efficiently
Implementing this management focus does not necessarily involve making changes to a company’s organizational chart. However, the new processes that are defined may reveal a role that is not addressed by the existing structure. The ultimate goal of identifying and describing a company’s processes is, without a doubt, to implement them efficiently. To guarantee that this occurs, the following should be taken into consideration:
- Change management is needed in order to help transform a hierarchical organization into one that is managed by processes.
- A key factor is that the company’s management must support and lead the project, include it in the strategic business objectives, and be able to convey it to the entire organization.
- A communication plan and a training plan must be prepared as key elements of change management.
- It is important for the entire organization to make an effort and participate in the change process with a high level of commitment.
- All employees must be able to adapt in order to assume their role in each of the processes they are involved in.
Implementing process-based management is not only an operational change for organizations; it is also a change in mentality and in corporate culture. It involves breaking silos and having employees shift their focus from their department in order to view the company as a whole and understand that their work is an output that benefits the entire organization.