Dealing with Cultural Challenges in Operational Excellence

Operational Excellence focuses on providing the best execution of service and process for the benefit of the customer and the organization. It is not a proprietary program or methodology; rather, the term usually represents a conglomeration of process methods and techniques to improve operational discipline, its performance metrics, and customer satisfaction.

Operational Excellence is an enterprise approach. Companies want to address more end-to-end processes, going beyond earlier smaller process improvement projects in one department. For end-to- end processes to be successful organizations need to have consistent execution aligned with organizational purpose, leadership accountability that spans organizational boundaries, and employee skills and behaviors that see the flow of work across the organization and make results happen for the customer.

Let me address three cultural challenges that I see when moving to an enterprise approach with the consistent execution of Operational Excellence.

1. Leadership accountability and behaviors
2. Employee capability and respect
3. New organizational structures

Leadership Accountability and Behaviors

Leaders need to be identified as Process Owners for the new cross-functional processes. Their responsibility needs to extend beyond their hierarchal part of the company to accountability for the complete process across organizational boundaries. Process Owners need to ‘direct’ and manage across organizational boundaries through influence vs. as a hierarchal boss.

What can you do if you face this operational excellence leadership challenge?
Start small and learn. Identify Process Owners for the first end-to-end process the company will work on. Choose a leader at the Director level or above who is responsible for most of the steps and decisions in the process, and sees personal and business results as key to him/her and the company. Provide him/her a job description of the process and make it at least 30% of the job responsibility. Provide coaching as well, to advise on how to lead a cross functional project and later run the process in an ongoing fashion. Establish cross functional rewards to recognize and incent leaders working in these end-to-end processes.

Employee Capability and Respect
Employees are the ones who are doing process work activities now and they will be the ones who will be doing the steps in the larger cross-functional work processes. The work in the end-to-end processes will involve doing many of the same steps, but also involve new tools, wider roles and responsibilities, different handoffs, different decisions, and a different sequence of events. Employees may feel threatened by the new methods, they may feel resentful about the changes, or they may feel disappointed about activities they are giving up.

What can you do when you face the challenges of employee capability and respect?

Engage employees who are doing the work today in improving the end-to-end process to meet operational goals that are aligned with the strategy. Get them involved in user testing. Listen to employee concerns and use their ideas to plan skill training and identify ideas for behavior change. Monitor how employees are responding in implementation and make revisions as needs arise. Respect for employees is a critical part of Operational Excellence. Employees are closest to the work, and the leaders need to enable employees to do their work, see where it is working or breaks down, and help fix problems so employees can provide value to the customers.

New Organizational Structures
A new organizational structure may arise out of the enterprise focus on Operational Excellence. Shared Services is an example of such a new organization.

Definition: “Shared Services is the consolidation of business operations that are used by multiple parts of the same organization. Shared Services are cost-efficient because they centralize back-office operations that are used by multiple divisions of the same company and eliminate redundancy.” (Source: www.searchcio.techtarget.com)

Shared Services is a central organization which houses the transactions and services of finance, IT, HR, purchasing, or other infrastructure services. The employees in Shared Services do the operational steps of these processes and interact with the business units that require them.

Shared Services necessitates a new way of operating. In Shared Services the employee’s job changes to a focus on fewer tasks with more transaction volume, standardized processes, and a central physical location. For the field units, staff is not immediately available at the local site, and there is question about the speed and quality of responsiveness from the Shared Services unit. For both groups, the operational process is different and usually more automated. Both groups have to learn what their roles are, what the steps are, and how to identify and follow new handoff points. Shared Services builds consistency through standard processes that support customer value.

What can you do when you face the challenges of an unfamiliar organizational structure like Shared Services?

Here are some ideas.

1. Go out and benchmark some other organizations that already have a Shared Services organization and identify their challenges and suggestions. Benchmarking provides story data and quantitative data that can inform your organization from an experienced source.
2. Consolidate just one or two back office functions to begin with. Choose processes where there is a lot of variability across the organization today and build constancy of purpose and execution that will benefit the organization and customer. Think about what automation tools are need in the Shared Services group and determine how to integrate them into the process. Find leaders for the first processes that will advocate doing their work with Shared Services and respect the new Shared Services employees.
3. Get the field unit SME’s who will remain in the field units and SME’s in the Shared Services units to work together discussing their new roles and flow of the processes.
4. Incorporate change management principles to help managers and employees understand what will be happening. Then continue to monitor what is happening and make adjustments.

There are many kinds of cultural challenges in building an organization that values Operational Excellence and proves it by executing with discipline for customer satisfaction. This capability requires an enterprise effort with leadership accountability across boundaries, integrated systems that support end-to-end processes, and respected employees that can function together effectively for the customer.