4: The New World of Work
While reengineering entails a radical change in business processes, the results of this redesign ripple through the organization. When people who once are expected to follow orders without thinking are instructed to make decisions on their own and functional departments are dispersed, this has a significant impact not only on the day-to-day work, but on the culture of the organization.
In this chapter, the author means to consider some of the kinds of changes that may precipitate from reengineering processes.
Work Units Change
Companies that reengineer are often putting back together the work that Henry Ford broke into tiny pieces many years ago. Whereas a project team is assembled from people in various departments who temporarily work together to accomplish a short-term goal, process teams will work together on an ongoing basis - that is, they do not contain representatives from functional department, but they replace the departmental structure permanently.
If you were to track the progress of an order, a product idea, or an insurance claim through an organization, you would discover that each item is handled by many different people who are scattered across various silos in an organization. Not only is it difficult to track and manage work, but each department has its own agenda - one might care about inventory turnover whereas another seeks to optimize delivery time - that are at odds with one another.
Reengineering begins by looking at the process rather than the organization, and brings together the collection of people who are involved into an integrated team who work together. Even if their tasks remain the same, the ability to coordinate and communicate with one another will lead to greater efficiency and effectiveness at the process involved. They collaborate on a piece of work, end to end.
The author describes "virtual teams" as a process team that has a shorter lifespan. Returning to the Kodak example, a virtual team was brought together to design a new camera - people from various departments worked jointly on the design project and dissolved, moving on to other projects, when the task was completed. (EN: I fail to see the distinction between this "virtual" team and a typical project team.)
Another type of team is the "case" team. This blends the qualities of a project and a process team, in that work is sorted into jobs or cases, work together until the job is completed and the case is closed, then disperse and join other teams. The difference between this sort of team and a project team is that the task they are doing is not unusual - it's a task done as part of ongoing business, and is often done repeatedly. Consider a team that works together to develop construction contracts or credit agreements for large-scale clients.
It's noted that case teams can evolve into process teams when the individual members learn to take on more of the job and can function autonomously - that is, a generalist can handle a case end-to-end, with specialists who are periodically called in to help in difficult situations.
Jobs Change
People who are assigned to process teams find their daily work to be significantly different to what it was before. Assembly-line work, whether blue-collar or white-collar, involves the repetitious performance of a single task, Once a person is trained to do it, they do the same thing, over and over, and they have little care for or knowledge of the entire process.
Process team workers become generalists - they are given a goal, and have guidance for how to accomplish it, but are not doing the same thing from day to day. They use a boarder range of skills, see the process as a whole, and are empowered to adapt as necessary to achieve success.
Going back to the Kodak example, the engineer who designs only camera shutters now sees and understands the work of others who design components that work in conjunction with his shutter, and can understand how adapting his design to accommodate others creates a better camera.
Additionally, workers who are able to see the entire process are better able to recognize activities that add no value or create waste. They are able to devote more time to the activities that matter, which makes them far more productive.
Work also becomes more satisfying, as workers are no longer cogs in a machine, unable to appreciate the ultimate value of their work. When someone does a whole job, not some anonymous part of it, they tend to care about the outcome. Their concern is for the results of work, not the rituals.
On the other hand, a job that entails greater responsibility also becomes more challenging and difficult. The new model, which involves people who do complex tasks, requires them to be smarter workers and to take on greater challenges. This should, but does not always, entail the need better compensation than a less productive and capable worker - the means for which should be furnished by higher productivity.
Roles Change
Traditional companies demand people follow the rules and established procedures. Innovative companies don't want employees who merely follow rules, but those who make decisions on their own to achieve a desirable outcome. If they are to be effective at all, management must delegate authority to make decisions along with the responsibility of getting work done.
The notion of empowering employees has caught on in the customer service sector. The author relates one story (of many that exist) in which a front-line worker was empowered to go the extra mile to please a customer, and earned their loyalty and advocacy.
In order to be effective, a worker on a process team must be empowered to think, use judgment, and make decisions that are not constrained by rigid policy and procedure. He should not need to ask for permission to do his job, or even something out of the ordinary that is necessary to achieve success. The need to get authorization or approval effectively stops the work while employees wait.
This does not mean that process teams are mavericks: they are beholden to goals and boundaries: there are deadlines, productivity goals, budgets, quality standards, and other measures that define the performance that is expected of them - but so long as they meet them, they are left to manage their own affairs.
Job Preparation Changes
If jobs in a reengineered process require people to exercise judgment, then these same people need sufficient education and training to make such judgment calls.
Historically, training has focused on following procedures and doing tasks a specific way: a person is shown how to do a simple task and they are ready to set to work as soon as they have learned it. And they can keep doing the same task for decades without need for additional training.
In a reengineered process in which employees have broader responsibilities, preparation must shift to provide employees a broader awareness of the work and the ability to understand the impact of decisions. It is more in the nature of education (knowing why) rather than training (knowing how).
One example is given of a pet food company that set out to hire 150 employees to staff a new plant. None of the applicants it hired had any factory work experience - all of them had the right character and the right education. This was not a problem at all - the company was able to train the new hires because they were people who knew how to learn.
(EN: Something similar is said in a number of places. Skills are very easy to teach to employees who have the right attitude and character, but changing the attitude and character of a person who has only skills is nearly impossible.)
The ability to perform a specific task is less important than the ability to learn to do a range of tasks, particularly in the present age where jobs change frequently. A person who knows how to do a task is obsolete when the job changes and the task is no longer needed. A person who is flexible and educable an easily learn new skills when the job changes. And because the workplace is constantly changing, education needs to be ongoing.
Metrics and Compensation Change
In traditional companies, people are paid for their time spent performing tasks. They are paid more over time, due to seniority and tenure at a given firm. Many people are paid merely for showing up and engaging in some meaningless ritual that creates no value.
The author suggests that pieces of work have no value: what is the dollar-value of a soldered joint? What is the value of verified employment data on an insurance form? While it's possible to extrapolate the percentage of the total cost related to a granular task, the task really isn't worth anything by itself, and cannot be monetized until the product is completed.
When employees perform process work, it becomes easier to trace the income their work generates, and pay them according to the total value they create. That is, teams create a product or service that has intrinsic value - one person may design a shutter mechanism, but the team's work produces a salable unit: a camera.
(EN: Even at this, it seems like splitting hairs. You can't objectively assign a value to the work of designing a camera, or the work of processing an insurance form, because that is still part of a larger process that creates a salable output. To get revenue, you also have to produce the camera, market it, distribute it, etc. So all of this seems entirely arbitrary and I have the sense that it would be rare for a team to be responsible for everything necessary to produce a salable unit.)
It's also suggested that a reengineered job would have a relatively flat compensation rate: what matters is not the amount of time you spend on the job, but the amount of value you create regardless of your tenure. Base salaries would largely be flat except for adjustments to compensate for inflation, and substantial rewards would take the form of bonuses rather than pay raises.
There is some precedence for this schema in firms that compensate employees based on commissions. The VP of sales typically makes less than the most productive sales rep, and the chairman of an investment bank receives less than the star bond dealer or currency trader.
Advancement Criteria Change
Traditionally, employees advance through the ranks just for doing time - after a certain number of years of service, and employee whose performance has been acceptable and whose disciplinary record is clean steps up to the next level. A tenured employee who is not particularly competent or capable will automatically advance at the prescribed time, and a employee who is competent and capable now must wait his turn.
When jobs are reengineered, competence stands out: an employee is not limited to, and cannot hide behind, some small part of a larger task when they are responsible for the entire process. In that situation, their capability (or lack thereof) is evident, and their potential for advancement is noticeable.
Many companies claim to pay for performance and promote for ability, as the principle seems obvious, but few actually follow through: on closer examination of their record of employee advancement, it becomes clear that they are still acting based on tenure.
Once client (Capital Holdings DRG) has gone so far as to split its employee review into two separate reviews: one of them considers the performance of their present job, and a separate one considers their potential for advancement. This helps communicate to employees that the skills that make them successful in their present position are different to those that will make them successful in a different job.
(EN: This also strikes me as wise for another reason - it is presumed that everyone wants to advance in their careers, which is not true. Some people are perfectly happy in a hands-on job and dread promotion into management. By splitting the review in half, the company can reward and encourage performance without pushing people in directions they do not wish to go.)
Values Change
Changing the daily routine of employees and focusing on new goals creates a shift in the culture of an organization. An empowered employee who has greater responsibility considers himself to be working to achieve results, not merely obeying his boss's orders. They begin to take personal responsibility for achieving organizational goals and feel they have a greater stake in the future of the firm.
(EN: I think this may misrepresent cause and effect. My sense is that reengineering follows a culture change, not the other way around. That is, a company that feels its culture and values are "right" will not be interested in reengineering in the first place. Reengineering is still to be credited as a practice by which a desired change of values is supported and effected, but I don't see it as the cause.)
In terms of corporate culture, "too many" managers believe that employees' beliefs and value systems are changed by inspirational speeches alone, and that the company does not need to make any change in its practices in order to effect a cultural improvement. This is clearly wrong, as speeches without action is quickly recognized for the disingenuous platitudes that they are.
The author shares some of the sentiments of employees whose work is fragmented: they feel their work is about pleasing the bosses, that they are just cogs in the wheel, that their best strategy for personal growth is to avoid rocking the boat, that a person's importance is determined by their rank and number of subordinates, and that their job will be the same next year as it is this year. All of this supports obedience and compliance, but does not provide incentive for exceptional performance of customer-oriented action.
After a reorganization, employee sentiment should change: they should recognize the customer pays their salary and should be valued, that their work is essential and makes a difference, that it is performance rather than attendance that makes a person valuable, that they have ownership of problems and the authority to solve them, that they are contributing members of a team, and that their job is constantly evolving and getting better.
Management Styles Change
Traditional managers focus on supervision, overseeing the work and stepping in to resolve problems. On process teams, workers are expected to perform these functions, and the management style changes to one of coaching. Coaches do not solve problems for people, they advise people on how to solve their own problems.
Gone, too, is the necessity for a boss to move tasks from one performer to the next: when processes are redesigned properly, there are fewer hand-offs between different groups of people, and the transitions are planned. Where work seems to be piling up or falling through the cracks, managers switch to the role of facilitators to coach employees in addressing and preventing snags. The traditional view is that managers are more important than workers; the process approach places emphasis on the work, and the manager becomes a supporter and facilitator of the employees.
It also becomes clear that management requires a different set of skills: the skills that make a person a good worker do not necessarily make them a good manager, and vice versa. The author drags a few examples out of the sports metaphor bin to demonstrate that great players often made lousy coaches, and mediocre players went on to be excellent ones.
Organizational Structures Change
Reengineering involves changing the working relationships between people. They are no longer clustered according to their skills, but brought together as needed to accomplish specific tasks. Traditionally, all accountants worked together in an accounting department that acted as a service bureau to other business units. But when teams are assembled according to processes, an accountant might be situated anywhere that accounting work is routinely needed.
In a reengineered company, organizational structures will change to reflect the business processes, not the skill-sets of the employees. Not only does this make work more efficient, it also decreases the need for managers to act as liaisons between departments, making introductions and acting as middlemen when people in different departments need one another's support.
A lot of energy goes into designing and managing organizations that are organized into functional departments because of the tremendous amount of coordination, control, and monitoring that must be done to get a people in different departments to work together as a unit. When a company is structured according to processes, the people who are needed to accomplish a given task are organized into a unit that works to achieve a given goal and communicate as necessary.
Managers can monitor the work very simply when it is done by a single team - work does not need to be chased down, it doesn't bounce from one department to the next, it doesn't get lost in transit, and it is immediately evident when it is or is not getting done. In many instances, teams can manage their own workflow, troubleshooting when performance goals are not being met.
As a result, the organizational structure of process-driven organizations becomes flatter. Work is performed by teams of essentially equal people who operate with autonomy and need only occasional support.
It's suggested that traditional organizations need about one manager for every seven people, because their constant involvement in the work requires a great deal of time and attention. Where work is organized according to processes, the ratio can be one-for-thirty because there is less work for managers to do.
Executives Change
Reengineering and the flattening of organizations also creates a shift in the role of a company's senior executives. The executives are less remote from the people who perform the work, and less remote from the customers.
The managerial duties of executives are reduced, in the same way as managers: when departmental silos are removed, less effort is necessary to coordinate people, manage the allocation of resources, and maintain channels of communications.
Instead, executives become owners of processes - they ensure that processes are designed in such a way that workers can do the work required of them, and can change processes to achieve better results. Their goals shift away from maintaining the organization to improving its performance.
Significantly, executives become aware of the actual work and can no longer bury themselves in numbers and metrics that are disconnected from the actual work. Back to sports metaphors, there never was a great coach who told his team "I want you to win by fifteen points" and nothing more - there is more to being a leader than merely stating a goal.
The Business System Diamond
The author borrows from Michael Hammer's "Diamond" model of businesses:
- At the top of the diagram are "Business Processes"
- The middle is "Jobs and Structures" and "Values and Beliefs"
- The bottom of the diamond is "Management and Measurement"
In a roundabout way, this implies that a firm must first figure out the processes that need to be done to accomplish a given objective. Once the process is known, you can then determine what tasks must be performed and how those tasks can be arranged into structures. Once the structures are known, you can consider what mechanisms are necessary to monitor them.
Values and beliefs get short shrift: in the author's view, values describe the qualities that are essential to seeing that the job is done well. That is, if a job must be done accurately, then "accuracy" is determined to be a value, so metrics are designed to gauge the degree to which work is being done accurately and management systems to encourage accuracy can be put in place.
Every company, even those with traditional organization structures, has this diamond - it is lopsided and flawed. A clever simile is that reengineering can be likened to the task of shaping and polishing the diamond to restore it to perfection.