Working In Uncertainty
Fixing a process and controls mess
First published 15 May 2003.
From time to time most organisations have internal processes that get into a mess, resulting in wasted time, aggravated customers, or lost money. The symptoms range from chronic inefficiency and aggravation that people have got used to, through to complete melt down.
For example, in telecoms companies it was discovered a few years ago that most were losing between 2% and 10% of their revenues simply because they failed to bill for all the services their customers used. The technical difficulty of the billing and the pace of the industry had led to process and controls mess in nearly every company's billing.
In government departments and related organisations there have been some huge messes (in the UK at least) over the last few years affecting tax credits, passports, child support, exam results, health care, and so on.
Often these ghastly situations are the result of big projects that did not achieve everything necessary for success. Other common causes are rapid expansion, prolonged financial distress, and repeated reorganisations or changes of ownership.
In an ideal world this would never happen because organisations would skillfully design the processes and internal controls they need to operate efficiently and reliably. (That's the subject of other guidance on this website.) In the real world, there will always be organisations with mess to sort out.
Sorting out process and controls mess is not easy. It takes strong nerves and sheer intellectual horsepower. However, the right approach can make a huge difference. Many people who get the job of sorting out a process and controls mess spend weeks or even months getting nowhere. This need not happen. On this page I'll explain what to expect and how to succeed.
Elements of the task
Work to sort out process and control mess usually involves doing the following:
The work is tough, but not just because there are several aspects to what needs to be done.
What to expect
The work is tough because of what it requires from your mind. Messes vary, but my experience is that you can expect the following:
What not to do
Common sense suggests that a number of things will be effective in sorting out a mess, but they are not:
How to do it right
To succeed at sorting out a process and controls mess you need to do this:
The following subsections discuss these in more detail.
Sequence activity to accelerate benefits and exploit learning
Combine investigation and solution building
There are two reasons for getting on with solutions before you have finished investigating the problems. Firstly, there is rarely enough information already available to explain all the mysteries and starting new control checks or starting to cleanse some data is a way to generate new information. Secondly, the sooner you get on with preventing more problems the better. You may not have a complete answer immediately but you can very quickly identify parts of it.
For example, suppose you are searching for lost data and take a copy of someone's reconciliation spreadsheet to see what you can learn from it. The spreadsheet has large amounts of useful data on it, but the design of the reconciliation is poor. After a day's work you have improved it so that you can examine the data more powerfully. A couple of hours extra work makes it user-friendly enough to give back to the owner as their new reconciliation spreadsheet. From now on they are checking more powerfully and that is likely to be a part of the final, improved process and controls design. Even if it is ultimately replaced with something even better you have made a fast improvement that has also helped you investigate the issues and may throw up new clues as you are working.
As another example, imagine the initial mystery is a reconciliation difference suggesting lost invoices. The reconciliation looks interesting but its results are hard to interpret. Your approach could be to design a reconciliation that is easier to interpret and more powerful, and that will probably explain the mystery. This same reconciliation is also something that will be a key control in the new scheme so once you have done it once it will become a regular task for someone.
Make a bootstrapping implementation plan
Being in a mess often makes people too busy to solve their problems. It is vital to plan improvements with this in mind. Start with things that can be done easily – like stopping doing some useless activity – but which release time for other things.
The most important thing to focus on is removing the causes of errors. Prioritise the problems if you can so that you start with the most prevalent and time consuming errors that are also relatively easy to eliminate.
For example, one billing team facing a huge mess realised that a small change to some error checking software would cut down the number of false or trivial alarms they were having to deal with, releasing time for someone to investigate the reasons for the errors that worried them. Later, success in reducing the incidence of some types of error released further time, which was put to the same good use, and so the virtuous circle continued. In the first 6 months the size and composition of the team changed dramatically and improvements continued for some time after that.
Establish early on the controls that indicate overall controls effectiveness
Everyone wants to know if things are improving or not. It is helpful to put into place early on controls that provide information about overall controls effectiveness. It is rarely possible to get perfect information, but useful indications are usually practical.
For example, if the problem is thought to be loss of information between two departments, then an overall comparison in total between the two departments is an obvious way to see the difference and as the difference gets smaller it is evidence of progress, though not proof.
Implement process control monitoring
Processes in a mess rarely have any kind of process management going on. Nobody knows how healthy or unhealthy the process is. There may be little information about how much work is being done, let along what the error rate is, or where the backlogs are.
Since this is vital to managing the health of a process and you also want to watch your progress one of the first control improvements to start implementing is nearly always process control monitoring and reports to support it.
The reports will usually show end-to-end workload, error rates (as measured by the results of controls), backlogs (e.g. uncleared suspense items, unprocessed orders), systems support (e.g. down time, progress on bug fixing), and resources used (e.g. headcount). Some statistics might be gathered daily, some weekly, and some just monthly. Graphs are essential if people are to use the statistics and good design of the reports makes a huge difference to their usefulness.
Often the process passes through more than one department, so a committee is needed to monitor the process end-to-end. If this has not happened before you are well on your way to a lasting solution when you set one up and get them working.
Use clarification and order to maximise your mental power
Since the mess has probably been looked at by others before you came along, how are you going to succeed where others have not? The key to your success is to think more clearly than anyone has before. Where others have said ‘OK, I think I understand.’ you will say ‘Let me just check that I've understood exactly what you are saying’. Where others have accepted the jargon people are using you will insist on jargon that is precise and consistently used. Where others have tolerated badly designed reconciliations and useless diagrams you will not.
The way people talk and think about the messy processes and controls will tend to be messy. Jargon will be out of control, with many different ways of saying the same thing, and no ways to say certain concepts that are important. Some jargon will be needlessly confusing or even misleading. This jargon is part of the fog of confusion that surrounds mess and to think your way through the mess you must sort out the jargon, at least within your own mind or team.
It is vital to clarify terminology early on, and helpful to invent notation for numerical aspects of your analysis. For example, if you are trying to reconcile information at one stage in the process to the same information later on it is important to be clear exactly where any figures have come from, and to distinguish between the front and back end of a computer application, for example.
It is particularly important to agree names for reports used as the source of information, and to state them as sources rather than just saying ‘from the XYZ system’. The XYZ system may give conflicting information on its various reports. When sorting out a mess, trust nothing.
Do clear diagrams
It does not matter so much what style of diagram you use but sticking to certain rules makes diagrams of any type easier to follow. If diagrams are easier to follow they are easier to inspect for omissions and errors. They help you identify what you still do not know. Clarity is vital.
Here are the rules:
Design clear reconciliations
Most reconciliations are incomprehensible. This means they are hard for others to understand, hard to check, and often contain errors because the designer himself is muddled. It is usually worth refining the design so that it works intuitively and labels/descriptions need no further explanation. As before it is vital to show exactly where data has come from.
On MS Excel it is possible to add comments to give further information. These do not display normally but when you put your mouse pointer over the little red corner of a cell the comment pops up. This is useful for clarifying sources without creating too much clutter.
Having neat filing and perhaps a database is helpful but it is even more important to organise information so that your brain can grasp it more easily and precisely. There is a lot of information to take in and think about so to help your brain it is important to lay information out neatly and in a way that helps bring out structures and patterns. It sometimes takes several tries to get something just right. Tables, diagrams, and graphs are the main tools. Effort spent refining the layout to compress more information onto the page, and make notation more compact and intuitive will be repaid.
Use statistics in bulk, and graphs
It is a mistake to stare at a few clues trying to work out what they might mean. Grab as much data as you easily can, organise it, format it, and display it so you can easily spot breaks in patterns, and trends.
For example, if you are trying to fathom the meaning of a monthly reconciliation difference one of the easiest ways to get ideas is to pull together a large volume of easily accessible data, put it on a spreadsheet and look at graphs. Instead of looking at a monthly difference you could be looking at daily differences, which might give you clues about when the difference(s) arose.
Plot different statistics over time on the same graph to see if their movements seem to be linked in any way.
Use critical thinking to cut through misinformation
Search for unlikely or inconsistent information continually
The best defence against the misinformation you will be given is to evaluate it critically. Is it likely that it is true? Is it something that could easily be misunderstood? Does it seem inconsistent with other information? If it seems doubtful it's probably wrong.
If I had to pick out the one skill that has helped me most through this kind of project I would have to say that spotting dodgy information by critical thinking is it.
The problems people tell you about could be the tip of an iceberg. Weakly controlled processes have insufficient checks built into them so errors pass unnoticed.
Once again, thinking can tell you where to look for problems. If you see some work being done in a way that must be difficult to get right all the time expect errors, even if none have been reported. For example, a table of thousands of meaningless reference numbers typed in by hand over a period of months with no checks performed is going to contain errors, even if none have been found to date.
If any of the usual causes of mess are present (e.g. chronic financial distress, rapid expansion, repeated reorganisation and change of ownership, very old computer applications, large numbers of databases with seemingly similar functions) but people say everything is fine do not believe them until you see proof.
Have confidence in your inferences. Many times I have anticipated a problem, sent an assistant to investigate it, and been told that everything is fine. I have been known to send the assistant back two or three times to search harder and so far have always found the problem I expected.
Decide if there are more problems still to find
Think critically about possible explanations to mysteries.
A beginner's mistake is to find a cause of errors and think ‘Aha! I've found it.’ Process and control messes usually involve multiple error causes, not just one. Try to assess whether there could be more error causes still to find. Often this is easy. For example, you might have a mysterious reconciliation difference of about 2% and uncover an explanation for the differences. However, some rough calculations might show that the explanation can only account for differences of around 0.01 – 0.5%, so there must be more to find.
Do things others forget or feel they cannot do
As you have fact finding conversations with people it helps to meet them at their desks rather than in a meeting room, unless you need white boards. See screens, reports, and papers with your own eyes if possible, though it can be much more efficient to make enquiries by telephone in a very large organisation spread across more than one site.
If organisational boundaries force you to leave an issue with someone else for investigation without the opportunity to push them along the chances are that nothing will happen very quickly.
Look in the manual
Since many people you might interview for information have not bothered to look in the software manuals it is often possible to become quite an expert in just a few hours. Well worth it.
One of the most common reasons for errors and omissions is human error resulting from confusing software and paper forms. Be super critical of the design of forms, and their wording. Badly designed paper forms can often be sorted out very quickly and easily, saving time for people who have to use them and cutting down errors and the time they waste.
A variant on this theme is the untidy desk. Many years ago I used to audit an accountant whose desk was always piled high with papers. Perhaps ‘piled’ is misleading – the papers were one heap, spilling out onto the floor, up to 30 cm high in some places. All the drawers were full, and the space under the desk, and there were boxes of mess around his desk. His staff sometimes tidied up when he went on holiday, against his wishes. For some reason, although everyone could see this was an accounting blunder waiting to happen nobody felt it was quite right to insist that he tidy his desk up and start filing things or dealing with them when they arrived at his desk. Today I would have no hesitation in making that recommendation.
What to do if you are on the Steering Committee
If you are involved in clearing up a mess and need to delegate the task to someone and monitor their progress, the guidance above may be very helpful in showing what to look for and what is likely to be a mistake. Here are some key points for Steering Committee members:
Process and controls mess ranges from the light breeze of the occasional customer complaint to the terrifying hurricane of a dismally failing Finance function. Whatever the amount of mess you are taking on the guidance above should help you. Do not let such a mess destroy your health and alienate your family. Calm, clear thinking is your most powerful weapon in reaching the truth, and early action is your route to the sunny uplands of a healthy process with sound controls.
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Words © 2003 Matthew Leitch. First published 15 May 2003.