Applying Process Changes: Process Measures Equal Better Improvements

In the first quarter of 2017, APQC conducted its bi-annual survey to understand how organizations leverage frameworks to provide insights on the common applications and guidance around implementation tactics and addressing the common barriers of implementation.

How Are They Being Used?

As you may have heard me say a few times, people use process frameworks to understand how processes relate to each other by grouping them into a classification structure. This, in turn, helps them figure out how best to get things done in the organization.  So, to get greater clarity and a more granular look at explicit uses, we asked people what their typical applications of frameworks were.

Top Three Applications

1. Identifying current processes within the organizations—frameworks can serve as a frame of reference for understanding what processes the organization already has, how robust and standardized they are, and if they are well documented.
2. Building process maps and models—frameworks also support organizations' mapping efforts and can be used as a checklist of what activities the organization conducts (e.g., the process steps, the inputs and the outputs).
3. Creating process definitions—because frameworks provide a standardized language, it's typically an initial starting point for the development of process definitions. This is further supported by the process definitions already included in some frameworks.

The first three uses are components of foundational process-related work: discovery, definitions, and mapping. In other words, most respondents are using the frameworks for their primary purpose: as a reference model that they can use to understand their processes, clarify communications between disparate groups, and create a model that ensures work is being accomplished efficiently and can be tracked and measured consistently.

Scratching the Surface

Most of the survey respondents are limiting how they use frameworks in their process efforts. In the 2015 version of the survey, the number three application was “supporting or managing process improvement efforts”; however, this year that use came in at number nine. This was initially confusing because identifying improvements is a natural extension of foundational process-related work. Once the organization has established a common framework and mapped out its processes, it can then use the information it gathered during the current state assessments, process discovery, and mapping activities to identify improvement areas.

To further widen this gap, the majority of organizations are not conducting ongoing process performance management or benchmarking as part of their implementation. In other words, organizations are missing out on some the benefits of the frameworks to ensure that work “…can be tracked and measured consistently.”

This is problematic for a couple of reasons:

1. Process design alone is busy work. Without deployment and ongoing monitoring, process maps and models become an investment in standardization that sits on the shelf and gathers dust.
2. Making improvement decisions without performance measures results in either ad hoc improvements or the potential to negatively affect one process while improving another. This also results in one-off benefits; once the process in question is optimized, the organization goes back to business as usual. The optimized process in question then either gets put on a shelf or doesn't align with organizational performance measures and scorecards, ultimately resulting in a lot of wasted effort and investment.

In other words, organizations lack the foundation for making process work actionable, providing organizational value through performance management, and making objective decisions about improvement opportunities. Though standardization and documentation efforts have their own value, when an organization includes measures in its processes, it is able to elevate process management's impact.

All of these benefits raise the question…

…Why Aren’t Organizations Including Measures?

To understand the potential root cause of this trend, we dove into additional survey findings and discovered that:

• Almost half (44 percent) of organizations are only at the “developed” stage (level 2) on the business process management (BPM) maturity scale. This means that they are characterized by some organized processes and have a structured process management approach, but that they do not tie processes directly to performance measures and quantitatively manage performance.
• The majority (53 percent) have an ad hoc process improvement approach.

Simply put, not a lot of attention is paid to the performance management side of the process work. This means that organizations are missing out on valuable information that provides the context for understanding how to make the most strategic and high-impact improvements.  However, this is not surprising.  As we discovered in research on the Seven Tenets^SM, most organizations tend to focus on the discovery phase of their process journey or jump straight into optimization or improvement phase.

So How Do We Address the Gap?

The most critical distinguishing factor among the different process performance maturity levels is the active use of a balanced mix of measures to understand and improve upon the organization's processes. The balanced mix of measures includes a couple of different concepts. The first is the difference between key and supporting measures. The second is the balance of leading and lagging measures.

Key and Supporting Indicators

Organizations use several types of measures (e.g., productivity, costs, or ROI) to manage their processes' performance and each one serves a different purpose. However not all measures are created equal. One mistake that organizations make when measuring their processes is using far too many measures and not differentiating between more and less important measures..

This is where the difference between key and supporting performance indicators comes into play.

• Key performance indicators (KPIs) are specific measures used to gauge a quantifiable component of an organization's performance at the functional, process, or activity level. KPIs typically correspond to the organization's critical success factors and business goals. Typically, a single KPI has up to seven support indicators to manage and monitor performance. Furthermore, KPIs are of strategic importance, so results from operational objectives are central to measuring the impact on key stakeholders (e.g., stockholders, customers, and employees).
• Supporting indicators are measures, like KPIs, used to manage and improve business performance. Support indicators provide drilled down information on the performance of a process and help organizations identify the root cause for performance gaps.

In other words, each process should only have one KPI and then multiple support indicators. The KPI should be the one that aligns to the specific value the organization derives from the process, while the support indicators provide the rest of the productivity measures (e.g., throughput, cost, or cycle time) that helps the organization drill in and problem solve when the KPI goes outside of its acceptable threshold.

Mix of Leading and Lagging

Most organizations also tend to use in-process and lagging indicators (e.g., cost metrics like revenue, number of units produced) while overlooking leading indicators that help them react to changes in the business environment. Best-practice organizations balance these measures with input (predictive) measures. One way to change process outcomes is to improve the inputs—that is, measure the cycle times, lead times, employee satisfaction, and other upstream activities that affect the results of the process. There are several methods available to include leading indicators in the organization's performance management. The most widely known is the balanced scorecard. The customer component of the balanced scorecard is often associated with leading indicators.

Picking the Right Measures

Finally, there are several ways organizations can identify the “right” measures for their processes, and which one they use will depend on their current performance management practices and the level of buy-in and engagement they need for adoption. Some organizations use the measures found in process frameworks or common benchmarks as starting points. While others use workshops to bring the larger group of stakeholders together to determine the best fit measures. Facilitated workshops between cross-functional stakeholders are particularly useful for identifying KPIs for level 1 or 2 processes or end-to-end processes. Often, KPIs for this level of processes tend to be more strategic and are usually linked to a strategic objective or are a leading, rather than lagging, indicator. The important thing to keep in mind when picking measures is ensuring that they align with the organization's goals, capture the value of the process, and include several support measures (which tend to be more in-progress and productivity focused).

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Holly Lyke-Ho-Gland

Holly Lyke-Ho-Gland is a research specialist at APQC, with over ten years of business research and consulting experience. Her focus has predominantly been on best practices in business processes, corporate strategy, and R&D. She can be reached via email at hlykehogland@apqc.org and on Twitter at @hlykehogland.

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