Business Process Management.
Case study regarding the course Business Process Management. Attached are both the article and the required questions to be answered regarding the case.
III. SUMMARY
Provide a summary in your own words on the article you requested to read and analyze in the following space.
IV. KEY LEARNING POINTS
Identify the key learning points in the read and analyze assigned activity.
V. RELEVANT STATEMENTS TO THE SESSION
While you reading, identify the relevant statements to the session and insert them in order in the following space.
VI. CRITICAL ANALYSIS
This is the most important section in your analysis. To complete it sucessfully, learner is to consider the following guiding steps:
? Present arguments coherently, supported by evidence and facts to substantiate on why you may take a particular stance and/ or position towards a particular approach whether against or in support of it;
? Capable of bridging the gap between the theory and conceptual work with the application under consideration.
VII. PRACTICAL IMPLICATIONS
How could you apply the subject matter from the article in a real business case?
VIII. LEARNING REFLECTIONS
What have you learnt? Critical thinking is about lessons learnt to be drawn from the analysis.
Experiences of implementing
process management:
a multiple-case study
Klara Palmberg
Lulea° University of Technology, Lulea° , Sweden
Abstract
Purpose – Process management is becoming an essential part of contemporary organizations in
all industries. However, many organizations experience problems during the implementation of
a process management approach. The purpose of this paper is to explore and describe the
organizational implications when implementing process management, how to handle the relationship
between the functional organization and a process perspective, and the roles of managers, teams, and
individuals.
Design/methodology/approach – A multiple-case study approach is used to get an extensive
picture of and analyze how three Swedish organizations have worked with process management.
Findings – The studied organizations have introduced a process management structure into their
functional organizational structure, including the introduction of new management positions such as
process owners and process leaders. A discourse is identified in earlier research between those arguing
for a full transformation from a functionally oriented to a fully process-oriented organizational
structure, and those promoting a more moderate transformation where a process management
structure is “matrixed onto” the existing organization. The analysis could be interpreted as supporting
the second line of reasoning, where the functional and process structures co-exist in the organization,
creating a constructive dynamic.
Originality/value – The paper provides two major contributions. First, the empirical descriptions
and analysis of implementing process management contribute to the knowledge and understanding
among both practitioners and researchers. The second major contribution is the identified need of
co-existence of a process and functional perspective, and the implication that complexity is created
rather than reduced in organizations.
Keywords Process management, Business process re-engineering, Organizational structures, Sweden
Paper type Case study
1. Introduction
Processes and process management are becoming an essential part of contemporary
organizations in all industries. Quality management, Six Sigma and Lean all build on
components of working with and improving organizational processes (Andersson et al.,
2006; Dahlgaard and Dahlgaard-Park, 2006). The new ISO 9001:2008 standard is
placing considerable emphasis on processes (ISO, 2009), and process management is a
significant part of most excellence models, such as the Malcolm Balridge National
Quality Award (NIST, 2009) and the EFQM Excellence Model (EFQM, 2009). When
exploring if Six Sigma and Lean are new methods, or if they are repackaged versions
of previously popular methods – total quality management and just-in-time – Na¨slund
(2008) emphasises the importance of placing organizational change and improvement
methods in general under a process management umbrella.
Zairi (1997) stated, based on a literature review, that the word “process” had become
a part of everyday business language. Hammer and Stanton (1999) argued, on the basis
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1463-7154.htm
Process
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Business Process Management
Journal
Vol. 16 No. 1, 2010
pp. 93-113
q Emerald Group Publishing Limited
1463-7154
DOI 10.1108/14637151011017967
of a study of IBM and Microsoft among others, that for most companies there is no
real alternative to shifting from a traditional business to a process enterprise.
Organizations in Sweden have been working explicitly with process management since
the end of the 1980s. The methodology has been used in order to reduce lead times
and increase customer focus both inside and outside the organization, and this
development has been attributed to escalating demands from customers regarding
quality (Egnell, 1995).
Even though process management is a common approach today, many organizations
express concerns about problems with implementing and maintaining a process
management approach. In a study of quality award recipients in Sweden, Hansson
(2003) found that many small organizations perceive work with process management
to be problematic. Based on a survey of the application of process management
in Swedish organizations Forsberg et al. (1999) state that the expectations for results
are unreasonably high. Implementing process management appears to be rather
demanding: “In practice, however, the process approach seems difficult to understand
and to put into action” (Rentzhog, 1996, p. 13).
In a paper on the definitions and models of process management, the Palmberg (2009)
concludes that in both research and in applications in organizations there is a string
focus on the technical parts of process management; the definitions of a process, the
levels and categorizations of processes, and the techniques for mapping
and documenting processes on an activity level (Palmberg, 2009). Many organizations
devote extensive resources to web-based documentation systems, presenting their
processes in several levels, from main processes down to individual tasks, without
achieving the planned effects. This is combined with the often seen confusion and
discontent among senior management regarding the perceived lack of clear results from
implementing process management.
Through a literature review of the area, Hellstro¨m and Peterson (2005) conclude that
the literature is foremost built on theoretical reasoning, resulting in a large number of
how-to-do checklists. Furthermore, they argue that there is a lack of empirical research
into the effects of process management. Hellstro¨m and Peterson (2005) believe that
“despite a decade of experience of practicing process-oriented management, certain
fundamental problems still beset its successful application and causes practitioners
concern.” Based on a literature review, O’Neill and Sohal (1999) reach the same
conclusion, and state that more empirical research is needed.
Several empirical articles covering tools and methodologies for mapping and
improving single processes have been identified (Ku¨ng and Hagen, 2007; Sandhu
and Gunasekaran, 2004; Ongaro, 2004, among others). However, few empirically
based articles have been found on the organizational issues of implementing process
management, how to handle the relationship between the functional organization and a
process perspective, and on the roles of managers, teams, and individuals.
Based on the arguments above that process management is becoming essential in
organizations, that many organizations experience problems during implementation,
and the expressed need for empirical research, the purpose of the paper is to explore
and describe the organizational implications when implementing process management.
It describes the experiences of introducing process management in three different
organizations. The overarching questions have been:
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. What was the purpose and what were the results of implementing process
management?
. How is the ability to drive improvement affected when implementing process
management?
. What are the effects experienced by individuals when implementing process
management?
. How are organizational structures, roles and responsibilities affected when
implementing process management?
The paper is displayed as follows: as a part of a further introduction of process
management, the next sections present definitions of process management, the purposes
and results of implementing process management found in the literature, and different
process maturity models. The next section describes the methodology used when
performing the case studies, followed by case descriptions of the organizations studied.
The case descriptions are then summarized and analyzed. Finally, conclusions are
drawn and a discussion of the implications is presented.
1.1 Definitions of process management
The concept of process management is not something entirely new. Shewhart (1931)
was one of the first to argue for process control in favor of product control. During the
1970s, methodologies for working with processes were developed under labels such as
just-in-time and lean production (Schonberger, 1986). In the 1980s and 1990s, the scope
of process control was expanded to encompass a corporate emphasis, including all
functions of an organization. A great deal of attention was focused on business process
re-engineering, as described by, for example, Hammer and Champy (1993). Process
management has been on the agenda since the early 1980s, but unlike that of many
other management concepts, the interest in process management has remained high
(Hellstro¨m, 2006).
A recent literature review on process management (Palmberg, 2009), covering
77 articles, indicates that there are no common definitions of the concepts of processes
and process management.Aprocess definition is presented as “A horizontal sequence of
activities that transforms an input (need) to an output (result) to meet the needs of a
customer or stakeholder” (Palmberg, 2009, p. 207). When it comes to a definition of
process management, two different movements are identified. The first movement (A),
focusing on the management and improvement of single processes, is summarized as:
“A structured systematic approach to analyze and continually improve the process”
(Palmberg, 2009, p. 210). The second movement (B) shares a more holistic view on
process management as a part of managing the whole organization and is defined as:
“A more holistic manner to manage all aspects of the business and as a valuable
perspective to adopt in determining organizational effectiveness” (Palmberg, 2009,
p. 210).
1.2 Purpose and results of implementing process management
The purposes found in the literature review of implementing process management
(Palmberg, 2009) include: to remove barriers between functional groups and bond
the organization together (Jones, 1994; Llewellyn and Armistead, 2000); to control and
improve the processes of the organization (Melan, 1989; Pritchard and Armistead, 1999;
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Biazzo and Bernardi, 2003; Sandhu and Gunasekaran, 2004); to improve the quality
of products and services (Melan, 1989; McAdam and McCormack, 2001; Sandhu
and Gunasekaran, 2004); to identify opportunities for outsourcing and the use of
technology to support business (Lindsay et al., 2003; Lock Lee, 2005); to improve the
quality of collective learning within the organization and between the organization and
its environment (Bawden and Zuber-Skerritt, 2002); to align the business process
with strategic objectives and customer needs (Lee and Dale, 1998); and to improve
organizational effectiveness and improve business performance (Jones, 1994;
Elzinga et al., 1995; Armistead et al., 1999).
Sentanin et al. (2008) present a case in a Brazilian public research center where the
purpose of implementing process management was to understand its core processes
in order to continue operating effectively and gaining competitive advantage. A survey
from manufacturing plants in the USA shows that process management is one of the
core quality principles that have significant impacts on quality (Zu, 2009).
Armistead and Machin (1998) present a description of the adoption of process
management at Royal Mail, UK, where the driver was declining market shares and
dissatisfied customers and employees. The result described was that the process
view allowed for a genuine understanding of what quality is from the viewpoint of
the customer, and that the employees in the operations understand where they fit
(Armistead and Machin, 1998).
The results achieved from implementing process management in a Swiss bank
are described by Ku¨ng and Hagen (2007) as reduced cycle time, increased output
per employee, and increased quality of work products. Process re-engineering and
management logic and techniques are used as enablers for the successful introduction
of one-stop shops in a number of Italian municipalities; the approach resulted in
reduced throughput times and a single interface with entrepreneurs was established
and empowered (Ongaro, 2004).
Empirical research at Volvo Cars between 1994 and 2000 (Hertz et al., 2001) describes
the results of the work with process management as decreased inventory cost, shorter
lead times, increased delivery precision, and higher customer satisfaction. Forsberg et al.
(1999) found, based on a survey of the application of process management in Swedish
organizations, that the introduction of process management gave positive results in the
following areas: common language, cooperation, customer orientation, cost, lead time,
learning abilities, holistic view, and standardization.
Findings similar to those of Forsberg et al. (1999) have also been reported by Garvare
(2002). Telephone interviews with managers of 62 Swedish small and medium-sized
enterprises revealed that in their opinion the general response from the personnel when
implementing process management had been positive or very positive.Amajority of the
respondents claimed that since the introduction of process management their company
had improved its financial result, recognized increased customer satisfaction, increased
its customer base, become more efficient and had reached a higher level of delivery
accuracy. The main problem areas due to the implementation of process management
included bureaucratic documentation procedures and difficulties when trying to involve
older personnel and middle managers.
DeToro and McCabe (1997) state that a change towards process management
requires not just the use of a set of tools and techniques, but a change in management
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style and way of thinking. According to Rentzhog (1996), the implementation of
process management includes both structural and cultural changes to the organization.
1.3 Process maturity models, organizational structures, and roles
Several models of process maturity have been described in the literature; see examples
in Table I. Sentanin et al. (2008) present a maturity model developed by Goncalves
(2000), describing five stages (A-E) of companies moving towards a process-based
organization, from a strictly functional model to a stage essentially based on processes
(the original article has not been used because it is written in Spanish). Sentanin et al.
(2008) use this model to identify the process maturity level of their case, a Brazilian
public research center that is placed in the second stage (B).
The second process maturity model is presented by Lockamy and McCormack
(2004), describing the stages from an ad hoc to an extended maturity level. The third
model is based on empirical research at the Swedish car company Volvo between 1994
and 2000 (Hertz et al., 2001). Hertz et al. (2001) present a three-level model combining
the orientation (production, cost, and network) with the organizational focus
(functional, project, and process).
The first two maturity models by Goncalves (2000) in Sentanin et al. (2008)
and Lockamy and McCormack (2004) argue for a full transition from a traditional
functional organization (Stage A or ad hoc) to an organization fully based on the
processes (Stage E or extended); see Figure 1 and the transition all the way from Stage I
– a strictly functional organizational structure – to Stage III – a strictly process-based
organizational structure.
Hertz et al. (2001) describe a conflicting, more moderate transformation, where a
process management structure is “matrixed onto” the existing organization, as in
Stage II – a matrix with both a process and a functional organizational structure – of
Figure 1. In the same line of reasoning, Ongaro (2004) concludes that process
management should not be seen as a question of all or nothing, but as a continuum
between better process-related knowhow of the employees to an organizational and
technological solution. Also supporting a more moderate line ares Ku¨ng and Hagen
(2007, p. 86), who state that: “Process management does not entail the absence of
traditional hierarchical relations [. . .] Process management usually leads to a matrix
framework.”
Hammer and Stanton (1999) argue that most companies overlay new processes on
established functional organizations, with possible negative consequences since the
traditional organization – with job definitions, performance measurement systems,
and managerial hierarchies – do not always support the performance of processes.
Hammer (2007) states that the horizontal processes pull people in one direction, and the
traditional vertical management system might pull them in another.
There is possibly a danger if working too hard on building a prominent process
management structure within an organization, a new hierarchical structure, going
horizontally through the organization instead of top-down, could be created. Silvestro
and Westley (2002) present an analysis of functional and process structures and
conclude that both structures have both benefits and limitations.
A similar discourse can be seen in the area of roles and responsibilities. On one side,
Ongaro (2004) argues that the process owner must have authority over process aims
and staff resources. On the other side, Hertz et al. (2001) identify process managers
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Goncalves (2000) in Sentanin et al. (2008, p. 485) Lockamy and McCormack (2004, p. 275) Hertz et al. (2001, p. 138)
Stage A: no decisive steps towards a processbased
organization. Can only perceive their
manufacturing/core process
Ad hoc: processes are unstructured and ill defined.
Organizational structure is based on traditional
functions
Production orientation/functional organization:
focus on labor productivity, delivery to stock, and
product quality
Stage B: identified processes and sub-processes,
but focuses on functions. Started reducing
bottlenecks
Defined: basic processes are defined and
documented. Organizational structure includes a
process aspect
Stage C: identified and improved core processes.
Functional mentality with power in the functional
units. Might add technology to core processes and
eliminate non-value-adding activities
Linked: process management is employed with a
strategic intent. Broad process structures are put
in place outside traditional functions
(breakthrough level)
Cost orientation/project organization: focus on
delivery speed, total quality management and
process reengineering
Stage D: distribution of resources in core
processes. Appointment of process owner
responsible for managing each core process.
Traditional organizational structure. Success in
improving isolated processes
Integrated: organizational structure is based on
processes; traditional functions begin to
disappear. Process measures and management
systems are deeply embedded in the organization.
Cooperation with suppliers and customers on
process level
Stage E: organizational structure designed based
on the logic of core processes
Extended: multi-firm networks with collaboration
between legal entities built on trust and mutual
dependency
Network orientation/process organization: focus
on speed and precision, customer satisfaction and
network effectiveness
Table I.
Process maturity models
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without formal authority. Hammer and Stanton (1999) argue that the process owner
has to be a permanent role and must have the responsibility for and authority over;
designing the process, measuring its performance, and training the frontline workers.
From the case of a Brazilian research center, Sentanin et al. (2008) present a reason for
resistance to a process organizational structure among managers, as they lose authority
and power as well as their financial losses caused by the reductions of hierarchical levels
in the organization. The same line of reasoning is presented by Hammer and Stanton
(1999) who argue that it is usually senior functional executives who are the biggest
opponents to process management because of their loss of autonomy and power.
Another type of maturity model is presented by Hammer (2007) who describes the
features of process enablers and enterprise capabilities. The process enablers determine
how well single processes are able to function over time, and are presented as: design,
performers, owner, infrastructure, and metrics (Hammer, 2007, p. 113). Organizations
that are able to put the enablers in place are described to possess enterprise capabilities,
presented as; leadership, culture, expertise, and governance (Hammer, 2007, p. 113).
Further, Hammer (2007) presents four levels of maturity within each enabler and
capability. In an earlier paper Hammer and Stanton (1999) preset the infrastructure of
the process enterprise to be; measurements, compensation, facilities, Training &
Development, and career paths.
As presented above, there are several possible perspectives to be used when studying
the implementation of process management in organizations. The focus of this study, as
stated earlier, is the organizational structure, roles and responsibilities – corresponding
to the enabler “owner” and the capabilities of “leadership” and “governance” according
to Hammer (2007).
2. Methodology
The purpose of this paper and study is to explore and describe the implementation of
process management in order to increase understanding among practitioners and
researchers.Acase study approach is used, as it is an empirical inquiry that investigates
a contemporary phenomenon within its real-life context (Yin, 2003).
2.1 Purposeful selection
The selection and execution of the case studies were made in collaboration with a study
examining organizations using the SIQ Model for Performance Excellence as a tool for
quality improvement (Eriksson and Garvare, 2005). A multiple-case strategy was used
to get a more extensive picture of how the organizations have worked with process
management.
Figure 1.
I – A strictly functional
organizational structure
II – A matrix with both a process and
a functional organizational structure
III – A strictly process based
organizational structure
Notes: Three different organizational structures from a strictly functional organizational structure. (Stage I)
to a matrix structure with both a process and a functional organization (Stage II), and finally a strictly
process-based organizational structure (Stage III)
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Both managers and employees have been chosen as informants. The managers have
foremost been those responsible for the process management initiative. The employees
have been selected based on recommendation from the managers because it eases
the sampling process, but with the awareness of risk of bias. This is a kind of
triangulation in social sciences described by Johannessen and Tufte (2003) as looking
at a phenomenon from different perspectives.
2.2 Data collection
The primary sources for data collection in these studies have been interviews and
observations. This choice was made on the basis of wanting to hear the “stories” of
the organizations, and wanting to hear these stories from different angles. Before each
study, the organizations were contacted and agreed to participate in the study.
A date was set for the visit and the organization received information about the areas
that would be investigated. The interviews were prepared through tests of the questions
with colleagues. Case study protocols, stating what areas to investigate and questions to
ask, were used to ensure that the same procedures were followed at all the organizations.
This strengthens the reliability of the study, according to Yin (2003).
Semi-structured interviews were conducted with representatives from different
hierarchical levels, both managers responsible for the work with process management,
and employees who had been involved in the work. The visits to the organizations
were extended to one day, which gave time to observe and understand the environment
in the organizations.
In addition, Organization C has been closely examined over a period of two years
following the multiple-case study. For a period of three months in 2003 and between
September 2004 and February 2006, I was partly positioned at the company, actively
participating in the development of their process management work through action
research. This is important, as it enables access, collection, analysis, and validation of
empirical material.
2.3 Data analysis
When conducting data analysis, Yin (2003) suggests that there are two general
strategies when approaching the material: relying on theoretical propositions, and
developing a case description. In this paper, case descriptions were developed (see the
next section) as a means of presenting the material for the readers. The case descriptions
are based on transcripts of the interviews and notes from observations. Coding has been
used in the text analysis, with codes that evolved during the work (Miles and Huberman,
1994). The case descriptions have been analyzed using the frame of reference presented
in the earlier sections with results from previous, mainly empirically based, research.
A summary of the analysis is presented in Table II.
3. Results – case descriptions
3.1 Organization A
Organization A is a logistic company owned by the organizations whose products
they are transporting. In 2003, the turnaround was almost e1,700 million and they
had about 400 employees in Sweden. In 1994, the company was the first organization
in their branch of trade that received an ISO 9001 certification. At the time of the study,
they had a market share approaching 50 percent.
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Organization A Organization B Organization C
Purpose of process management Initiated by declining results and
demands for improved results from
new owner
Wanting to develop the organization,
not because of (external) pressure or
crisis
Aiming for 25 percent growth and 25
percent saving on total cost
Organizational structure Process organization in parallel to
functional organization
Process and competence organization
instead of functional organization
A matrix of functional organization and
process organization
Roles and responsibilities First approach:
Process owners. Working with flows
throughout the company, an “honorary
title”
Functional managers. Budget and
staff
Second approach:
Functional manager also process
owner. Responsible for staff, budget
and performance
In each department:
Team leaders. Responsible for staff
Process leaders. Responsible for
development of processes, facilitating
process improvement groups of
employees
Process leaders, soon renamed process
owners. Former department managers
with new titles, responsible for
operations and performance of
processes
Competence owners. Responsible for
personnel, the whole individual
Process leaders. Reporting to process
owner, aided by improvement teams
that might include customers
First approach:
Functional managers. Responsible
for results, budget and staff
Process owners. Working part time
on improving the processes
Process developer. Part time,
supporting the process owner on
specific problems
Second approach:
Functional managers. Same as above
Process owner. Full time, without
process developer. Responsible for how
operations are performed and long-term
development
Team leaders. Coaching employees
day-to-day, short perspective
Changes at team level Very few changes at team level N/A Autonomous teams were tested with
mixed employees from different market
areas with the objective of aligning
procedures, and the ability to learn
from each other
Difficult to realize because of the need
to be placed closely with those working
with the same products to share
knowledge
Back in specialized teams
(continued)
Table II.
A summary of the
case studies of
Organizations A-C
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Organization A Organization B Organization C
Experienced results of process
management
Increased strategic understanding
A shared responsibility
Sharper economic control
Increased understanding between coworkers
from different departments
Easier to drive improvement
A more effective use of employees
A better general picture
A unified way of working between
market areas, standardization of work
procedures enabled the targeted cost
savings
Increased customer focus – clear what
should be delivered to the customer
Experienced effects on structure
and roles
Second approach resulted in
clarification of responsibility
The responsibility is given to one
person to avoid parallel agendas and
work
Risk of sub-optimization of staff with
separated responsibilities between
business areas
Sometimes difficult to find the
relationship between different positions
Answers about organizational
structure depend on who you ask in the
organization
The matrix between functional and
process organization is difficult, but
creates a dynamic
Those working in the matrix are in
control
It is experienced as a challenge for
employees to understand it
Answers on organizational structure
depend on who you ask in the
organization
Experienced effects for
individuals
A majority of employees find work
with process management positive
A raise in well-being in employee
surveys
Frustration, requesting clearer
commands
Increase in sick leave due to stress
caused by larger responsibility for each
individual
A risk in the new structure that some
individuals take on too much
responsibility
Table II.
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3.1.1 Incitements and implementation. Already in 1994, the company started
working with the criteria of the Swedish Quality Award, which includes parts of
process management. In 1996, a new CEO was hired who had previously been working
with process management in other organizations:
The new CEO was the catalyst [for process management], she brought the toolbox (Process
leader, Organization A).
The reorganization that followed was initiated by declining sales and a new owner who
demanded improved results. The reorganization was carried out with the help of
external consultants who worked with the top management team, but who also held
workshops with middle management and employees on a team level. According to one
of the process owners, the existence of slack in the organization has been important
since it provided openings for improvement work and learning.
3.1.2 Organizational structure. Since 1997, there had been a cross-functional process
organization present in parallel with the old functional organization. In the process
organization, the process owner was working with different flows through the
company, and the functional managers were responsible for budget and staff:
Process owner used to be a bit of an honorary title, with no large responsibilities, given to
those who worked in the process and was very engaged. These process owners did not have
that much power; the power still lay within the functional organization (Process leader,
Organization A).
In 2000, top management at Organization A reached to the conclusion that it would be
better to work the opposite way, and a new reorganization was initiated. Two years
later, this reorganization had led to the following organizational structure: the head of
the department is also the process owner, responsible for staff, budgets and process
performance. One of the interviewed said that: “it was new titles, but no new people.”
This gave the process owners more responsibility, with higher demand from the top
management. One positive factor mentioned with the reorganization was the
clarification of responsibilities:
The organization has given the responsibility to one person to avoid that work made on many
different, but parallel tracks, with different agendas. [. . .] You do not [have to] discuss who
should be doing what (Process leader, Organization A).
Under each process owner there are now team leaders responsible for the personnel, and
process leaders responsible for the development of the processes. The process leaders act
as facilitators within the department and the groups when working with improvement.
There are, however, some adjustments between the different departments that mainly
depend on the size of the department.
To aid the process leader in the work with improvements, there are also process
improvement teams with employees from different parts of the department. These
groups are given some theory background and they become a forum for improvement.
The members have been recruited to the group through recommendation or by
application:
There has to be someone who grabs hold of the ideas and makes them happen. Now we have
the process improvement groups which do that (Member of a process improvement group,
Organization A).
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3.1.3 Effects. According to the interviewed, the process orientation in Organization A
had several effects on the company. The strategic understanding of the business
increased because of the process approach. One of the employees described how before
the change, one could blame someone else when things went wrong, but how there was
now a shared responsibility and also much stricter economic control. The process
orientation also increased the mutual understanding between co-workers of different
departments, and there was a desire to deepen that understanding by performing an
internship at other departments.
A majority of the employees found the work with process management to be a
positive experience, but the increased productivity control that followed was causing
stress for some of the employees. It had become easier to drive improvement when
working in a process organization. However, according to one of the process owners, it
had also become more difficult to build commitment among employees.
One of the interviewed suspected that the organization might be losing some of the
links across the company when working with process management:
There can be a bit of sub-optimization of the staff. The different business areas keep their
own staff who can be working in parallel with someone at a different business area (Process
leader, Organization A).
The reorganization towards process management led to few changes at the team and
team leader levels of the company:
This does not change our assignments. My group leader is still the same, and neither did nor
do we now see much of the management above him. [. . .] We do not notice that much
difference; it does not change our tasks (Employee, Organization A).
3.2 Organization B
Organization B is an energy producer owned by a larger European energy group.
In 2003, the turnover for the company was e200 million and they had about
100 employees.
3.2.1 Incitement and implementation. The process orientation at Organization
B started when one of the top managers attended a seminar about process management
and found it to be interesting:
We started working with process management because we wanted to develop the
organization, not because of [external] pressure or crisis (Process owner, Organization B).
In the middle of the 1990s, the company took on working with the Swedish Quality
Award. In 1999, a new CEO was appointed and the company went through a major
reorganization. The implementation of process management took place through
seminars and workshops with all employees, assisted by external consultants. The
process owners and process leaders, who all came from the old organization, attended
courses in process management, leadership, and personal development.
3.2.2 Organizational structure. To start with there were process leaders appointed
in the organization, but soon they were renamed process owners. These persons were
the old department managers who got new titles and became responsible for the
operations and performance of the processes of the company. New competence owners
were appointed, responsible for the personnel:
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Some employees are working in three or four different processes with different process
owners. Therefore, it is important that the competence leader takes the whole responsibility
for the individual (Process owner, Organization B).
After the reorganization the process owners categorize the competence they need for
their processes and demanded this competence from the competence owners.
At Organization B there were now again process leaders, which reported to the
process owner and were aided by improvement teams. The teams sometimes included
representatives of the customers. The position of a process leader was not defined
within the organizational chart:
It is a bit difficult to find the relationship between the different positions [. . .] The answer
about our organizational structure depends on who you ask in the organization (Process
owner, Organization B).
3.2.3 Effects. According to employee surveys, there has been an increase in well-being
among the employees as a result of the work with process management:
The work with process management could be a way to achieve commitment from everyone
(Process owner, Company B).
The new organizational structure has allowed a more effective use of employees. The
process orientation has also given a better general picture. Both process owners and
process leaders indicated that it was hard work to make the new organizational structure
work. One frustration was mentioned, where some of the employees had wanted clearer
commands about what to do:
There is no one telling you what to do when you get to work in the morning [. . .] In the
beginning it was hard to know who to ask about what in the organization (Process leader,
Organization B).
A downside discussed by both the process owner and the process leader is sick leave
due to stress caused by the larger responsibility put on each individual in the new
organizational structure:
Working in an organization of process management demands a lot of the individual, to take
own initiatives. There is no one telling you what to do [. . .] This way of working does not suit
all people (Process leader, Organization B).
The process leader argues that the number of sick leave days is clearly higher after the
organizational restructuring.
3.3 Organization C
Company C is a wholly owned subsidiary of a larger Swedish insurance organization.
It has about 150 employees who serve 360,000 customers. The turnover in 2003 was
about e90 million and the market share was about 60 percent. In 1998, Organization C
was the first insurance company in Sweden to receive an ISO 9001 certification.
3.3.1 Incitements and implementation. In 1992, a new CEO was appointed at
Company C. Three years later he set up a goal: the company shall grow 25 percent while
saving 25 percent on total costs. As a part of its strategy to reach this goal, Company
C started working with the Swedish Quality Award. As a result, process management
became a part of Organization C’s quality improvement efforts.
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3.3.2 Organizational structure. At Organization C, a matrix model has been used
when organizing for process management. Process owners have been working full time
improving the performance of the processes at the company. These process owners
have all been recruited from within the organization:
There have not been any exact calculations on the profile for being a process owner; there is a
slightly different focus in the different processes (Former process owner, Organization C).
The full-time arrangement for process owners was a later development. In the
beginning, all process owners worked part time with the process manager matters and
part time with their old settings.The process owner then has a process developer at hand
when working with specific problems. Later, this role disappeared.
There have been some different turns on the way the organizational structure is
presented at the time of the study. Earlier, the process owners of the core processes had
been working full time with the processes, while the support process owners had been
the old functional managers from the support departments, which had only been
working part time with the management of process performance. In the fall of 2004, the
five part-time support process owners were replaced by one full-time support process
owner for all the support processes:
Those of us who work in the matrix are in control of it. But it can be a challenge to explain the
structure for the employees. [. . .] The organizational structure, it depends on who you ask
what picture you will get (Process owner, Organization C).
In the other dimension of the matrix there were functional managers who had the
responsibility of the results and the employees. Team leaders, responsible for coaching
the employees, were placed below the functional managers:
A team leader is working in the operations with a perspective of a couple of months. My task
as a process owner is to have a more strategic picture. I am responsible for the system, not the
staff, and I have more of a development perspective (Process owner, Organization C).
The management at Organization C has tried to take the organizational restructuring
one-step further and form mixed, autonomous teams. The idea has been to mix
employees from different market areas, and thereby have them work in the same way.
However, this idea turned out to be difficult to realize, and therefore the organizational
structure went back to specialized teams. The employees had a need to be placed close
to those working in the same area to be able to efficiently transfer knowledge:
We were mixed teams with a combination between different competences. We did not connect
or work across the borders in those groups so now we are back in our specialized teams. It is
good because now my manager knows about the things that I do (Employee, Organization C).
3.3.3 Effects. Before the process orientation, the differentmarket areas had beenworking
in different ways. One of the biggest gains of the work with process management was,
according to the former process owner, that a unified way of working at Organization
C was developed, a way of working that was not dependant on which market area was
looked at. The standardization of work procedures has been an important contributor
to the cost savings achieved. The goal of 25 percent growth with 25 percent reduction in
cost was reached in 1999, four years after it was set:
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Our work got more systematic, we documented what we were doing and structured it. It
got obvious all those not important things we where doing (Former process owner,
Organization C).
One place where conflicts still occurred at the time of the study was in the matrix, where
the process owner is responsible for how the operations are run, and the functional
manager is accountable for the result.However, in Organization C, many people describe
this as a dynamic which has been a positive and contributing part of the success:
Process management has made it clear what should be delivered to the customer. To produce
what the customer wants you have to calculate the activities and processes you need to
accomplish that. [. . .] Customer focus has got a deeper meaning. It got obvious that my
process delivered something directly to the customer (Former process owner, Organization C).
According to the interviewed, there was a risk in the new structure that some
individuals could take on too much responsibility, more than they had time for.
4. Analysis
The analysis has been guided by the purpose and research questions of the paper, by
earlier empirical results described in the introduction, and by the empirical material of
the studied cases. The analysis has been performed on an organizational level, not on
the individual level. A summary of the cases, using the initial questions posed in the
introduction as variables, is shown in Table II.
4.1 Changes on organizational structure, roles and responsibilities, and the experienced
results
All three organizations have chosen to implement some kind of matrix-organization,
saving parts of the old functional structure, and then adding new positions to a process
overlay superimposed on this structure. The organizations have chosen different paths
when implementing the process overlay. All three have used internal recruitment for
the positions as process owners, but have given this position different status and
responsibilities.
The role of giving day-to-day support to staff has principally been kept by the team
leaders or competence leaders in Organization B. This role had seldom been affected by
the reorganizations, even though there had been changes of role names and titles. Daily
support and direction were given to the employees by their immediate superior,
regardless of organizational type.
The different paths the companies have taken seemto have delivered different results.
When, aswas the case in OrganizationsAand B, functional managers with a long history
within the organization enter the role as process owners, there is a risk that little really
changes. Onthe other hand, there can also be difficultieswhen appointing other persons as
process owners, as was the case in Organization C and also initially in Organization
A. Inexperienced managers can have difficulties with legitimacy and authority towards
the more senior functional managers, leading to the status of the process organization
becoming lower that that of the functional organization. To try to prevent this, strong
support has to be given fromthe topmanagement to the process owners so that they have
the knowledge and authority to stand up to the functional managers.
According to the process maturity model by Goncalves (2000) presented in
Sentanin et al. (2008), all three organizations studied meet the requirements of Stage C
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of having identified and improved their core processes. Organizations A and B could
be categorized as having a functional mentality (Stage C), where the old functional
managers have been renamed process owners.Organization C has appointed newprocess
owners that exist in parallel to the functional organization, and can therefore be placed
in Stage D.
The process maturity model of Lockamy and McCormack (2004) places all three
organizations into the third “Linked” stage, where process management is employed
with strategic intent, and process structures are put into place outside the traditional
functions. None of the three organizations reaches the higher levels of the first two
process maturity models.
This could be interpreted as supporting the argument that process management is
not all or nothing (Ongaro, 2004), does not require the absence of a functional
organization (Ku¨ng and Hagen, 2007), and that a process structure can be matrixed
onto a functional structure (Hertz et al., 2001; see Stage II in Figure 1).
Another supporting argument for the matrix structure can be found in Organization C
when testing mixed teams based only on the process structure, leaving the functional
structure of the market areas. It was difficult to develop the mixed teams because of the
need to be placed closely with those working with the same functional responsibility and
specialty. This might be interpreted as an indication of the need to keep a functional
structure while, at the same time, adding a process structure to the organization.
However, in all three studied organizations there seems to be a challenge to find a
balance in the matrix between the functional and process perspective. Organization B
describes it as difficult to find the relationships between different positions. Organization
A has chosen a path where the complexity is reduced when both perspectives of the
process and the function is gathered in one position. Some of the interviewed state that this
has resulted in a clarification of responsibility, but also in a risk of staff sub-optimization
when the managers do not work closely together between departments.
Organization C describes the matrix as difficult, but also as contributing with a
constructive dynamic. In the beginning of implementing process management, one of
the process owners loudly claimed the difficulties as a process owner being responsible
for the operations without having the responsibility or authority over budget and staff.
After two years, he was one of the strongest promoters for the matrix structure. He
then argued that the discussions he was forced to have with the functional managers
(responsible for budget and staff) made them reach better decisions together than if one
of the perspectives (process or function) dominated.
This is in line with Hammer and Stanton (1999) who argue that the matrix structure
separates the control over work from the management of the people who perform
the work. Further, they state that this split of authority makes cooperation unavoidable.
“Traditional styles of management, to sum up, have no place in a process enterprise.
Managers can’t command and control; they have to negotiate and collaborate” (Hammer
and Stanton, 1999, p. 114).
5. Summary and conclusion
It seems that all three organizations have found ways to use process management not
just as an approach for improving single processes (movement A in Palmberg (2009)
and the process enablers in Hammer (2007)), but also as a perspective for managing the
whole organization (movement B in Palmberg, 2009, and the enterprise capabilities in
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Hammer, 2007). The purpose of this paper is to explore and describe the organizational
implications of implementing process management. The results will be summarized
below:
(1) What was the purpose and what were the results of implementing process
management? To summarize, there seems to be almost as many purposes of
implementing process management as there are organizations attempting it.
The results found in the three studied organizations cover:
. increased understanding among employees of strategies and customer
needs;
. standardization of work procedures, enabling cost savings;
. more effective use of employees;
. sharper economic control; and
. easier to drive improvement.
(2) What are the effects experienced by individuals when implementing process
management? People at the organizations studied express an increase in
well-being and that the employees find the work with process management
positive. But this is combined with a concern about the risk of stress caused by
increased individual responsibility among employees.
(3) How is the ability to drive improvement affected when implementing process
management? In all three organizations, the process organizational structure,
with process owners and process leaders as facilitators and process
improvement teams of employees driving change, has strengthened the
organizations’ capability to change and improve.
(4) How are organizational structures, roles and responsibilities affected when
implementing process management? All three studied organizations have
introduced a process management structure into their functional organizational
structure, including the introduction of new management positions such as
process owners and process leaders. The relationships between the process
organization and the functional organization differ between the three
organizations, but all match Stage II in Figure 1.
6. Discussion and implications
There appears to be a conflict when the old functional and more hierarchical structure,
where you are told what to do, meets the new process organization, where the individual
has a larger responsibility for taking his or her own initiatives. The companies question
it if it, for those who like to take on challenges, presents too many opportunities. It is also
reflected upon whether this way of working does not suit everyone or if it is a question of
the individual having the right support to handle the new responsibility.
In the introduction of this paper, two different discourses were identified. On one
hand, a full transformation from a functionally orientated organizational structure
(Stage I in Figure 1) to a fully process-oriented organizational structure (Stage III in
Figure 1) is favored; on the other hand, a more moderate transformation where a process
management structure is “matrixed onto” the existing organization is preferred (Stage II
in Figure 1). The analysis of the three studied cases could be interpreted as supporting
the second line of reasoning, where the functional and process structures co-exist in the
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organization, creating a constructive dynamic. The implication of this line of reasoning
is that complexity is created rather than reduced in the organizations to handle the need
of several parallel perspectives on the business. How to manage complexity instead
of reducing it could be seen as a challenge for the management of contemporary
organizations.
This is in line with Silvestro and Westley (2002) who promote the matrix structure
because of its relative strengths of both the horizontal and vertical structure. But, they
also highlight the risk that the matrix structure becomes complex and unwieldy. They
suggest that viewing the organization as a network of activities may be more realistic
than the matrix.
The contribution of this paper is two-folded. First, the empirical descriptions and
analysis of the three organizations that have implemented process management. This
contributes to the knowledge and understanding among both practitioners and
researchers. Second is the identified need for the co-existence of a process and functional
perspective, and the implication that complexity is created rather than reduced in the
organizations.
The implication for practitioners could be interpreted as instead of trying to control
the functional and process structure separately, the challenge is to collaborate and
negotiate between the functional and process perspective. To put it in another way:
the solution is not functional or process management, but functional and process
management. It could be suggested that this calls for improved management approaches
within areas such as leadership and culture. For example, Organization C gather all their
managers, one day a month, to discuss current issues together, with the objective to unite
and align managers from different perspectives. This is an example of creating an
arena for negotiation and collaboration. See further descriptions of approaches from
Organization C in Palmberg and Garvare (2006).
The implication for researchers could be the indication of a need to further explore the
issues of managing complexity, as a suggestion in relation to the knowledge of complex
adaptive systems. A suggestion for future research is to further explore the relationship
between the functional and organizational perspective, and structure in organizations
working with process management, both empirically and theoretically. A suggestion
is to use the framework of Hammer (2007) to further investigate empirical cases.
Possibly with an interactive research approach where the researcher work with the
management team of the organization under study, including process owners, and
coaches the organization to increase their process management maturity according to
the framework, while simultaneously exploring their process management initiative.
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About the author
Klara Palmberg, in 2005, presented her licentiate thesis on “Experiences of Process
Management.” Since then, she has shared her time between research and management
consulting. Her doctorial thesis on “Beyond process management” (working title) is planned for
August 2009. Within both her research and management consulting practice, she is working
with organizations exploring process management and the challenge of complexity – how
to manage organizations as complex adaptive systems. Klara Palmberg can be contacted at:
klara.palmberg@mementor.se
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