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UNIVERSITY OF MUMBAI

BUSINESS PROCESS
REENGINEERING
INTRODUCTION TO INDUSTRIAL
RELATIONS
Simeen Akbar Khalfay
MMS, Sem 3. HR - 01

Alkesh Dinesh Mody Institute for Financial & Management Studies

questioning. quality. including cost. more innovative and effective processes. service and speed (Hammer & Champy 1994). redefinition and redesign of business processes with the aim of eliminating all activities not central to the process goals … and automating all activities not requiring human judgmental input. BPR was championed by Michael Hammer and James Champy (1994) in the book ‘Reengineering the Corporation’ in which they advocated that old systems be discarded and replaced with new. However. Re-engineering is about rethinking and redesigning organisational processes in order to achieve dramatic improvements in performance. Increased levels of interdependence facilitate team-based work and create a need for effective interpersonal skills. BPR demands lateral thinking that extends beyond the current boundaries in order to achieve a more effective organisation. BUSINESS PROCESS REENGINEERING Effects on the Working Class Introduction: Business Process Re-engineering (BPR) can be defined as: . or facilitating that judgment at reduced cost (Thomas 1994.28). Further. the essential element or principles of reengineering include the following: • Rethinking the theory of the business. they are required to collaborate. the work is often more challenging and difficult yet. Staffs are required to perform many different tasks and to have an understanding of the entire business. but are also more accountable for their actions. a radical scrutiny. For the employees. From the work of Abolo (1997) and Thomas (1996) cited by Ezigbo (2003).. They may enjoy more autonomy and more empowerment. more rewarding. often with people who have very different skills to themselves. p. .. at the same time. this can be impeded if those implementing BPR feel that they are constricted by the existing framework within which the organisation is operating.

• Encourages training and development by building creative work environment. the "breeding out" of risk-taking. Another danger is that.• Challenging old assumptions and discharging old rules that are no longer applicable. although information technology plays a central role in reengineering. • Internally focus on harnessing more of the potentials of people and applying it to those activities that identify and deliver values to customers. Reengineering and Information Technology: According to executives with extensive BPR experience. These rules of work design are based on assumptions about technology. Due to the evolution of the field of “industrial relations” in to personnel management and then in to “Human Resources Management” this study would focus on reengineering of the human resources along with the processes and effects of business process reengineering on the working class in general. people and organizational . concentrating on flows and processes through the organization. they are excluded from the reengineering team. • Externally focus on customers and the generation of greater value for customers. Hammer (1990) considers Information Technology (IT) as the key factor in BPR for organisation that wants to witness a “radical change” in its operation. He argues that at the heart of reengineering is the notion of discontinuous thinking or recognizing and breaking away from the outdated rules and fundamental assumptions underlying operations. "the IS organization in many companies is unable to play." This ineffectualness may be due to the historic inability of IS to do "anything big quickly". • Think and execute as much activity as possible horizontally. since the IT group is not perceived as being part of the business process. • Breaking away from conventional wisdom and the constraints of organizational boundaries. • Using information technology not to automatic outdated process but to redesign new ones. or the lack of advanced technology groups. He prescribes the use of IT to challenge the assumption inherent in the work processes that have existed since long before the advent of modern computer and communications technology.

it is not unreasonable to view IT as a disabler. Although 85% of IT spending in the 1980's was in the service sector. speed up superfluous work steps. Senior management may be skeptical about the effectiveness of IT as a whole due to the "lackluster" performance of many information systems in the past decades. IT promises and its ultimate impact is to be the most powerful tool for reducing cost of coordination (Davenport and Short. to fundamentally reshape the way business is done. Davenport and Short (1990) refer to this broadened. while productivity in the manufacturing sector rose 44%. IT should be viewed as more than an automating or mechanizing force. In essence. Walmart. Ford was able to decrease its headcount in the procurement department by 75% by using IT in conjunction with BPR. but instead justify the way they are done. encourage shoddy thinking and misdirect attention to spurious details. People Involvement: Reengineering the Human Resource . 1990). it can be argued that the huge investment in IT has had little impact on productivity. IT enables a firm to achieve competitive advantages.9%.goals that no longer hold. productivity in this sector increased only 1. generate unnecessary information. Information technology (IT) and Business Process Reengineering (BPR) have recursive relationship. IT capabilities should support business processes and business should be in terms of the capabilities IT can provide. Most analysts view reengineering and information technology as irrevocably linked. would not have been able to reengineer the processes used to procures and distribute mass-market retail goods without IT. which is never used to "challenge why things are done in a company. marketing and customer service. In fact. Aremu and Saka (2006) argued that Information technology (IT) is a strategic resource that facilitates major changes in competitive behaviour. for example. Davenport and Short (1990) further posted that Business Process Reengineering requires taking a broader view of both Information Technology (IT) and business activity and of the relationships between them." Systems in the service sector have been used to generate more unneeded reports. recursive view of IT and BPR as the new industrial engineering business process represent a new approach to coordination across the firm. Based on this record.

" However. but their close colleagues as well. sell and provide service. nowhere do they include the prerequisite that no reengineering effort will succeed without first reeducating and retraining the people who will ultimately work with the new process. they fail to demonstrate how to reengineer the human resource in conjunction with reengineering processes. BPR stands or falls on the quality and manner in which the concepts are . managers must constantly communicate their plans and expectations. The BPR activity that is the focus of this paper actively sought out as many individuals as possible. and Project Team members interviewed them. where group discussions were held. When bonuses are linked to profits or even the performance of a team. this may lead to a situation where the individual is judged on factors beyond his or her control. where both were involved in the reengineering process. "If you're going to move information and responsibility down to the local level. this can be problematic. states the following observations: The impact of the BPR activity on the staff of the organisation was significant. According to Meg Wheatley. and indeed the level or quality of industrial democracy in the workplace.Hammer and Champy recognize the importance of the human resource when they state "companies are not asset portfolios." The two principle obstacles to BPR are fear among employees that their jobs are endangered and that years of experience will account for nothing. but people working together to invent. This inclusiveness had a valuable impact on. Although companies which are seeking to reengineer may work on revamping the performance appraisal system to support new values. Central to the manner in which BPR is brought about is the background of industrial relations within an organisation. they were carried out in functional areas by the managers of those areas. Although the University had previously undertaken institution-wide consultation exercises (the most recent one being in preparation for the QAA Continuation Audit). not only the participants. To overcome these apprehensions. The introduction of other Business Systems (such as the Finance System and the Human Resources System) did not include such a comprehensive activity. then the key question is how can you be sure that people will behave appropriately? You need to make sure that everyone is playing by the same rule book. A paper on the immediate effect of BPR in a University on staff and students. Although Hammer and Champy provide a long list of why reengineering fails. these were largely paper-based and.

BPR starts with a vision or idea. Action research and process consultation are central to the philosophy and methodology of OD. processes and environment. emergent changes have been replaced by dynamic environments. OD and TQM are three different approaches to the management of organizational change. people. However. bought (from an IT company or consultant). Benchmarking does not allow competitive advantage and buying the idea is expensive and often results in the purchase of a ‘solution’ . TQM can be defined as an approach to doing business that attempts to maximise the competitiveness of an organisation through the continual improvement of the quality of its products.introduced to those people most closely involved. ideas only come from three sources — they can be copied from other companies (benchmarking). Studies carried out in the late 1980s and early 1990s by the European Foundation for the Improvement of Living and Working Conditions. or they can be original ideas (Thomas 1994). One of the salient conclusions from these studies is that the form and quality of participation in technological change depends greatly on the way in which each Member State's industrial relations system has been shaped by political. Thus the quality of in-house communications. the ability and willingness of employees to voice their opinions and offer a contribution to the change management program are all vital components in any such program. services. Total Quality Management (TQM) is an organisational change intervention that is concerned with quality. Each of the approaches is suitable for different situations and each approach can lead to increases in organisational efficiencies. economic. BPR. Organization Development (OD) incorporates a planned approach to change that aims to improve the performance of organisations through the people in them. BPR. social and historical forces. Stable business environments that were once characterised by incremental. show that there is a correlation between the ease of implementation with which technological change is introduced and the quality of the industrial relations and the decision-making process in the organisations concerned. Total Quality Management & Organization Development: Organisations worldwide are facing increased competition and rapid advances in technology. which often demand large-scale change interventions.

Indeed. and new methods to the parent company. rather than the improvement of business processes. Although the radicalness of BPR can create many challenges. . An organisation that has embraced BPR and developed an original idea is likely to be the leader in their industry rather than the follower. Indeed. TQM and BPR all aim to increase organisational efficiency. with significant downsizing’. Perhaps it is the lack of constricting frameworks that has prompted many BPR initiatives to be conducted in greenfield sites. Criticism for BPR: BPR has been heavily criticised in the literature. However. TQM is clearly a suitable approach where the quality of the products or services is the major concern. especially when associated. This can lead to a competitive advantage and can positively and drastically affect organisational performance. Patching (1995) argues that is possible to gain commitment and motivation during reengineering through the use of the vision. by contrast. One criticism is that BPR is focused on the implementation of new technology. but attempt to do this through very different means. OD. they are often developed within existing and constricting frameworks to maximise the chances of them being accepted. large organisations have been known to set up new companies with new staff. While original ideas seem to be the only way to develop unique and relevant solutions. a more generic approach that is suitable for a variety of problems.which is not relevant to the business to which it is sold. new policies. BPR may be the most suitable approach for an organisation that seeks dramatic changes. original ideas are criticised by Thomas who believes that the acceptance of an idea is ‘inversely related to its radicalness. It is commonly used by organisations that have widespread problems or are close to bankruptcy. it also appears to be able to offer many advantages when it is implemented successfully. as it is so often. It is particularly useful where the problem itself is unknown. research shows that around eighty percent of organisations that implement BPR are satisfied with the results. but it is also suitable as a way to stimulate innovation for improvement. rather than survival. Furthermore. This ‘starting again’ avoids the issue of organisational change and transformation which is complicated in BPR due to the frame-braking nature of the changes (Thomas 1994). OD is.

which must address leveraging IT as a competitive tool. • Case teams must be comprised of both managers as well as those will actually do the work. who are not about to leave or retire. BPR has also been criticised as being associated with downsizing and cost-cutting. • Place the customer at the center of the reengineering effort -. • BPR must not ignore corporate culture and must emphasize constant communication and feedback. not driven by a group of outside consultants. • The IT group should be an integral part of the reengineering team from the start. but to streamline work processes.concentrate on reengineering fragmented processes that lead to delays or other negative impacts on customer service. ideally between three to six months. • BPR must be "owned" throughout the organization. so that the organization is not in a state of "limbo". • BPR must be sponsored by top executives. My Analysis: A comparison on the research-based material available on BPR and its effect on organizations give a complete overview of the BPR as a concept in practice.Information technology companies are selling ‘solutions’ to business problems and are promoting the existence of problems merely to enhance sales of their own products and services (Thomas. stating that it was not intended as a way to simply slash labour costs. • BPR projects must have a timetable. with little regard for quality or long-term business objectives (Mumford & Hendricks 1996). 1994). Hammer has defended BPR. Reengineering Recommendations: • BPR must be accompanied by strategic planning. However. it has not been successful in about 70% of the . remove bureaucratic procedures and increase efficiency (cited in Mumford & Hendricks 1996). Although BPR has been used repeatedly for radical changes.

cases. . Most of the researchers have presented the factors contributing to the BPR system but a thorough research on organizations that have successfully carried out BPR as a change mechanism would produce a reference material on success parameters and mantras to be followed to achieve the end-objectives of BPR. its processes and its workforce. In spite of this failure not enough research has been carried out on parameters that would practically contribute to the successful reengineering of an organization.