Building Business Value | Corporate Management Strategies

The Failure of Process and Procedures

Many managers, when faced with declining performance, make the mistake of relying on processes and procedures to fix the situation. Conventional wisdom says businesses should develop new policies, procedures, and processes to control growth and manage profitability. But conventional wisdom, in this case, is dead.

This mentality is a product of a bygone era and no longer works in the knowledge era. Indeed, growth and profitability have never come from new processes alone. So why do so many managers fall back on such traditional constructs when faced with performance problems? Why do so many executives rely solely on their monthly and quarterly management tools rather than proactively coaching and mentoring their next generation of leaders?  In short, it is much easier to rely on traditional business constructs than take the time to teach employees how the company makes money.

In large and small companies alike, employees still must understand their need and ability to impact the financial performance of the organization. It’s a fate shared by both company and employee. Whole Foods, for example, has a gain-sharing program that allows teams to manage their labor budget (a huge percentage of their expenses), and a portion of the surplus is sent back to the teams in form of an incentive.  They’ve drawn a direct line of sight between daily operations and corporate financial performance.

Are there failed processes and procedures in your organization that you are clinging too?