Archive for March, 2011

The Six Purposes Of Process Mapping

March 31st, 2011

The Six Purposes Of Process Mapping PhotoThe basic assumption of any organization is that it desires to improve its business performance. Improvement begins with looking at the way people do their work. Therefore, if a company wishes to stay a strong, viable business it must look for leverage points in its functions where improvements can be made at both the organizational and individual levels. You should use process mapping specifically to:

  • Solve problems. Unresolved problems are a drain on your efficiency, annoy people, and create low morale. Problem solving is usually a set of questions to be initially asked. Process mapping can be used to solve problems by helping answer three questions:

1. What is the problem? (This is called the problem statement.)

2. Why is this a problem?

3. How will you solve the problem?

  • Define individual responsibility, authority, and accountability. This means tasks within a company, project, or work team are assigned. It answers the questions of who is responsible for each task, what authority they have to complete the work, and how you plan to hold them accountable.
  • Clarify work. If we understand individual responsibilities then we must eliminate redundant tasks, eliminate repetition, and reduce effort by having a clear picture of what constitutes work.
  • Eliminate task redundancy and duplication. Redundant work is unnecessary, not cost-effective, and detracts from focused performance toward objectives. Often redundancy occurs when departments fail to clarify areas of responsibility and two individuals are working on the same project unknown to each other.
  • Initiate continual improvement. By cleaning up the specifics of workflow, improvements begin to appear in the system.
  • Initiate reengineering if necessary. Reengineering is an alternative choice that may develop from a process map. This decision is reached when the advantages of small changes are not sufficient to warrant the continuation of the process. If a major or bold improvement is needed, the decision becomes one to reengineer.

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The Importance Of Organizational Culture

March 29th, 2011

The Importance Of Organizational Culture PhotoAn entity’s culture also plays an important role in setting up a cost management system. Organizational culture refers to the underlying set of assumptions about the entity and the goals, processes, practices, and values that are shared by its members. To illustrate the effect of organizational culture on the cost management system, consider AT&T prior to its divestiture. It was an organization characterized by “bureaucracy, centralized control, nepotism, a welfare mentality in which workers were ‘taken care of,’ strong socialization processes, [and] little concern for efficiency. . . .”

In such a culture, the requirements of a cost management system would have been limited because few individuals needed information, decisions were made at the top of the organization, and cost control was not a consideration because costs were passed on to customers through the rate structure. After divestiture, the company’s culture changed to embrace decentralized decision making, cost efficiency, and individual responsibility and accountability. Supporting such a changed culture requires different types, quantities, and distributions of cost management information. The values-based aspects of organizational culture are also extremely important in assessing the cost management system. For example, one part of Birmingham Steel Corporation’s mission statement is “to be the lowest-cost, highest-quality manufacturer of steel products in the markets served.” Without a well designed cost management system, Birmingham Steel could not evaluate how well it is progressing toward the accomplishment of that mission. Thus, the cost management system is instrumental in providing a foundation for companies with an organizational culture that emphasizes total quality management.