Friday, October 16, 2009

How to Break Down Functional Thinking Within Your Organization

We've all been in situations where a division or functional group within an organization points fingers at other divisions when a process failure occurs. Or part of a team that had little idea of how their function fits into other functions within the organization. This article discusses an issue that affects almost every organization, and that's breaking down functional or departmentalized thinking and creating streams of information that flow across multiple functional or departmental boundaries.

Most organizations use departments and business units in order to differentiate the various functions and services which drive their business. For example, personnel related matters are managed in HR departments, payroll is handled in accounting departments and computer and systems related incidents are resolved in IT departments, and so on. In addition most business intelligence systems are built to support decision making in those specific functional areas rather than being built around core processes that span the enterprise and govern how a business operates. For instance, marketing collects only the information it needs to put products and services before the public eye. Sales departments pay attention to leads, and conversions, and customer buying patterns. And customer service tracks only those customers who call in with questions and complaints, and how the issue was resolved.

In reality, business processes are streams of activity that flow across functional boundaries, and not contained within a single department. As a result business processes are often fragmented across "functional silos". A silo in this case is a division or management system that is not integrated with the operations of other, related divisions or management systems.

The problem with organizations that are trapped in this siloed mentality is employees rarely study how their function contributes to the larger business process in which their function supports. As a result, these organizations have limited knowledge on their processes and often do not properly identify their core processes. This is a major pain point in many performance management initiatives, because most major processes require support from multiple functional support groups. In order to break down these silos, each functional group and individual must understand how their primary process fits into the core function of their business.

In order to successfully measure the performance and efficiency of these major processes, we must first understand which groups are responsible for handling these processes and what their responsibilities are. Second, we must understand the handoffs of responsibility, that is, when and how the process gets transferred from one group to the next. Thirdly, we must develop requirements for each responsibility within the process. And if we're really serious about eliminating functional thinking within our organizations, we must cross-train employees so that they fully understand the entire processes, which they support.

For example, when a purchase request comes in, an approval committee or governance team must approve or reject that request within 24 hours. Then the purchasing department must place the order within 24 hours. Then, the warehouse must send the order within 24 hours. Once we understand this, we can say that the purchasing order process, if approved, will be completed within 72 hours. If the purchase is not sent within 72 hours, we now understand where the bottleneck occurred. Ultimately, if this happens on multiple occasions, the responsible group will have to revisit their sub-processes.

Success breaking down functional thinking depends largely on how well the performance management team involves functional support group management and key team members, and how well these sub-processes are identified. Breaking down functional thinking is critical for organizational growth. The important aspect is developing the proper communication channels throughout the entire organization so that when dependencies and cross functional processes are identified, points of contacts will be established and each group will be responsible for ensuring that their staff understand their contribution to larger, multi-functional processes and organization goals.

If you are looking for a performance management solution that focuses on applying the best practices and key processes that drive organizational success, check out my Free Performance Management Kit.

To learn about the 35 performance management best practices, the 48 key processes, 82 decision support techniques and more, go to The Peformance Portal.

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