Process Based Management – An overview
Introduction
The Process Based Management System (PBMS) is a Management System, which is based on simple but
fundamental ideas:
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understand your business processes and what they need to achieve
manage their delivery
monitor their actual performance against set targets
and then improve both the processes themselves and their performance over time.
The aim of doing this is to meet your business objectives, which have been defined by the senior managers of the
organisation, based on understanding stakeholder needs..
This approach is totally consistent with ISO9001:2000, which requires users to understand and then effectively
manage the process(es) that contribute towards what that standard calls their 'Product Realisation'. Its companion
standard, ISO9004:2000 extends this customer focus to stakeholder focus, extending the system to cover the whole
business. Process management has been placed at the core of these standards for one very good reason - it is
considered to be a 'best-practice' approach to the delivery of business performance. In the case of ISO9001:2000,
the processes are primarily focused on the delivery of customer satisfaction, and hence it is the basis of external
accreditation, which some organisations require their suppliers to achieve before purchasing products or services
from them.
The aim of ISO9004:2000, and the ‘whole business’ PBMS we are describing here, is to also satisfy other key
stakeholders. Unfortunately, many organisations appear to have applied the 'letter of the standard' in order to gain
ISO9001:2000 accreditation, rather than look to their wider needs. Neither they, nor their customers, are going to
benefit fully from the investment they have made in the development and implementation of their management
system. In order to be successful, over time, they also need to look at and understand ISO9004:2000, which also
extends focus on performance improvement as well as other 'stakeholders' and embeds this within the management
system.
In effect, they have implemented a process based 'initiative', leaving the management of the rest of their business
activities to be covered somewhere else. They will have the same difficulty that has always been the case for
organisations that create a multitude of management systems, with separate ones for each of the initiatives they
wish to manage. How often have you seen separate management systems for such things as Quality Management
(ISO9001), Investors in People (IIP), Environmental Management Systems (EMS), Health & Safety (H&S), Value
Based Management (VBM), Business Improvement (BI), etc. etc.? How often have they had to compete for
resource and recognition, sometimes seen to be fighting against each other rather than acting together for the
overall benefit of the organisation? How often have they been seen as the 'pet initiative' of a particular manager or
director, who seems to pursue them without the real support of their colleagues? And how often have these failed to
deliver the true value that had been expected? Failure has not normally been because of anything wrong with the
ideas behind the initiative itself, but because of the way it was implemented.
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Process Based Management – An overview
Where a PBMS Could Be Used
The PBMS is equally applicable to every type or size of organisation - as indeed is the ISO9000:2000 range of
standards. The approach is:
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not aimed at a specific country, culture or industry.
can be applied across the globe, regardless of the type or location of the organisation and whatever type of
product or service it provides
equally applicable to commercial, 'not for profit' and governmental types of organisation
appropriate for organisations of any size - from 'one-man-bands' to multi-national organisations
ISO9000:2000 addressed this by defining a range of key business principles rather than to list specific detailed
'things' that organisations need to do. It looked at all of the best-practice approaches that have been developed over
recent years, and considered how they work together for the delivery of business benefit. This best practice
included process management.
The ISO9000:2000 series deliberately left the interpretation of these principles to individual organisations. They
knew that every organisation would need to apply them in a way that was specific to their own unique situation - no
two organisations would have exactly the same interpretation. There is also the reality that organisations will
develop over time. This will certainly include changing business objectives and will hopefully also be because of
their increasing maturity in 'process-thinking'. As this happens, their management system will also need to change,
as will the way in which they interpret the principles. A classic example will be the way they start to address new
and emerging CSR / CG requirements within their system. This ‘movement’ is the real meaning of business
improvement.
ISO9000:2000 gives a 'best-practice' basis for senior management teams to think about how they need to lead their
organisation, and how they can focus every part of it on the delivery of business results. Interpreted well, through
the use of a comprehensive PBMS, it can be the way in which organisations transform their performance.
Interpreted badly, it will quickly become discredited and disposed of. Those responsible for deciding how to
develop their management system have the opportunity - and responsibility - to decide which of these two
alternatives it should be.
The Foundation is The PBMS
Process management is the foundation upon which all of the other business principles are built and applied. It is the
mechanism by which any organisation can define and manage the way all of its constituent parts work together to
jointly deliver their business results – i.e. the outcomes that are delivered to their customers and other stakeholders.
These are, in effect, their CSR / CG deliverables. Applying this principle well is the way organisations can move
from a departmental (silo) approach to a cross-functional (process) approach and get everyone focussed on what is
really key to their success. Vitally important to those who wish to apply other management standards, they are now
all using this approach as the basis from which they need to be built and implemented - so getting this right at the
outset is essential for moving forward with any of these into the future.
When designing your PBMS, always think business first, standard second. Build a system that reflects your
business needs, rather than blindly developing a system that follows the individual clauses of the standard. If you
don’t do this, you may well get certification to the standard, but you will miss out on the big benefit – the
opportunity for enhanced and sustainable business performance and maximising your CSR /CG performance.
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Process Based Management – An overview
So what is Process Management?
The PBMS is all about:
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putting in place the key business processes that are needed to deliver your business objectives,
managing their performance and
improving them over time
Sounds like a fairly easy thing to do doesn't it? Well, yes, it does, but many people have tried to apply businessprocess-management in the past and have not been too successful. The whole idea of managing by process has been
around for a long time, but it is still very unusual to see organisations effectively applying it as a routine way of
managing their performance. So there must be some catch? It must be either too difficult or does not deliver
results?
This is far from the truth. There is no catch, it does not need to be complicated and it can deliver results. It does
however require a number of things to be done, in a logical way, and with the appropriate levels of management,
support and planning. Just like any other significant business change, it does not happen overnight and the full
implications of the changes have to be understood and addressed as part of the 'change-plan'. It is as much about
'cultural' issues as it is about 'practical' ones, and if you try to do one without the other, as has so often been the case
in the past with business ‘initiatives’ then any change achieved is unlikely to be sustainable.
It is perhaps useful, initially, to consider why history has not created a large number of 'process-management
exemplar' organisations. The main reasons why process-management has not been effectively taken forward in the
past are:
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More often than not, it has not been seen as a strategic issue - to be driven and championed by the senior
management team.
This is closely followed by the fact that when it has, the whole system has often been designed in a way that
was far too complicated to be effectively used by everyone within the organisation.
The third major reason is that process management has been seen by many as only applicable to the 'operations'
or 'production' parts of an organisation, creating processes focus only on these. In reality all parts of an
organisation operate within processes.
Process Management has, for some reason, often become a tactical issue, a highly technical one or only applicable
to a part of the organisation. None of these should be the case. It has to be strategic, practical and wholeorganisation, and then it will work.
Some of the really important issues about making this happen and some of the ways in which the likelihood of
success can be maximised are:
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Senior Management Involvement
The definition of a Key Business Process
Measurement of Performance - Key Performance Indicators
Process Thinking vs Functional Thinking
If we get these firmly embedded at the outset into both our thinking and our change plan, then we can move
forward with some confidence. It is these 'core' ways of thinking that make the real difference to the success of the
eventual system.
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Process Based Management – An overview
Senior Management Involvement
The PBMS is a 'whole-organisation' management system, designed with the express intention of delivering the
organisation's strategic objectives. It should also be created and used in a way that allows it to be adjusted
(improved) over time, in order to reflect the changing objectives of the organisation. It does not run alongside any
other methods by which the organisation is managed - it is the way the organisation is managed. If it is thought
of as anything else, perhaps in the way that many other Management Systems have historically been developed
individually within organisations, then it will fail to deliver the maximum benefit. This is because it will not be a
'whole-organisation' system. There has to be real recognition that it is core to the organisation, not a system that
'bolts' together a range of management systems covering the other issues the organisation needs to manage. It is the
basis of the Integrated Management System, the prime building block for management to direct and manage their
organisation.
In reality it is the mechanism through which the Senior Managers or Directors responsible for the delivery of the
performance of the organisation will deliver their responsibilities. Its high level design and management cannot be
effectively delegated to anyone else. Strategic management is what their role is all about and there is an absolute
need for this senior team, and especially the 'managing director', or whoever is ultimately responsible for the
performance of the overall organisation covered by the system, to fully 'own' it. They need to display the leadership
necessary to make it work and if they do not do this, it will certainly become just one of the many failed initiatives,
and not worth even starting to implement.
The leadership and involvement shown by the senior team in the development and use of a PBMS has a number of
critical effects:
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It provides a real focus on understanding, prioritising and delivering stakeholder needs – the major role of this
team
It allows them to design their own system in a way that gives them confidence - it creates the management
system they feel is the most appropriate one to help them to deliver their strategic objectives
It starts them all thinking in terms of processes rather than departments - a fundamental change of focus for
many organisations and managers
It creates the opportunity for true process ownership to be taken by appropriate members of the senior team we will discuss process ownership in a later chapter
It displays the importance of the system to everyone within the organisation, through the senior team's
involvement - it will not be seen as important if they are delegating it to someone else
It allows them to relate process performance very closely to business performance - again, more of this in the
later chapter on Key Performance Indicators
It allows them to start to effectively delegate the management of 'lower-level' activities to managers and
supervisors, giving them more time to focus on their key role of strategic management
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Process Based Management – An overview
What Is A Key Business Process?
Key Business Processes are at the core of the PBMS. They are what actually deliver the performance of the
organisation. There have been many ways of describing a business process, and they range from two extremes:
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The single process theory - everything that happens within an organisation is totally linked together into a
single process, describing everything that is done to deliver the key outcomes - which are to satisfy the key
stakeholders.
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The many process theory - there are a large number of individual processes within the organisation, each
focussed on the delivery of specific detailed outcomes. These outcomes are a mixture of deliverables to
colleagues within the organisation (internal) and to individuals and bodies who are not part of the organisation,
such as customers, shareholders, etc. (external). Many of the processes are highly inter-dependent and are often
characterised by each department having a number of processes, which are not cross-functional.
In reality, both of these approaches are correct - there is no right or wrong - and both can effectively describe the
process(es) of an organisation. It just depends on how you intend to use them. When developing a PBMS, there is a
need to understand some specific ground rules that will help you to design it in the most effective way, and these
will provide the key to getting the right level of definition for your key business processes, somewhere between the
two extremes above. But how do we decide where to ‘cut the cake’?
The link between the organisation's strategic objectives and the key processes is provided through the 'High
Performance Cycle', as shown in Figure 1. This describes why the key business processes are so important and how
they link together with the other significant elements that drive organisational high performance.
Stakeholder requirements
Customer requirements
Report on progress
to meet objectives
Create management
information system
Define & prioritise objectives
Define processes
to deliver objectives
Identify Process Measurements
Fig 1 - The High Performance Cycle
The cycle starts with a full understanding of the external environment in which the organisation operates. This
covers all customer and other stakeholder requirements and is where a clear understanding of what the unique CSR
/ CG requirements are for the organisation. From this, the senior management can prioritise and define the strategic
objectives - in reality, the things that they intend to deliver back to the various customers and stakeholders – and
the standards or frameworks they need to apply within the organisation.. Only when they have done this are they
truly able to positively understand and describe the key processes that will deliver them. These processes than have
to be effectively and efficiently undertaken in order to deliver these objectives. The linkage is absolutely clear and
very obvious if you apply this cycle. The performance of these processes then needs to be appropriately measured
and used to identify and drive improvements.
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Process Based Management – An overview
The Key Processes form the highest level of the PBMS, and provide the senior management team with a way of
sub-dividing the activities within the organisation into manageable elements. These key processes are defined in
such a way that the team is confident that they will jointly deliver the strategic objectives of the organisation when
adequately performed. Because of this, they will also provide a mechanism for the senior management team to
review the overall business performance against the objectives, by measuring the outputs of these key processes
against specified targets.
Experience shows that there are between 8 and 15 key processes at the top level of a PBMS. This number
provides sufficient definition of the activities of the organisation to give the right level of visibility and
management responsibility. Although following the High Performance Cycle principles, they need to be uniquely
defined by each management team to reflect what they feel is specifically appropriate for their organisation. If there
are too few processes (less than about 8), they will be very difficult to manage effectively, because they each have
such a large scope, range of activities and outcomes. This small number of processes also provides a very limited
view of performance across the full spectrum of what is important to the organisation, with too little visibility of
key performance elements. On the other hand, if there are too many key processes (more than about 15), it becomes
very difficult for the senior management team to see amongst them what is strategically important, and which ones
should be monitored at this level? In this case, they will cover areas of process that should belong to middle and
junior managers, which should not be of direct management concern to the senior management team.
The key processes will be defined to cover all activities that the organisation undertakes - everything that is
included in the 'scope' of the management system and the responsibility of the 'owner' of the system. It needs to
cover all functions and all elements of the organisation's planning and operational cycle - all the way from gaining
market intelligence to learning and improving based on the results achieved. It must also include all of the 'support'
processes necessary to ensure the core processes can be consistently delivered. In a nutshell, it includes all
processes that are required to deliver the organisation’s objectives. Examples of the types of processes that could
make up a typical PBMS are:.
Understanding the Market
Designing and Enhancing Products & Services
Business Planning
Communicating Services/Products and Winning Business
Delivering Products & Services
Monitoring and measuring Performance
Managing People
Improving Performance and bringing about change
Managing Assets
Managing Finance
These can be visualised in the following way:
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Process Based Management – An overview
Measurement of Performance - Key Performance Indicators
When the PBMS has had its processes defined in the way outlined above, with processes that will jointly deliver
the strategic objectives of the organisation, then it is possible to review organisational performance by looking at
process performance. In effect, they should be the same. As each process has been defined with the main purpose
of delivering some specific output(s) that contribute towards the strategic objectives of the organisation, we need to
be able to measure the delivery of these outputs in an appropriate way. These measures, or other indicators of
performance, provide us with strategic KPIs for each process within the PBMS - in effect, these KPIs show us
whether they have delivered what they were defined to do?
We will have created a measurement mechanism that allows us to review not only the output performance of the
processes themselves but also, by looking at the KPIs of all of the processes together, the strategic performance of
the organisation. Within these measurements, we will need to embed everything that is required to ensure the
standards and frameworks appropriate to the organisation are being applied. This is the measurement of CSR
Process Thinking vs Functional Thinking
It will be appreciated that when we are talking about this relatively small number of key processes, then it is highly
unlikely that a single department alone will perform any one of them. Even if you are already a ‘process based
organisation’, and have structured yourself around your operational processes, it is highly unlikely that you will
have included all of your key processes within this approach. In such organisations, it is often the case that
functions such as Finance and Human Resources are kept separate from this process structure, acting in a similar
way to most other organisations, as supporting functions. If we think about some of the processes identified above
in the typical PMBS, then we can see that they do in reality require cross-functional activity in order to be
successfully delivered.
The effective delivery of process performance must therefore include adequate control over the way in which the
different functions work together to jointly deliver the process outcomes. Process Management is most definitely
not the same as Functional Management. Someone has to be able to take responsibility for the overall performance
of the process, and therefore the activities of people from the different functions taking part in the process. They
will also need to be able to manage cross-functional improvements to the processes, breaking down any barriers
that may exist between the functions involved. Equally, for the people working within the processes, there is a need
for a change of thinking, requiring them to have commitment to the process in which they are working as much as
the department in which they are organisationally located. You will appreciate that this is significantly different to
the way in which most organisations operate and are managed today. There is a cultural shift required to make the
PBMS work effectively.
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