Thread

Business process reengineering

Impact on organizational performance

What is BPR?

Business Process Reengineering (BPR) involves fundamental rethinking and radical

redesign of a firm’s processes to bring about drastic improvements in organizational

performance. By increasing the efficiency and effectiveness of core processes, BPR

enables firms to enhance their productivity, quality, speed, and customer satisfaction. BPR

gained in popularity during the 1990s against the backdrop of globalization and

technological developments. Rapidly shifting macro-environmental conditions and intense

competition from both local and global players left firms vulnerable with outdated business

practices. These shifts forced organizations to rethink the way they operated. Adopting BPR

allowed firms to stay competitive and keep up with dynamic market changes. BPR is

particularly beneficial during global crises such as the present pandemic during which firms

can proactively reduce operating costs and maintain profitability.

While BPR can lead to improved firm performance, its implementation often proves to be

immensely challenging. Research suggests that 70% of BPR programs fail. As BPR can

bring about substantial change, such projects are often met with employee resistance and

resentment. Employees who are habituated to a routine way of doing things may be

unwilling to adapt to new systems and processes. Moreover, reengineering is a cyclic

process whereby a set of activities is built upon the success of previous phases. Hence

organization-wide commitment and effort may be required for the successful execution.

Several factors can contribute to the success of BPR programs.

Top management commitment

A firm’s top management team sets the direction of the organization. They must have a clear

vision of how BPR will be implemented and how it could potentially benefit the firm. Sufficient

financial and non-financial resources must be made available to support the program. Top

management is also responsible for cultivating an internal environment or culture that fosters

high performance. New programs such as BPR require a significant change on the part of

employees. The successful application of such programs thus requires the active support and

backing of the top management. Top management must build awareness of the program and

advocate its benefits. They should constantly communicate with employees, motivate them

and sustain their interest in the practice over a long time period.

Organizational readiness

Employees need to be adequately prepared before launching a BPR program. Moreover,

the readiness of employees must be both in terms of knowledge and mindset. Employees

must have the right skills, and necessary training to be able to successfully implement

change. Further, employees must have the belief and confidence that they themselves and

the organization possess the abilities to make the proposed changes. An organization

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should have open communication channels to share feedback during the reengineering

phase. The firm must also be adept at overcoming resistance and conflicts that arise during

times of change.

Information technology

IT can play a key enabling role in the implementation of BPR. Technology may allow the

automation of numerous processes and help eliminate manual and lower value-adding

activities. IT can be utilized to redesign business processes to enhance productivity and

quality. Further, IT systems can support decision making, provide timely information, end

facilitate coordination and communication across the enterprise. Thus, before launching the

BPR program, organizations should have integrated information systems in place. Equally

important is having qualified personnel who can expertly utilize such systems.

People management

While top management may initiate BPR, it is the employees who are primarily responsible

for seeing through the execution. People management hence is a critical factor for

successful BPR implementation. The organization must invest resources in the training and

development of employees. These educational initiatives make employees more

knowledgeable about BPR and help them better understand their new processes and tasks.

Moreover, the goal of the training is not only to upgrade skills but also to reduce their

uncertainties about BPR. In addition, employees must be empowered to provide ideas and

suggestions to improve business processes. Their involvement in problem-solving and

decision-making diminishes their resistance to change. Rewards systems should be

aligned with employee participation and successful BPR implementation.

Organizational structure

A firm’s organizational structure may influence the outcome of the reengineering

process. The right structure allows smoother BPR implementation and results in a

greater likelihood of program success. In centralized organizations, decision-making

authority is concentrated at the higher levels of the organization. Such organizations are

more formalized whereby policies, procedures, and rules are explicitly articulated. In

contrast, in decentralized companies, decision-making and problem-solving are done

at the lower levels by employees closer to day-to-day operations. In such organizations,

a flexible work culture fosters greater creativity, teamwork, and collaboration. As BPR

requires significant employee involvement, a more decentralized and less formalized

organizational structure may be advantageous.

Strategic thinking

Strategic thinking refers to a managerial mindset that involves a shift from day-to-day

operational to long-term strategic oriented thinking. When adopting such a mindset, firms

By increasing the efficiency and effectiveness of core processes, BPR enables firms to enhance their productivity, quality, speed, and customer satisfaction.

VOL. 38 NO. 1 2022 j STRATEGIC DIRECTION j PAGE 27

emphasize on continuous information gathering, analysis, and evidence-based decision

making. Firms incorporating strategic thinking in their decision-making are more likely to

benefit from BPR.

To understand how these BPR factors impact organizational performance, the authors

studied electronics manufacturing companies from Malaysia. This industry was pivotal to

the Malaysian economy contributing both to export and employment. However, over time

the country’s electronics industry was experiencing a slowdown which was further

aggravated by the pandemic. This made the situation ripe to examine the impact of

reengineering practices on performance. Some of their key findings include:

� top management commitment positively impacted performance. Their endorsement is

likely to motivate employees;

� organization readiness was the most critical BPR factor influencing performance. Firms

must be prepared with adequate resources, communication systems, employee skill

training programs;

� IT was important to get the best out of BPR;

� people management positively impacted performance. This included having adequate

training, reward systems, employee participation, and empowerment; and

� organizational structure by itself did not have an impact on performance. However,

structure along with strategic thinking had a favorable influence.

Comment

The review is based on ‘The impact of business process reengineering on organizational

performance during the coronavirus pandemic: moderating role of strategic thinking’ by

Shahul Hameed et al. (2021), published in Foresight.

Reference

Shahul Hameed, N.S., Salamzadeh, Y., Abdul Rahim, N.F. and Salamzadeh, A. (2021), “The impact of

business process reengineering on organizational performance during the coronavirus pandemic:

moderating role of strategic thinking”, Foresight.

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While BPR can lead to improved firm performance, its implementation often proves to be immensely challenging.

Keywords:

Business process reengineering, Strategic thinking, Organizational performance

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