Business Process Reengineering and the important Role of Change Management

Table of Contents (Structure)

Introduction

Section 1: Definition of Business Process Reengineering

Section 2: Implementation of Business Process Reengineering
2.1 Step 1: Development of Process Objectives
2.2 Step 2: Identification of Processes to be reengineered
2.3 Step 3: Measurement of existing Processes
2.4 Step 4: Utilization of Information Technology
2.5 Step 5: Design and Evaluation of Process Prototypes

Section 3: The Reengineering Structure
3.1 The Business Process Reengineering Leader
3.2 The Process Owner
3.3 The Reengineering Teams
3.4 Other Employees involved

Section 4: Change Management as an Enabler of Business Process Reengineering
4.1 Why Change Management?
4.2 Nature of Change
4.2 Process of Change
4.3 Roles of Change
4.4 Resistance to Change
4.5 Commitment to Change
4.6 Culture and Change
4.7 Resilience and Change

Section 5: Common Mistakes in Business Process Reengineering
5.1 Reengineering too many Processes
5.2 Inadequate Training of Process Owners and Team Members
5.3 Improper Monitoring
5.4 Wastage of Time
5.5 Delay in Showing Results
5.6 Discontinuance after Achievement

Section 6: Example of Business Process Reengineering at Lufthansa Cargo AG
6.1 Lufthansa Cargo AG’s Issues
6.2 The Program: “Growth and Results by Improving Processes and Services”
6.3 The Goal: “Continuous Process Management”
6.4 The Barrier: Lufthansa Cargo’s Culture

Conclusion

1. List of Tables

Figure 3.1, p. 4: “The Reengineering Structure”, B. R. Dey, Business Process

Reengineering & Change Management, New Delhi, 2005, p. 114

Figure 4.1, p. 6: “Model of change process”, B.R. dey, Business Process

Reengineering & Change Management, New Delhi, 2005, p. 151

Figure 5.1, p. 9: “Ideal Pattern of a Reengineered Process”, B.R. Dey,

Business Process Reengineering & Change Management, New Delhi, 2005, p. 134

Figure 5.2, p. 9: “Actual Pattern of a Reengineered Process without

Monitoring”, B.R. Dey, Business Process Reengineering & Change Management, New Delhi, 2005, p. 135

Figure 5.3, p. 9: “Actual Pattern of a Reengineered Process with Monitoring”,

B.R. Dey, Business Process Reengineering & Change Management, New Delhi, 2005, p. 135

2. List of Abbreviations

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Introduction

In today’s business world - no matter which market we are in - several key words keep reoccurring, which managers and Chief Executive Officers like to use to explain the reorganization of structures and processes of their companies. “Total Quality Management”, “Business Reengineering”, “Six Sigma”, “Quality Function Development” and “ISO Standards” are just a few that could be mentioned. All their concepts have one thing in common which is the strive to remain profitable in a business world of faster changing, hard to forecast markets and growing customer expectations.

This co-op report will discuss the meaning and implementation of “Business Process Reengineering” with the example of Lufthansa Cargo AG along with the importance of “Change Management” as an enabler.

Section 1: Definition of Business Process Reengineering (BPR)

Since the end of World War Two the U.S.A. as well as the European markets have been observing Japan’s fast recovery and gradually increasing market shares in Western markets, e.g. in the automobile and the electronic industry.¹

The Japanese business strategy, is not as concerned with results and profits as in the West, but with the quality processes and performance, which is based on topmost priority to customer needs and empowerment of employees at all levels, which in turn seems to enable Japanese companies to maintain profitably during hard times. Their domination of Western markets lies in the practice of “Kaizen”² in combination with “Quality Circles”³. “Kaizen” is defined with continuous improvement, standardization of each improvement and unending raise of these standards by steadily striving for improvements. “Quality Circles” empower each employee, no matter what status or level he has, and thus motivates each employee through a sense of belonging and an improved quality of work life, resulting in giving his or her best to the organization. The main idea behind this is, that each person doing his job knows it best and therefore can easily identify problems and find solutions for improvement. That is why he or she has also to be given the power to develop such improvements.⁴

While Kaizen and Quality Circles can be considered a soft strategy, “Business Process Reengineering” is one of the most radical ways to form a result oriented and hierarchical structured company to process and customer orientation. According to Hammer and Stanton¹ BPR is defined as “the fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance”.

To improve its processes a company’s management will have to identify causes of problems and their effects as well as dispense with some of their existing tasks, processes and sub processes to reinvent them and bring significant improvements in organizational performance. Dealing with whole processes and not just single tasks, BPR affects an entire company and not just few departments. It changes a whole company’s structure as well as culture and is therefore a radical way to improve business.

Section 2: Implementation of Business Process Reengineering

Before BPR can be implemented, the organizational culture has to be shaped to ensure that all employees are convinced about its necessity and inevitability for the survival and growth of the company. All employees also have to have a clear understanding of the concept and be well trained, since failures of BPR in the past have been caused by people who did not know what they were doing.²

In general it is difficult to suggest a systematic standard procedure for implementing BPR, since each organization has its own unique work environment, technology and culture. Therefore not all suggestions might be appropriate for all organizations. Still Davenport and Short³ developed a five-step implementation plan, based on the observation of many companies, which have successfully implemented BPR by following these steps. In the following their suggestions will be presented.

Step 1: Development of Process Objectives

Davenport and Short define a business process as “a set of logically related tasks performed to achieve a defined business outcome” - not only tasks but an integrated whole of combined tasks forming an end-to-end business process (e.g. product development). The most common objectives are cost reduction, time reduction, quality improvement and improved quality of work life (including learning and empowerment). However fulfilling all of these objectives simultaneously is difficult.

Step 2: Identification of Processes to be reengineered

It is the top and senior management’s task to identify the processes to be reengineered. An approach for identification can be a “high impact” approach, identifying only the most important processes. All employees involved in such processes have to develop a clear understanding of (a) activities and tasks involved in each process, (b) how their tasks form a link in the process chain and (c) how the process chain is affected by their own work. Process charts containing sub-processes and other activities involved in the main process should be documented as well. Still there is no need for a detailed analysis. The process’ targets can be set by benchmarking. Targets have to be quantitative (and therefore be measurable) such as time, cost, quality etc. but at the same time company’s capabilities have to be kept in mind. Unrealistic targets may lead to frustration and ultimate failure of the process to reach its goals.

Step 3: Measurement of existing Processes

The measurement of processes by quantifications before and after reengineering enables the company to identify whether the reengineered process has achieved its goals and if not, how wide the gap is. Appropriate correctives can then be taken for further improvement. Hard facts allow a company wide communication about achievements, reinforcing a process-oriented culture and silencing the skeptics.

Step 4: Utilization of Information Technology

Generally the expertise of an Information Technology (IT) specialist is rarely used during the reengineering process. However his contribution can add high value to the process. Not only as a tool but also as a facilitator IT can speed up the implementation as well as obliterate existing tasks and sub processes to bring significant improvement. It is unlikely that a company can bring major improvements in its key business processes without considering IT as an enabler of the reengineering process.

Step 5: Design and Evaluation of Process Prototypes

Just like a product prototype has to be tested to see whether it fulfills its desired requirements and in order to make changes without high expenses, a process prototype should be critically examined before implemented. However reengineering is characterized by steady improvement, therefore improvements will also have to be made during (and after) implementation and uncertainties cannot be eliminated totally.

Section 3: The Reengineering Structure

The usual reengineering structure is as follows (Figure 3.1):¹

illustration not visible in this excerpt

Figure 3.1: The Reengineering Structure

3.1 The BPR Leader

The BPR Leader has to be a person who holds one of the top management positions, to ensure enough power and authority over the concerned departments, which strictly follow his or her instructions required for a reengineering process. Most likely the Chief Executive Officer (CEO) will be too preoccupied with several important activities and therefore not able to devote enough time and effort to be the BPR Leader as well. Still the CEO has to give constant support to the BPR Leader. Apart from holding a top position, the leader needs personal attributes such as conviction, optimism, sternness and commitment, so that the employees are convinced that he or she is going the same way. The leader always has to be accessible to the Process Owners, when they face problems, meet with them regularly and show personal interest in monitoring the results.

3.2 Process Owners

The BPR Leader cannot carry out the reengineering process alone, since he has other activities to look after. Therefore he appoints Process Owners who are each in charge of reengineering a process. They will need adequate training to acquire the skills and knowledge for successfully reengineering a process, since knowledge of project management will be little of help. It is the Process Owner’s responsibility to act as a team leader of the Reengineering Team and resolve the problems occurring during implementation with the team.

[...]

¹ com. Dey, B.: [Business], pp. 9-34

² Kaizen (Japanese, literally "improvement")

³ first formed by Kaoru Ishikawa (japanese chemist * 1915, Tokio; † 16. April 1989)

⁴ com. Dey, B.: [Business], pp. 9-34

¹ Hammer, M a.o.: [Reengineering], p. 3

² com. Dey, B.: [Business], pp. 85-103

³ Davenport, D. a.o.: [New], pp. 11-27

¹ com. Dey, B.: [Business], pp. 113-123