If all you want to do is execute a one-time improvement to a small business process then governance issues may not be high on your agenda. But if you wish to fully leverage the power of BPM and apply the key principles and practices to your company’s large business processes, you will soon discover that governance is the cornerstone to sustainable BPM success.
Any broad-based effort to improve and manage a company’s large business processes relies on measuring what matters to customers and assigning accountability for the ongoing improvement and management of the firm’s cross-functional processes. Measurement and ownership – that’s what governance is about. While the need for process governance is fairly widely recognized, precisely how to do it can be much more problematic.
Many companies unnecessarily complicate the topic of measurement. Customers have well-known needs. They want what they ordered, received complete and defect free when it is delivered. They want the delivery to be when it is expected, an accurate, user-friendly invoice, and pleasant, responsive service to inquiries and problems. That’s what you need to measure to assess the performance of the ‘order to delivery’ process. What’s so hard about that?
But only about one third of process-oriented firms measure what matters to customers in any disciplined way. Even fewer can correlate improvement in customer-centric measures to improvements in financial performance.
Approaches to Governance
Measuring the performance of a company’s key end-to-end business processes such as ‘order to delivery,’ ‘idea to launch,’ and ‘procure to pay’ is a necessary but not sufficient condition for effective governance. Assignment of accountability for the improvement and management of these business processes is required for sustainable results. While there are various approaches to assigning accountability or ownership, the two most common might be called the ‘two hats line’ and the ‘one hat staff’ approach. In the ‘two hats line’ approach, a senior line executive assumes responsibility for an end-to-end process and retains accountability for their functional area. This approach relies upon ‘matrix management’ principles. In the ‘one hat staff’ approach, a senior executive is appointed to a staff position of ‘process owner’ or ‘process steward’ for an end-to-end business process.
Role clarity and aligned recognition and reward systems are essential to both approaches. The former involves clearly defining the scope of the associated end-to-end processes, being clear on the size of the gap between current and desired performance, broadly communicating improvement goals, and investing in a common methodology for process improvement and management. Modifying compensation such that some significant part of the discretionary component of executives’ and managers’ bonus compensation becomes directly related to the performance of end-to-end processes is equally important.
The customer-centric measurement practices and the assignment of ownership for a company’s end-to-end business processes are arguably the two most important aspects of governance. The combined effect is to shift company culture so people begin to assign their loyalty to serving customers via the key business processes. Process management and process governance is not intended to dominate or replace a business unit focus or the need for functional excellence. Instead, it represents an additional and valuable management practice that emphasizes the way in which a company creates value for customers.
