Process Management Manual

8/4/2019 Process Management Manual

1/36

PROCESS MANAGEMENT

MANUAL

Version 1.0 - May 2011


2/36

2

TABLE OF CONTENTS

1 INTRODUCTION ............................................................................. 4

2 PROCESS MANAGEMENT ........................................................... 5

2.1 What is process management? .............................................................. 52.2 Why is process management important? ................................ ............... 5

3 ELEMENTS OF PROCESS MANAGEMENT................................. 7

3.1 Introduction ................................ ................................ ............................. 7 3.2 Organisational chart ................................ ................................ ............... 73.3 Primary process ..................................................................................... 83.4 Managing process ................................ ................................ .................. 83.5 Ancillary processes ................................................................................ 83.6 Risks (risk aspects) ................................................................ ................ 83.7 Control measures ................................ ................................ ................. 10

4 STANDARD APPROACH TO PROCESS MANAGEMENT ........ 11

5 NOTES TO APPROACH TO PROCESS MANAGEMENT .......... 13

6 THE PREPARATORY STAGE ..................................................... 14

6.1 Introduction ................................ ................................ ........................... 146.2 Step 1a: Introduction to process management (current situation) ........ 146.3 Step 1b: Strategic course ................................................................ ..... 146.4 Step 1c: Process decomposition .......................................................... 156.5 Step 1d: Action plan and Formation of team ................................ ........ 16

7 THE ANALYTICAL STAGE .......................................................... 17


3/36

3

7.1 Step 2: Process analysis ................................................................ ...... 177.1.1 Establishing the beginning and the end of the process .................. 187.1.2 Establishing the activities embedded in the process ...................... 187.1.3 Preparing the process chart ........................................................... 187.1.4 Identifying actors ................................ ................................ ............ 19

7.2 Step 3: Risk analysis ................................................................ ............ 197.2.1 Mapping out risks ................................ ................................ ........... 207.2.2 Reviewing risks ................................ ................................ .............. 21

8 CONTROL STAGE ....................................................................... 23

8.1 Step 4: Identifying control measures ................................ .................... 238.2 Step 5: Developing control measures ................................ ................... 24

8.2.1 Developing a procedural chart ................................ ....................... 248.2.2 Establishing duties, responsibilities and powers ............................ 268.2.3 Developing work instructions ................................ ......................... 27

9 IMPLEMENTATION STAGE ........................................................ 29

10 ANNEX 1: RACI CHARTING.................................................... 30


4/36

4

1 INTRODUCTION

This manual was written as a guideline for ANY organizations interested in learning moreabout the opportunities for managing and improving business processes in general and howtheir own organisations can benefit from these opportunities in particular.

This manual sets out to define process management and its relevance for an organisation.Section 3 then maps out a number of concepts relating to process management. Sections 4and 5 address how to approach a process management project. The standard approach can

also be used to set up a quality assurance system and/or an internal control structure.


5/36

5

2 PROCESS MANAGEMENT

2.1 What is process management?

A pilot can only keep his plane on course and adjust his course to changing weather

conditions where necessary if he knows that the plane as such is in good working order.The technical systems need to be managed and controlled.

This example also applies to an organisation. An organisation (i.e. the plane) is formed bya group of people (i.e. the pilot) who use tools to perform activities (i.e. technical systems)in mutual collaboration in order to effectively achieve the agreed targets (i.e. the course).The activities that are undertaken are aimed at achieving the set business objectives, which

requires them to be managed. An enterprise cannot exist without process management.

Process management is defined as: managing and controlling employee activities such

that the business processes in which the activities are bundled, are aimed at achieving the

enterprises strategic and other objectives.

In short, process management entails achieving strategic and other corporate objectives bystreamlining business processes. It is not only important to secure that the organisationreaches its targets, but also that it does so properly, i.e. efficiently. In order to do so, any

risks associated with the processes must be mapped out to avoid them leading tomisunderstandings. In addition, the organisation should develop preventative measures thatreduce these risks to a minimum. Such measures could include describing procedures or

setting requirements for the education and skills levels of employees. Before describing thedifferent aspects of process management, we will first address why process management isessential for an organisation.

2.2 Why is process management important?

Process management has been at the centre of attention in the past few years. But why?The need for managing processes becomes more pressing commensurate with:- increases in changes due to in-company and external developments;- the rising complexity of internal relations and the business environment (e.g. e-

commerce);- employees lack of time to develop good working relations with their colleagues;- the impossibility to exclude all human error; and- a rising need to offer employees as much independence as possible in performing their

duties based on decentralisation of decision-making powers.

Based on the above, the primary purpose of process management is to state withreasonable assurance that business objectives will be achieved, with emphasis being placed

on reasonable assurance since there are always unforeseen risks for which no controlmeasures are taken, whether consciously or unconsciously.

There are another few reasons why organisations should consider introducing a processmanagement system:


6/36

6

- the system leads to a higher level of transparency of the organisation for every personinvolved, including managers, current and new employees, the internal auditor, etc.;

- the system offers more insight into business processes, such that changes andimprovements can be implemented more rapidly;

- the system offers insight into critical business processes and improves anorganisations governability by providing access to more facts, thereby reducing the

number of discussion points;- the system reduces an organisations dependence on one or a limited number of key

officers;

- the system results in fewer errors, i.e. introduces higher efficiency levels;- the system fosters alignment among departments and people (i.e. coordination); and- the system leads to a more pleasant working environment (provided that it is

implemented well, i.e. is sufficiently supported in the organisation).


7/36

7

3 ELEMENTS OF PROCESS MANAGEMENT

3.1 Introduction

For the sake of clarity, we will elaborate on a number of terms and concepts in this section.

3.2 Organisational chart

When asked about the structure of their organisation, employees are likely to present anorganisational chart.

However interesting an organisational chart may be, the information that it contains islimited. The average organisational chart shows what the job titles are, who occupieswhich position and who reports to whom hierarchically. The following information is not

included: what do the employees do and what are their working methods?

what information and other input do they need to exercise their duties?

what tools (i.e. equipment, computers) do they need to exercise their duties? which internal and external parties do they consult? what is the outcome of their duties?

This is better expressed in the below figure, which describes an enterprise as an

organisation in a state of transformation: assets are input, and activities result in the desiredproducts and services, which are supplied to the customer.

INPUT OUTPUTPROCESS

- People- Resources- Materials- Information

- Raw materials- Semi-finished goods

- Energy

Activities - Products

- Services

ManagementBoard

F & A Secretariat

Purchasing Production Sales


8/36

8

The above aspects provide information about the transformation process that anorganisation is undergoing. This information is of great relevance because it adds value tothe transformation process. After all, an operating margin is created if the added value (inthe eyes of the customer) is higher than the production costs. In other words, processes

show how an organisation makes its profit.

Every organisation operates a range of processes. The most common processes are theprimary process (Section 3.3), the managing process (Section 3.4) and ancillary processes(Section 3.5). Risks, which may occur in each of the processes, must be managed using arange of control measures (Section 3.6 and 3.7).

3.3 Primary process

An organisation's core activities take place within the primary process. The organisationsraison dtre is derived from the primary process, and its continuity is contingent on this

process because value is added here. For industrial companies, it is the production processthat qualifies as the primary process, for a financial institution it is the flow of financial

resources and for an institute of learning it is the curriculum. The primary process is madeup of a number of logically sequenced processes. The primary process is also referred to asproduction process and the value chain.

Sales Planning Purchasing Production ServicesShipping

3.4 Managing process

The objective of the managing process is to structure the primary process and to attune it tomarket requirements, and to set targets for, and adjust (i.e. steer), the primary process. An

example of a managing process is the planning & control cycle of an organisationsmanagement.

3.5 Ancillary processes

Rather than adding immediate value, ancillary processes ensure that the primary andmanaging processes continue to run.

Examples of ancillary processes are:- the accounting function;- technical maintenance services;- purchasing of sustainable assets; and- staff recruitment, selection and training.

3.6 Risks (riskaspects)


9/36

9

A risk is an unplanned, negative disturbance of a process that leads to an unplanned output(e.g. poor results, i.e. low effectiveness) or to reprocessing and/or higher consumption ofresources (i.e. lower efficiency). In other words, risks are events that potentially prevent anorganisation from achieving its targets and objectives.

A risk analysis may lead to the discovery of a concentration of certain risk aspects. Risk

aspects may stem from the Critical Success Factors (CSFs) that were defined during theorganisations strategy formation. For instance, production throughput times may be ofcrucial strategic relevance in connection with delivery periods to customers. Any risks inthe primary process that result in an extension of the delivery period are then relevant

(strategic risk) and must be controlled. Other clear risk aspects (besides strategic risks) arefinancial, operational, hazard and miscellaneous risks.

Strategic risks- Business Environment risk: relates to the exposure of the company as a player in a

changing environment.- Regulatory environment risk: relates to the companys exposure towards its various

regulatory obligations.- Brand risk: relates to the companys ability to manage its reputation towards its

stakeholders.- Strategic management risk: relates to the companys exposure arising out of strategic

planning analysis, management of its business portfolio (and communication).

Financial risks- Price Risk: price risk is the exposure of earnings or book value to changes in market

fundamentals / orientations which affect future prices and thus income, expenses or

balance sheet values.- Liquidity risk: Liquidity risk is the exposure to default as a result of the inability to

meet cash flow obligations in a timely and cost-effective manner (or to turn securities

into cash).- Credit risk: credit risk is the exposure to actual loss as a result of the default (or other

failure to perform) of an economic or legal entity with which the company does

business.- Contract and financing risk: contract structure risk is the exposure to imbalances of the

structure of earnings compared to costs having consequences on margins. Financingrisk relates to loss or missed opportunities due to relations with financial institutions orclients because of their loan strategy or inability to reach an agreement.

Operational risks

- Operations risk: relates to the exposure of the company in the achievement of the dailyprocesses of the business.

- Organizational risk: relates to the structure of the company and its adequacy to meetthe companys activities and processes.

- Human resources risks: relates to the quality of management and its ability to sustainand meet business objectives through the empowerment of employees.

- Information and Processing management risk: relates to the quality of the informationcommunication and monitoring.

Hazard risks


10/36

10

- Global location risk: relates to the exposure of the company - depending on itslocalisation - to catastrophes and site vulnerability.

- Property and assets risk: relates to the protection of the companys physical andintangible assets in general. It also concerns the ability of the company to continue

operations.- Liability risk: relates to financial losses arising out of third parties claims consequential

to damages.

Miscellaneous risksSpecific risks which fall under none of the above categories.

3.7 Control measures

Control measures can be divided into preventative, repressive and corrective measures.Preventative measures reduce the chance of risks and their effects occurring, one example

being the drafting of a procedural chart. Repressive measures mainly entail establishingwhether the preventative measures actually work. They include all manner of checks. After

an organisation has established that an error has occurred somewhere in the process, itneeds to take corrective measures to rectify this error such that any damage incurred is keptto a minimum. Corrective measures also include a change in procedures. The below figuresillustrates how these measures correlate.

Process Check Adjustment,

fneeded

Prevent

t

vemeasure

Repressivemeasure

Correction

Corrective

measure

Process Check Adjustment,

ifneeded

Preventativemeasure

Repressivemeasure

Correction

Corrective

measure


11/36

11

4 STANDARD APPROACH TO PROCESS MANAGEMENT

Although the basic approach to process management applies to every organisation ingeneral, there are major differences among enterprises, their organisational models and theconditions under which they operate. The practical implications of control measures must

be in line with an enterprises specific requirements and be geared to the prevailingcircumstances. Aspects that have to be taken into account include the growth stage inwhich the enterprise finds itself, the size of the organisation, the educational background ofits employees, the management style, etc. In other words, the method as such offers a

frame of reference rather than ready-made solutions.

The figure on the next page shows that there are four stages in the standard approach. Firstoff, there is the preparatory stage, which consists of management involvement. This stageis made up of four steps. The management of an organisation should first of allacknowledge the importance of process management. It is crucial in this step to gain

insight into the current situation of the organisation. Then the strategic course (which is

made up of policy, targets and critical success factors) needs to be clearly defined, afterwhich the organisational processes are roughly charted through process decomposition.

Based on the above steps, a team is put together and an action plan developed.

The next phase, which is the analytical stage, serves to further dissect the processes. The

processes are then subjected to a risk analysis, the primary objective of which is to identifyrisks and to review their impact. The advantage of this approach is that it does not create anexcess of procedures and work instructions. Control measures will have to be taken only

where they are needed (depending on the risks). This approach also leads to support withinthe organisation. If employees realise that things can go wrong, they also understand whytheir employer is trying to put things right. This stage fosters understanding for processmanagement.

Based on the risk analysis, control measures are defined in the control stage. The best possible mix of control measures must be determined for the enterprise. This will be

different for each organisation. The development of control measures is then addressed.This manual describes the three most common types of measures, i.e. definition of

procedural charts, allocation of duties, responsibilities and powers, and definition of work

instructions.

The last stage is the implementation stage. This stage serves to roll out the newly defined

procedures throughout the organisation. The foundation for the implementation has already been built in the previous stages, however. The approach to process management (i.e.offering employees the opportunity to provide input) has already led to organisation-widesupport for the implementation.


12/36

12

STAGE STEPS TOOLS

1

1a

1b

1c

1d

2

3

4

5

6

Implementation

stage

Management

Strategic course

Process decomposition

Process analysis

Definition of control

measures

Preparatory

stage

Analytical

stage

Control

stage

Presentation Kick off

process management

Business plan

Procedural chart

Activity/actor matrix

Activity/risk matrix

Risk management matrix

Procedural chart

D/R/P matrix

Work instructions

Other controls

Introduction to process

management

Implementation

Development of

control measures

Risk analysis

Action plan and

formation of team


13/36

13

5 NOTES TO APPROACH TO PROCESS MANAGEMENT

The philosophy of process management is based on the degree of self-activation ofmanagement and staff. After all, most knowledge of the processes is embedded in theorganisation itself and the employees are the ones who have to work with the processes.

The consultants act in a supervisory capacity. There are a number of preconditions thatmust be met before the project can be kicked off. These preconditions are described in thefollowing section entitled The preparatory stage.


14/36

14

6 THE PREPARATORY STAGE

6.1 Introduction

If you dont know where you're going, any road will do. Lewis Carrol in Alice in

Wonderland

The preparatory stage lays the foundation for a successful project. A wide range of aspects

is addressed during the preparatory stage. This does not mean, however, that this stage isnecessarily a time-consuming one. The steps that need to be taken in the preparatory stageare summarised under the heading management involvement.

6.2 Step 1a:Introductionto process management (current situation)

Before an organisation initiates the introduction of a process management system, there

must be consensus at the highest organisational level about the importance and purpose ofintroducing the system. Depending on the size of the organisation, middle managementshould be involved in this step as well. Middle managers play a key role: they not onlyhave to familiarise themselves with the concepts, but they also have to explain them to the

people for whom they bear responsibility and communicate that they support the new

ideas.

Management involvement is an important aspect since the success of a process

management project depends mainly on the commitment and participation of, and theexample set by, an organisations management.

6.3 Step 1b: Strategic course

In addition to commitment, it is important to form an impression of the organisation and itsperformance before the project is initiated. Obviously, there is quite a difference betweenimplementing a management system in a chemical company, a law firm or a business

undertaking. The aspects that need to be accentuated will be completely different.Corporate culture and organisational form also play a major role in the way in which a

management system is built up. For instance, the level of detail of procedures and workinstructions will be much higher in a mass production facility staffed by low-skilledemployees than in an organisation whose employees have enjoyed higher education. Sinceevery management system must be customised to the organisation for which it is intended,

it is useful to highlight these specific aspects in the management orientation phase. Withthis in mind, we can make use of an organisation's strong points and make allowance for its

weak points in executing the project. In this process, regard must also be had for the statusof any current management system.

Furthermore, there must be no doubt about the mission, vision and strategic course of theorganisation. A road-side restaurant that wants to compete on speed, nutritional value and

price will need to implement different processes than a luxury restaurant that aims to create

culinary fireworks.


15/36

15

It is very useful, therefore, if the organisation has defined so-called Critical SuccessFactors (CSFs). These are factors that play a decisive role in achieving, or failing toachieve, strategic goals; in other words, they serve as a guideline for day-to-day practice

but also steer the management and improvement of business processes. Examples of CSFsare:

time-to-market in developing new products; suppliers delivery reliability;

low purchase prices thanks to high volumes;

ability to recruit and retain talented sales people, and;

access to adequate management information.

6.4 Step 1c: Process decomposition

In order to gain adequate insight into the set of business processes within an organisationand their interrelationships, all processes that are in place must first be described in outline.

This need not be time-consuming; any details will be addressed later. It is relatively easy toprepare a rough process chart based on the knowledge of the organisation that has alreadybeen accumulated or the information gathered in the orientation stage.

The best way to initiate this is by describing the primary process. Tracking of thedeveloping product or service throughout the organisation offers a clear picture of the

primary process. By opting for a relatively high abstraction level, all manner of difficultdiscussions can be avoided (no-one here is capable of describing the labyrinth of

processes that we run or we hardly have any processes, we just do what our customersask of us).

After the primary process has been formalised, the activities undertaken to keep the primary process running (i.e. the ancillary processes) are added to the mix. Anotherprocess run by nearly every organisation is the managing process, which usually takes the

form of a review of periodic figures and measures that are taken where needed. We haveincluded an example of a process chart on the next page.

As soon as a blueprint has been prepared of the organisational processes, the organisation

must designate a process owner for each process. A process owner is responsible formanaging and executing the process as a whole.


16/36

16

In addition, targets must be defined at process level. They show the input of the processinto the corporate objectives. Targets help to put all the wood behind one arrow andencourage action. In addition, they allow organisations to compare actual and targetsituations in the interim. Targets commonly have the following characteristics:

they are frequently number-oriented;

they often contain some type of planning;

they are usually adjusted annually; and they are defined by and in all departments.

Process targets must be aligned to both customer and organisational requirements. In

addition, they must be based on the SMART principle, i.e. be Specific, Measurable,Agreed, Realistic and Timely.

6.5 Step 1d: Action planand Formation ofteam

The fact that a management system is set up with the assistance of an external adviser doesnot mean that the organisation has outsourced the project. Organisations are urged to have

process management projects executed by their own staff as much as possible because theyknow the score. This has the following advantages:

y employees have knowledge of the processes;

y the number of consulting hours (if needed) is limited, thereby reducing the fee; and

y employee involvement boosts organisation-wide support of the project and theimplementation of changes.

The last bullet point is of particular importance. Practice shows that the implementation of

a process management system invariably leads to changes in an organisation, whetherthese changes are drastic or relatively minor. Unfortunately, employees tend to resistchanges because their work environment is adversely affected, they are fearful of theunknown or simply because the purpose has not been adequately communicated. Anadviser will have to make allowance for these threats, for instance by involving employeesin the change process, being open to employee initiatives, offering clear and transparentinformation, etc.

Firm infrastructure (e.g. finance, planning)

Sales Planning Purchasing Production ServicesShipping

Planning & ControlManaging

process

Primary

process

Ancillary

processes

Human Resource Management

Technology Development

Procurement


17/36

17

In other words, adequate communication with staff is a prerequisite for their acceptance ofthe change process and facilitating the implementation of the management system. Afterall, employees have a right to know what is going on. Participation and co-responsibilityare key elements in a management system since they allow employees to display their

commitment to the organisation and help them structure their respective department, dutiesand work environment.

In order to prevent the development of a system that is not geared to staff perceptions andsensibilities and that they will, therefore, not accept, it is crucial that the responsible

persons in the organisation should regularly be kept abreast of the status of the project.

This can be achieved by making use of existing consultative structures, such as staffmeetings or the employee magazine, for instance.

The next step is to prepare a clear action plan, which the management must communicateto employees clearly and effectively.1. Step-by-step plan: an outline of the activities that must be performed, as well as a list

of resources that are required to complete the project, including automated tools.

2. Timing and costs: depending on the number of charts that must be worked out, areasonable estimate can be made of the number of hours required to be put in by both

staff and experts that must be interviewed. Costs can then be estimated based on thequestion of whether external advisers will be called in and which tools and facilities arerequired.

3. Time schedule: this refers to the throughput time of the project and the required staffingcapacity, including the project start date.

4. Responsibilities: a list of persons who bear responsibility for the project or partsthereof. It is extremely important that the ultimate responsibility is assigned to line

management.

There are three options for the risk analysis and the development of control measures, i.e. a

workshop for each process, an interview for each process, or training of process ownerssuch that they are able to execute the activities entirely independently.

The level of support is contingent on:- the size and culture of the organisation;- the degree of staff self-activation;- the available capacity within the organisation; and- the availability of knowledge and expertise in the organisation.

7 THE ANALYTICAL STAGE

7.1 Step 2: Process analysis

After processes have been defined based on process decomposition in the preparatorystage, they are further moulded into a process chart in the analytical stage. The processchart then shows the process steps of a single process. The chart offers information aboutthe following process aspects:- the input into the process;- the activities of the process; and


18/36

18

- the output of the process (i.e. the product or service).

The following activities must be undertaken to prepare a process chart:- establishing the beginning and the end of the process;- establishing the activities embedded in the process;- preparing the process chart; and

- identifying the actors.

7.1.1 Establishing the beginning and the end of the process

When establishing the beginning and end of a process, the input (i.e. the beginning) and theoutput (i.e. the end) of the process are described.The input of the purchasing process is a recommended order list, for instance. The output

of this process is an article held in stock and a message to the party that ordered it.

7.1.2 Establishing the activities embedded in the process

A process is made up of different activities, which together merge into a product. Whenestablishing the activities embedded in the process, it is useful to keep in mind that allactivities result in a partial or intermediary product. Intermediary products in the

purchasing process may include internal order forms, product specifications or tenders.The distinctive steps in the purchasing process include internal order, purchase article,receive article, check article and delivery to customer.

7.1.3 Preparing the process chart

Below, we have listed a number of useful tools for preparing a process chart:- For the sake of clarity, use verbs and direct objects when referring to activities;- In order to ensure that the process is described as it takes place, have the chart prepared

by, or with the assistance of, the people who are directly involved in the respective

process;- In the process description, use the standard situation as a starting point, i.e. avoid

describing exceptions. They will only complicate matters. Exceptions can always berevisited as a specific risk later if necessary;

- Avoid complex feedback or loops in a process chart;- Avoid going into too great a detail in the description of the steps. The process should

first be described in outline. Try to divide the process into no more than eight activities.A useful memory aid for establishing whether activities are not described in too great a

detail is to remind yourself that the process descriptions are intended for management.


19/36

19

The figure below shows an example of a process chart for the purchasing process.

7.1.4 Identifying actors

The next step is to identify actors. After all, the activities described in the process chart areperformed by people, i.e. the actors. An actor is responsible for the performance of certain

activities in a process based on duties, responsibilities and powers (D/R/P). The actors aremapped out through the activity/actor matrix. This matrix reviews for each activity whichemployees are actively involved. This involvement ranges from executive duties to aninquiring role. The rule of thumb is as follows: the more people are involved in an activity,the more coordination is required and the more difficult it becomes to manage and controlthe process. Please refer to Annex 1: Role & Responsibility Charting (RACI) at the end

of this document, to get support on how to define responsibilities for roles.

ACTIVITIES ACTORS THROUGHPUT

HeadofEngineering

Technician

HeadofMaintenance

Operations

Planner

PurchaseOffic

er

StockManage

r

Accounting

PROCESS 1. Purchasing process

INPUT Recommended order list

1.1 Internal order C A C A Ir Ir Internal order form

1.2 Purchase article Ig A A Ir Purchase order

1.3 Receive article A Ir A Suppliers packing list

1.4 Check article C C Signed-off packing list

1.5 Article in stock A Ir Stock file

1.6 Delivery to customer C A A A Ig Delivery noteOUTPUT Delivery note and Article in stock

7.2 Step 3: Riskanalysis

Check article

Input: Recommended order list

Output: - Delivery note

- Article in stock

Internal order

Purchase article

Receive article

Delivery to customer


20/36

20

Any activity comes with a certain degree of risk, i.e. there is a chance that something cango wrong with an activity that potentially has adverse effects on the organisationsoperations or financial performance. Measures must be taken to manage these risks. Beforewe are able to establish which measures are necessary, however, the risks must be mapped

out, after which they need to be prioritised for the benefit of risk management.

7.2.1 Mapping out risks

There are many ways to identify the risks that are incurred during the running of a process.What follows are a number of guidelines.- Risks can be divided into a range of risk aspects, which vary from organisation to

organisation. Common risk aspects include: strategic, financial, operational, hazard and

miscellaneous risks.- The critical success factors and objectives of the organisation were defined in the

preparatory stage. Risk is incurred if these objectives are not achieved. Any factors thatmight result in an organisation not achieving its targets constitute risks.

- Another method for identifying risks is to make use of the process objectives that weredefined in the process decomposition phase. The same holds true here: any factors that

might result in the organisation not achieving its objectives threaten the process.- The questions that should be asked are: What can go wrong in the process? When

asking this question, try to formulate the answer as follows: If goes wrong, theconsequences will be that

- It is useful to include both in-company suppliers and customers in mapping out therisks associated with a process. These are employees that spring into action before orafter the process. In-company customers are particularly well aware of the pitfalls andwill usually be more than willing to share this information: after all, improved products

are in their best interest.- In addition, risks can be identified based on the activity/actor matrix (refer to the

previous step). The general rule is: the more actors are involved in the process, themore difficult to manage it is.

- Another method for identifying risks is based on the management loop. A process isadequately managed if it comprises activities that are best described by the verbs Plan,

Do, Check, Act. These four categories make up the management loop.

This management loop should be a recurring factor in every process, or in the process steps. Let us return to the purchasing process: the internal order of the article constitutes the planningelement, the purchase and receipt of the article represents the

doing, which is followed by the check and, where necessary, theacting on any shortcomings. This circle must be complete in order

for steering and feedback to be possible. Steering is required tomanage and control the process. Feedback needs to be given if any

shortcomings are identified in the checking phase. If necessary, activities should be addedto a process in practice in order to complete the management loop. Practice has shown that

the most commonly added activity is the check.

The risks identified for each activity can be shown in an activity/risk matrix. Below, we

have included an example of such a matrix for the purchasing process.

P


21/36


22/36

22

Activities are regarded as critical, for instance, if:- they come with many transfer points, each of which threatens to destroy or distort

information.- bottlenecks or inconsistencies are identified;- they greatly affect the rest of the total process, e.g. if errors in certain activities have

serious consequences for other activities;

- they are associated with a relatively major financial interest, or come with a relativelyhigh level of fraud and risk sensitivity;

- agreements are made with customers;- they are performed frequently;- they are relatively time-consuming;- they are performed by a range of employees; and- they are extremely complex.


23/36

23

8 CONTROL STAGE

8.1 Step 4: Identifying control measures

In the previous step of the step-by-step plan, risks were identified that may have an adverse

effect on results. In addition, risks were categorised and prioritised. The risks now need tobe limited by introducing and formalising control measures. An organisation should definethe best possible mix of control measures. After all, the risk analysis only results in those

measures that are strictly required. Any measures taken that are not linked to an identifiedrisk are a waste of time and effort.

It is important, therefore, to review any existing control measures. Organisations are

recommended to consider which measures continue to be relevant and whether theycontinue to be useful based on the identified risks.

Alternatively, an organisation may opt not to control a risk as a result of a balanced

alignment of resources and risks. The costs of the risk when it occurs will then have tobe weighed against the costs to reduce it. A consciously accepted risk is referred to as a

calculated risk.

The risks that need to be controlled must be resolved in collaboration with staff (usually

the process owners), e.g. by drafting procedures or setting criteria for the employeeseducational backgrounds. The selected control measures can be shown in a risk/controlmeasures matrix. What follows is an example.

ACTIVITIES RISK ASPECTS REVIEW RISKS CONTROL

MEASURESImpact of risk Chance of

occurence

PROCESS 1. Purchasing process1.1 Internal order

1.2 Purchase article

1.3 Receive article

1.4 Check article

1.5 Article in stock

1.6 Delivery to

customer

Common control measures include policy, procedure, D/R/P, work instruction, expertise,computerisation and/or other measures.

The table on the next page lists a number of control measures that can be used as aguideline. Below, we will flesh out a number of common measures, i.e. procedures,

duties/responsibilities/powers (D/R/P), and work instructions.


24/36

24

Control measures Notes/ application

Policy plans Master plan or department plan defining targets and ob8

ectives

Budgeting Quantification of targets and ob8

ectives

Procedure Coordination of activities spread over persons, processes or departments. Routine

activities can be formalised in greater detail than creative processes (R&D) or

management processes

Duties/Responsibilities/Powers Detailing of procedures, including additional requirements for certain activities

Work instruction Practical instructions about how to complete a certain task

Staff education and experience If standardisation of duties is impossible, controls can be implemented by making

requirements of employees who operate the processes (e.g. relating to their

education, experience, personal skills)

Authorisation Granting of consent for the purposes of monitoring the adequate deployment of

resources

Time sheets Monitoring of the efficient use of time

Monitoring of throughput times Monitoring of the efficient use of time

Allocation of direct and indirect

costs (Activity-Based Costing)

Monitoring of efficiency levels in general

Capacity usage register Monitoring of the efficient use of assets

Product specification Information monitoring; proper specification of products

Stock management Prevention of excessive costs and obsolete stock

IT More efficiency in routine tasks, more information in support of management

Management reporting Timely identification of whether targets and ob8

ectives are achieved so that

corrective action can be taken if necessary. This is also relevant with respect to

accountability to higher management echelons

Quality care system Monitoring of the quality of the output and the efficiency of processes in general

8.2 Step 5: Developing control measures

8.2.1 Developing a procedural chart

A procedure formalises how to approach routine tasks for employees of variousdepartments. It sets down activities in the order in which they must be performed. A

procedural chart shows the interrelationships between the various parties that areresponsible for each process (activity): who does what when. The involvement of the

persons and their actions are formalised in a procedure.

Procedures structure processes and activities, making the product more predictable. Theynot only improve control, but also contribute to efficiency. In drafting procedures, an

organisation is forced to scrutinise the way in which it structures its activities. In addition,the procedural chart shows who should be involved in the production process. For people

who are new to a position or take up a position temporarily (e.g. due to illness of theresponsible colleague), formalised procedures help to ease the transition. In order to ensurethat procedures are accepted, the employees themselves need to be involved, and actively

participate, in the writing process. In this manner, they are able to bring their knowledge of

the processes/activities to the table as well.


25/36

25

Procedure descriptions usually consist of a schematic representation of the activities,forms, files, etc. based on symbols. In addition to a chart, the description often contains atext page that describes the activities to be performed (mostly at work instruction level).Provided that they are sufficiently detailed and complete, work instructions can also be

considered separately after the charts and the texts have been worked out. This allows anorganisation to use the instruction for one specific activity for training employees in that

specific activity. The activity completion of an order form, for instance, is detailed in awork instruction that tells employees which information must be entered on the form.Every activity must be linked to an employee or officer, so that it is clear from thedescription which employee is authorised or qualified to perform the duties.

Procedural charts commonly use symbols. Each symbol refers to an action or duty of theresponsible employee or employees. The following table shows a number of symbols that

can be used in a procedural chart.

Activity/action Storage

Decision Link between symbols

Document Reference to

process, department or

external party (e.g.

customer, supplier)

Monitor: data consulting Page number

These procedures can easily be prepared using Word, Excel or PowerPoint.

The document Matrices Process Management is a tool that allow for an organisation toeasily gain insight into a process. In addition, this method of recording procedures is auseful tool in conducting an internal audit.


26/36

26

The following chart is an example (in Word) of the purchasing activity.

8.2.2 Establishing duties, responsibilities and powers

A procedural chart describes who does what when. This guarantees that the right personsare involved in the duties/actions. The involvement of a person in the execution of a dutyalone is not sufficient to control a process, however. The person executing a duty will haveto be authorised to the right level in order to perform his duties properly and should be

accountable for the outcome of a duty. This comes under responsibilities and powers. Inthis step, agreements are made about the responsibilities and powers of the different

employees who are mentioned in the description of the procedure (and in the activity/actormatrix).

Duties

Duties are tasks that must be performed. The duties/actions that are listed in the proceduralchart form the basis for the D/R/P tables.

ResponsibilitiesResponsibility entails accountability to the management or a colleague for activities

performed. An area of responsibility is defined as a delineated topic or field where the

organisation aims to achieve results of deliver a performance.

We have the following practical guidelines for defining areas of responsibility:- responsibility must be borne for the outcome of activities, rather than of activities

themselves;- the degree of detail in which a responsibility is described must be chosen such that the

responsibility can be borne by exactly one employee; and- all areas of responsibility must be covered, i.e. it must be possible to hold someone

accountable for all relevant performances in the organisation.

Purchasing Officer

Purchasing Officer

Purchasing Officer

Purchasing OfficerCustomer Order Check

EnterPurchasing

system

OK?Order

Send

Filing

Order Supplier

Customer

Copy File


27/36

27

Keeping this in mind, organisations should opt for a wording that shows that the work hasalready been completed. For instance, they should use the description suppliers qualifiedrather than qualification of suppliers and inspection plans available rather than draftingof inspection plans.

In order to identify who is responsible forwhat activity, the following questions could be

asked:- who are responsible for the outcome or product of the activity?- who is accountable when things go wrong?

PowersPowers refer to the right to perform an activity. A Purchasing Officer may be authorised,for instance, to purchase articles for an amount of up to US$ 15,000. The organisation

should guarantee that authorisation powers are strictly delineated.

Essential powers and responsibilities should be described only. It may be a problem thatseveral people in different positions have the same area of responsibility. The opposite may

happen as well, i.e. no-one is responsible for a certain area, creating the risk that the duty isnot executed properly, if at all. In both cases, the process owner will have to decide who is

responsible.

8.2.3 Developing work instructions

Work instructions describe the most efficient method of executing a project and tend to beworkstation-oriented. Work instructions are commonly prepared in order to instructemployees or, where extremely critical processes are concerned, to prescribe exactly how

an activity must be approached. A detailed work instruction usually indicates which forms,files and other tools are required to perform an activity. In other words, similar to a

procedure, a work instruction is a document in which agreements about working methodsare set down. The key difference between a procedure and a work instruction is that thelatter indicates how a person is a required to perform a certain task. Whilst a proceduremostly describes the coordination of the activities of different persons and/or departments,

a work instruction offers concrete guidelines for the way in which a duty or action must beperformed.

The objective of a work instruction is always to execute a process in a certain manner andto describe the desired outcome. One objective could be to describe what a purchase ordershould look like. The objective should offer employees clear insight into why it is

necessary to adhere to the work instruction. Here, a link can be made with the activity/riskmatrix, i.e. what will go wrong if the work instruction is ignored.

The question to ask is whether a work instruction should be defined for eachactivity/process. Fortunately, the answer is no. Work instructions are developed only ifthey are considered relevant, i.e. when they relate to activities that are routine, yet

complex. Work instructions are useful only if an activity must be performed with theutmost care or if the knowledge about the execution of certain duties rests with one singleemployee (continuity risk). Detailed work instructions may also be helpful for extremely

complex duties. Under other circumstances, work instructions will be less relevant. Afterall, if an activity is simple, it may be assumed that working methods were addressed during


28/36

28

an employees training or that the employee has performed the activity before. Workinstructions must be geared then to the expertise that is available in the organisation.Furthermore, it is not very useful to write an instruction for an activity that is not part ofthe daily routine. In such cases, an organisation should rely on the creativity of its

management and staff.

Below, we have set out a number of practical guidelines for drafting work instructions:- Use the imperative, which is more direct and easier to read.- Actively involve employees in defining the instructions; this will facilitate the

implementation of the described consistent working method.

- Regularly evaluate whether the work instruction is still in tune with day-to-daypractice.

- Write work instructions in a language that employees can understand.- Make sure that the work instructions are available in the workplace, e.g. on laminated

sheets.

In many cases, work instructions will give a step-by-step description of current working

methods. A work instruction may take the form of text or a flow chart with notes. Thedescription should include:

- what materials are needed for each step;- what tools, equipment and documentation are used in each step;- how and when each step must be performed;- the order in which the steps must be performed; and- the frequency with which a step must be performed.


29/36

29

9 IMPLEMENTATION STAGE

The success of a project is contingent on the following factors:- oral and written communication skills of process owners and project supervisors;- a fresh, independent view of processes;

- commitment on the part of management;- staff involvement;- feasible time constraints and adequate motivation; and- knowledge of control measures.

Below, we have outlined a number of guidelines for a successful implementation:

- Create wide support in the organisation, including at management level, e.g. byoffering as many people as possible the opportunity to participate in the variousanalyses. Alternatively, you might want to consider organising a kick-off event, such as

a party, offer every employee a present or dress the office with new fittings.

- Appoint one process owner for each process who can be held accountable, so that he orshe has an interest in keeping the process running smoothly. In other words, assignresponsibilities to people who are in a position to influence working methods.

- Ensure that communication is adequately arranged, both prior to and during the project.

- After the implementation of the new working methods, ensure adequate follow-up tothe project by identifying potential areas for improvement. Use the management systemas a stepping stone for improvements. Another tool for achieving improvements is theinternal audit, which is intended to establish whether the procedures are being followedand identify any areas for improvement in the processes.


30/36

30

10 ANNEX 1: RACI CHARTING

Role & Responsibility Charting (RACI)

DefinitionResponsibility Charting is a technique for identifying functional areas where there are

process ambiguities, bringing the differences out in the open and resolving them through across-functional collaborative effort.

Responsibility Charting enables managers from the same or different organizational levelsor programs to actively participate in a focused and systematic discussion about processrelated descriptions of the actions that must be accomplished in order to deliver asuccessful end product or service.

Approach Definitions

Responsibility Charting is a way of systematically clarifying relationships pertaining to:

1. Communication or actions required to deliver an acceptable product or service2. Functional roles or departmental positions (no personal names).3. Participation expectations assigned to roles by decisions or actions.

THE RESPONSIBILITY CHARTING THEORY

Managers and supervisors are not accountable for everything in their organization.Responsibility charting ensures accountability is placed with the person who really can beaccountable for specific work. Often this results in accountabilities for actions being moved

down to the most appropriate level.

Everyone has some process role in their job. Because of differing perceptions, one personsview of their role may be quite different than anothers. Role perceptions held today willchange tomorrow even though the job activities remain the same. There are three (3) basicassumptions in any role. They are:

ROLE CONCEPTION:

What a person thinks his/her job is and how the person has been taught to do it. His/herthinking may well be influenced by many false assumptions (e.g., misleading titles,training received from a predecessor during his or her last week on the job, etc.)

ROLE EXPECTATION:What others in the organization think the person is responsible for, and how he/she shouldcarry out those responsibilities. Others ideas may also be influenced by incorrectinformation (e.g., the way it was at a former job, priority changes, assumptions,inconsistent messages from leadership, etc.). The role expectation is usually based on theoutput of results expected from the role.

ROLE BEHAVIOR:What a person actually does in carrying out the job.


31/36

31

Responsibility charting reconciles ROLE CONCEPTION with the ROLE EXPECTATIONand thus, ROLE BEHAVIOR becomes more predictable and productive!. Ideally, what a

person thinks his or her hob is, what others expect of that job, and how the job is actuallyperformed are all the same. The RACI process is a tool to lock all elements in place.Working with other process providers provides a real time consensus that clarifies who

is to do what, with whom and when. This is of great benefit for overall processperformance.

A substandard product or process can often be tracked back to a fault in the chart.Common faults in the chart include: an action not includedon the chart (thatshouldbe), a

positionfailing to perform as assignedor a missingormisapplied responsibility code. Thehighly visible and collaborative nature of the charting process promotes rapid and effectiveupdates/corrections as well as better understanding by those involved in the work.

DIAGNOSING THE NEED

The need for managers and supervisors to clarify roles and responsibilities does not end

after the Responsibility Charting process is complete; it must be an ongoing activity.Managers need to acquire a sixth sense so they can recognize the symptoms of roleconfusion and determine when the process needs to be repeated. Perception drift isnatural. The identification and elimination ofdrift is important to the companys overallwell being as it relates to cost, service and quality.

The symptoms of role confusion are:

Concern over who makes decisions Blaming of others for not getting the job done Out of balance workloads Lack of action because of ineffective communications Questions over who does what A we-they attitude A not sure, so take no action attitude Idle time Creation of and attention to non-essential work to fill time A reactive work environment Poor morale Multiple stops needed to find an answer to a question


32/36

32

ROLES AND RESPONSIBILITIES CHARTING DEFINITIONS

RESPONSIBLE..R

The Doer

The doer is the individual(s) who actually complete the task. The doer Is responsiblefor action/implementation. Responsibility can be shared. The degree of responsibility isdetermined by the individual with the A.

ACCOUNTABLE..A

The Buck Stops Here

The accountable person is the individual who is ultimately answerable for the activity ordecision. This includes yes or no authority and veto power. Only one A canbeassigned to anaction.

CONSULTC

In the Loop

The consult role is individual(s) (typically subject matter experts) to be consulted prior to afinal decision or action. This is a predetermined need for two-way communication. Inputfrom the designated position is required.

INFORM..I

Keep in the Picture

This is individual (s) who needs to be informed after a decision or action is taken. Theymay be required to take action as a result of the outcome. It is a one-way communication.


33/36

33

ROLES AND RESPONSIBILITIES CHARTING DEFINITION STEPS

1. Prepare alist of roles or people involved in process activities

y Roles can be individuals, groups or entire departments. Can include people outside

your department our outside the company (Customers, suppliers, etc.).y Roles are better than individual names

y RACI chart should be independent of personal relationships so the chart would stillbe valid if all new people filled the roles tomorrow.

2. Develop the RACI chart

y As a general rule, first assign Rs then determine who has the A, then complete Csand Is

o For larger groups or more complex issues, an independent facilitator is

requiredo Meeting time can be significantly reduced if a straw model list of

decisions and activities is completed prior to meeting.

Hint: The ideal group size is four to ten people

3. Get feedbackand buy-in

y Distribute the RACI chart to everyone represented on the chart but not present inthe development meeting

y Capture their changes and revise chart as appropriate

y Reissue revised RACI chart

y Update as necessary on a on-going basis

Hint: A follow-up meeting may be necessary if significant changes are made

RACI Charting An Example


34/36

34

RACI Chart Review

Vertical Analysis

Finding Possible InterpretationLots of Rs Can this individual stay on top of so much?

No empty spaces Does the individual need to be involved in so manyactivities?

Too many As Can some of the accountability be pushed down in theorganization?

No Rs or As Is this a line position? Could it be expanded or eliminated?

Overall pattern Does the pattern fit the personality and style of the roleoccupant? Does it go against the personality type of the roleoccupant? (i.e., either too much or too little involvement,etc.)

ROLES / PEOPLE


35/36

35

RACI Chart Review

Horizontal Analysis

Finding Possible InterpretationLots of Rs Will the task get done? Can activity or decision be broken

into more specific tasks?Lots of Cs Do all these individuals really need to be consulted? Do the

benefits of added input justify the time lost in consulting allthese individuals?

Lots of Is Do all these individuals really need to be routinelyinformed, or could they be informed only in exceptionalcircumstances?

No Rs Job may not get done; everyone is waiting to approve, beconsulted, or informed; no one sees their role as taking theinitiative to get the job done.

No As No performance accountability; therefore, no personalconsequence when the job doesnt get done. Rule #1 inRACI charting: There mustbe one, but only one, A

for eachaction or decisionlisted onthe chart. No Cs / Is Is this because individuals/departments dont talk? Does

a lack of communication between individuals/departmentsresult in parallel or uninformed actions?

ROLES / PEOPLE


36/36

RACI Closing Guidelines

1. Place Accountability (A) and Responsibility (R) at the lowest feasible level.

2. There can be only one accountable individual per activity

3. Authority must accompany accountability

4. Minimize the number of Consults (C) and Informs (I)

5. All roles and responsibilities must be documented and communicated

6. Discipline is needed to keep the roles and responsibilities clear. Drift happens. RACIhas to be revisited periodically, especially when symptoms of role confusion reappeare.g.,

o Concern over who makes decisionso Blaming of others for not getting the job doneo Out of balance workloadso Lack of action because of ineffective communicationso Questions over who does whato A we-they attitudeo A not sure, so take no action attitudeo Idle timeo Creation of and attention to non-essential work to fill timeo A reactive work environmento Poor moraleo Multiple stops needed to find an answer to a question

Documents

Process Management Manual