A business process can be defined as a set of planned activities that are organized by a company and are geared towards accomplishing a specific goal for a particular market segment (Chandler, 1997). Establishing a viable process-based organization system involves the scrutiny and establishment of the main processes that the company is involved in. It is imperative to have and to apply a distinction between the processes based on whether they involve the customer, the staff, business development or business planning. This allows them to be more operational and relevant to the organization.
The number of processes may vary among different organizations based on the activities that the company is involved in. Each of the processes is then sub channeled into several main activities which are controlled by different specialists (Chandler, 1997). Process based structures can be largely subdivided into several processes depending on the nature; Customer processes encompass those activities which add value for the bulk of customers for the organization. These are very crucial and should never be sidelined. They form the framework upon which other processes are integrated (Davenport, 1998).
Development processes include those activities which allow the organization to plan ahead. These include matters that concern product improvement and development, market innovation and the innovation of technological infrastructure within the organization (Ghoshal & Barlett, 2004). The other organizational units of the company focus around the development processes because these determine the direction the company is likely to take in future. Planning and control processes include those activities that are concerned with management.
It is imperative for the organization to distinguish between the different types of planning and control processes. Some of the planning and control processes integrate with the other processes and overlap with customer and development processes. However there are integral planning and control processes that exist independently and must also be catered for adequately. An example of these includes logistic and business planning (Davenport, 1998). Staff and service processes are very important to the organization (Chandler, 1997). These activities facilitate the successful completion of the other three activities.
An integral part of this process is the human resource management, administration, information and communication technology and finance. These services enable the company to function as it should and should therefore be run independent of other processes. Most companies have designed their organizational structures in either a functional or a product oriented manner. The problems arising from these organizational structures have prompted a shift in the organizational structures with most of these companies opting for process based structure systems (Davenport, 1998).
Process based structure systems are ideal for ensuring a company’s optimal performance regardless of the complexity and diversity of the economic environment. Process based structures also allow the company to modify its organizational structures to fit the activities of the company more. Although companies cannot be primarily designed on the concept of process based structures, such a structure is beneficial to the running of the company and eliminates most of the problems which are brought about by other structural systems.
It has therefore been proved to be more effective when integrated to already existing functional or product based systems. The elimination of these other structures cannot be effected if a company is to remain relevant in the market (Ghoshal & Barlett, 2004) American Express Financial Advisors (AEFA) is a good example of a company that uses a process based structural system. This is one of the largest financial planning and insurance companies. This organization is also involved in asset management through its financial corporation. The clientele mainly involves retired people.
In addition to investment, AEFA also offers insurance services through the IDS life insurance company and also among other subsidiaries. The company is also involved in record keeping activities as well as arranging work place conventions for other companies. In utilizing the process based structure system, the company divided their activities based on the different processes that take place. Commercial activities including the asset management and share acquisition was moved to a centralized financial institution. This enabled a disconnection with other activities in the organization.
Administrative activities and record keeping duties were restricted to a different operation system. The organization also mandated the process of insurance to IDS Life Insurance Company. The major advantage of using the process based structure system was that the new organizational structure was better suited to cater for the company’s needs in coping with the demands of the emerging market. It became possible for customer based trading as different services were restricted to different branches of the organization allowing better accountability and responsibility.
The clients were also served better and in cases of problems they knew exactly what channels to follow and the departments to channel their complaints through. This also allowed the company to streamline activities which required knowledge intensive man power and to cluster them into different processes allowing improved overall productivity. A process based structure brought the American Express Financial Advisors problems with activities that required the integration of more than one process. There were issues arising from retired clientele who wanted share acquisition as well as insurance coverage form the same company.
Normally these two would fall under two different organizational departments and two different processes. It therefore became imperative to offer a multidimensional structure integrated with process ownership to ensure that these cases and others falling over more than one process would be handled optimally while the coordination between the different units was minimized. Another example of a company that uses process structured organization is 3M. This is a company that targets on production of innovative products as well as services.
It houses more than six different business processes. They sell ICT products and services as well as information systems to a wide audience of global clientele. The 3M Company faced limitations in production and supply of their diverse products as they demanded various competencies in the various lifecycles of their production. It became imperative for the company to restructure its organization from the classical based structure to process based structure to ensure that processes like repair were demarcated along processes and not function of the different products.
This in turn increased efficiency in productivity and enabled accountability. The new model based on processes divided the businesses in the company along two processes which involved a high volume market and a second but minor process which dealt with information systems. Each of these two units was then divided into different processes which involved customer based and product based processes including product specialists as well as field engineers. In addition the financial process was kept independent of the other processes to ensure better organization.
Johnson and Johnson is a major American company which deals with pharmaceutical and consumer packaged goods. It is a good example of a major capital intensive production process. The global market changes in the twentieth century triggered a huge need for the company to diversify its products in order to remain relevant globally. This diversification led to arising problems in the fulfillment of customer needs. This led to the division and acquisition of other smaller subsidiaries which would deal with the other various divisions such as pharmaceuticals, orthopedic as well as publishing needs.
This product based structure brought problems in regard to combining standard and promotional products especially in the toiletries section. The management had to shift the organizational structure to a process based structure where the two planning processes for both products were separated. Due to the high demand for promotional products, they were first given precedence over the standard products. Process based structures are important but they do not guarantee improved productivity unless the various departments within the organization foster collective responsibility among its staff.
It is also imperative for the management to steer process responsibility and accountability by ensuring that the right competencies are responsible for the right jobs (Davenport, 1998). When laying down process based structures, it is important to ensure that the company is laid down on basic organizational units which must revolve around the core processes. These must be integrated to the customers needs to ensure the relevance of the company in the market and foster future development.
After these are laid out, the other processes including management are then integrated to the customer framework. REFERENCES Chandler, A. (1997). Strategy and structure. Cambridge: MIT Press. Davenport, T. H. (1998). Process Innovation – Reengineering Work through Information Technology. Cambridge: Harvard Business School Press. Ghoshal, S. and C. A. Barlett (2004). The Individualized Corporation: A fundamentally new Approach to Management. New York: Harper Business Press.