Organisations that want to focus more on bringing the best value to their organisation and their customers should start thinking about re-engineering their business processes. Business process re-engineering does not only entail instituting piecemeal reforms in the organisation. It can also come in the form of a complete overhaul of the organisation’s foundations. One can think of business process re-engineering or BPR as an intervention that transforms a company into a more valuable organisation. Many experts consider BPR as one of the most radical change interventions any organisation can ever implement.
Effect of Organisational Structures on Performance
Most companies have a structure that adheres to the principles of Adam Smith’s concept of division of labour. Each organisation comprises of different units that serve to specialise in one specific aspect of the organisation’s operation. Many believe that such a structure is more efficient, since employees can specialise in one specific task. People can get very proficient at what they do. This allows the company to thrive by improving the efficiency of worker allocation that can translate to greater production at minimal costs.
Unfortunately, specialisation can also lead to a sense of monotony or boredom in one’s work. There is also the absence of responsibility for other aspects of the job, since one is only responsible for his or her task. There are also intriguing studies that show such an organisational structure can lead to a retardation in the personality of employees. There is no growth and their craftsmanship eventually decline over time. In certain instances, there can also be a loss of pride in one’s work.
Overall, the persistence of division of labour in an organisation can lead to increased production costs. There will be some aspects of operation that are no longer needed, but the organisation still must pay for them
Nature of Business Process Re-Engineering
The 1990s saw the emergence of business process re-engineering. There are two schools of thought when it comes to organisational transformation. On one hand are those in favour of a more drastic change in an organisation’s fundamentals. The other group contends that re-engineering can still occur with subtle changes in an organisation’s foundation.
- Incremental Change vs. Fundamental Rethink and Radical Change
Hammer and Champy believe that re-engineering business processes involve the complete overhaul of an organisation’s fundamentals. This is likened to having a rebirth, with the organisation completely overhauling and changing everything from the ground up. However, there are also those who espouse a more gradual approach to re-engineering. The Japanese business ideology of Kaizen is a good example. For the proponents of incremental change, an organisation can still strive to be the best by instituting efforts at continuous improvement.
- Localised Piecemeal Change vs. Organisation-wide Wholesale Transformation
Organisations that want to re-engineer their business processes should look to transform the organisation. Unfortunately, this is very challenging when one is talking about an organisation that has thousands of employees and tens of different departments. Such situations may benefit more from localised piecemeal changes than an organisation-wide transformation.
- Collaborative Effort
Conventional organisational structures follow a top-down flow of communication and decision-making. If an organisation wants to re-engineer its processes, then it should espouse better collaboration.
The Process of Re-Engineering Core Business Processes
Re-engineering the different processes of a business organisation requires a very systematic and organised approach. It consists of several steps that starts with the generation of a very clear understanding of current processes. The intervention culminates in the effective implementation of the newly-designed processes.
- Process Mapping
BPR starts with a clear idea of the different processes that an organisation currently has. Instead of reviewing these processes textually, it is more helpful to do it use diagrams. Process mapping allows organisations to have a very clear view of the different steps that are involved in a workflow.
- Identifying Processes for Re-engineering
The process map can give organisations an overview of the different processes that they can do without, as well as the processes that they need to re-engineer.
- Understanding the Selection Process
It is important for organisations to define the different criteria for inclusion and exclusion into the re-engineering process. This helps provide a clear idea of which of the identified business processes receives priority when it comes to effecting change.
- Defining Key Performance Objectives
The goal of business process re-engineering is to create a new process that is more efficient and more effective than the present system. As such, managers in charge of designing the BPR should also define the different core performance objectives.
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- Designing New Processes
The key performance objectives defined in the preceding step serve as a guide for the creation and development of new business processes. These new processes should be able to address the requirements of the set objectives.
- Testing
It is often wise for organisations to ‘walk’ the process by performing the different steps of the new process themselves. This will help in the identification of loopholes in the newly-designed process. However, this is not enough. The organisation should also put the new process into a trial run. Testing the new process in the real world will help uncover any deficiencies, while also highlighting its strengths.
- Implementation
The last step in business process re-engineering is its full implementation. The organisation must have trained and trustworthy people to help monitor the effective implementation of the new process.
Outcomes of Business Process Re-Engineering
There are several studies that show the effectiveness of BPR interventions in improving cost efficiency, service efficiency, and overall service quality. These results come from different sectors of society, including aviation, tourism, travel, automotive, and the manufacturing industry.
Unfortunately, there are organisations that failed in their attempt to re-engineer their business processes. Experts say that there are two fundamental contextual factors that can have a significant impact on the success of BPR interventions. These include both technical and human factors. The composition of the team and the extent of organisational commitment are two very important factors that can spell the success of a BPR intervention. Another factor is the effectiveness of the organisation’s change management.
Re-engineering critical business processes is not for every organisation. The intervention is most successful in organisations that have a very strong, collective desire to rethink their fundamentals and institute the necessary changes from the ground up. Change agents should work with the upper management in determining the nature of their BPR intervention and in carrying out the different steps to re-engineering their business processes.