Business improvement strategies in the Highways Agency
Background
The Highways Agency is responsible for England’s strategic
road network, a network that consists of 9400km (5481 miles) of motorways and
trunk roads and carries a third of all road traffic and two-thirds of all
freight traffic in the country. This equates to an annual total of around 153
billion kilometers traveled. As an Executive Agency for the Department for
Transport the Highways Agency priorities are to:
Continue to maintain
the network in good condition to ensure that it is safe and available for use.
Maximize performance
from the existing network.
Improve the network where necessary.
At the end of the 1990s the UK Cabinet Office introduced a
Better Quality Services Review (BQSR) program in response to the Government’s
white paper ‘Modernising Government’. As part of that program the Highways
Agency undertook a review of the performance of its activities with a view to
considering one of five options:
Abolition
Market testing
Contracting out
Privatization or
Internal improvement
The Highways Agency Management Board realized the potential
of the BQSR proposals, particularly the opportunity to incorporate a long held
policy to improve the management and operation of the organization. The first
step was to set up a small team to consider howsuch a program could be
delivered and by April 1999 this ‘Business Improvement Team’ presented a paper
to the board detailing a potential improvement strategy, which linked the need
to implement a program of better quality service reviews to a structured
approach to improving the business.
The proposed BQSR program was authorized by the Highways
Agency Management Board and was due for completion in April 2004. Alongside the
authorization of the program the board approved the establishment of a Business
Improvement Co-ordinator in each of its 23 divisions. This role was to be
supported by the Business Improvement Team who were charged with facilitating
program delivery.
The approach
The approach that was adopted by the Agency was to use a
small team of internal consultants supported by external expertise to identify
good business practices and assist the functional directorates of the Agency to
analyze the services provided using the BQSR criteria, identify areas for
improvement and implement any improvements. Each of the services identified
would then be subjected to a comparative benchmark with a view to aiding the
final BQSR decision-making process. Figure C8.1 is a visual representation of
the approach that each directorate used.
.jpg”>
The Business Improvement Team worked with the management
teams in each area to decide on the service strategy for each of the previously
identified directorate key activities. This was effectively the first BQSR
analysis designed to identify those services which could be abolished or where
there was already consideration of outsourcing. This exercise provided a
strategic review helping directorates to clarify their purpose. The end of 1999
saw thecompletion of this part of the program with a limited number of services
put forward as having the potential for outsourcing. Those services that were
put forward were subjected to a comparative benchmark and a subsequent
improvement program was devised.
The Business Improvement Team then facilitated the delivery
of the second phase of the framework – ‘Self-assessment using the EFQM
Excellence Model’. Several of the divisions were already using the EFQM
Excellence Model to identify and plan improvements, so it was decided early in
the program that self-assessment against the Excellence Model was likely to be
the most effective way to identify, in a holistic sense, the areas that each
functional directorate of the Agency should consider for improvement. The
Business Improvement Team assessed a number of methods for self-assessment and
eventually settled on two. The first of these would be a simple
questionnaire-based self-assessment, designed for use with the smaller
directorates, where all staff would participate. The second form of
self-assessment, to be utilized by larger directorates, would involve training
a small group of staff as EFQM assessors who would then gather evidence of
business practice, assess that evidence, identify areas for improvement and
plan the implementation.
By mid-2001 over 90 percent of the organization had
undergone one of the two forms of selfassessment and a clearer picture of the
key areas for improvement was evident. Indeed a number of directorates had
already agreed improvement action plans and were well into the delivery of
improvement.
Achievements
The improvement strategy has had an impact on the way the
Highways Agency manages and operates its day-to-day business. For example, work
completed in the financial payments division has led to improvements in key
performance, particularly in terms of the handling time of invoices for payment
(down from an average of over 15 minutes to less than four minutes per
invoice). This has led to an improvement in the prompt payment initiative
targets, from less than 75 percent being paid within the mandated 28 days to
greater than 95 percent being paid on time, with fewer staff employed in the
process.
.jpg”>
The planned improvement is led by the customer facing and
program delivery directorates, as they are responsible for the Agency’s key or
core delivery activity, working to a directorate improvement framework (see
Figure C8.2).
From their clarified purpose (what they are there to
achieve), both directorates have identified their key activities (what they are
there to do), and their key processes (how they will operate). This was
developed using ICOR (inputs, controls, outputs and resources) techniques and
has enabled the production of agreed consistent practices, recorded as
flowcharts and working procedures in the form of process tables (see Figures
C8.3, C8.4 and C8.5). These enable anyone in these directorates to understand
their contribution to the overall work of the Highways Agency and provide clear
practical working guidance. These delivery processes, held in an electronic web
format, are continuously improved and developed alongside their support
processes for customer management, people management, supplier partnerships and
management planning, following ISO 9000:2000 principles.
This delivery process development work has enabled the
picture of the Agency’s overall delivery process to be developed, as shown in
Figure C8.6.
This is enabling the wider process picture and to be
addressed supporting the Directorates in clarifying their contributions.
Measures from these key delivery processes feed forward into the Agency’s
balanced scorecard.
.jpg”>
.jpg”>
Other areas include the identification of potential
improvements to project delivery areas that, once realized, should improve
control over delivery processes, reducing wasted effort through failures, etc.
Work in developing customer satisfaction and management
systems allow the line managers to identify key areas for improvement, based on
the needs and expectations of the customers, as well as clearly measuring, in
both lead and lag terms, how the organization is performing in meeting those
needs and expectations.
.png”>
.png”>
There has also been a number of improvements identified as
the result of detailed benchmarking studies conducted with a range of public
and private sector partners and it would appear that the impact of these has
been mainly positive.
A notable achievement following the adoption of the Highways
Agency business improvement strategy is the greater awareness and desire by all
staff to embrace business improvement as a way of resolving problems and
delivering improved services to customers.
Acknowledgement
The author is grateful for the contribution made by Dick
Tyson and Barry Westwood in the preparation of this case study.
Textbook reading (Oakland Ch. 10 pp. 167–181) You have
covered models that can be used for a quality management system. The same can
be developed for the processes within the QMS as well. Traditional
organisations find it difficult to visualise their activities as a cluster of
processes rather than a group of departments, but this conceptual change is
essential to break down artificial barriers that obstruct performance
improvement and prevent people from focusing on customer requirements. To help
with this, APQC developed a general framework for process modelling called the
Process Classification Framework (PCF). The purpose of the PCF is to help
organisations understand their inner activities from a horizontal process
viewpoint rather than a vertical functional viewpoint. The framework breaks
down the activities of the organisation into several general categories and
makes the identification of processes easier to recognize. By moving away from
the old way of segmenting the organisation into functions such as accounting,
marketing, finance, etc. and instead seeing the activities of the organisation
as a network of processes (designing products, ordering materials, developing
contracts, etc.), everything can be seen from the customer’s point of view.
This is a key element in becoming a customer facing organisation. APQC (This
PDF file provides useful background about the PCF as well as the complete
taxonomy of cross-functional business processes for your reference.)
http://www.apqc.org/portal/apqc/ksn/PCF_5x.pdf?paf_gear_id=contentgearhome&paf_d
m=full&pageselect=contentitem&docid=152203
Process analysis
Textbook reading (Oakland Ch. 10 pp. 181–189) Your textbook
explains methods for analysing a process, including use of the correct flowcharting
symbols. The essential point is that the typical business process consists of several
concepts. Each process should have a goal (i.e., a purpose behind it or
something it is meant to accomplish). Each process will usually consist of
several activities (steps) that use organisational resources (materials,
labour) and inputs (information from other units) to deliver outputs (invoices,
contracts, sales calls) to customers (internal or external). Usually the
activities within the process will be performed in some predetermined order or
sequence. Also, the impact of the business process may be on more than one
organisational unit. The actual development of a flowchart or diagram will
require the team to ask many questions. Perhaps the most important is ‘how does
this process contribute to higher level goals?’ Once that is determined it is
necessary to determine what individuals, teams, units, or departments are
involved in the process and what skills are required. The roles of all parties
must be identified, as well as the steps required to perform the process. Once
a process has been properly diagrammed it can be measured and analysed for
conformance or nonconformance. This also helps make the process easier to
repeat, which reduces errors and makes it easier to train new employees. This
is the systematic way to begin the improvement of processes and the better
management of quality throughout the organisation. BPMO (This paper explains
Business Process Modelling and how it fits in with IT systems development.) .projectperfect.com.au/info_business_process_modelling_overview.php”>http://www.projectperfect.com.au/info_business_process_modelling_overview.php
Redesigning the
organization
Textbook reading
(Oakland Ch. 11 pp. 192–193) Improving business processes is essential to
remaining competitive in the global environment. The redesigning of any
organisation should be a systematic, disciplined approach that focuses on
improvement through the critical analysis of the business processes. Business
Process Redesign (BPR) as defined by Hammer and Champy is ‘the fundamental
rethinking and radical redesign of business processes to achieve dramatic
improvements in critical, contemporary measures of performance, such as cost,
quality, service, and speed’. While all BPR projects are different, there are
common elements that may be shared: fundamental rethinking of how activities
are accomplished (how work gets done), the introduction of new information
technologies that decrease costs and increase the flow of knowledge (enables
better decision making), and a new performance system to measure the processes.
BPR requires changes in organizational structures, jobs, management systems,
and culture.
The benefits of redesign may be high, but the uncertainties
and risks involved can also be considerable. The use of appropriate models will
usually have a very positive effect on the chances of getting it right. The
organisation should expect to encounter resistance from management, employees,
stakeholders, and, possibly, customers. By executing the redesign through
teamwork and empowering the employees, the organisation can greatly increase
the chances of success. BPR is like any other process improvement approach to
the extent that the needs and requirements of stakeholders and customers must
be the primary goal. Also, any redesign should be consistent with the strategic
vision of the organisation and be in line with operational objectives. Booz, et
al. (This PDF file presents a new perspective of BPR from a product focus to a
customer-first approach.) .boozallen.com/media/file/137115.pdf”>http://www.boozallen.com/media/file/137115.pdf
Business process
reengineering
Textbook reading
(Oakland Ch. 11 pp. 193–205) Business process reengineering is about radical
rather than incremental improvement. It has its roots in arguments put forward
by Michael Hammer in the early 1990s to the effect that businesses should get
rid of the non-value adding work that exists within the organization. The premise
behind this idea is that any work that does not create value for the customer
is unnecessary and should be eliminated. The key elements of BPR (note:
Business Process Redesign and Business Process Reengineering are
interchangeable terms) are: aiming for radical improvements through process
redesign; cross-functional reorganisation to meet customers’ needs; getting
internal customers involved in the processes supplying them; and merging
control and action wherever possible. One of the best examples of BPR across an
organisation is reflected in the work of the General Accounting Office (GAO) of
the United States. With over 1.7 million employees, the U.S. federal government
is the largest employer in the United States and the GAO, mandated by law, has
issued guidelines for initiating a BPR review and implementation for all
agencies under the U.S. government umbrella. Your reading below details these
guidelines, beginning with addressing the question as to whether or not BPR is
right for the agency, how processes are targeted and developed, and to what
degree the implementation of BPR achieves the goals and objectives of the
agency. While this example comes from the public sector, the lessons and guides
are entirely applicable to private industry with the customers, in this case,
being those whom the various agencies of government serve. The ultimate
objective of BPR in this instance is to reduce costs and to improve customer
service through implementing the nine assessment issues. GAO (This U.S. General
Accounting Office document provides a comprehensive and practical guide to
business process engineering. Browse it for the information you need.)
.library.unt.edu/npr/library/gao/bprag.pdf”>http://govinfo.library.unt.edu/npr/library/gao/bprag.pdf
Management systems
and models
Textbook reading
(Oakland Ch. 12 pp. 221–223) Adebanjo, D. (2001) ‘TQM and business excellence:
is there really a conflict?’, Measuring Business Excellence, 5 (3), pp. 37–40.
You have covered several quality management systems and models that can be
implemented for improved quality of business processes. However, these do not
constitute an all-inclusive list, nor should they be considered appropriate for
every organisation. While researching ISO 9000, you may have encountered
information regarding ISO 14001. These standards were developed specifically
for environmental management for organisations that desire to meet global
environmental requirements. While organisations must focus on the quality of
their product, they must also control their impact on the environment in all
activities, and this set of ISO standards provides a framework for setting
environmental targets and objectives. There are many systems and models that
have been developed with the emphasis on quality. The reference listed below
provides a comprehensive list and a detailed explanation of how each works. The
decision of what system or model to implement is an important one, but the
decision to implement demonstrates a choice to change the focus or direction of
the organisation. The decision shows that the business wants to improve, wants
to be better, and is not too proud to admit mistakes. The goals of any quality
management system should be to place the focus on the customer, to understand
the processes involved, and to change or improve those processes by working
towards excellence. Whatever model is chosen, the standards which the model is
based upon will provide the guideline that the organisation will follow. As a
manager you will live by these standards. You will also be at the forefront of
change and you will play a vital role in implementing the new system. 12manage
(This site provides a comprehensive list of supply chain and management methods
and tools.)
http://www.12manage.com/i_sq.html
