How Process Management Impacts Financial Performance

Businesses revolve around projects. Every company — no matter how big or small — is usually involved with multiple projects at the same time, whether it’s manufacturing a thousand new laptops, implementing a fundamental change in the company, or hiring new staff. 

Projects can go right or wrong, and while a failed project can set a company back considerably, a new project can always make up for it. 

With advanced ppm software and increasing awareness about project management, businesses are putting a higher emphasis on project and process management. With this focus on processes in mind, let’s take a look at what process management is and why it’s so useful. 

The basics of process management  

At the core of each business are certain processes. Unlike one-time projects, these processes are iterative and make the foundation of many different projects. 

Now, each person involved in a process gets to see a very limited view of it. Individuals involved in a process are usually not aware of its beginning and end, as well as potential bottlenecks that might be hindering the process or making it less effective and more costly to carry out. Look for the best process management books to tips on how to improve the critical path of projects. Project management books should also include the tools you need to improve performance and outcomes.

And because these processes make the foundation of the company, inefficiencies in them hurt the company more than one-time projects gone wrong over long periods. 

This is where process management comes in. It basically involves taking a bird’s-eye view of the different core processes of a company, identifying inefficiencies and bottlenecks, and correcting the same to make the company more efficient. 

While project management is mostly about editing existing processes to improve them, process managers might sometimes decide to create new processes and replace them with those in current use if necessary. 

What happens if processes are not managed properly 

Because core processes affect literally all operations of an organization, poor process management can cause widespread negative effects on a company. 

Inefficient processes slow things down, which translate into higher costs and increased error rate a company has to incur. Lengthy and time-consuming processes can sometimes also make the employees tired, frustrated, and demoralized. 

A tired workforce will slow things down even further, creating a vicious circle that has no end. Also, some processes are not clearly defined. This can lead to communication errors, increased blame on each other, and lack of proper data. 

One example where process management can be of great use is HR. Hiring and onboarding are basic processes that every company has to execute, and if they’re too complex, tiring, or confusing, your company could lose great candidates in the chaos.

Process management can help your HR team automate the hiring process, cutting down on lengthy paper forms and other inefficiencies. At the end of the day, you can hire new candidates faster, identify the best candidates with greater ease, and even approve timesheets of current employees faster. The impact upon treasury & financial management (See some great books) is obvious too.

The benefits of process management  

Many people believe that a dedicated process management strategy is only good for large companies with thousands of intricate, inter-related processes. 

That’s not true. Every company — big and small — makes use of processes, so optimizing them benefits both large and small businesses alike. Here are some benefits you can expect from good process management. 

It’s easier to implement changes 

The business landscape is dynamic, which means companies need to adapt and change their course according to the market. 

With clearly defined, optimized processes, it’s easier to implement changes in a company compared to when processes are ambiguous and inefficient. When employees have a solid understanding of a process, it’s easier to introduce change in it. The company becomes more agile and risk management control improves.

It’s easier to transfer business knowledge  

Without process management, companies rely on individual employees to have a thorough understanding of processes relevant to their areas. 

This knowledge is lost when an employee retires, transfers, or takes on a new job, which can cause significant problems for the replacement, leading to errors and delays. 

A good process management strategy requires companies to document each workflow and the processes that go with it. This information stays with the company even when employees leave, which helps in bringing new employees up to the mark relatively quicker. 

Evidence-based improvement  

Companies make improvements by making small, successive, and continuous changes to their processes and policies rather than drastic measures.  

Drastic measures are risky and can damage a company considerably if taken without adequate planning, which is why they are not usually implemented. 

Intelligent process management software provides companies with valuable data with regards to its processes. This can open doors for continuous refinement of those processes and help managers take evidence-based decisions. 

This will lead to smoother processes, increased efficiency, reduced costs, and a lower risk of errors as companies march on!