B2B-Breaking Functional Mindset

7/25/2019 B2B-Breaking Functional Mindset

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/ / they want employees to take

collective responsibility for

customers, managers must do

more than reorganize.

Breaking the

Functional

Mind Set in

Process

Organizations

by Ann Majchrzak and Qianwei Wang

Thousands of businesses have reengineered work

in order to focus employees on processes tbat clear-

ly provide value to customers. Tbey have done

away with their functional silos and created new

organ iza t iona l s t ruc tu res -p rocess -comple te de-

pa r t m en t s -e ac h ab le to per fo rm a l l t he c ro ss -

functional steps or tasks required to meet cus-

tom ers needs. Although many of these efforts have

paid off in tbe form of lower costs, shorter cycle

time s, and greater custom er satisfaction, many oth-

ers have resulted in disappointment: companies

bave endured the trauma of reengineering only to

discover that their performance is no bet te r- and in

some cases actually worse - tba n before.

W bat caused tbings to go wrong? The re certainly

are a variety of possibilities, among them a failure

to focus on parts of tbe husiness that were signifi-

cant to customers and a fai lure to integrate au-

tonomous, functionally focused information sys-

tems into a shared, process-focused database and

network. But something else that is often over-

looked is tbe tend ency of managers and reengineer-

ing teams to underestimate tbe actions required to

t ransform the way employees behave and work

with one another. They assume that simply chang-

ing their organizational structure s from functional

u n i t s i n t o p r o c e s s - c o m p l e t e d e p a r t m e n t s w i l l

cause people to shed their functional mind-sets and

will forge them in stan tly into a team inte nt on

achieving common goals.

Over the last three years, we conducted a study

of U.S. electronics manufacturers tbat proved tbat

tbis assumption is wrong. At eacb of tbe com-

panies, which ranged in size from small concerns

to sucb corporate g ian ts as Texas Inst ruments ,

Hewlett-Packard, and Unisys, we examined a de-

partment whose responsibilities included manufac-

turing -

or

to be more specific, assem bling a printed

circuit board, inserting the board into an electronic

commercial product, or both. Each manufacturing

department had been identified by management as

tbe one with the hest practices in tbe company.

Eacb had fewer than 300 workers. We chose these

departments because tbey were sufficiently homo-

geneous-in terms of tbeir production processes,

their national cultural influences, and the market

condit ions tbey faced-to permit a comparison of

tbeir performances.

Of tbe 86 departments, 31 could be classified as

process complete because tbey were responsible for

most man ufacturing steps, support tasks, and inter-

faces with customers. Those responsibil i t ies in-

eluded creating the schedule,- acquiring tbe orders

and the needed parts and people; training workers;

moving parts; setting up, maintaining, and repair-

ing equipment; transforming tbe parts into a final

product; inspecting and reworking tbe product; de-

livering the finished product to customers; obtain-

ing feedback from customers and making modifi-

cations in the product to meet tbeir needs; and

evaluating and improving tbe process. Reengineer-

ing experts such as Michael Hammer and James

Ch am py wou ld call this set of jobs the order-fulfill-

ment process. We classified tbe remaining 55 de-

partments as functional because tbey did not bave

responsibility for most of tbose activities.

We obtained data on cycle times, conducted de-

tailed work-flow analyses, identified who was re-

sponsible for each step in tbe process, doc ume nted

Ann Majchrzak, a professor of human factors and sys-

tems management at the University of outherr} Califor-

nia in Los Angeles, develops software for managing tech-

nology and sociotechnical redesigns. She is the author of

Human Side of Factory Automation

(fossey-Bass, 1988).

Majchrzak s E-mail address is majchrza@ usc.edu. Qian-

wei W ang is a doctoral candidate in sociology at the

University of Southern California.



BREAKING THE EUNCTIONAL MIND-SET

the organizational structure, observed how the de-

partm ent coordinated work, and interviewed man-

agers and workers. We interviewed more tha n 1,500

people . To compare performances , we focused

mainly on cycle t imes, for three reasons. First ,

cycle times are a major competitive factor in the

electronics industry, and many companies in our

s a m p l e e m b r a c e d p r o c e s s - c e n t e r e d s t r u c t u r e s

specifically to shorten their cycle times. Second, it

was possible to compare cycle times in a uniform

fashion. Finally, cycle times included time spent

rew orkin g parts and therefore could serve as a

process-quality metric, too. '

To our surprise, we found that process-complete

departments did no t necessarily have faster cycle

times than functional departments. In fact, the on-

ly ones that did were those whose managers had

taken steps to cultivate a collective sense of respon-

sibility among workers that went beyond merely

changing the organization 's structure. We found

M anagers who aren 't ready to

promote a collaborative culture

may be bette r off leaving the ir

functional departments intact.

that such collective responsibility could be fostered

in a variety of ways: by structuring johs with over-

lapping responsibilities, basing rewards on group

performance, laying out the work area so that peo-

ple can see one another's work, and designing pro-

cedures so that employees with different jobs are

better able to collaborate.

Interestingly, the particular m ethod or number of

me thods em ployed did not seem to matter. Process-

complete departments that had adopted al l four

methods did not have significantly faster cycle

times than those that had adopted only one or two.

What did matter was whether a company had em-

braced ny of the methods-whether the company

recognized that it needed to do more than merely

restructure the organization to foster a collabora-

tive culture.

And it mattered considerably, ¡See the exhibit

How Ways of Promoting Collaboration Improve

Cycle Times. ) Process-complete departments that

had acted on the insight had cycle times as mu ch as

7.4 times faster than those that hadn't. Even more

startling, the latter departments had much longer

cycle t im es -a s m uch as 3 .5 t imes long er- tha n the

functional departments. The process-complete de-

partments with longer cycle times had one or sev-

eral of the following critical deficiencies: jobs with

narrow responsibilities, employees with many dif-

ferent titles, rewards based solely on individual per-

formance, physical layouts tha t discouraged people

from seeing one another's work, and no explicit

procedures for knitting employees together. In oth-

er words, those departments maintained functional

distinctions and a narrow focus on specific tasks,

thereby n egating the po tential benefits of a process-

focused structure.

hanging the ulture

In the course of conducting this study and other

research, we have asked many managers who are

reengineering their businesses to explain why they

are moving toward process-complete departm ents.

They always answer that such a change will reduce

the time and effort required to inte-

grate and monitor the work of au-

tonomous un i t s , t he reby reduc ing

cycle times and instilling in workers

a common unders t and ing o f what

they have to do to satisfy custo me rs.

But when we ask managers to de-

scribe the changes that must take

p l a c e f o r t h e i r o r g a n i z a t i o n s t o

achieve those objectives, they speak

mainly of meld ing mul t ip le func-

tions into customer-focused teams responsible for

an entire process. Most of the managers assume

that tbis structural change will naturally create a

com mo n u nderstan ding of, and a collective sense of

responsibility for, customers' needs. Surprisingly

few can define the type of collaboration they want

employees to achieve, let alone the means they

might employ to encourage such collaboration.

For example, one organization had restructured

procurement and manufactur ing engineer ing by

melding the two functions into customer-focused

team s responsible for the entire pro ces s-fro m the

initial price quotatio n to the custom er to the deliv-

ery of the product. The individual jobs of the manu-

facturing engineers and tbe procurem ent officers on

tbe teams were broadened but did not overlap. Al-

though every team was now supposed to be respon-

sible for customer satisfaction, tbe procurement of-

ficers continued to spend tbeir time buying parts

from suppliers, and the manufacturing engineers

continued to occupy themselves witb designing

and manu facturing products and proposing new de-

signs to customers. As a result, tbe two groups did

not feel jointly responsible for total customer satis-



faction and retention, and problems fell tbrougb

tbe cracks.

Such a situation is not unusual. Managers often

underestimate the difficulty of breaking tbe func-

tional mind-set. During the reengineering process,

tbey spend enormous amounts of money defining

wbicb tasks the process-centered units should per-

form and wbicb people should he assigned to tbose

units, but tbey give relatively little tbougbt to re-

structuring incentive systems, reconfiguring tbe

work space, or designing jobs and procedures witb-

in tbe process-based units to eneourage collabora-

tion and collective responsibility. Tbey also give

little tbougbt to their own jobs. Many managers do

away witb functions but fail to change their own

positions. They continue to aet like functional

chiefs even tbougb tbe functions no longer formal-

ly exist.

Such managers overlook the importance of

changing their organization s culture. They fail to

see tbat collective responsibility is an attitude, a

value, a concern. It means taking an interest in

one s colleagues and in improving tb e outcome of

mutual (as opposed to individual) efforts. People

wbo feel collectively responsible are willing to

work especially bard to avoid letting tbe team

down. They will take the in itiative in offering

col-

league a helping hand with a work problem even

though doing so migbt make it more difficult for

tbem to meet tbeir own deadlines. Changing tbe

organizational structure alone will not instill sucb

values or bebavior.

Our research indicates that if companies are not

ready to take the steps required to change their cul-

ture, they may be better off leaving tbeir functional

departments intact. After all, coordination among

functions can be greatly improved witbi)ut reorga-

nizing around complete processes.

Tbe bigb-performing functional departments we

studied sbowed, for example, tbat memhers of a

function can be eneouraged to help outsiders if they

are given cross-functional responsibilities. Infor-

mation networks can be installed to distribute in-

formation more widely, more quiekly, and in a

more useful form. Tbe links among functions can

be strengtbened by baving fewer sign-offs for un-

usual requests, by introducing specific and clearly

stated outcome-based performance criteria, and by

inviting individuals from otber functions to fre-

quent milestone-review meetings.

Reengineering experts suggest tbat such changes

will not go far enougb to make employees feel col-

lectively responsible for producing the outcomes

required to satisfy customers. Our researcb, bow-

ever, indicates tbat companies may reap greater



H ow W ay s of Promoting ollaboration Impro ve ycle Times

14,000

12,000

10,000

3

i

8 000

c

I 6,000

¿- 4,000

2,000

I process-complete deparfmenis

I functional departments

14,000

2,000

^ 10,000

I 8,000

I 6,000

U 4,000

2,000

I proce5s<omplete departments

I functional departments

1-6.9

7-9.5

9 6 - 2 5

Number of tasks per ¡ob

1-4.7 4 .7 -7 7 77- 26

Number of people per ¡ob title

benefits by strengtbening the ties among tbeir func-

t ions than by creating process-complete depart-

ments tbat lack a collaborative culture.

Cultivating Collective Responsibility

In

our

study, we focused on the im pac t of tbe four

critical means of building a collaborative culture.

Of the 31 process-complete departments, none had

adopted all four methods. Tbe best performers had

employed an average of 3, wh ile tbe w orst bad em -

ployed an average of 2.7-a differenee tbat is not

statistically significant. Let s exam ine each m ethod

in more detail.

Make responsibilities overlap

In our sample,

proeess-complete departments made responsibil i-

t ies overlap by designing jobs witb a relat ively

broad range of duties, by having a relatively small

num ber of job titles, or botb . Tbe cycle tim es of the

20 departments witb broadened jobs [jobs witb re-

spon sibility for about 10 to 25 different activ ities in

tbe process) were, on average, 7.4 times faster than

tbe cycle times of departments tbat did not bave

broad jobs [jobs witb responsibility for fewer tban

7 activities). Similarly, tbe cycle times of the 10

departments witb few job t i t les (departments in

which about eight or more people had the same ti-

tle) were, on average, 5.8 tim es faster th an tb e cycle

t imes of departments with many t i t les ( tbose in

which fewer than five people bad the same title).

One department in our sample that bad made re-

sponsibilities overlap by designing broad jobs and

using few titles was a 61-person unit tbat assem-

bled printed circuit boards. Tbe dep artm ent, part of

a 1 600-person faci l i ty owned by one of Nortb

Am erica s largest com puter-hardw are man ufactur-

ers,

was resp onsible for all the steps involve d in ful-

filling customers orders. Whereas many similarly

sized departments in our sample had as many as

13 t i t les, tbis d epar tme nt bad only 4: operators,

process operators/inspectors (bigher-skilled opera-

tors),

main tenance technicians [ for complex re-

pairs), and quality-control people (for suggesting

impro vem ents to the process). Tbe 29 operators and

25 operators/inspectors performed most of tbe de-

partm ent s tasks, and tbe two tech nician s and four

quality-control people served as expert c ons ultants .

AU 60 employees reported to a single supervisor.

The depar tment a lso t r ied to break down tbe

boundaries between positions by assigning people

to mult iple teams, by rotat ing assignments witbin

teams weekly, and by holding unitwide meetings

twice a month to d iscuss improvements to tbe

process. As a result, every employee could perform

mo st of the depar tme nt s funetions.

Designing jobs so that employees ean at least par-

tially perform most of tbe funetions assigned to a

department belps create a sbared sense of respon-

sibil ity because people unders tand one anotbe r s

work and tbus sbare a common language and simi-

lar cons traints and objectives. More im portan t, if a

process-complete department does not make re-

sponsibilities overlap, it will end up witb a set of

specialized jobs by default and may inadvertently



7 000

6 000

5 000

4 000

3 000

2 000

1 000

0

I process-complete

departments

I functional

departments

no

yes

Are rewards based

on unit performance?

10,000

14,000

12,000

.E 10,000

E

f

8 000

^ 6 000

4 000

2 000

I process-complete

departments

I tunciionat

departments

kP -̂

no yes

Does the physical layout

promote collaboration?

12 000

10 000

8 000

C

E

6 000

11

Ë

-ë 4 000

u

2 000

I process-complete

departments

I functional

departments

no yes

Do work procedures

promote coiiaboration?

re-create the same coordination problems and high

overhead that bedevil organizations with function-

al departments.

Base rewards on unit performance. Rewards may

take

the

form

of

bonuses, raises,

or

nonfinaneial

reeognition.

In our

sample,

12 of the

proeess-

complete departments rewarded their members

for

meeting or exceeding unitwide targets or standards.

The cycle times

of the 12

departments were,

on

average, 2.7 times faster than those of the depart-

ments that based rewards

on

individual perfor-

manec alone.

Rewarding unit performance is

important because

it

prevents

em-

ployees from placing their individual

or funct ional needs ahove cus-

tomers needs.

For

example,

if

em-

ployees

are

rewarded

for

reducing

processing times

at

their individual

workstations, they probably w ill no t

feel eompelled

to

examine ways

of

reducing cycle times at the places hetween or out-

side their workstations (such as in inventory con-

trol, purchasing,

or

order preparation).

In

contrast,

employees rewarded for achieving high levels of

customer satisfaction or reductions in the depart-

me nt s total cycle time are more likely to be moti-

vated to solve what they traditionally would con-

sider other people s prohlem s.

One high-performing department with unit-

based rewards chose

to tie a

pereentage

of the

monthly bonuses for all employees directly to cus-

tomer satisfaction. It tied ano ther pereentage to the

plant s performance, using such measures as rev-

enue and profit. It based the remainder on group

and individual performance

in

meeting product-

quality standards. This complex reward system was

possible because the department had accurate mea-

sures

and

tightly monitored processes. For exam-

ple, quality levels

for

critical process equipment

were monitored and reported automatically in real

time. Management

set

upper

and

lower limits,

whieh operators used

to

traek their own perfor-

mance; they could obtain information on daily.

Departments can reduce cycle

times by designing jobs with

overlapping responsibilities.

weekly, and monthly trends w ithin seconds. Alarms

sounded when

the

equipment began

to go out of

control. As a result, employees became aware of

problems im mediately and were motivated to work

together to solve them .

Change the physical layout. The layout of

work

site can either inhibit or promote collective respon-

sibility. In our study, process-com plete depart-

ments with layouts that permitted people

to see

others work had cycle times 4.4 times faster than

those with layouts that didn t.



Physical layouts thot

permitted people to

see others at v/ork

resulted in cycle times

4.4 times faster than

those that didn t.

Layouts can encourage people to sbare informa-

tion about one anotber's work and try out new ideas

openly . One such layout organizes processing

equipm ent in a circle or U-shaped cell with workers

performing the ir task s inside the cell. Tbis kind of

layout, used at several of tbe sites we studied, al-

lows workers to sbare tasks easily, to observe w ben

otbers are in trouble, and to offer assistance with-

out letting their own performance deteriorate.

Ano ther type of collaborative layout w e observed

was a special area for continuous improvement. A

place for tbe work group to sit and discuss prob-

lems,

such an area contains all the data relevant to

the manufacturing floor [either in computers or on

wall charts), as well as tbe tools for documenting,

analyzing, designing, and building prototypes. T bis

type of area makes it easier for people to analyze

problems together, build prototypes, and discuss

their individual a nd group-inspired ideas.

In contrast, certain layouts can prevent people

from spontaneously sharing information, seeing

how others do tbeir work, and noticing opportuni-

t ies for assist ing others. Machine tools instal led

back-to-back with control panels facing outward

are an example of this kind of layout: tbe operator

of one mac bine tool cannot see the work of tbe op-

erator of the other. Anotb er exam ple is a traditional

long assembly line in which tbe assembler at tbe

beginning of tbe line is unahle to see wbat an as-

sembler is doing farther down the line. When peo-

ple cannot see otbers at work, mispercep tions arise

both about tbe nature of their jobs and about the

pace, pressures, and commitment of those employ-

ees. Tbe I work barder than you do me ntality can

easily develop.

Redesign work procedures. We asked employees

to tell us to wbat extent tbeir departments' formal

and informal work procedures encouraged them to

do tbe following three tbings: share ideas for im-

provem ent w itb people in otber disciplines, involve

everyone who would he affected by a decision in

ma king tha t decision, and help otbers do tbeir w ork

even if it caused tbeir own productivity to suffer. In

24 of tbe process-complete departments, employ-

ees reported tb at tbose tbree ways of relating to one

another were integral to tbeir work. By integral

tbey meant that sucb bcbavior was encouraged hy

management, was systematically monitored, and

occurred frequently. Tbe cycle times of the 24 de-

partments were, on average, 3.3 times faster than

tbose of tbe otber in our sample.

For example, in one 57-person department tbat

assembled computers (part of a 2,700-pcrson com-

pany), there w ere no team s or broad johs. Altbough

i t w a s a s u p e r v i s o r - d i r e c t e d u n i t , n o t a sclf



BREAKING THE FUNCTIONAL MIND-SET

ustomizing the Design

T h e r e is no s ing le cook ie -c u t t e r des ign for

achieving a collective sense of responsib i l i ty - that

is,

no one

approach

is

appropriate

for all

process-

complete departments, even within the sam e orga-

managed one, and had narrowly defined johs, work-

ers reported that management strongly encouraged

them

to

collahorate w ith cow orkers

and

with

sup

port staff.

One way ma nagem ent encouraged collahoration

in this department was by providing all workers

wi th

a

computer term inal that conneeted them

to

an E-mai l network and an e l ec t ron ic p roh lem-

reporting-and-tracking system. Managers actively

used the E-mail network

to

keep workers informed

When managers redesign their

organizations, they should ask

their employees what they n eed

in ord er to work w ell together.

of customer, cost,

and

ma rket data. They also

en

couraged workers to us e the reporting and trac king

system to log prohlems and to commen t on those

that others encountered.

The

prohlems

and com

m ent s were routed to the people assigned to provide

tbe so lutions. Because the problems, the responses,

and

the

speed

of the

responses were tracked

and

measured, the engineers and othe r support people

whose joh it was to solve the prohlems were moti-

vated to heed the workers.

The department's managers guaranteed that sup-

port staff would arrive on the scene within three

to five minutes

of

receiving word

of a

line stop-

page. (Workers knew whom to notify, and the de

partment's E-mail and pager system s ensured that

the messages

got

through.

In

addit ion, managers

tracked response times.) Tbis approach made tbe

workers feel confident that the role of support staff

really

was to

suppor t t b e m - t o he lp them solve

problems quickly.

Finally, the managers made themselves available

for informal discussions in tbe cafeteria with any

one wbo wisbed to join them. Workers reported

that they eould discuss problems freely at these ses-

sions.

All in all, the message came tbrougb clearly

tba t managemen t cons idered co l l abo ra t ion ex

t remely important .

nization. Neither does it seem to matter how many

different methods

are

employed. W hat coun ts

is

bow well any one metbod is implemented. Tbe im-

plication: When redesigning their organizations,

managers should

not he

overly influenced

by

what

other units in their companies or otber best prac-

t ice depar tments

are

doing. Instead, they should

ask their own employees what they would need

in

order to work well together. In addition, managers

should eonsider tbe const rain ts and pos sibil i ties

provided

by

technology ,

the

work

proeess, the existing organizational

culture, and tbe organization's stra-

tegic mission.

For example, changes in the physi-

cal layout

are

l ike ly

to

fac i l i t a t e

a collective sense of responsibil i ty

only wben face-to-face interaction is

essen t i a l - sueh

as

when workers

in

different disciplines witb different

professional languages must exam-

in e

a

prototype togetber

or

Usten

to the

odd no ises

emanating from a machine tool to reach a cpmmon

understanding of a prohlem and come up wi tb the

best solution.

In an

organization where workers

al

ready share a com mo n professional language and

are not tied to their desks, changes in the physical

layout may

not

be sufficiently compelling to create

a eollective sense of responsibility. Instead, sucb

workers may benefit from team-hased rewards or

overlapping re sponsibilities.

Our study suggests that the success of business-

process reengineering depends on how well man

agers create a collective sense of respo nsihility. Re-

s t r u c t u r i n g by process can lead to faster cycle

t imes ,

greater customer sat i sfact ion , and lower

costs, hut only if the organization bas a collabora-

tive culture. Combining the boxes on tbe organiza-

tion chart alone w ill not create such a culture.

A grant from the Natioriitl Center for Manufacturing Sciences

helped support the research for this article- The authors would

like to thank the members of ihe ACTION project team for

their willingness to share their experiences and ideas and for

guiding the research on which the article was based.

1.

The

cycle tim e

of

each department was

thu

total throughput time

for

the three products that accounted tor the highest percentage

of

the depart-

ment's output during the mo.st recent six-month period. Total throughput

time

was the

time from order

to

delivery

and

mcluded times

for

opera-

tion, setup, queuing, transportation hetween work sites, inspection, test-

ing, and rework.

2. For each of the four methods of cultivating a collahorative cultu re, we

determined through statistical analysis that

it

was highly likely (at a 95%

level of confidence) that the particular m ethod we were stud yin g-a nd not

one

of the

other three -w as responsible

for the

differenec

in the

cycle

times

of

the departments that had employed that method and the depart-

ments that hadn't. This means th;it 9S% of the time, departments that

employ the particular method w ill have faster cycle times than depart-

ments that don't.

Reprint 96505

order reprints, see the last page of this issue.



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