When Good Processes Go Bad
By Eric Johnson
We always talk about processes as going from bad to great, based on deliberate projects and other interventions that recognize issues as they arrive; and when identified, how management reacts to the discovery and its attempts to resolve the problems.
In a prior post, we discussed how this occurs in safety culture – i.e. “backsliding” – when bad habits slip into the safety culture, how this manifests itself, and what the organization can do to reverse the trend. We now turn our attention to processes – the ways employees generate value for the firm.
As in the past, we focus on three major elements:
1. The focus on getting the job done above all else: i.e. Work-arounds
2. Lack of manager involvement / attention to gradual process changes
3. Organizational success in light of rising complexity / process degradation
The three elements listed above highlight the bane of most organizations – not the sudden onset of change that can be recognized and approached with traditional vision and expeditiousness, but the gradual change born out of complacency and the iterative changes that shift the focus from value creation to merely work completion.
Processes begin to “backslide” when employees attempt to correct informational and process inefficiencies with their own make-shift processes to “get the job done”. They continue to backslide when management is not proactive in addressing work-arounds.
The focus on “getting the job done” above all else shifts the conversation away from the core principle of a going concern: how do we create value for the customer? Under normal circumstances, the jobs “that get done” are tightly associated with the core values of customer satisfaction and profitability – i.e. giving the customer what they want at a price that delivers value to them at the highest level that the marketplace will bear, while maximizing margins – i.e. keeping costs low. Within this desired pathway lies a multitude of decision points, each with its own set of dependencies and complexities. Work-arounds exist for two reasons: a lack of information/resource or a process breakdown – and often times the two are related. But how does this happen? The causes can be for many reasons – employee turnover, tool/software deficiencies, changing markets/demand, etc. But the results are the same in the gradual sense: the steady increase in the time it takes to deliver on various sub-processes, increased employee “angst” and burnout, and a rising level of either customer complaints and/or a decrease in demand.
The responsibility of management in these situations is to be able to recognize the subtle changes that occur under its watch. This is a bit easier at the front-line level – those managers are closest to the work activities and can see first hand the changes that occur over time. It is here where the manager needs to first understand best practices – this involves taking employee feedback and information into account and also inquiring about deficiencies. This last part is crucial and requires good relationships with subordinates who feel comfortable in reporting. At the senior-level, these subtle changes will show up in the financial statements. Senior leaders will be adept at noticing these small changes as they compare through successive years or quarters, but they will have limited insights into root causes. Senior leaders must be prepared to “walk the floor”. To do this, they must first prep their direct reports and create an environment where they will not be seen as threatening – if this occurs, employees will only show the favorable elements of their work, directly contradicting the purpose of the floor walk. The floor walk for the senior executive is to see how the practices at the front line translate to the results from the financial statement. And it’s a bold move – not many senior executives feel comfortable walking the floor. But if the executive is willing to take the risks and go beyond her comfort zone, there is a treasure trove of information that will both clarify issues and present solutions.
The last element of processes going bad actually involves success. It is often said that a rising tide lifts all boats. In this case, a rising tide covers all rocks. As such, if the rising tide signifies revenue, then the rocks below signify complexities that induce waste and limit the growth of the business. As revenues rise, it can be tempting to think that the good times will last – until they don’t. It’s during this decrease in revenues that operational inefficiencies become magnified. Unfortunately at this point, there may be fewer resources to invest in changes and process improvements, which then cascades the issue. This is why the importance of improving processes during “good times” cannot be overstated – this is the time to invest in operational efficiency.
Good processes most often go bad gradually – which makes them all the more harder to discern. Having employees that feel empowered to report deficiencies allows for identification of the micro-decisions that are affected. And when executives take the initiative in walking the floor and working with frontline management, they can identify the processes that affect the financial statements. The key to making all this successful is recognizing that process inefficiencies occur even when revenues are high and the business is successful. By taking initiative at these points, management will have greater tools in getting operations back on the right track – with the added advantage of inherent preparation for eventual down periods, because these periods can be opportunities to grab marketshare.