Business process reengineering and organizational performance : a case of Ethiopian banking sector

Since the late eighties, BPR has established itself as one of the attractive radical change management option for coping and adapting to the new competitive market environment and become popular both in the public and private organisations throughout the world . Cognizant of this fact, all Ethiopian public (government owned) institutions including the public financial institutions have embarked on large-scale change projects since 2004 in which Business process re-engineering(BPR) is a central element . This research examined whether implementation of Business Process Reengineering (BPR) projects have improved operational performance of the selected case public commercial banks in Ethiopia by collecting and analyzing both quantitative and qualitative comprehensive data set, using mixed research approach through questionnaires, interviews, observations and review of secondary sources of information. The operational performance measures utilized in this study are cost reduction, speed of service delivery, service quality, customer satisfaction as well as innovation. A total of 837 (84% response rate) questionnaires were returned from respondents of the selected branches and head offices. In addition, in-depth interviews were conducted with eight senior managers of the respective banks, who were also members of their respective banks reform team and were involved in the design and implementation of BPR. The third method that was used to collect qualitative data was personal observation of the selected bank branches in order to measure the speed of service delivery and convenience of the waiting places. The researcher measured the service delivery time of selected busy bank branches for five consecutive days, for half an hour spent in each branch. This study found that the introduction of BPR in the case banks was met with mixed reactions from employees and some managers. The main achievements of BPR were: service delivery time reduced dramatically as a result of the new process redesign and introduction of information and communication technology services(introduction of e-banking); introducing a single customer contact point through employee empowerment to make all the necessary decisions at that point of contact which resulted in improving the satisfaction of employees and customers. The challenge was that resistance from employees and some managers (labelled the initiative as “Blood pressure raiser” due to their assumptions it will result in employee lay off or the change brings increased workloads for some remaining employees without compatible rewards following the new process redesign. The study also revealed that telecom infrastructure and power interruption considered as main problem areas in providing banking services efficiently and effectively through branch net workings. The researcher recommends that for a better BPR design and implementation as well as sustainability of improvement gains in the banking sector, a forum should be established to discuss and share good practices and technology in the banking sector ; establish strong change management offices to continuously assist and monitor results; and continuously involve and communicate key stakeholders in the design and implementation of change initiatives.Business ManagementD.B.L