The main elements in a business process are:
➤ Tasks/activities – a piece of work that needs to be done for a particular purpose.
➤ System – this is what drives the process
➤ Human resources – these resources are needed to execute the process
➤ Workflow – the process of defining, executing, and automating business process
➤ Data – the information required to run the process and that which defines it.
The main intent of business processes is to contribute to overall organizational goals and objectives. Through each process, the business strives to achieve specific goals. What are the key attributes of a process? The most distinguishing feature of a process is that it is repeatable. A process is made up of repeatable steps that are executed in an orderly manner. A process is flexible and not rigid. A business process is flexible enough to accommodate modifications and additions in the future. A process has specific start and end points. Finally, a process is measurable. The process outcome and performance must be measured to ensure that the outcome of every task is as expected.
Processes form the lifeline of any business and help it streamline individual activities so that resources are optimally utilized. Why do businesses need well-defined business processes?
➤ Improves process efficiency
➤ Identify the tasks that are important to achieve larger business goals
➤ Set approvals to ensure accountability and optimal resource utilization
➤ Bring orderliness into day-to-day operations
➤ Streamline inter-department, inter-team communications
➤ Standardize a set of processes that matter to the business
Types of Business Processes
Depending on the importance and priority of the process, it may be classified into the core process, support process, and management process. Let us look into each type of process.
Core processes – The most critical functions of a business that adds direct value to the end customer are classified as core processes. Core processes are closely aligned with the fundamental values, objectives, and vision of the business. Continuous monitoring and improvement of these processes is a must as they directly contribute to the growth and revenue flow of the business.
Support processes – Processes that enable and support the core business processes for smooth execution are called support processes. They do not directly contribute to revenue generation, they assist core processes in creating a collaborative environment where core processes can be aligned to work better. Business processes like HR, Finance management, administration, and operations can be categorized as support processes.
Management processes – Business processes that are focused on end-to-end planning, monitoring, managing, and controlling of the core processes are categorized as management processes. These processes are goal-oriented and ensure efficient and seamless business operations. Management processes focus on monitoring business functionalities both internally and externally, and on analysis of opportunities and challenges faced by the business.
Business Process Explained with an Example
Business processes vary according to the type, industry, and location of the business. However, there is a common set of business processes that all businesses utilize. Let us understand business processes better with 2 examples. One is the sales process and the other is the hiring process.
Making a sale of the product or service offered by the business is a fundamental process. The approach to the sales process may vary, but the end goal is to ensure successful and consistent sales.
The common tasks in the sales process include:
➤ Sharing the sales proposal
➤ Sending the sales quote
➤ Negotiating the pricing
➤ Receiving orders for product/service
➤ Updating the records of sales
➤ Delivery of product/service
➤ Invoice Billing
These steps are repeated for every sale that the business engages with. The sales workflow and structure of the process depend on the nature of the business. These tasks need to be executed sequentially and some of them depend on the input from the preceding step.
The hiring process of the HR department involves several steps, some of which are tedious and time-consuming. The main steps in the hiring process include:
➤ Updation of the job requirement by the HR executive
➤ Acceptance of job applications from prospects via the job portal
➤ Screening of profiles based on suitability to job description by HR executives
➤ Chosen candidates are called for the next stages of recruitment
➤ The best fit for the role is chosen at the last stage of recruitment, which is usually a personal interview
➤ Negotiations for salary and policy are held with the candidate
➤ Offer letter is sent to the candidate for acceptance
➤ Acceptance of the offer letter initiates the employee onboarding process
Similar to the sales process, all the steps are repeated each time a new job vacancy opens up at the organization. All the steps are executed in a sequential manner with each step having a dependency on the preceding step.
Other examples of business processes are materials procurement, employee onboarding, claims processing, document approvals, CapEx approvals, and customer service.
What is a Procedure?
What is the meaning of procedure? A procedure is a set of instructions that guide the execution of a specific task or activity. A procedure is usually documented in great detail to ensure that the task is completed consistently and precisely. The instructions listed in a procedure explicitly mention how a task/activity/stage must be completed within a process. When a procedure is followed diligently, they provide employees with the necessary skills and path to perform the task/job with precision. A procedure is about how we carry out an activity.
A procedure is usually in text form. Work instructions or standard operating procedures are other names by which a procedure is known. It details the exact steps that an individual must execute in order to complete an activity detailed in a process. A simple example of a procedure is “The time and attendance spreadsheet can be found in the HR folder of the network drive. You need to populate the number and hours worked in Columns C and D of the spreadsheet”.
Characteristics of Procedures
Procedures are meant for insiders in the business like employees, managers, directors, and workers. A procedure comprises operational guidelines that reflect the way policies are implemented in a business. The policies and procedures are interconnected to each other and are to be undertaken within a general policy framework. The main characteristics of procedures are listed below:
Acts as an action guide for the team – A procedure instructs the team on how to carry out the task in great detail. In other words, it is a comprehensive action guide for the team.
Aligned to the company’s objectives, resources, and policies – Procedures are defined according to the company’s objectives, policies, and resources.
Related to the time sequence of the work to be performed – Business procedures are closely related to the time sequence for the work to be performed.
Helps handle repetitive and regular events effectively – Procedures outline instructions on how repetitive and regular events should be handled effectively.
Effective in controlling and coordinating process activities – Procedures are relevant for controlling and coordinating activities related to the process.
The beginning and end points that are required to be pursued in an exact manner for efficient and satisfactory implementation of the task are clearly defined by a procedure. What is the importance of a procedure in a process? Businesses that are looking for streamlining their business operations must make procedures an integral part of their business strategy.
The importance of procedures in a business is described below:
➤ Defines the manner in which work is to be carried out so that repetitive and irrelevant steps are eliminated.
➤ Brings uniformity into task execution so that every task is consistent with company policies and there is no confusion or chaos in process execution.
➤ Minimises errors in process execution. When a process is executed according to a standard operating procedure, the incidence of errors, inconsistencies, or accidents is minimal.
➤ Suggests ideal ways and methods to undertake any task.
➤ Enables successful completion of the work assigned in a timely manner.
➤ Saves time and money by standardizing task execution.
➤ Specifies the base for evaluating the performance of workers or employees
Types of Procedures
Depending on the purpose, procedures may be classified as compliance procedures, instruction manuals, and policy procedures.
Compliance Procedures –
Procedures are required by compliance standards like ISO for Quality, Joint Commission for healthcare, Sarbanes-Oxley for public accounting, etc. These compliance standards are specific to the domain and geographical location of the business. Compliance procedures are used to train new employees on a process in order to obtain more consistent results. They are also used to document company knowledge to ensure that important information is recorded and retained within the organization. Overtime procedures improve and evolve into company best practices.
Policy Procedures –
Procedures are often associated with company policies. Laying down company policies as clear procedures guides the entire organization through various processes. Some examples of procedure-supporting documents are process maps, business manuals, reports, forms, checklists, Control plans, and quality plans.
Process Manuals –
An employee manual or a handbook defines policies and procedures that are needed to comply with various laws and regulations, and own company software. Employee manuals include policies and sometimes procedures.
Procedures are helpful for training purposes in the form of SOPs and best practices documents as well. The usefulness of procedures has been well established in the above sections. The only limitation with procedures is that they constrain the scope for innovation or improvement in performing the work.
Example of Procedures
Let us take the example of the procedure around activities like purchasing, issuing raw materials from stores, conducting meetings, handling grievances, etc. All these repetitive activities have a definite procedure to be followed.
Procedure for Recruiting Employees
➤ Inviting applications through advertisements on multiple platforms
➤ Screening of employees through CV
➤ Shortlisting candidates and inviting them for further recruitment steps
➤ Conducting a written test
➤ Conducting interviews for candidates that clear the written tests
➤ Further HR and medical tests for candidates that clear the interviews
➤ Candidates that clear the medical test are sent the joining letter.
The procedure for recruiting new employees has been clearly defined in the above steps. Essentially, a procedure is a well-defined method for completing a task. It comprises a series of steps that need to be undertaken while performing a course of action in a uniform and consistent manner. Procedures can be reviewed and revised based on events or incidents that have occurred in the past.
Process versus Procedure: Differences and Similarities
Procedure versus process – Why do we even need to have the debate? Quality and improvement professionals are mainly concerned with the difference between process and procedure. Organizations spend a good deal of time and money on capturing and improving processes in order to support the best practices followed in the company. Process and procedures are important aspects of business operations. The former sets out the “what you do” part, while the latter sets out the “how you do” part. The below table lists the differences and similarities between processes and procedures.