In this blog, we will discuss the meaning of People vs process dependent businesses and their difference, How to know if you have a people or a process dependent business as well as Bottlenecks and best way to proceed.
The flow of your business operations definitely defines whether your business is successful or not and, in many companies, these business operations tend to depend on people especially if it is a small or medium business that is still figuring out how to do things. These companies tend to be people dependent in the sense that they have a key person which in most cases is the CEO or the founder which carries out most operations and to which tasks are centralised. This phenomenon can exist in bigger companies on the departmental level.
Therefore, people dependent business operations are defined as business tasks that require a certain person with specific skills or knowledge –and generally a level of seniority within the company to be done.
Some other businesses, on the other hand, have a different approach and tend to rely more on standardised processes rather than key people within the company. We usually find this mindset in bigger -and usually global companies since they have had their time to create and test the different processes and have come to a level of standardisation. However, any company can be process dependent in its operations if it creates a flow of tasks and specific descriptions for each task so that the people assigned could be switched comfortably without hindering the flow of the operations.
In that sense, we define process dependent business operations as business tasks that are pre-defined, evaluated and standardised.
To figure out the difference between people dependent and process dependent businesses, we should take a look at how work flows in each one of them.
The example that we will be observing is a company that sells apple juice, each company has 5 employees and it utilises them according to the type of its operations.
Let’s take the example of company A, this company is a people dependent business. As you can see from the representation below, the key person is Jane since all tasks are centralised to her and the final output is only obtained in her presence. Say for example Steph gets ill and is absent to work, step 3 wouldn’t happen and there is no one forwarding to Jane. Since Jane is too busy with the other tasks she wouldn’t notice, but eventually the work would stop and in worst cases there would be no stock of apple juice and there is a risk of a big loss. In extreme cases when the key person is not present, the process wouldn’t even go past the first stages and this could also lead to unwanted outcomes.
Company B, however, is process dependent, that’s why in the illustration you’d find steps represented by boxes of tasks and not people. Each different task is defined by a set of steps and a specific background knowledge to be performed. And as you can see, the steps in this case are way less, compared to the first example so they can produce more apple juice using less steps. If the person who performs task 2 is absent, they could easily be replaced temporarily by another person since there is a predefined list of tasks and knowledge within that specific task. This methodology is more efficient especially in a fast paced environment.
To find out if your business is people vs process dependent just take away one person from the steps and see if anything goes wrong. In addition, generally, key-people in the business are very easy to spot too since they have a great input into the workflow.
Now that we understand the difference between people and process dependent business, we can look into the bottlenecks of each one and find out how to avoid them to have a successful business. Intuitively, you may say that a people dependent business is doomed to failure since people are such a non-constant factor but a process dependent business also has its negatives.
If the business operations are people based, and especially key person dependent one might have issues with:
– Longer business process: Over centralisation of tasks which could make the business process longer
– Loss: Risk of potential loss if key person leaves without passing on their knowledge
– No source of knowledge: Key person is entitled to the knowledge that they hold and could take it with them when they leave
– Time wasted: Each new person will need time to figure out how to do their thing which is a lot of time wasted
For a process dependent business, the different bottlenecks that could arise are:
– Resistance to change: Having a set process may make it difficult to change and adjust to changes in business industry
– No personal input: When a new person comes in, they already have a specific list of tasks that they can perform and have no margin to put their own print on the work
– Trial and error: Achieving a process dependent operations chain takes a lot of trial and error and many years to reach
– Automated workflow and lack of human connection
As you can see, both types have their different bottlenecks and challenges and the best way to do things would be to combine the flexible way of doing things through relying on people and the standardised way by following a process.
The optimal way to combine both is to make use of the technology that we have nowadays. With the emergence of new softwares catered for every department in the company, it has become easier to join the flexibility of a people based approach and the structured way of a standardised process. With the implementation of softwares, whether it is for Marketing, Supply Chain or Finance, it is always important to keep in mind the nature of your business.
At the end of the day, it is up to you now to define how much of each that you need in your business, are you a manufacturing company that needs more rules and standards? Or are you a film production company that relies on what people can bring to the table?