Management And Accounting Web

Hammer, M. 2007. The process audit. Harvard Business Review (April): 111-123.

Note by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Process Design Main Page | Structure/Restructure Main Page | Systems Thinking Main Page

This purpose of this article is to describe a framework Hammer refers to as the Process and Enterprise Maturity Model (PEMM). The model emphasizes a whole systems' view where managers think in terms of end-to-end processes rather than activities or functions, and develop process oriented people rather than supervising and rewarding people for focusing on narrow functional goals. The model includes five process enablers and four enterprise capabilities.

The process enablers include:

Design - how the process is to be executed,
Performers - the knowledge and skills of the people involved,
Owner - the senior executive responsible for the process,
Infrastructure - the systems that support the process, and
Metrics - the measurements used to track the performance of the process.

The four enterprise capabilities are:

Leadership - Senior executives who support the process,
Culture - Emphasis on a customer focus, teamwork, personal accountability, and willingness to change,
Expertise - Skills and methodology needed for process redesign, and
Governance- Mechanisms required for managing complex projects and change initiatives.

A table based on the process enablers is presented to facilitate an assessment of the maturity of a company's processes (See pp. 116-117). This table shows four levels of process maturity P1-P4. Each process enabler is divided into several components. For example, the components of design are purpose, context, and documentation. For the purpose component, level P1 is where the process has been designed end-to-end, P2 is where the design is optimized, P3 extends the design to fit with other processes, and P4 is obtained when the design also fits with customer and supplier processes. Assessment involves determining whether statements related to each component at each level are largely true (green), somewhat true (yellow), or largely untrue (red).

A second table based on enterprise capabilities is designed to evaluate the maturity of the enterprise, i.e., if the organization is ready to support a process-based transformation (See pp. 120-121). This table shows four levels of enterprise capability E1-E4. Each of the enterprise capabilities is divided into several components. For example, the components for leadership are awareness, alignment, behavior, and style. As in the table above assessment involves determining whether statements related to each component at each level are largely true (green), somewhat true (yellow), or largely untrue (red).

The ideas underlying the PEMM model are fairly old, e.g., the need for emphasizing a whole systems view, teamwork, appropriate rewards and measurements, top management support, and a realization that process design (i.e., the system) determines performance. However, the model's contribution is that it provides a framework for planning, identifying problems, and tracking process-based change in any industry.

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Related articles and summaries:

Champy, J. 1995. Reengineering Management: The Mandate for New Leadership. Harper Business.

Champy, J. and H. Greenspun. 2010. Reengineering Health Care: A Manifesto for Radically Rethinking Health Care Delivery. FT Press.

Hammer, M. 1990. Reengineering work: Don't automate, obliterate. Harvard Business Review (July-August): 104-112. (Summary).

Hammer, M. 2001. The Agenda: What Every Business Must Do to Dominate the Decade. Crown Pub.

Hammer, M. 2001. The superefficient company. Harvard Business Review (September): 82-91. (Summary).

Hammer, M. 2002. Process management and the future of six sigma. MIT Sloan Management Review (Winter): 26-32.

Hammer, M. 2004. Deep change: How operational innovation can transform your company. Harvard Business Review (April): 84-93.

Hammer, M. and J. Champy. 1993. Reengineering the Corporation. Harper Business. ("The core message of our book... It is no longer necessary or desirable for companies to organize their work around Adam Smith's division of labor. Task-oriented jobs in today's world of customers, competition, and change are obsolete. Instead companies must organize work around process."... "Companies today consist of functional silos, or stovepipes, vertical structures built on narrow pieces of a process. ... The contemporary performance problems that companies experience are the inevitable consequences of process fragmentation." p. 28).

Mintzberg, H. and L. Van der Heyden. 1999. Organigraphs: Drawing how companies really work. Harvard Business Review (September-October): 87-94. (Summary).