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The accounting department at a local phone company needed to reduce its operating expenses. Who was it gonna call?
It all took place in the accounting department of a local telephone company. The company was a subsidiary of a regional company created by the break-up of the Bell system. Accounting operations included billing, accounts payable, accounts receivable, and treasury. The department had about 500 employees. Approximately 3.5 million bills were issued each month to business and residential customers.
To maintain competitive pricing, each department was directed to reduce annual expenses by 8 to 10 percent. Initially, the department head and her direct reports attacked this objective by eliminating redundancies at the job level. Internal consultants convinced the management team to focus on streamlining processes in contrast to streamlining jobs.
The key players in the accounting scenario included the general manager, who headed the department, and the middle managers reporting to her. They evolved into a steering team that selected processes for improvement, appointed teams to the projects, approved major design decisions, monitored progress toward design and implementation goals, and resolved issues that stymied teams. Projects were staffed by representatives of the work groups responsible for executing the process selected for improvement.
The project was supported by organizational development consultants from the human resources department who guided the steering team on methodology, facilitated work sessions, developed procedures for the implementation of the process designs, and managed the training for the project teams.
The first process improvement undertaken was called the "Cash Process," which involved receipt of the customer's payment, crediting the customer's account, and depositing the amount in the company's account. Specific tasks included such activities as correcting errors, tracking cash flow, investigating claims, and issuing refunds. Banks do much of the work in processing the payments. Eighty employees were assigned responsibilities for the process.
The steps of process redesign
The critical business issue (CBI) that inspired this project was the directive to reduce operating expenses. (A CBI is an organizational priority or goal that anchors strategy. It is not specific to a project. A CBI is often expressed in financial terms.)
The general manager and her team defined the issue as: "Reduce expenses by 8 to 10 percent in each of the next five...