At the risk of providing yet another article on the "R word" - reengineering - I'd like to point out that the word and the concept have become overused and misunderstood in the banking industry.
Discussions with the managers of various banks have made this abundantly clear.
"I only want to reengineer specific functions within the bank," is one thing I hear.
But in real reengineering, you can't isolate functions, including specific departments and excluding others. A true reengineering of business processes in support of strategic objectives necessitates a complete review and analysis of processes that cross many functional and departmental lines.
By not following this approach, one runs the risk of not optimizing benefits and results. More than likely, the effort will be doomed to failure.
Wrong Level
Here is another statement that reflects confusion about reengineering: "Middle management will lead the reengineering effort and present the results to senior management for approval."
On the surface this may seem like an appropriate way to proceed. It is not. It is fraught with problems and is not likely to succeed.
Successful reengineering requires the commitment of senior and executive management and the participation of employees at all levels.
Commitment from the top signals the importance of the effort and, if done correctly, communicates the strategic objectives intended.
Contributions at lower levels are important for many reasons. These include ensuring employee "ownership" of changes, soliciting input from employees closest to the customer, and defining at a detailed level the operational considerations necessary to support any changes.
Wrong Time Frame
And here is another danger signal: "We need to get the benefits from reengineering by next quarter," or before yearend.
The most obvious problem here is that few complete reengineering projects can be completed to have impact in the succeeding quarter.
Furthermore, reengineering is a continuous process, not a one-time event.
It is intended to stimulate and develop discipline, methodology, and tools. The objective is to enable managers and staff members at all levels to examine how business is done and make changes warranted by customer demands, the business and economic environment, and other factors.
If expense reduction is management's real objective, other means may be utilized to identify opportunities for savings.
"Our reengineering effort is going to include the entire bank."
Although this is noble, it excludes the most important strategic consideration of reengineering - the customer. It is amazing how many reengineering projects fail because the customer is not considered.
Many banks that have tried to change everything they do to support their objectives still meet few of the needs and expectations of customers and potential customers.
There are no shortcuts to reengineering - identifying radical changes in support of strategic objectives. Reengineering requires at a minimum:
* A well-developed strategic plan that identifies and supports customer needs.
* Input and participation of employees at all levels of the bank, with a strong commitment from senior management.
* Constant communications and change-management training.
* Analysis of complete processes across functional and departmental levels.
* Development of the tools to measure the impact of changes.
* Commitment to developing the discipline required for continuous examination of all facets of the business in support of strategic objectives.
Reengineering is not for the faint of heart. It is often painful, as it involves radical change.
Change is difficult for most people; it is particularly difficult in the workplace.
However, by better understanding and communicating the objectives of reengineering, the chances for long-term success are dramatically improved.
Most important, senior management must be totally committed to reengineering before beginning the process. Anything less will almost certainly result in failure.
Mr. Neckopulos is a managing consultant the San Diego office of BEI Golembe, a Washington-based bank consulting firm.
