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Archive of posts tagged management commitment

Process Management in Service Organizations VS. Manufacturing Companies

How is process management applied in service organizations? Do service providers apply process management practices differently to manufacturers? Does firm size play a role? The brand new paper “Process Management Practices: Organizational (Dis-)Similarities” by D. Weitlaner and M. Kohlbacher, published in the The Service Industries Journal a few days ago, addresses these questions. The study empirically explores the adoption of BPM practices contingent upon different industry affiliations and firm sizes. The summarized findings are as follows:

Process management in service organizations vs. manufacturing companies:
The findings indicate that manufacturers are more process-oriented than service providers. In particular, manufacturing companies are more likely to apply continuous process improvement methods, to have a stronger management commitment toward process orientation, to have process owners on site, and to perform process performance measurement. In particular, the greatest difference between service providers and manufacturers is found in the process performance measurement practice. No significant difference is found in the context of process-supportive corporate culture as well as process documentation.

Process management in small vs. large organizations:
Large companies are more process-oriented than small ones. More specifically, they are more likely to apply continuous process improvement methods, to have a stronger management commitment toward the process view, to have implemented the process owner role, to measure process performance, and to exhibit a higher level of process documentation. However, process-supportive corporate culture seems to be independent from firm size.

The Components of Business Process Management

This article summarizes the study “Process orientation: Conceptualization and Measurement” by Kohlbacher M. and Gruenwald S., to be published in the Business Process Management Journal in 2011, Volume 17, Issue 2.
The paper empirically explores the “building blocks” (“components”) of business process management. The article first considers the following definitions of business process management:

  • The approach of process orientation emphasizes processes as opposed to hierarchies (McCormack and Johnson, 2001).
  • Process orientation means focusing on business processes ranging from customer to customer instead of placing emphasis on functional structures (Reijers, 2006).
  • Process management capitalizes on improving an organization’s efficiency through high-level coordination of an organization’s activities in a rationalized system of end-to-end processes (Benner and Tushman, 2002).
  • The process management philosophy is a comprehensive problem-solving heuristic that is process-oriented, customer-focused, fact-based, and participative throughout a firm (Winter, 1994).
  • Business process management incorporates the discovery, design, deployment, execution, interaction, control, analysis and optimization of business processes (Smith and Fingar, 2003).

Based on these definitions, the paper builds up a model consisting of different business process management aspects. The final empirical analysis of the model suggests that process management is a concept consisting of seven “building blocks” (“components”):

  1. design and documentation of business processes
  2. management commitment towards process orientation
  3. the process owner role
  4. process performance measurement
  5. a corporate culture in line with the process approach
  6. application of continuous process improvement methodologies, and
  7. process-oriented organizational structure.

At present, many managers are looking for ways to make their organization more process-oriented. The findings of the paper indicate that business process management involves many different aspects, ranging from design and documentation of business processes to process-oriented organizational structure. The developed model in the paper has potential use for an organization to review its internal progress of process-oriented organizational design and has potential use for process assessment, either as an alternative or supplementary measurement of process capability and organizational maturity.

Continuous Process Improvement, Business Process Orientation and Innovation

This article is a brief summary of the paper “Dynamic Capabilities through Continuous Improvement, Organizational Process Alignment and Innovation” by M. Kohlbacher and M. Ringhofer, which will be presented next week at the 30th Annual International Conference of the Strategic Management Society in Rome (http://rome.strategicmanagement.net). The paper examines the interaction effect of continuous improvement initiatives (e.g. Six Sigma or KAIZEN) and business process orientation on innovation. The empirical study uses a sample of 67 Austrian manufacturing companies.

 The empirical evidence shows that firms which apply continuous improvement methods and at the same time

  • have a culture in line with the process approach (i.e. a culture based on teamwork and customer orientation; and where  process workers have detailed knowledge of how their process is executed, etc.) or
  • a strong top management commitment towards the process approach (i.e. where management does not perceive the process program as a single project, but as a way of managing the business; and where management is actively engaged in the process program)

can develop their products to the market more quickly. The paper will be presented in Track I, Session 203.

Survey on Process Management: Management Commitment towards Process Management

This article discusses the issue “management commitment towards the process approach” of the process management survey. Details on the survey (research design, sample, etc.) can be found here.

In most of the firms, management supports the process program (see figures below). It is worth mentioning that about 25% of the firms state that senior executives are not committed to process management.

The item “The management of our organization perceives process management not as a single project, but as a way of managing the business” was rated by the firms in the sample as follows:

  • 26,17%: Disagree
  • 32,89%: Neither agree nor disagree
  • 40,94%: Agree

The item “There is at least one senior executive who has taken leadership of, and responsibility for, the process program” was rated by the firms in the sample as follows:

  • 25,33%: Disagree
  • 21,33%: Neither agree nor disagree
  • 53,33%: Agree

The item “The senior executive team is actively engaged in the process program” was rated by the firms in the sample as follows:

  • 25,50%: Disagree
  • 28,86%: Neither agree nor disagree
  • 45,64%: Agree


The Characteristics of Process Orientation. Part 2: Management Commitment

In a process-oriented organization, management needs to support the process program. Without the support of senior executives, the process idea cannot unfold to its full potential. There is a high risk for process management to fail if senior executives do not undertake necessary leadership roles and do not promote process-oriented thinking (Hinterhuber, 1995). Process oriented initiatives are less likely to secure benefits unless managers come to a consensus and an understanding of such initiatives (Edwards et al., 2000).

  • Process orientation must be a long-term commitment rather than a quick fix. Management should perceive process management not as a single project, but as a way of managing the business (Hammer, 2007).
  • In an ideal case, the organization has established a so-called chief process officer (CPO) who deeply understands the concept of the process approach and who is centrally responsible for the advancement of the enterprise-wide business process management (Schmelzer and Sesselmann, 2006).
  • The senior executive team should be actively engaged in the process program (Hammer, 2007),  e.g. by setting process performance goals or deciding between several process design variants.

Main Characteristics of a Process-Oriented Organization

According to (Hammer, 2007; Harmon, 2007; Hinterhuber, 1995; Melan, 1989; Reijers, 2006), an organization which has adopted the process-view exhibits the following characteristics:

First, a prerequisite for managing an organization based on its processes is to know which business processes are performed within the organization and how they are related to each other. Hence, a process-oriented firm explicitly designs and documents its business processes.

Second, management needs to support the process program. Without the support of senior executives, the process idea cannot unfold its full potential.

Third, the existence of process owners is the most visible difference between a process enterprise and a traditional organization. A business process needs to have a manager who has end to end responsibility of the process.

Fourth, a process-oriented organization comprehensively applies the concept of process performance measurement. By focusing measurement on processes rather than functions, alignment and common focus across separate organizational units can be achieved. Implementing measures and taking corrective actions are operating precepts of process management.

Finally, there are other characteristics a process-oriented organization exhibits, including a process-oriented corporate culture (e.g. teamwork, readiness to change, and customer focus), IT systems which seamlessly support business processes, a process-oriented organizational structure, people and expertise (e.g. existence of process redesign and change management experts), process-oriented HR systems (e.g. existence of an incentive system emphasizing the process’ needs) and the existence of a BPM office coordinating and integrating process projects.

Further information on the characteristics of process orientation can be found in this blog post: The Components of Business Process Management.

Information on which process management components are important for improving firm performance can be found here: The Effects of Process-Oriented Organizational Design on Firm Performance.