Business Process Reengineering and Organisational Change

Business Process Reengineering and Organisational Change Introduction This chapter reviews the Business Process Reengineering (BPR) and its vision of radical business process change, focusing upon the use of Organisational culture change for multidisciplinary team-working. It highlights BPRs superficial treatment of the human dimension of its programme for radical organizational change and raises the question of how HRM specialists are to respond to its trivialisation of the complexities and dilemmas associated with the reengineering of work processes. Business Process Reengineering Following the publication of the fundamental concepts of BPR by Hammer (1990) and Davenport and Short (1990), many organisations have reported vivid benefits gained from the fruitful implementation of BPR. Corporations like Porsche AG (Zinser, Baumgà ¤rtner, Walliser, 1998), CIGNA (Caron, Jarvenpaa, Stoddard, 1994), and Wal-Mart (Altinkemer, Chaturvedi, Kondareddy, 1998) are all acknowledged as having productively implemented BPR. However, in spite of the noteworthy advancement of the BPR concept, not all organisations embarking on BPR projects achieve their intended result. In 1993, Hall et al. claimed that 50-70 per cent of business process reengineering (BPR) initiatives fail to deliver the expected results (Hall, Rosenthal, Wade, 1993). Having BPR constantly at the top of the list of management issues in annual surveys of critical information systems reveals executives failure to either implement properly or attain the benefits of BPR (Stefanescu, Stefanescu, Constantinescu, Constantinescu, 2007). This combination of outcomes makes the concern of BPR implementation very significant. BPR has abundant capability for accumulative productivity through reduced process time and budget, enhanced quality, and superior customer satisfaction, but it frequently involves a fundamental organisational change. As a consequence, the implementation process is multifaceted, and needs to be examined against numerous succes s/failure factors to ensure successful implementation, as well as to prevent implementation drawbacks. Practitioners and Researchers have classified BPR in various ways with dissimilar prominence. Hammer and Champy (1993) described BPR as the primary rethinking and radical redesign of business processes to accomplish spectacular enhancements in significant, modern measures of performance, such as expenses, service, speed and quality (Adeyemi Aremu, 2008). Lowenthal (1994) defined BPR as the fundamental rethinking and redesign of operating process and organizational structure, focuses on the organizations core competencies, to achieve dramatic improvements in organizational performance (Aurand, Schoenbachler, Gordon, 1996). Alter (1990) described BPR as a systematic process that uses information technology to radically overhaul business process and thereby attain major business goals (Grover, 1995). Sethi and King (1998) defined BPR as a redesign and reorganization of business activities that results from questioning the status quo. It search for fulfilling explicit objectives and ca n lead to revolutionary enhancement. It is often interrelated with major cultural and technological changes (Sohail, Daud, Rajadurai, 2006). Nevertheless the idea of BPR began to evolve where many theoretical propositions underlying BPR surfaced (Khong Richardson, 2003). Figure 1 shows some of the developments that BPR has undergone. Although the theoretical propositions differ, similarities are present. Figure 1: Comparison of Perspective and theoretical proposition underlying BPR (Khong Richardson, 2003) Impact of BPR on the organisation The previous segment highlighted the fact that for the BPRs success organizational culture plays a crucial role. In this segment of debate a description is provided on the basis of various thinkers thought that what are the main units or elements of organization, where the organizational culture element stands among them and the inter twinning of these various elements showing that how influencing one can guide rest in the desired direction. As discussed ahead, an organization is an integration of various sub-units or sub sets. For successful implementation of process such as BPR, one needs to consider all these elements simultaneously or to identify the core of these elements so that by influencing that the entire organization can be aligned for the process change purpose. In 1988, Leavitt and Bahrami Diamond model (see Figure 2) accentuates the association between technology, business structure, and people issues and related control mechanisms (Peters Waterman, 2004). They identified these four elements as the core and need to be considered for any change initiative in the organization. Figure 2: The Leavitt and Bahrami Diamond (1988) Again, Weisbord (1978) tries to develop a diagnostic tool for identifying six-box organisational areas, using the categories if structure, purposes, relationships, rewards, helpful mechanisms, and leadership (see Figure 3), where an organization has to perform well in order to succeed (Weisbord, 1978). Figure 3: Weisbords six-boxes Organisational Model (Weisbord, 1978) Further elaborating and developing on this thought McKinleys 7s provide a comprehensive set of factors to assess an organizations readiness for change. These factors recognize seven fundamental components (see Figure 4) none of which should be overlooked before the change process starts (Peters Waterman, 2004). The various frameworks and models have several common aspects. Since, McKinleys 7s encapsulates the important constituents of an organisation and because it has Shared Values (or Culture) at its heart, McKinseys 7s model will be used as a framework to assess the impact of BPR on the organisation. Because of the comprehensive nature and the area of vastness and dimension, McKinleys model holds a bigger degree of acceptance in the literature of Change management in organizations. A further elaboration on the elements identified by McKinleys will make this fact more elucidate to the reader and establish its importance for this research work. Figure 2: McKinseys seven S (Peters Waterman, 2004) Systems Systems are codified knowledge, structured in an analytical arrangement (Zack, 1999). They are management control system, performance measurement and reward systems, planning, budgeting and resource allocation systems and management information systems (Kaplan, 2005). They are the guidelines that direct workforce and administration in their daily tasks. All the BPR explanations, either explicitly or implicitly, imply to these features of systems as the subsequent examples of BPR implementation demonstrate. Rohm, in his examination of BPR at the Principal Financial Group Inc., gives an illustration from its field support transaction. He found that earlier, it has 16 step process involving input from nine people located in several areas and on distinct floors of the home office. The modern structure empowered this process to be diminished to six steps, involving the work of only three people. Consequently, customers were supplied with a single contact individual who could implement and control the whole process (Rohm, 1992). Often, new processes are aided by new technology. Thus, both the new technology and the new multi-function positions demand employees learn new techniques. Structures In 2005, Kaplan describes structures as The way in which tasks and people are specialized and divided, and authority is distributed; how activities and reporting relationships are grouped; the mechanisms by which activities in the organisation are coordinated (Kaplan, 2005). Henley goes on to classify six distinct kind of organisation: Simple structure, machine bureaucracy, professional bureaucracy, divisionalised form, adhocracy cult organisation. Having redefined the crucial processes within an organisation, the next step within BPR is to reorganise the organisation along process lines. Process organisations present a new form of organisation that aims to break away from many of the above traditional types, particularly the bureaucracies and divisional forms. Hammer Champy recommend a move to a widely horizontal structure established around the processes (Hammer Champy, 1993), whereas Davenport recommends a multi-facet matrix structure, with process accountability as a key element (Davenport, 1993). To achieve this, Jon Minerich states: the new organisation must adjust a balance between functional expertise and process involvement and goes on to say it is essential to remove functional barriers (Minerich, 2008). Still, whilst a process orientation is a new organisational structure it will incorporate attributes of the adhocracy: Workforces do not need to be supervised; they are grownups who are willing to take accountabilit y for their work products. Staff Buchanan Huczynski (1997) defines Staff as the quality and quantity of people employed but also adds the management concerns of motivation, reward systems, empowerment, the structure of jobs and team work (Buchanan Huczynski, 2004). The quality concerns will be noted in the Skills section that follows. BPR is often linked to new rewards systems. Davenport (1993) mentions gain-sharing, lateral promotion and a move from role title to process title, and variety through work role rotation. Life time employment, he considers encourage employees to redesign the processes to eliminate their own job (Sabki, Nawi, Mohamed, Azzli, 2005). BPR has certainly made some significant impact on the number of staff. At least in its early phase, re-engineering generally means heavy downsizing and extensive job reorganisation. The role of supervisors gets transformed and the number of intermediate managers usually decreased. At the same time, staffs at all horizontal have new, more receptive roles and specialist roles change fundamentally (Vollmann Brazas, 2004). BPR has indeed become related with down-sizing and right-sizing, and in such situations it is problematic to square with Davenports assertion above, that staffs should ha ve the confidence to redesign themselves out of the process. Skills Skills are defined as The distinctive competencies of the organisation needed to perform difficult tasks to a high standard along the dimensions such as people, management practises, systems technologies (Kaplan, 2005). The word empowerment is invariably associated with BPR. Bambarger (1993) and Anon (1993) illustrate employee involvement in the decision making through brainstorming potential solutions and by developing necessary skills to allow teams to make quick decisions. Hammer Champy (1993) elucidated on changing nature of job from simple tasks to multi-dimensional work, managers role from supervisors to coaches and executives evolves from scorekeepers to leader. Strategy Kaplan (2005) defines Strategy as: The positioning and actions taken by an enterprise, in response to or anticipation if changes in the external environment, intended to achieve competitive advantages. He concluded that strategic decisions are complex in nature, involve a high degree of uncertainty, and involve major changes. Johansson et al definition of the BPR drivers are of a strategic nature: Customers; Competition; Cost; Technology; Shareholders; Politics; Economics, Legislation, and Regulation [i.e. Environment] (headings in pp 37-49). One can see these relate to the Strategy definition given above. Johansson et al first task is to Discover the companys strategy and of what drives competitive advantage in a particular industry; the industrys value chain and the basis for competition, and how a particular company seeks to gain competitive edge (p87). Hammer Champy talk about the three Cs: Customers, Competition and Change (p17). Davenport (1993) advocates a Process Vision that is driven by Business Strategy (p127). BPR decisions, like Strategy decisions, are complex and involves a high degree of uncertainty ([BPR] is a complex undertaking and carries significant risk (Carey, 1993), and as noted under Systems and Structures, BPR involves major change. Style Style is the norms, dominant values and beliefs adopted by managers in their use of leadership (Kaplan, 2005). Hammer Champys New World of Work suggest managers to change from supervisors to coaches and executives to change from scorekeepers to leaders (Hammer Champy, 1993). Davenport (1993) also highlights that communication and commitment building must occur at all levels because changes incurred by process innovation are not only broad, but deep, extending from the vision of managers to the attitudes and behaviours of the lowest-level workers (Marjanovic, 2000). Considerable behavioural factor makes process innovation based change qualitatively distinctive from other forms of large scale restructuring. Process innovation involves immense change, not only in process flows and the culture surrounding them, but also in organisational power and controls (Davenport, 1993). Shared Values Shared values are the core or fundamental set of values that are widely shared in the organisation and serve as guidelines principles of what is important; vision, mission, and values statements that provide a broad sense of purpose for all employees (Kaplan, 2005). Successful reengineered business operations and individual belief systems need to be aligned with the specified beliefs of the organisation. Real value in an organisation is to be gained by looking at shared values that elevate above growth and profit objectives by connecting the ambitions of the organisation to innate human needs and principles (Ridder Wesselink, 2006). Reengineering entails as great a shift in the culture of an organisation as in its structural configuration. Reengineering demands that employees deeply believe they work for their customers, not for their bosses (Hammer Champy, 1993). The new process teams combined with shared values must believe in rewards, self-development and self-management centred on skills used. Critical Success and Failure factors of Business Process Reengineering There are a number of factors responsible for making a BPR process successful; simultaneously there are numbers of factors coexistent which can make BPR unaccepted in organization ultimately resulting in a complete negation of this process. Here is a discussion provided to elaborate on some of these factors so that it can be identified that which factor holds the bigger responsibility for a BPR to succeed or to fail. Success factors of BPR Among the chief success factors are aspiring objectives, a process approach and integration of electronic data processing (EDP), and the deployment of a creative team in problem solving (Peppard Fitzgerald, 1997). Ascari et al. (1995) emphasize four other elements in an organization with regard to successful BPR: Culture, Processes, Structure and Technology (Chang Powell, 1998). Ascaris analysis discovered that the enterprises that implemented BPR consented that its effect on the change of their culture was associated to the organisations reconsidering of its elementary business process. The concentration was also on recognising and enhancing core processes. Conversely, the extent and maturity of the business process architectures and the nature of changes within processes diverge within organisation. Furthermore, there must be substantial changes in structure, exclusively with stress on cross-functional work teams. The extent of the business process architectures is related to the study done by Maull et al. which showed the significant importance of this subject. He defined business process architectures as the definition of an integrated set of business processes (Maull, Weaver, Childe, Smar, Bennett, 1995). In 1999, Al-Mashari and Zairi underlined several facets of the critical success factors for BPR, including management proficiency and support, system composition, project management planning, change management and human resistance to change (Al-Mashari Zairi, 1999). According to Smith and Fingar (2002), BPR aims to achieve business performance and competitive advantage by applying innovative ways of doing business. Among few things, they stated to manage radical change efficiently comprises: communication is crucial to show support to the process change project and effective leadership to coordinate deployment of the resources to accomplish the strategic objectives (Smith Fingar, 2002). Further, to recognise the critical success factor of BPR in an organisation, it is essential to comprehend the organisation itself, since the factors may diverge viewing the type of organisation, including private or public. In the public sector, Hutton (1996) stressed several factors that need to be considered in order to implement BPR. These comprise swift dramatic changes in policy direction, rigid hierarchies, culture, multiple stakeholders, overlap of initiatives, wide scope of activities, and staff resistance that are crucial parts of public sector organisations (Hutton, 1996). However, he suggested that human issues should be considered for BPR to be performed in the public sector. This is supported by Smith and Finger (2002) who emphasized that communication at all levels becomes one of the critical elements here. According to the research done by (Berrington Oblich, 1995), it could be encapsulated that in order to implement reengineering, an organisation must understand it s composition first and ensure the vision was achieved. One of the significant points here is that commitment needs to be sustained and improved through communication. The employee concern rather than the technology concern is seen as vital to be dealt with and disciplined so as to make the change effort a success. The concern of culture becomes an imperative factor for BPR, which was further highlighted by Peppard and Fitzgerald (1997) who inspected the allocation of culturally based management procedures, namely BPR, making explicit reference to the German Organisation and cultural context. Their analysis determined that managers and employees as well should contribute their pledge for change. The conflict-free state will reflect on the sustainability of BPR in the long term. Other factors such as empowerment, culture, organisational circumstances and self-autonomy seemed to be significant for BPR to be effectively implemented. Hall et al. (1993) emphasized the depth factor which is related with shared values or culture in following BPR. This study identified six depth levers roles and responsibilities, measurements and incentives, organisational structure, IT, shared values and skills, which require change to enable successful reengineering. In an addition of methodology from the Hall et al . (1993) composition, Maull et al. (1995) concluded what the concerns are which fortify a BPR programme, by study commenced into a range of companies, located solely within the USA. Unstructured interviews took place with selected leading practitioners who had undertaken successful BPR projects and who were asked to share their experiences. The study was conducted with an individual or, more commonly with a team, which had overall responsibility for the BPR project within the organisation. There were five key issues in this study: scope of change, performance measures, information technology, human factors, and business process architecture. It is fascinating to observe and learn that human factors could become one of the sepping stones for the change to occur. The outcomes in Hall et al. (1993), Ascari et al. (1995), Maull et al. (1995), Hutton (1996), Peppard and Fitzgerald (1997), Al-Mashari Zairi (1999) and Smith and Finger (2002) underlined that Organisational culture and human resistance to BPR could lead to unproductive BPR projects. If the change has not been controlled and supervised carefully, employees would resist it, even it is a top-down approach, i.e. driven from the top. Failure factors of BPR Apart from the success factors, several authors also emphasized various failure factors in deploying BPR. Aggarwal (1998) stressed fiascos of BPR deployment, which were related to managers arrogance, resistance, crisis, expenditure, idea, etc. Hammer and Champy (1993) stressed some failure factors such as failure to have a process viewpoint, a rigid process that is not adaptable enough to be receptive to the requests and requirements, not linking workforce (i.e. bottom-up) in decision making, assigning someone that does not understand BPR, technology constraints, fabricating a project but concentrating on downsizing and cost diminution, processing an ineffectual team, and trouble with communication. Therefore, this research emphasized that reengineering is believed to commence with a new vision, mission and customers. Moreover, the scarcity of human resources, and insufficient IT competence and proficiency posed the main inconvenience in carrying out these programmes (Stoddard, Jarve npaa, Littlejohn, 1996). Other factors are the insufficient support from organisation members, absence of strategic vision, rigid organisational arrangement, and shortage of champion for BPR efforts (Ranganathan Dhaliwal, 2001). It is exciting to observe that, among erstwhile failure factors are poor top management support and human resources (Al-Mashari Zairi, 1999), people resistance to adopt (Stoddard et al., 1996; Peppard and Fitzgerald, 1997; Ranganathan and Dhaliwal, 2001), IT related problems (Al-Mashari and Zairi, 1999; Ranganathan and Dhaliwal, 2001; Smith, 2003), and ineffective BPR teams, lack of project management, and problems in communication (Al-Mashari Zairi, 1999). The point for reiterating with these critical factors is that without another kind of fundamental change, namely, a change in organizational culture, there is little hope of enduring improvement in organizational performance. Although the tools and techniques may be present and the change strategy implemented with vigour, many efforts to improve organizational performance fail because the fundamental culture of the organization-values, ways of thinking, managerial styles, paradigms, approaches to problem solving-remains the same (Quinn Cameron, 2006). Evaluating the above discourse it can be summarised to some extent that although there are numerous factors which make impact on BPR majority of them can be summed under the organizational culture umbrella and those who cant be listed under this head can be guided and impacted by the organizational culture dimension. So here onward the essence is to explore further this crucial dimension of BPR which not only impacts the success of BPR most but can guide it to the way of success. Conclusion Using McKinseys organisational model it was shown that a implementation of any change like BPR will impact on six of the organisational dimensions, and that it is driven by the seventh element i.e. Strategy. One can deduce then, that a full BPR programme will embrace significant organisational change. BPR is the fundamental rethinking and radical redesign of business processes that result in dramatic improvements especially in meeting customer needs and other external strategic demands. Crucial to prosperous reengineering is not only the formulation of more effective and efficient BPR processes but orientation of organizational culture to support BPR. Since, shared values is placed at the heart of an organisation by McKinsey, one can also infer that a full BPR programme will incorporate substantial organisational culture change. To fully understand this repercussion, the subsequent chapter will investigate the literature on organisational and culture change. Organisational Culture Managing Organisational Change Introduction Previous chapter emphasised that reengineering is not sufficient to attain necessary change in an organisation. It had to be integrated with an overall approach to changing an organizations culture. All prosperous organisations have established something special that surpasses corporate strategy, market presence, or technological advantages. They have found the potential that exists in developing and supervising a unique corporate culture. The failure of reengineering occurred in most cases because the culture of the organization remained the same. Almost every highflying firm has established a unique culture that is visibly recognizable by its key stakeholders. This culture is sometimes shaped by the original founder of the organisation, for e.g. Disney or Microsoft (Schein, The Role of the Founder in Creating Organizational Culture, 1995). Sometimes it is established intentionally by management teams who decide to enhance their organisations performance in systematic ways, for e.g. , G.E or McDonalds (Karp, 2006). But, not all companies automatically acquire a robust and highly operative culture; henceforth further discussion would be on methodology for how to lead a culture change effort in an organization. The potential for professional subculture exists within any organisation employing professionals. Professionals entering an organisation bring with them a large range of cultural knowledge gained both from the wider society and from their professional training schools and previous work experiences. When they join an organisation and meet like professionals, then their previous cultural repertoire gets validated. Even a sole professional within an organisation will find support for his or her existing beliefs and interpretations through interaction with peers outside the organisation, reading professionals journals, and so forth. This sharing of experiences and belief leads to the development and maintenance of professional subcultures which compliments, conflict and counterbalance the primary organisational culture (Bloor Dawson, 1994). To comprehend how culture change can improve implementation of BPR and organisational capability, it is important that we make clear what is and isnt Organisational culture. A description of organizational culture and subculture will be first delivered followed by the clarification of methods for comprehending culture change in the context of organizations. Finally, employee response to cultural change will be described followed by process of initiating culture change is described which can be used in organizational development interventions. Organisational Culture Subculture There is no clear consensus of an organizational culture definition (Zammuto, Gifford, Goodman, 2000). However, many researchers tried to describe organisational culture as below: According to Quinn Cameron (2006), an organizations culture is revealed by what is valued, the dominant managerial and leadership styles, the language and symbols, the procedures and routines, and the definitions of success that make an organization unique. Culture has been an important concept in organisational study for a long period, but there remains significant range in how researchers observe and analyse culture (Martin, 2002). The anthropologist Kluckhohn (1949) defined culture as the set of habitual and traditional ways of thinking, feeling, and reacting that are characteristic of the ways a particular society meets its problems at a particular time (Price Chahal, 2006). Several academicians who have analysed culture and have frequently come up with considerably narrow definitions, or some have used these definitions and merged them into recent, more espousing definitions. For example, Schein define culture as: a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way you perceive, think, and feel in relation to those problems (Schein E. , 2004). Scheins definition highlights that culture is something not to do with individuals alone but with groups of people collectively, who through their skills together in the work surroundings, will construct an image of what the organisation is all about and how it carry out its purpose. This image is constructed by knowing how to perform for survival and advancement. Contrary, (Smircich, 1983), support analogous hidden features of beliefs and values, while (Thompson Luthans, 1990) emphasise the behavioural interpretation of organisational culture that is learning through both direct and indirect means. For example, employees observe how they are cared by management and how they infer management treating other people. Accor ding to above theory, two components of behaviour exists: the patterns which are internal opinions of how one should act and the norms which are external observable manifestations of the internal opinions. Ogbonna (1993) asserted that culture may have lost much of its meaning as academics and practitioners use culture to refer to any facet of organisations that does not offer itself to obvious explanation. Also, there is a strong tendency among researchers and practitioners towards viewing organizational cultures as unitary belief systems (Ogbonna Harris, 1998). According to this, homogeneity, harmony and unity are features of organization cultures, and cultural change is understood as an organization-wide transformation process, where the old unity is replaced by a new one (Martin, 2002). This is a common view, although cultural organization studies have provided plenty of reflection on the issue of how organizations are subject to different types of cultural divisions (Lindstead Grafton-Small, 1992). It has also been made clear that the organizational belief systems are not necessarily clearly articulated or internally consistent, but that they may at the same time include inconsis tent and ambiguous elements (Meyerson Martin, 1987). The claim goes that the unitary interpretation can only deliver information regarding beliefs that are usually held within the complete organization. This creates problems such as the inability to reveal subcultures and a multiplicity of views, the inability to handle inconsistencies and the inability to take into account ambiguity in organizational beliefs. But, many theorists such as Morgan (1986) and Sackmann (1992) call for a view of culture that is pluralist with the existence of subcultures (Harris Ogbonna, Employee responses to culture change efforts, 2005). There are many kinds or levels of culture that influence organizational and individual behaviour. At the widest level, a global culture, such as a world religions culture or the culture of the Eastern hemisphere would be the highest level (Quinn Cameron, 2006). At a less general level are national cultures or subgroup cultures such as gender-based cultures, ethnic gr oup cultures, occupational cultures, or socioeconomic group culture. Each of these cultures is generally reflected by unique language, symbols, and ethnocentric feelings. Still less broad is the culture of a single organization (Quinn Cameron, 2006). Subcultures are groups whose common characteristic is a set of shared norms and beliefs. In contrast to subgroups, subcultures need not form around existing subdivisions, such as departmental or functional groups (although they often do), nor do they need to be consciously or intentionally formed (Boisnier Chatman, 2003). The range and variety of subcultures is as diverse as the range and variety of existing organizational cultures. Siehl and Martin (1984) gave three categories of subcultures: orthogonal subcultures, enhancing subcultures and counter cultures. Orthogonal subcultures are those groups of organisational members who accept the dominant values but also hold the