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Archive of posts tagged organizational structure

The Effects of Process-Oriented Organizational Design on Firm Performance

This article briefly summarizes the study “The Effects of Process-Oriented Organizational Design on Firm Performance”, by M. Kohlbacher and H. A. Reijers, which will be published in the Business Process Management Journal.

The study investigates which process management components (i.e. process design and documentation, management commitment towards process management, process ownership, process performance measurement, corporate culture in line with the process approach, application of continuous process improvement methodologies, and organizational structure in line with the process approach) are important for improving customer satisfaction, product quality, time-to-market speed, delivery speed, delivery reliability, and financial performance.

The empirical findings of the study reveal that

  • process performance measurement is important for improving product quality.
  • a process-oriented organizational structure is important for improving time-to-market speed.
  • the application of continuous process improvement methods is important for improving financial performance, and
  • a culture in line with the process approach is important for improving customer satisfaction, delivery speed, delivery reliability, and financial firm performance.

The paper will be published in the next issue of the Business Process Management Journal (Vol. 19, No. 2, 2013).

Developing an Enterprise Process Model Based on Cascading and Segmentation of Business Processes: A Case Study

This article introduces the study “Process Cascade- and Segmentation-Based Organizational Design: A Case Study” by Kohlbacher M. and Weitlaner D., which was presented at the IEEE International Conference on Industrial Engineering and Engineering Management in Singapore in December 2011.

The paper discusses the approach of process cascading and segmentation, a design principle which helps organizations to build its structure around its customer-oriented business processes. Cascading of processes is an approach where the organization’s business process design is based on internal customer-supplier relationships which ensure that every business process of the organization has a clearly defined (internal) customer which places an order and also receives the results. Segmentation of business processes refers to the idea of creating process variants of business processes which face heterogeneous market and/or customer requirements. Both principles – cascading and segmentation of business processes – complement each other. The paper shows how these design principles are applied in practice by using an Austrian manufacturing firm as a case study.

The poster of the presentation can be found here; the paper is available via IEEE Xplore.

Process Owners: How to Help Them Succeed

This is a brief summary of the article “How to help process owners succeed”, posted on Harvard Business Review Blog Network by Brad Power.

According to Brad, six things militate against success in the role of the process owner:

  • The management team’s attention shifts to other priorities.
  • Process owners misunderstand their role.
  • Process owners are not held accountable for improvements.
  • Process owners are not senior enough to have the necessary influence.
  • The organizational structure to accommodate the role is too complex.
  • Employees are uncomfortable belonging to business processes rather than functions.

Brad lists 6 specific bullet points how to address these issues:

  1. Make the process owner role permanent and incorporate it into overall performance management.
  2. Select process owners with strong leadership skills and develop those skills even further.
  3. Make the process owner accountable for how well the process performs.
  4. Give the process owner organizational power.
  5. Minimize disturbance to the organizational structure. Create process owners outside the formal organization with a very small staff, leave most people in their functional organizations, and clarify the process owner’s role with respect to the functions and business units they will work with.
  6. Help employees get comfortable thinking in terms of end-to-end activities that together generate value to customers. Encourage cross-departmental activities that solve customer problems, and reward cross-departmental teamwork.

Survey on Process Management: Structure follows Process

In the process approach, it is the process which comes to the fore, and not the existing organizational structure (Becker et al., 2004).This article discusses the concept of structure follows process which was investigated by the process management survey. Survey details (research design, sample, etc.) can be found here.

A process-oriented organization has adapted its structure to the process view. Several authors stress that the organizational structure should be aligned with the organization’s business processes (Suter, 2004; Gaitanides, 2007; Kiraka and Manning, 2005). 45% of the surveyed firms state that they derived their organizational structure from the organization’s business processes.

The item “The organizational structure is derived from the organization’s business processes” was rated by the firms in the sample as follows:

  • 22,96%: Disagree
  • 31,85%: Neither agree nor disagree
  • 45,19%: Agree
The organizational structure is derived from the organization's business processes.

The organizational structure is derived from the organization's business processes.

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.

The Characteristics of Process Orientation. Part 5: Process-Oriented Organizational Structure

“Structure follows process”: In the process approach, it is the process which comes to the fore, and not the existing organizational structure (Becker et al., 2004). A process-oriented organization has adapted its structure to the process view. Several authors stress that the organizational structure should be aligned with the organization’s business processes (Schantin, 2004; Suter, 2004; Gaitanides, 2007; Osterloh and Frost, 2006; Kiraka and Manning, 2005).

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.