The Process Level

of Performance

Looking out upon the future, I do not view the process with any
misgivings. I could not stop it if I wished; no one can stop it. Like
the Mississippi, it just keeps rolling along. —Winston Churchill

We have found the Process Level to be the least manage them. We have proposed that the only
understood and least managed level of perform- way to truly understand the way work gets done
ance. Processes are rolling along (or, frequently, is to view an organization horizontally (as a
stumbling along) in organizations, whether we system) rather than vertically (as a hierarchy of
attend to them or not. We have two choices—we functions). When you view an organization
can ignore processes and hope that they do horizontally, you see business processes.
what we wish, or we can understand and

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In previous articles, we discussed the systems the effective management of the business. We
view at the Organization Level. We introduced call these support processes. The third
the Relationship Map as a tool for viewing an category of processes—management
organization as a system. We showed how a processes—includes actions managers should
tremendous amount of learning and eventual take to support the business processes.
improvement can result from the documentation Examples of these types of business processes
and examination of the input-output (customer- appear in Table 5.1.
supplier) linkages depicted in a Relationship
Map. Understanding and Managing the
However, between every input and every output Organization Level
is a process. Our understanding and improve- A process can be seen as a “value chain.” By its
ment are incomplete if we don’t peel the onion contribution to the creation or delivery of a prod-
and examine the processes through which uct or service, each step in a process should
inputs are converted to outputs. While the add value to the preceding steps. For example,
Organization Level provides a perspective, sets one step in the product development process
a direction, and points to areas of threat and may be “prototype market-tested.” This step
opportunity, our experience strongly suggests adds value by ensuring that the product is
that the Process Level is where the most appealing to the market before the design is
substantive change usually needs to take place. finalized.
A clear strategy and logical reporting Processes are also consumers of resources.
relationships (Organization Level) and skilled, They need to be assessed not only in terms of
reinforced people (Job/Performer Level) cannot the value they add, but also in terms of the
compensate for flawed business and amount of capital, people, time, equipment, and
management processes. material they require to produce that value.
At the Organization Level, we “peel the onion” to
What Is a Process? increase our understanding of the customer-
A business process is a series of steps designed sup-plier relationships among functions. At
to produce a product or service. Some the Process Level, we peel the onion by
processes (such as programming) may be con- breaking processes into subprocesses. The
tained wholly within a function. However, most manufacturing process, for example, may
processes (such as order fulfillment) are cross- comprise these sub-processes: scheduling,
functional, spanning the “white space” between tooling, fabrication, as-sembly, and testing.
the boxes on the organization chart.
Some processes result in a product or service Why Look at Processes?
that is received by an organization’s external An organization is only as effective as its
customer. We call these primary processes. processes. Organization Goal can be achieved
Other processes produce products that are only through logical business processes, such
invisible to the external customer but essential to as those listed in Table 5.1 . For example, one of
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an automobile manufacturer's Organization
Goals may be to reduce the time it takes to Table 5.1. Examples of Business Processes.
deliver a car with the options requested by a Generic Primary Processes
customer. The company cannot hope to • Business generation
meet this goal if it has an inefficient ordering • Product/service development and introduction
process or a convoluted distribution • Manufacturing
process. • Distribution
When we view the situation from the top • Billing
down, we see that process effectiveness is a • Order fulfillment
major variable in the achievement of • Customer service
• Warranty administration
Organization Goals. We can also look at the
value of processes from the bottom up. At the Industry-Specific Primary Processes
Job/Performer Level, we can take a variety • Loan processing (banking)
of steps to improve performance. For • Claim adjudication (insurance)
example, we can improve our recruiting and • Grant allocation (government)
promotion practices. We can provide more • Merchandise return (retail)
specific, up-to-date job descriptions, more • Food preparation (restaurant)
effective tools, and more attractive incentives. • Baggage handling (airline)
We can drive decision making down in the • Operator services (telecommunications)
organization. We can empower teams to • User-manual writing (computer)
• Reservation handling (hotel)
solve problems in their work units. However,
even talented and motivated people can Generic Support Processes
improve organization performance only as • Formal strategic and tactical planning
much. • Budgeting
To continue our automobile distribution example, • Recruiting
• Training
salespeople may be thoroughly completing
• Facilities management
order forms, data-entry clerks may be accurately
• Purchasing
cod-ing information, and dock crews may be
• Information management
effi-ciently loading cars onto trucks. However,
the effectiveness of any improvement in their Generic Management Processes
per-formance could be limited by the logic (or • Strategic and tactical planning
illogic) of the total distribution process, made up • Goal-setting
of the order entry, production scheduling, and • Resource allocation
• Human performance management
trans-portation subprocesses.
• Operations review/performance monitoring

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People in jobs such as these can certainly influ- Goals that reflect the contribution that the process
ence the effectiveness and efficiency of the is expected to make to one or more Organization
processes to which they contribute. However, we Goals. In our experience, most processes do not
have found that individual and team problem have goals. While functions (departments)
solving rarely focuses on process improvement. usually have goals, most key processes cross
Furthermore, actions taken in a single organiza- functional boundaries. If we are working in an
tional unit often lead to the reinforcement of the organization in which billing is a key process,
functional silos and the system suboptimization. and if we ask for the goals of the billing process,
The net message is that, over the long haul, the response usually is “Oh, you mean the
strong people cannot compensate for a weak goals of the billing department.” When
process. All too often, management relies on we replythatwe reallydo meanthe billing process—
individual or team heroics to overcome including those steps accomplished outside the
fundamentally flawed processes. Why not fix billing department—we frequently get blank stares.
the processes and enlist our heroes in the battle We believe that measurement is most effective if it
against the competition? is done in relation to targets, or goals. Process Goals
Finally, the Process Level is important because are derived from three sources: Organization Goals,
process effectiveness and efficiency should drive customers' requirements, and benchmarking—
a multitude of business decisions. For example, comparing a process to the same process in an
a reorganization serves no purpose if it doesn’t exemplary organization—is particularly useful. Often
improve process performance. Jobs should be the organization that is best in its class for a given
designed so that people can best contribute to process is not a competitor and is therefore easy to
process outputs. Automation is a waste of study. An organization can learn a lot by
money if it calcifies an illogical process. The piv- benchmarking its inventory management process to
otal link between organization performance and Wal-Mart's and it's product development process to
individual performance can be established only 3M's. One of the Organization Goals of Computec,
through the three variables at the Process Inc., our software and systems engineering
Level—Process Goals, Process Design, and company is to introduce three new software
Process Management. products and two new system integration services
within two years. As a result, Computec's product
The Performance Variables development and product introduction process is
at the Process Level critical to its strategic success. The goals it might
establish for this process include:
Process Goals. Each primary process and each
support process exists to make a contribution to
one or more Organization Goals. Therefore, each
process should be measured against Process

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• We will introduce our first new software prod- product development and introduction—market-
uct within nine months, our second within ing, sales, manufacturing, and field operations.
eighteen months, and our third within twenty- By meeting these goals, this process will make a
four months. significant contribution to the realization of the
• We will introduce two new system integration company’s strategic vision.
services within twelve months.
A second Computec Organization Goal is to re-
• Our five new products and services will gen-
duce the software package’s order cycle to an
erate a total of $4.4 million in revenues and
average of seventy-two hours by the end of next
$660,000 in profits during the first full year after
year. For this goal, Computec’s order-filling
their introduction.
process becomes strategically critical. The goals
• The aerospace industry’s need for each new
for this process might include:
product or service will be supported by current
market research.
• No products will be shipped to incorrect
• Each new product and service will have appli-
addresses because of Computec’s errors.
cations outside as well as within the aerospace
• We will meet our seventy-two-hour goal without
industry.
increasing the cost of order filling.
• New products and services will be unique or
• We will provide our customers with a single
will be superior (in the eyes of the customer)
point of contact for order questions and feed-
to competitors’ offerings.
back.
• New products and services will use our exist-
ing sales and delivery systems.
Given Computec’s Organization Goals, its man-
agers should also establish Process Goals for the
These Process Goals are linked both to Organi-
customer support process. (The impact of
zation Goals and to customers’ requirements.
Process Goals on functions will be discussed in
Note that they are not merely goals for the prod-
the section on Process Management.) In all
uct development department. These Process
cases, the key question for Process Goals is:
Goals also reflect the performance expected of
product development’s partners in the process of

[ Are goals for key processes linked to customer

and organization requirements? ]
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Process Design. Once Computec has estab- As the Computec team documented and ana-
lished goals for its critical processes, its man- lyzed the current process for filling an order, it
agers need to ensure that the processes are identified a number of disconnects:
designed to achieve those goals efficiently. To
• Sales reps take too long to enter orders.
determine whether each process and
• There are too many entry and logging steps.
subprocess is appropriately structured, we
• Sales administration slows down the process
recommend that a cross-functional team build
by batch-processing orders.
a Process Map, which displays the way work
• Credit checking is done for both old and new
currently gets done. While the Relationship Map,
customers.
which is built at the Organization Level, shows
• Credit checking holds up the process be-
input-output relationships among departments,
cause it is done before (rather than concur-
a Process Map documents, in sequence, the
rently with) order picking.
steps that the departments go through to
convert inputs to outputs for a specific The team then created a “SHOULD” Process
process. All too often, a team finds that there Map, which reflects a disconnect-free order-fill-
isn’t an established process; the work just ing process. That map appears in Figure 5.2.
somehow gets done. As the figure shows, the major changes in the
“SHOULD”map are:
Figure 5.1 contains an “IS” (current state)
Process Map of Computec’s order-filling • Direct order entry by sales, eliminating sales
process, as developed by a team representing administration
all functions that contribute to the process. • Parallel order processing and credit checking
The mapping process starts by identifying the • Elimination of multiple order-entry and order-
entities involved with the process, listing them logging steps
on the left-hand axis, and drawing a horizontal
Another possible “SHOULD” process would in-
band for each. Once this is done, the team
clude a Just-In-Time production system, in
(made up of representatives from all the
which packages are assembled to order and
functions listed—possibly including the
not inventoried.
customer) traces the process of converting the
input (orders) through all the intervening steps
“IS” and “SHOULD” Process Mapping is a cen-
until the final required output (payment) is
tral step in Process Improvement Projects. For
produced. The map shows how all functions
example, organizations are finding Process
are involved as the order is processed. This
Maps to be more useful than procedures
mapping format allows the team to see all the
manuals as a format for meeting the
critical interfaces, overlay the time to complete
documentation requirements set forth in the
various subprocesses on the map, and
ISO 9000 standards.
identify “disconnects” (illogical, missing, or extra-
neous steps) in the process.

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 Comp “IS” Proc
Figure 5.1. Computec Order Filling: An “IS” Process Map.
CUSTOMER

Order
generated

order
Order
clarified
FIELD OPERATIONS

SALES Order Order

completed submitted

Order Sales
SALES record
logged updated
ADMINISTRATION

Order Checked
Order OK with Order
logged checked ? no sales rep. corrected
ORDER ENTRY or customer
FINANCE

yes

no
Credit OK
checked ?
CREDIT AND
INVOICING yes

PRODUCTION
CONTROL
PRODUCTION

COPYING

ASSEMBLY
AND SHIPPING

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 Figure 5.1. Computec Order Filling: An “IS” Process Map (cont.)

Software Invoice Payment payment

received received sent

Credit
problem
resolved

n Referred
to Order Held for Customer Payment
sales rep. entered invoice invoiced received

yes

no Copy
Order Inventory Available order Shipment
logged checked ?
placed scheduled
software packages
notice of shipment

Production Diskettes
scheduled copied

Packages
assembled Order Order
and picked shipped
inventoried

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A successful Process Improvement Project re- functional goals can be developed. Any functional
sults in an affirmative answer to the key Process goals established at the Organization Level
Design question: should be modified, if necessary, to reflect maxi-
mum functional contributions to the Process
Goals and subgoals. Since the purpose of a func-

[ Is this the most efficient and effective process

for accomplishing the Process Goals? ] tion is to support processes, it should be measured
on the degree to which it serves those processes.
When we establish functional goals that bolster
processes, we ensure that each department meets
the needs of its internal and external customers.
Process Management. Unfortunately, even the
most logical, goal-directed processes don’t man- Computec’s first step should be to identify each
age themselves. These are the four components function’s contribution to the process. For exam-
of effective Process Management: ple, order entry is the first segment (subprocess)
of the order-filling process. Three functions con-
1. Goal Management: The overall Process tribute to this segment:
Goals should serve as the basis for the establish-
ment of subgoals throughout the process. If we • Sales, which enters the order via telephone
managed a natural-gas pipeline, we would want • Finance, which determines the customer’s
to measure pressure and purity, not only at the credit status
end but also at various critical junctures along the • Production control, which determines the
line. Similarly, we need to establish process sub- inventory status and, if necessary, triggers
goals after each step that has an especially criti- copying to produce additional diskettes
cal impact on the ultimate customer-driven
Process Goals. Figure 5.3 shows some
examples of process subgoals for Computec’s
order-filling process.
Many organizations, particularly in manufacturing
industries, use Statistical Process Control (SPC)
tools. We fully support the use of these tools,
such as control charts, to track process perform-
ance, reveal problems, and maintain process sta-
bility. We have found that the goal-setting
approach depicted in Figure 5.3 helps identify
where SPC tools should be used.
Once process subgoals have been established,

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 Figure 5.2. Computec Order Filling: A “SHOULD”Process Map.

Order
generated
order Credit
problem
addressed
Order Order
SALES
completed submitted

SALES
FIELD

ADMINISTRATION

ORDER ENTRY

yes yes Credit OK no

Order New
CREDIT AND customer checked ?
INVOICING received ? yes
no

PRODUCTION Order Inventory

CONTROL entered adjusted

COPYING Production Diskettes

scheduled copied

ASSEMBLY
AND SHIPPING
order

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 Figure 5.2. Computec Order Filling: A “SHOULD”Process Map (cont.)

Software Invoice Payment

received received sent

yes Order
OK resubmitted
? no Order
cancelled

n
Invoice Payment
Invoice sent received
prepared

Order
stopped
software
notice of
order

Packages
assembled
and
inventoried
Order Order
picked shipped

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One way to summarize this contribution is of documentation, and quality and quantity of
through a Role/Responsibility Matrix. measures. Each function’s contribution to the
On the basis of these contributions, and on the process could also be rated.
basis of the process subgoals displayed in Figure • Designate a Process Owner to oversee the
5.3, Computec should establish functional goals, entire process. (The criteria for selecting
such as those that appear in Table 5.2. Process Owners and a description of their
possible roles are included in Chapter Four-
2. Performance Management. After Computec
teen.)
has established a workable order-filling process
• Identify a permanent Process Team, which
(Figure 5.2) and a set of goals and subgoals for
would meet monthly to review and improve
its performance (Process Goals and Figure 5.3),
process performance.
its managers should establish systems for
• Hold monthly operations reviews, in which
obtaining internal and external customer
process performance would be reviewed first
feedback on the process outputs, tracking
and function performance would be re-
process performance against the goals and
viewed second.
subgoals, feeding back process performance
• Reward people within a function only if
information to the functions that play a role,
Process Goals were met and if the function’s
establishing mechanisms to solve process
contribution goals were met.
problems and continuously improve process
performance, and adjusting goals to meet Process Management is such a pivotal theme
new customer requirements. within the Three Levels of Performance.
During the last few years, we have learned a lot 3. Resource Management: Managers have al-
about managing process performance (which is, ways understood that resource allocation is a
in effect, managing the horizontal organization). major part of their responsibility. However,
We have learned that if processes are to be man- process-focused resource allocation tends to
aged on an ongoing basis (and not just fixed be different from the usual function-oriented
when they break), then managers must establish approach. Functional resource allocation
an infrastructure, which many organizations are usually results from a series of one-to-one
beginning to call Process Management. meetings between a senior manager and his or
Computec senior managers could take several her departmental or subdepartmental
Process Management actions to ensure that the managers. In these meetings, each manager
order-filling process is continuously managed: makes a case for a bigger slice of the pie, and
• Rate the performance of the process, giving the most persuasive presentations are
it a grade in such areas as customer rewarded with the largest budgets and
satisfaction, cost, clarity and thoughtfulness headcount allocations.

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Process-driven resource allocation is the result of cate budgets and costs across a process.
a determination of the dollars and people re- 4. Interface Management: A Process Map (Fig-ure
quired for the process to achieve its goals. After 5.2) clearly displays the points at which one
that is done, each function is allocated its share function (horizontal band on the map) provides a
of the resources, according to its contribution to product or service to another function. At each of
the process. If Process Management is institu- these points, there is a customer-supplier interface.
tionalized throughout an organization, each func- These interfaces often represent the greatest
tion’s budget is the sum total of its portion of each opportunity for performance improvement. A
process budget. process-oriented manager closely monitors
In Computec, for example, resources should be interfaces and removes any barriers to
allocated to each step in the order-filling process, effectiveness and efficiency.
according to the quality, timeliness, and cost As the Computec Process Map shows, the inter-
goals established for that process. Then the var- faces between sales and production control and
ious functions should receive the resources they between production control and assembly are
require to make their contributions to that particularly critical to the success of the order-filling
process. For example, the process budget may process. Senior management and the Process
be divided into order entry, credit checking, Owner should pay particular attention to this “white
scheduling, picking, and shipping. Each of these space.” To ensure proper attention, they should
process segments should receive an appropriate establish and monitor measures that indicate the
chunk of the process budget. The functions re- quality and efficiency of these interfaces.
sponsible for these process segments should
therefore receive budgets that will enable them to
make their process contributions. Activity-based
costing is a tool that can help appropriately allo-

The Process Management questions are:

1 Have appropriate process subgoals been set?

2 Is process performance managed?

3 Are sufficient resources allocated to each process?

4 Are the interfaces between process steps being managed?

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Summary
If we had to pick one of the Three Levels as the
Work gets done in an organization through its pri-
area of greatest opportunity for most organiza-
mary, support, and management processes. If
tions, it would be the Process Level. Perhaps that
you want to understand the way work gets done,
is because it tends to be the least understood
to improve the way work gets done, and to man-
and therefore the least managed level of perform-
age the way work gets done, processes should
ance. Perhaps it is because work gets done
be the focus of your attention and actions. View-
through processes. Perhaps it is because it is the
ing business issues from a process perspective
middle level and, as such, serves as the linking pin
often reveals a need to make radical changes in
between the goals, the design, and the manage-
goals, in the design of business systems, and in
ment at the Organization Level and at the Job/
management practices. The Process Level of
Performer Level. Or perhaps it is because applica-
Performance has significant implications for:
tion of the process tools can address some of the
most fundamental needs facing organizations—
• Executives, who can use the process per-
building a customer-focused organization, quickly
spective and tools to link Organization Goals
and intelligently adapting to new situations, im-
to individual performance, measure what’s
plementing change, and breaking down barriers
really going on in the business, benchmark
between departments.
performance against other companies, es-
tablish competitive advantages, assess the Regardless of the reasons, the Process Level
impact of mergers and acquisitions, and represents a wealth of largely untapped potential.
evaluate alternative organization structures We are learning that it is not enough to manage
• Managers, who can use the process per- results. The way in which those results are
spective and tools to identify and close qual- achieved (the process) is also important. If we are
ity, cost, and cycle time gaps; manage the achieving the results, we need to know why. If we
interfaces with other departments and the in- are not achieving the results, we need to know
terfaces within their own departments; imple- why. In both cases, to a great degree, the answer
ment change; and effectively allocate lies in the process. Once we have processes that
resources are designed and managed to meet Organization
• Analysts, who can use the process perspec- Goals efficiently, we can address the needs of
tive and tools to diagnose business needs the Job/Performer Level.
and recommend improvements that will have
a significant impact on organization perform-
ance, to evaluate actions they are asked to
take, and to facilitate improvement teams

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 Sele
Figure 5.3. Selected Process Subgoals for Computec’s Order-Filling Process.

100% 100% 100% of .01%

Order complete entered credit checks bad
generated within 24 within debts
first time
hours 24 hours
order Credit
problem
addressed
Order Order n
SALES
completed submitted

SALES
FIELD

ADMINISTRATION

ORDER ENTRY

yes Credit OK no
New
CREDIT AND Order checked ?
customer
INVOICING received yes I
?
no

Two
PRODUCTION Order Inventory scheduling
CONTROL entered adjusted errors per
quarter

COPYING Production Diskettes

scheduled copied

ASSEMBLY
AND SHIPPING
order

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 Figure 5.3. Selected Process Subgoals for Computec’s Order-Filling Process (cont.)
No
incorrect No
incorrect
products or 95%
quantities addresses
received
within 72
hours

$3.50
to process Software Invoice Payment
an order received received sent

yes
Order
OK no resubmitted
? Order
cancelled

100%
shipped
within 48
hours
software

n
Invoice Payment
Invoice sent received
prepared

Order
stopped
order

of

Packages
assembled
and
inventoried
Order Order
picked shipped

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