Most finance organizations document their processes in narrative documents used primarily for compliance purposes. Keeping this process document current takes time and effort, which is generally in short supply in today’s fast changing environment. Our experience shows that about a third of these processes are not documented, but are retained in institutional memory, which leaves the building each night.
We are reminded of the story of a very technical process for calculating deferred fuel costs of a publicly traded public utility company, which was prepared by a long time employee who did not carefully document the process, not cross-train anyone on the process. Two weeks before the year end, the employee passed away. Needless to say, many late nights, lots of stress and extra cost were incurred to close the books that fiscal year.
Many areas of the organization use methodologies such as lean, six-sigma, kaizen, etc. to manage change and adapt to the myriad of challenges facing them. Some of these methodologies, like Lean Six Sigma or Kaizen have been adapted for service organizations and are successful at managing change. Processes which exist because “that is the way we have always done it” or the often mumbled mantra “if it ain’t broke, don’t fix it.”
How does an organization create optimized processes?