Implementation of a Continual Process Improvement Program
As we know, all businesses have processes – and because no family business has perfect processes, it is a worthwhile endeavor to implement a continual process improvement (CPI) program in your business. To do so, your family business leaders must establish the culture and the expectation for this continual process improvement program. How difficult this will be depends on how resistant to change the people within your organization are. When employees become invested in an existing process, even a flawed process, they may be highly resistant to changing it.
Just tasking your employees to improve their processes will ensure mediocre effort and minimal buy-in, and they may not recognize waste in their process on their own. However, trying to force improvements from the top without employee involvement will only create suspicion and erode trust. Successful implementation of CPI requires a two-fold effort that includes management and the employees actually working within the processes themselves.
The key is for leadership to communicate the organizational goal of establishing a culture and top-priority for CPI. This includes setting the expectation among middle-managers that process improvement will be part of their daily management regime.
Senior management’s commitment must be as visible as the commitment they expect from the rest of the organization. This can include but is not limited to:
- Establishing safe, direct channels for process improvement ideas to be communicated to the top by all employees.
- Rewarding employees when defects or flaws are identified.
- Assuring employees that process improvement is not done for the purpose of eliminating staff. Always redirect staff elsewhere or reduce staff through attrition if possible. If they see their co-workers laid off, they won’t work to improve processes lest they believe their own jobs are in jeopardy.
- Publicly recognizing or rewarding employees who improve processes.
- Adding CPI to employee accountabilities and job descriptions.
Once the culture and expectations have been established, it’s important that at least some employees acquire some basic process improvement training. This can be accomplished with the use of written textbooks, consultants, or off-site technical training resources. Some employees may have already had exposure to CPI principles and concepts in the normal course of instruction they received in their technical training or degree programs. Most contemporary management and engineering degrees touch on operations management topics that include some CPI methodologies.
When embarking on the CPI journey, it‘s vital that universal process improvement activities are done in accordance with some sort of methodology that has stood the test of time in other organizations or industries. Merely looking at a process and declaring an improvement is not process improvement. It takes the application of the appropriate methodology and appropriate measurements.
There are, however, many opportunities to make small, incremental improvements just by making a conscious decision to accomplish work in a different way. Something as simple as using electronic means of communication versus paper is an example of how minor decision-based improvements can have a noteworthy impact. In fact, it’s fair to say that a significant portion of process waste may be removed by simple decision making; the rest may be a matter of resources or investment in new technology.
Many small to medium businesses and organizations can implement a CPI program without adding any additional full time employees or blocks on the organizational chart. Larger, more complex businesses that are technology heavy may need to add specialized CPI staff to leverage their own technology to the maximum extent possible for the best return on investment. For a smaller family business, however, a periodic engagement with a consultant specializing in CPI may be all that’s needed.
Most businesses already have the necessary tools to analyze their processes, brainstorm improvements, and track results. Something as simple as a stack of multi-colored sticky notes and a bare wall are all that’s needed to analyze a process for waste. Common office productivity applications such as Microsoft Excel are more than adequate for conducting statistical analyses of process capability.
As with any new initiative or program that you’re implementing, start small. Select smaller, more obvious processes to improve to get the quick win and foster the new mindset. We often call this “picking the low hanging fruit” or “picking up dollars off the floor.” Regardless of the cliché used, it’s important to see tangible results as quickly as possible. This will create the capital needed to go after larger, more complex CPI projects.
Once a few small wins are under your belt, selecting more complex processes for improvement can be challenging. There are several schools of thought regarding this topic, but one thing’s for sure, unless your business is running perfectly, there’ll be obvious indicators illuminating the need for process improvement.
Here are a few of those indicators:
- Overhead: What is your income statement telling you? Are basic measures such as your expenses or efficiency ratio in-line with your peers?
- Output quality: Are your products or services meeting customer needs 100% of the time?
- Internal quality: Do you have to re-work items in production to meet quality standards?
- Waste: How much of it do you have? (See our article Process Value and Waste in the Family Owned Business for a discussion of process waste.)
- Painful processes: Are there processes that you or your employees simply loathe?
Be sure to celebrate your progress as you continually find new areas of your process to improve. Finding opportunities to improve processes and acting on them is always a good thing. The real crime is accepting the status quo, because the reality is that without continual improvement, you’re sure to be left behind by your competition.