What Are Business Processes and Systems?

Creating and implementing good business processes is an excellent way to increase a company’s day-to-day productivity and profitability. It also lessens the risk of losing key knowledge if and when key workers retire or leave the company. For these reasons, it’s vital that owners create business processes and systems and train their employees on how to perform them.

What Are Business Processes? 

The definition of a process is “a systematic series of actions directed to some end.” A business process, then, is a series of actions that achieve an end or goal for the business. Business processes are used every day, and they range from something as simple as a McDonalds employee making a Big Mac sandwich to a manager setting a marketing budget. It’s something that the company uses to accomplish their mission. 

Business owners choose to create processes and train their employees in them for many reasons. These would include increasing:

  • Efficiency
  • Effectiveness
  • Accuracy
  • Productivity

As well as decreasing or eliminating:

  • Waste
  • Unnecessary time and motions
  • Costs
  • Mistakes
  • Risk of injury

In the early part of the 20th century, the famous efficiency experts Frank and Lillian Gilbreth pioneered the field of time and motion study by observing workers and how they did their jobs and making suggestions for how they might improve. Frank Gilbreth began his career in 1885 when he finished high school and got a job as a bricklayer’s helper for Widden Construction Company. As Gilbreth observed and learned this trade, he noticed that bricklayers around him all had different ways of laying brick. Their methods yielded different results and were tremendously inefficient as well as physically exhausting.

He could see that the most difficult part of the bricklaying trade was bending, stooping and lifting bricks and mortar. The average worker was repeating this motion 125 times an hour for bricks and 125 times for mortar. By the end of the day they were tired and in pain.

Gilbreth became interested in discovering the “one best way” to lay brick and, later, to do any task. He created a process for laying a single brick that reduced the worker’s motions from 18 to 5 to accomplish the same task. Gilbreth didn’t stop there, however. He also built and patented a multi-level scaffold that kept bricks within easy reach of the worker so the bricklayer didn’t have to waste time bending over each time he put a brick into place. Using Gilbreth’s process and the scaffold, the worker was able to increase the number of bricks laid per hour from 125 to 350. 

By controlling how bricks and mortar were delivered to the bricklayers, how the bricklayers laid each brick, and how they interacted together to build entire walls and buildings, Gilbreth created a system of bricklaying that radically transformed his employer’s business and eventually the bricklaying profession.

Systems are arrangements of processes that function together to accomplish the company’s overall mission – in this case, building brick buildings. It’s easy to see how Gilbreth’s creating individual processes and a system of processes benefited everyone. Creating a process for laying brick clearly benefited the bricklayer. Fewer motions meant less stress on his body and less energy expended. The worker could do his job faster, better, and more safely. 

Widden Construction Company also benefited. The work was performed by the workers more efficiently, lowering Widden’s labor costs. It also gave the company a competitive advantage over other firms because the owner could pass on time and cost savings to his customers. Creating a “one best way” process for laying brick was a win-win for everyone involved: worker, business owner, and customers.

How Do Business Processes Relate to Exit Planning?

A good process will improve the way employees work, improving the company’s operation and making it more profitable over time. This will make it easier to market to buyers and will result in a better sale price. 

In many of our previous blog pieces we have discussed why it is so important for a business to avoid being owner dependent. A company that cannot operate well without its owner is a company that buyers will avoid. This is not the only type of dependence, however. If the business cannot run without key employees performing their roles, this is a clear weakness. Implementing processes and systems and training employees in them will ensure that critical skills will not be lost when workers leave or retire. 

Using the bricklaying example, it’s certainly worthwhile to train all the workers to use the process – it greatly increases profitability. The manager also should also be able to train workers on every individual process of the overall bricklaying system. This should be written down in detail so that if the manager were to retire, the next person in the job would be able to easily understand all the processes, how they work together as a whole system, and how to train new employees to perform them. 

Creating and implementing business processes and systems are a great way to build value and decrease fragility within a company. Both of these are key components of the exit planning process. 

 

Vincent Mastrovito

Vincent Mastrovito

vincent@prometispartners.com
(616) 622-3070
250 Monroe Ave. NW, Suite 400 
Grand Rapids, MI, 49503

Scroll to Top