Improper distribution of Tasks and Functions in an Inefficient Management

Introduction

The article ‘Why everything breaks when you reach 25 employees’ tells what happens when a company starts to grow and have more employees. It describes well that once your company starts to have more than 25 employees, the information flow will be slower. That is the time when really need to consider how to structure your company. There are several different organizational structures, for example the traditional hierarchy, flatter organizations, flat organizations, flatarchies and holocratic organizations. (Lighthouse)

How to define Internal Business Processes in a Value Chain?

Tool you can use to analyse your internal business processes in a value chain is Porter’s value chain model. Value chain analysis is a strategy tool used to analyze internal firm activities. Its goal is to recognize, which activities are the most valuable (i.e. are the source of cost or differentiation advantage) to the firm and which ones could be improved to provide competitive advantage. In other words, by looking into internal activities, the analysis reveals where a firm’s competitive advantages or disadvantages are. The firm that competes through differentiation advantage will try to perform its activities better than competitors would do. If it competes through cost advantage, it will try to perform internal activities at lower costs than competitors would do. When a company is capable of producing goods at lower costs than the market price or to provide superior products, it earns profits. (Jurevicius 2013)

With this analysis tool it is easier to make a big picture of the company and go through each section carefully. To make everything work in a value chain, the basics need to be in order, starting with the employees. It is very important to hire the right people for your company. People who are passionate, work hard and agree the company’s values and ideology. Once you have people who really enjoy working in your company and they feel that their job and input is important, your company will nourish. The other thing, which is important once the company gets bigger, is that the information flow is efficient. If information, orders or strategies are not clear, things will get messy since employees will feel that they might not know what and how to work. Or if there are some problems, the information won’t reach the right people, who could solve the problems.

Nowadays, competitive advantage mainly derives from technological improvements or innovations in business models or processes. Therefore, such support activities as ‘information systems’, ‘R&D’ or ‘general management’ are usually the most important source of differentiation advantage. On the other hand, primary activities are usually the source of cost advantage, where costs can be easily identified for each activity and properly managed. (Jurevicius 2013) After your firms’ infrastructure and HRM are clear, the next step is to check that the technology and procurements are in good place. Technology is evolving now faster than ever, therefore it is important to follow the latest trends and what other big companies are doing. Technology could also mean in this case the platform that the company is using for communication inside the company to keep things on track. 

In order to keep your company on right track is that your procurements are in good shape. Procurement describes all those processes concerned with developing and implementing strategies to manage an organisation’s spend portfolio in such a way as to contribute to the organisation’s overall goals and to maximise the value released and/or minimise the total cost of ownership.  Procurement is a more comprehensive term than purchasing, which is more focused on the tactical acquisition of goods and services and the execution of plans rather than the development of strategies. (Rogers)

The process left to be considered is manufacturing. All the different phases in the manufacturing need work efficiently. If one part of the processes is failing, it will affect to others. Same rule will apply to any other part in the value chain. Therefore, it’s important to have good infrastructure in your company so that everything is clear and things will run efficiently.

How to implement an efficient Internal Business Process?

“A good business process is going to be well-documented so that it is a common playbook that the organization can refer back to,” says Erin Greilick, a senior consulting partner at Strata Leadership. “[It’s] developed enough that the members of the team can repeat what it is that is involved along the process of developing whatever the piece of work is that they’re focused on.” (DeBara 2019)

Here are a few steps according to Slack, that can take your company to new levels of efficiency:

1. Identify what’s working—and what’s not

Getting that initial feedback from key stakeholders—people who are actually using the process day in and day out—can give executives invaluable insight into what processes in their business need to be streamlined.

2. Set your baseline and your goals

Once you’ve identified a business process that you want to improve, you need to determine where exactly you’re starting from and where you hope to end up.

3. Leverage your team and build a roadmap for success

The next step is building a roadmap for getting from point A to point B. Greilick says leaders should look at how the business process has been functioning so far and then ask themselves, “How would it need to change in order for us to be quicker, more effective, more productive?”

So if you’re looking to improve a financial approval process, he explains, you don’t want too many finance people on that cross-functional team. Mix in people from marketing and IT and other departments. Getting a wide variety of views on the business process can help you develop a comprehensive and innovative game plan for streamlining it—which can achieve better and more effective results.

4. Look for opportunities to automate

Automation is a cornerstone of digital transformation. It’s one of the fastest and easiest ways to not only increase efficiencies in your business processes but to make each process more engaging and fulfilling for your team. According to a McKinsey report on productivity and automation, “About 60 percent of all occupations have at least 30 percent of constituent activities that could be automated.”

For example, is your client services team spending hours every week gathering contact information from potential business leads? Chatbot software can automate the process of gathering that initial lead information—and free up your team’s time to actually pitch those leads. Is your human resources director spending a good chunk of her time inputting benefits information for new team members? Invest in a human resources platform that allows employees to input their information directly—and free up your HR director to work on more high-level projects.

5. Roll out your new process and continue to gather feedback

You’ve identified a business process that could be improved, worked with your team to develop a plan to improve that process, and identified opportunities for automation. Now it’s time to pull the trigger and implement the process within your organization.

Once you’ve rolled out a new business process, it can be tempting to think “mission accomplished” and pat yourself on the back for a job well done. But it’s important, Greilick says, “Once you institute that process that you let people know, ‘Hey, I need feedback.’”

An essential aspect of effective change management is putting people first. So part of building the most efficient business processes is fostering an environment in which your team feels empowered to deliver honest feedback. “You have to have norms and behaviors that will support a true mindset of collaboration within a company,” says Kuczmarski.

Let your team know that your new business process isn’t set in stone. Schedule regular check-ins with stakeholders to get their feedback on how the process is working (or not working) and what you and your leadership can do to continue to improve and streamline it.

Summarizing Slack’s different steps, it is extremely important to gather feedback all the time – this process never ends. Once you gather the data continually and follow what is really happening inside the company, you will already gather good insight. Then you know how to use the data and what to do with it. Figure out ways to improve the processes which are not working. If you are having problems with employees, it is extremely important to keep their motivation high and let them know that their input is appreciated. All the processes go hand in hand, and if one process is failing, it will affect the whole process of the chain at some point.

References

DeBara, D. 2019. Make your business process more efficient in 5 simple steps. URL: https://slackhq.com/business-process-management-steps. Accessed: 21.5.2019.

Jurevicius, O. 2013. Value chain analysis. URL: https://strategicmanagementinsight.com/tools/value-chain-analysis.html. Accessed: 25.4.2013.

Rogers, P. Procurement. URL: https://www.scm-portal.net/glossary/procurement.shtml

Why everything breaks when you reach 25 employees. URL: https://getlighthouse.com/blog/company-growth-everything-breaks-25-employees/

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