Catalyst for change: Why transformative BPI relies on people, not technology

 

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FIVE THINGS YOU WILL LEARN FROM THIS MASTERCLASS:

1. How to start your project off on the right foot

2. How to neatly avoid the main pitfalls of business improvement projects

3. How committed leadership and clear communication contribute to success

4. How to make improved client service a central tenet of the project

5. How to drive organisational change through a process improvement project

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The growing popularity of process improvement techniques in the legal sector has been more evolutionary than revolutionary. International law firms were the first to recognise the benefits, but even mid-tier and now smaller regional firms are looking to the tools to generate competitive advantage and continue to improve value for their clients.

The majority of projects to date have nestled in the operational, business and support teams, rather than the legal teams. We think this is for five main reasons.

1. Need. When law firms cut their support teams in response to the recession, it wasn't as a result of less demand for support, but rather to preserve profitability. This demand for support has continued and, indeed, increased as clients demand more for less. With recruitment restrictions in place, operational heads (often with backgrounds outside the legal sector) looked to process improvement to help them to streamline delivery.

2. Technology. There is a pervasive view that process improvement equals technology, which equals the remit of the IT department. Of course, both technology and process improvement (largely) exist to deliver improved ways of working and delivering improved services to clients. However, they are not the same. What's more, while technology often requires capital investment, process improvement simply requires attitude and skill (as we will explain later).

3. Scepticism. Several years ago, when we asked department heads which parts of the firm's business they thought were apt for streamlining and improvement, the answer was "every other department except mine". That attitude is changing slowly.

4. Value. Perhaps it is not surprising in a profession that places such great value on 'bespoke' that the word 'process' should be treated with a substantial degree of scepticism, if not contempt. Partners still tend to equate process with cheap or low-quality output rather than the consistently high quality that good process-improvement projects aspire to.

5. Understanding. There is a lack of understanding about what it takes to create a successful improvement initiative and the wider benefits that such a project can deliver - not just in terms of business services, but within legal teams too.

If approached in the right way at the right time, perhaps post merger or after the firm has adopted a new strategy or brand, your business process improvement (BPI) initiative can be just the catalyst to successfully transform your legal services business.

The nature of process improvement initiatives is to focus on change which results in doing things better. In the very completion of process improvement projects, you create a great opportunity to reach further and materially alter the culture of your firm. The business will then be able to deliver sustainable results and transform itself over the longer term by generating ever more opportunities for improvement.

Establishing value

The most important point of any improvement project, let alone one you hope will transform your business, is the start. Initiatives which are started in haste, are limited in scope or are a knee-jerk response to a crisis will not deliver maximum value.

If you want your initiative to change your organisational culture as well as your processes, you need to be very clear about what it is you want to achieve and why.

1. Be specific

In setting the direction and objective of your improvement initiative, first define the problem which the business wants to solve. What does the business want to achieve with this investment? What will success look like for both staff and clients? What do we really mean by 'more commercial' or 'client focused'?

This careful approach to accurate description is critically important to guard against later 'scope creep'. Many law firms' improvement programmes have started off with excitement, only to get bogged down in the morass of heat mapping.

2. But not too specific

Be careful, though, not to set about defining the solution too early. A project to improve lock-up might indeed require an investment
in IT, but it might just take a few simple process changes to improve your lawyers' attitudes towards pricing and billing.

3. Understand the impact on client service

Initiatives borne out of a desire to increase profitability run the risk of neglecting client needs entirely. There is no doubt that client and business priorities are not always aligned and can occasionally be directly-opposing forces. Whether by omission rather than intention, the impact is the same.

Clients who are used to speaking directly to a favourite PA will complain bitterly about a new telephone system that routes them through a voicemail system. In one case, it was enough for the client concerned to send their work out for tender.

Always ask: how is this going to affect client service? Identify your clients' critical-to-quality requirements. Make sure they are included at the outset as either the focus of the project or to help guard against any unintended consequences of initiatives which are focused on increasing value for the business.

4. Understand the law of unintended consequences

In 1958, Chairman Mao ordered the extermination of all sparrows in China because they ate the fruits of the labour of the people, namely grain. However, the sparrows also ate the pests. This 'improvement programme' was brilliantly executed, with sparrows all but exterminated in the country in just a few years. As a result, 20 million people died during the Great China Famine, directly as a result of the success of the programme.

5. Avoid the squeaky-wheel syndrome

Particularly within a partnership structure, the 'leadership by committee' approach can result in projects being undertaken for the wrong reasons. These include personal popularity or simply 'who shouts the loudest', even when there are more meritorious candidates for resource. The selected improvement projects must be those most closely aligned with the overriding business strategy.

6. Create a SIPOC diagram

Create a diagram which maps your firm's suppliers, inputs, process, outputs and customers (see Figure 1: A high-level SIPOC diagram).

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FUGURE 1. A HIGH-LEVEL SIPOC DIAGRAM

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A SIPOC diagram is usually used at
the start of a process improvement project to aid the scoping of the project by identifying all the major elements involved.

SIPOC diagrams are easy to complete and are primarily used in the 'define' phase of the lean six sigma DMAIC methodology to provide a high-level view of a process that is being analysed for improvement. They are very useful in scoping improvement projects and in helping to ensure that stakeholders' critical requirements are not lost.

The SIPOC concept was originally developed by renowned consultant Peter R Scholtes, a student of Dr W Edwards Demming.

The following steps will help you to create a SIPOC diagram for your improvement project.

1. Begin with the process and map to approximately five to seven steps

2. Identify the outputs of the process

3. Identify the customers that are the recipients of the process

4. Identify the inputs needed for the process to create the outputs

5. Identify the suppliers that provide the inputs to the process

6. Identify the suppliers of the inputs that are required by the process

7. Identify the fundamental requirements of the customers

NB. Remember that customers can also
be suppliers.

Positive leadership

The nature of process improvement initiatives is to focus on change. Managing change is not an exact science but, in order to effect positive change, positive leadership is required. Unfortunately, many improvement projects are doomed to failure right here.

Even at boardroom level, even for lawyers, the recognition of the need to change can be difficult to process, let alone accept or implement. Doing things differently involves acceptance that things could be done better and have therefore been done inefficiently until now. The seeds for project failure are often sown here amongst fears that there may be question marks over competence.

The reality is that, for most of your staff, change is inherently negative and the words 'process improvement' are (erroneously) considered to be business speak for cost cutting and redundancies. Get communication wrong with your workforce and your improvement project will immediately instigate a decline in productivity and engagement and an increase in attrition rates. Get it right and you create a culture where change is embraced and celebrated, where staff are fully engaged with the vision of the firm and the purpose of the initiative, and critical momentum is achieved.

Whilst there is no one-size-fits-all approach when it comes to communication (some people demand more information, others want less), there are a few simple rules to ensure that any improvement initiative has the understanding and backing of all stakeholders (see box: Gaining stakeholder buy-in for improvement initiatives).

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GAINING STAKEHOLDER BUY-IN FOR IMPROVEMENT INITIATIVES

• Explain the vision to the stakeholders. There is a reason that an improvement initiative has been tabled and it rarely has anything to do with making staff redundant. It’s no good being frustrated that people don’t understand the reason behind the initiative. Your staff will have a personal view of how it will affect them. Most often, the end result will be positive, so explain not just the reasoning behind the initiative and the process but also that the initiative is being undertaken to explore ways to make their life easier and to improve business and client outputs. Explain that their input will be required and valued. If this is not communicated to staff, it is no small wonder that they will assume the worst

• Include subject-matter experts. Subject-matter experts (secretaries, front-ofhouse staff and client teams) are a critical resource and actively take part in generating ideas for business solutions. Just as importantly, they act as advocates within the firm, making sure that the story reaching the shop floor is informed and positive.

• Communicate regularly. It is said that people need to hear things seven times before they take action, so don’t just assume that a one-off email will do the job. Plan for regular progress updates with stakeholders (and, if appropriate, the whole business). Demonstrate the firm’s continuing engagement with the project and be passionate about what you are trying to achieve. Be honest about what has worked and where you are making changes. Otherwise, you risk letting rumours circulate that management support for the initiative has dissolved. Your project will quickly lose momentum if that happens.

• Focus on culture. Encourage an attitude of continuous improvement across the business, as this is key to creating lasting change in your firm.

Changing culture

The term 'continuous improvement' is usually reserved for the theory of accumulating small-win opportunities to streamline work and reduce waste using tools and methodologies such as lean, agile and kaizen. However, for the theory to lead to measurable benefits and improvements requires something more.

Organisational culture plays an important role in how well a firm will embrace change. Prospects are much reduced without a progressive attitude. Correlating business and client value, engendering a positive leadership style, ensuring a clarity of focused communication and engagement throughout process improvement initiatives are all vital tenets in developing a culture that accepts and welcomes change. Continuous improvement cultures are built from the bottom up through the very act of empowering all areas of the business to seek improved ways of doing things.

So, how do you begin to create this type of culture? Running an improvement project gives you a great base to work from, particularly when building your project team and including subject-matter experts from across the business. Just by doing this you shift the emphasis from managers telling staff what is going to change to leaders asking the open question 'how can we change?' This simple nuance can have a massive impact on how organisational culture develops.

This is only the start, however. In order to develop, maintain and embed this culture, you need to continually reinforce this mindset through the following.

• Appoint lean/change leaders. Empower enthusiastic people to play a pivotal role in bringing together employees to focus on how to improve the organisation. Picking the right people for these roles is key. They should be good communicators, show a commitment to the organisation, have a passion for improvement and be respected within their areas.

• Recognise and reward. In empowering your staff to create solutions and improve the organisation, there needs to be a quid-pro-quo. Ultimately, employee goodwill does not last forever and requires topping up with praise and material rewards when justified. Equally, as a change becomes the 'new normal', all staff must be expected to adopt the new working practices.

• Live the culture. Developing the culture from the bottom up will not be sustainable if the firm's management and leadership do not consistently and actively demonstrate that they support the changes.

People strategies

When defining the purpose of an improvement initiative, it is very easy (and common) for the assembled project team to provide instant solutions to a problem before there has been any detailed analysis of the root causes. Doing so risks missing substantial opportunities to improve how
your people are managed, measured,
trained and developed.

Getting the best out of your people is of course a monumental subject, but during a process improvement initiative there are some key questions that you should keep at the forefront of your mind when analysing problems and identifying solutions.

• Are your operational structures helping the flow of work or are they creating bottlenecks? Is one team retaining work that should be passed on or are they passing work on that does not pass muster?

• Which behaviours are your reward strategies driving? If you deploy a bonus scheme, does this actually contribute
  to improved performance?

• Which targets and measures are you using to assess the performance of your teams and individuals? Measuring the outputs will only tell you if you have a problem. Applying lean metrics to the inputs and key performance indicators (KPIs) to the milestones will help you to identify what the problem is.

• Have you got the right people doing the right job? For example, are your most technically qualified and experienced people undertaking admin tasks? (The answer is often 'yes' in law firms.)

• Are your attrition rates too high? Does your firm have a problem recruiting suitable staff? Is your lead-in time for new employees too long?

Getting answers to these questions (which are by no means exhaustive) will provide your firm with a platform from which to develop progressive people strategies.

Driving innovation

The application of process improvement tools and methodologies is only likely to increase as the legal market continues
to change and evolve rapidly. Several law firms are currently looking at using process management tools to improve pricing. Some are also considering how to improve workflows along the entire length of the in-house to private practice relationship.

The benefits that process improvement projects can bring an organisation in terms of internal performance and value delivered to clients are substantial. They are helping to drive innovation in the legal sector.

Sadly, innovation through process improvement is most often treated as being IT focused. Only looking at process improvement in this way is short sighted and can ignore elements that are vital in ensuring an initiative succeeds. By focusing on how people do things, you can deliver sustainable high performance and create a culture of continuous improvement.

Sally Calverley is director and Robert Heaton is head of business transformation at law firm business consultancy Richmonte Wells (www.richmontewells.com)