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August 2012


A Reflection on Work Systems

For the past few months, I have focused my Insights columns on topics related to upcoming revisions to the Baldrige Criteria for Performance Excellence for 2013–2014. This last column in that series will look at work systems and work processes. This has been a topic of consternation since the concepts were introduced in 2007. I believe addressing these two concepts is a major competitiveness challenge and a subject requiring strategic consideration by senior leaders on an ongoing basis. In this column, I will also reveal my evolving thoughts on why these concepts are so important and how to best treat these concepts in the Baldrige Criteria.

The Baldrige Criteria define work systems as follows:
How the work of your organization is accomplished. Work systems involve your workforce, your key suppliers and partners, your contractors, your collaborators, and other components of the supply chain needed to produce and deliver your products and services and your business and support processes. Your work systems comprise the internal work processes and the external resources necessary for you to develop, produce, and deliver your products and services to your customers and to succeed in your marketplace.
Decisions about work systems are strategic. These decisions involve protecting intellectual property, capitalizing on core competencies, and deciding what should be procured or produced outside your organization in order to be efficient and sustainable in your marketplace.

The Baldrige Criteria define work processes as follows: 
Your most important internal value creation processes. They might include product and service design and delivery, customer support, supply chain management, business, and support processes. They are the processes that involve the majority of your organization’s workforce.
Your key work processes frequently relate to your core competencies, to the factors that determine your success relative to competitors, and to the factors considered important for business growth by your senior leaders. Your key work processes are always accomplished by your employees.

Decisions about your work systems and work processes affect organizational design and structure, profitability, and sustainability. Decisions about work systems are the domain of senior leadership and are strategic decisions of great import.

Let me explore work system decisions by way of a specific example. Consider a company that produces electronic widgets for the consumer marketplace. The decision on how to research, design, manufacture, distribute, and service these widgets are key strategic decisions. Will you use contract research, or will you do research in-house for your next-generation product? Will you manufacture the widget yourself in your own facilities, or will you contract out the manufacturing? What subassemblies do you feel comfortable procuring through your supply chain, and what do you want to make in your facilities? Will you use your own sales force to reach the consumer marketplace, will you work through distributors who sell to retailers or directly to consumers, or will you use a combination of distribution mechanisms? These decisions can have major impact on how you protect intellectual property, how large your workforce will be, how many facilities you will own, your geographic footprint, your organizational design, and your carbon footprint and how you meet your commitment to society.

In this example, the work system being analyzed is product development, production, and delivery. Your key work processes are those pieces of the system that you decide to do in-house with your own employees. The other components of this work system will involve upstream and downstream suppliers, partners, and collaborators (possibly joint ventures). How you will accomplish your work involves strategic decisions of immense consequence.

Key work processes for this widget producer associated with the work system just described might include the following: in-house research and development, widget final assembly from supplier-fabricated components, supply-chain management, and marketing and sales to major retail outlets.

Let’s consider another example of a work system, a customer interaction work system. Let’s explore this one with some key decisions that might be asked by organizations in different sectors. For our widget manufacturer, will product support be through its employees or a contracted call center in a developing economy? For a school district, will students be transported by its employees and buses or by a contracted transportation company? For a hospital or health system, will its emergency department be staffed by employed physicians and nurses, employed nurses and a contracted physician group, or by a contract to operate the whole emergency department?

In these examples, the organization’s decisions have key staffing, organizational design, liability, customer engagement, and other strategic implications. Again, this is the domain of strategy and senior leadership. Once those decisions have been made, work process design and management can be accomplished deeper in the organization.

Whether you are new to Baldrige, a Baldrige aficionado, or an organization that will never use the Baldrige Criteria or other Baldrige Program resources, I encourage you to carefully consider these important strategic decisions about your work systems and work processes.

Now, I’ll share a sneak peek at the 2013–2014 Criteria revisions for people familiar with the Baldrige Criteria. I believe some of the consternation and confusion about work systems and work processes has stemmed from their placement in the Operations Focus category, when work systems are really about strategy, and work processes are about operations. Work systems should be considered in the Leadership and Strategic Planning categories, and work processes should be the focus of the Operations Focus category. In hindsight, this seems clear to me (and, I hope, to others now, as well). For example, having made strategic decisions on your work systems, you will have the basis for organizational design and structure, how you will realize your societal responsibilities, and what is needed for workforce planning.

In the most basic view of an organization, one might define three generic work systems: those that address production of your product or service, those that engage the customer, and your support systems that support production and customer engagement. Decisions about these systems are strategic, and their internal implementation is considered in the Operations Focus, Customer Focus, and Workforce Focus categories. Management of the key aspects of the external relationships is the domain of operational processes (e.g., supply-chain management, legal and ethical compliance oversight).

I hope this month’s Insights column and the subsequent revisions to the Criteria will inspire the critical work system conversations that your organization should have on an ongoing basis. The considerations outlined above are vital to an organization’s sustainability in a competitive and shifting external environment.



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Dr. Harry Hertz photo

Dr. Harry Hertz, Director
Baldrige Performance Excellence Program

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