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Process improvement = productivity gains.

Increasing productivity means changing the way we work. This is self-evident, yet most efforts to improve administrative productivity pay too little attention to this homely truth and focus instead on the higher visibility issues of structure (e.g., shared services) and technology (e.g., ERP implementations).

Improving tangible work, such as manufacturing automobiles, is much easier than raising the productivity of administrative and overhead functions. Staff work can be:

[1] Hard to envision on an end-to-end basis. Work is fragmented by geography, organization, or time. Consequently, people doing upstream activities don't see the impact of their work "products" on downstream "customers."

[2] Characterized by fuzzy accountability. In answering the question, "Who's in charge?" one may rightly respond, "Everyone and no one." The inherent cross-functional nature of support work means that authority is fragmented and, while each organization does the best it can, systemic problems rarely get addressed.

[3] Difficult to measure on either the input or outcome side of the ledger since staff people do many different things during the day and some of their work yields intangible outcomes.

[4] Interwoven with the individual's view of his/her professional competence so that making changes can be taken personally rather than seen as an opportunity to improve the value of the work itself.

Companies adopting the lean staff model are making productivity the central focus of their improvement strategy and are overcoming these challenges. They are doing this, first of all, by defining productivity to mean accomplishing more valuable outcomes with less effort.

Value can include such variables as quantity, relevance, responsiveness, or worth; effort encompasses people, time, cost, or leadership energy. For staff functions, the specific outcome/effort scales vary depending on the nature of the work. Performing transaction processes, turning knowledge into know-how, or adding value through business partnership are very different tasks and, therefore, require unique metrics.

Once the best companies begin to "see" the world through these "more value, less waste" glasses, they find all kinds of productivity opportunities. For example, they're:

* Learning that transaction work can be performed easier and faster for 1/10th the headcount. Ford's accounts payable department has fewer than 100 people today. When their journey began, they had more than 1,000.

* Turning knowledge centers into revenue generators. DuPont's safety department (acknowledged as the world's best) is selling its safety know-how to other "Fortune 500" companies and is becoming a high-growth and high-margin business.

* Relying on business partners to raise and sustain business performance. At Bank of America, the finance organization is using its understanding of performance metrics to help the units develop their strategies and is then showing the field, service, and marketing staff how to ensure that all parties are making decisions and taking actions consistent with the strategic objectives.

Lean companies are pulling key productivity levers throughout the staff functions. Here are seven of the most critical levers:

[1] Policy: Here's one of the quickest changes. Literally at the stroke of a pen, tons of low-value work can be eliminated. For instance, increasing the dollar limits for approval and authority can actually increase accountability (when only one signature is required, the person signing knows he or she has no place to hide) while wiping out tons of redundant work.

[2] Process: Eliminating and simplifying activities is a sure way to eliminate waste. Any process has a number of work steps that are there for historical reasons but have long since passed the point of being required or adding value. Eliminating redundant or wasteful steps and streamlining remaining tasks leads to step-by-step improvement.

[3] Products: If knowledge workers and business partners would only take the time to ask their clients, "Why do you need this?" or "What are you trying to accomplish?" they would enter a process of discovery that would redefine the task and increase its value. "Clients" often give only cursory thought to their needs and fail to realize that staff professionals can help them gain deeper insight into what they are attempting and use more common sense in how to go about it.

[4] Pricing: Adopting activity- or value-based pricing strategies can be a powerful way to eliminate waste, redundancy, and inconsistency. When customers see that they are being charged for their mistakes, special requests, or nonstandard outputs, they have an incentive to make changes along with specific information on where to start. When staff groups use value pricing, where the customer pays for the outcomes achieved, both staff and line have a common goal of achieving more with less.

[5] Place: Moving activities upstream to their point of origin or aggregating them so that one person has more end-to-end accountability is another way to effect high-impact change. This can often be accomplished by "self-service" initiatives using Web tools. As the work moves to the originator, the staff department batches the back-end tasks by giving this work to a single person. Two people are then doing the work that was formerly fragmented across many.

[6] People: A little training can go a long way. The goal is to eliminate errors and improve process discipline. Setting high performance standards (e.g., 100% of travel and expense reports will be submitted by 8 a.m. Tuesday), measuring performance, teaching people how to comply with the standards, and working one-on-one with the repeat violators will result in a smooth-running process that may even self-correct.

[7] Power: Data is noise, information is signal, and knowledge is power. Any staff function that systematically moves up this path will do more valuable work with less effort. The goal is to teach clients how to do it for themselves today so you'll have more time to discover what's needed for tomorrow.

A common denominator of these seven productivity levers is that they can all be applied to any staff or administrative work. Even more important, anyone can do it! While you can take the "big bang" approach to process improvement and reengineer it on an end-to-end basis, an equally profound strategy can be a step-by-step approach with every staff member asking, "What's the next most obvious action that will lead to improved productivity?" Wrestling with this question will produce insights into what to fix next.

These seven levers can then form a useful framework for thinking creatively about how to accomplish the improvement in the most commonsense way.

The final ingredient is leadership - defined as being able to see and then do the obvious! You don't have to seek leadership elsewhere. Your function has all the potential leadership energy it needs. The task is to turn that latent energy into kinetic energy that performs the real work of process improvement. The accountability of senior staff is to create the conditions that allow this energy to be released.

This journey starts with the question, "What's the most obvious thing to improve?" I suggest you begin by looking first at what you're doing today and seeing what occurs to you. Then figure out how to do it.... And enjoy the trip!

Bob Gunn leads Gunn Partners, a 50-person consulting firm that helps Fortune 500 companies improve the relevance, value, and productivity of staff functions. You can call Bob at (617) 747-5010 or e-mail him at bgunn@gunnpartners.com.
COPYRIGHT 1999 Institute of Management Accountants
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Author:Gunn, Bob
Publication:Strategic Finance
Date:Jun 1, 1999
Words:1202
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