Finance in 2030… my thoughts on what the future holds.

Its the time of year to look ahead to the future.  I’m putting it out there…  the finance function of 2030 will look very different from the finance function of 2015. Here are my predictions:

REAL TIME INSIGHT A REALITY

  • Real time info and insight will be king.  Quarterly closes will remain, but on a daily basis a soft close will take place. Most CFOs will demand and have a real-time ‘flash’ overview of their p&l, balance sheet and cashflow delivered to their mobile devices.  This capability already exists, but software vendors and corporates will have effectively reengineered their architecture to take advantage of cloud and in-memory processing as well as automating the many reconciliations and sub-processes, enable scenario and close simulation at any point.
  • The annual budget cycle will be ‘so 2015’Instead, in 2030, almost every business will have a rolling forecast process with an outlook of 18 months that at pre-defined dates a snapshot is uploaded as the budget.  Significantly more time will be spent on scenario analysis, risk adjusted forecasting than in compiling the underlying data.

INDUSTRIALISED FINANCE SERVICES

  • Finance will do more, with less head count than ever before.  Automation, artificial intelligence, standardisation of processes and systems and robotic process automation will drive efficiency and economies of scale.  As a result world class finance functions will cost less than 0.5% of annual revenue.
  • Each finance function will have a highly industrialised finance factory or next generation shared service capability.  Transactional processing will be largely automatic.  Automation of FX allocation, consolidation and intercompany and reconciliations will take away a lot of traditional operational activity.  Those finance personnel in shared services will be largely be overseeing systems that perform intelligent process monitoring, being able to jump rapidly onto a limited number of exceptions.  Paper will not be required within the finance function.
  • Finance shared services will become part of many organisations Global Business Services team, and will take advance of improvements in communication technology and virtual hubs to enable ‘follow the sun’ processing from networks of offshored teams and centres (whether captive or outsourced).
  • Core finance processes will have intelligent process management and policy breach detection software running 24×7 to reduce the risk of fraud or non compliant activity.  Artificial intelligence will make internal and external auditors lives a lot easier!

SIMPLIFIED, MOBILE TECHNOLOGY

  • This may seem far fetched but I don’t believe Microsoft Excel will be the prominent tool of choise for finance staff… organisations will use other technology tools for data analysis, simulation and visulisation – linked directly to accurate source data sets.
  • The age of customisation of ERP and financial tools will be over. Instead businesses will adopt standard processes provided by software providers and purchase them on an  ‘as a service’ basis, via the web.
  • With less customisation, and simpler web enabled processes ERP implementation cycles will shrink and CFOs will have a key role demanding that major ERP switchouts / replacements can be implemented in an agile fashion within the cloud in less than a year!
  •  Finance will be mobile, and will be providing mobile services to the business.  Every general manager will be able to review their business unit’s financial performanc on a daily basis via their mobile tools of choice.  No longer will the business be able to cite lack of real time information as a reason not to do something.

FINANCE TALENT WILL NEED NEW SKILLS

  • A new breed of finance personnel will emerge … The data analyst with ability to deliver insights with authority will take centre stage.  With strong mathematical and modelling skills coupled in teams with knowledgeable and influential business partners, the analysts will pro-actively provide insight from the ever expanding data sets available to the finance function from across the enterprise.
  • Remote working will be the norm. The Finance team will be dispersed across many locations, with modern communications, shared workspaces and lack of paper allowing finance personnel to work effectively remotely. This will force finance leaders to become adept at managing a geographically remote workforce.
  • There will be more routes to make CFO than ever before. Shared service, financial accounting and business partner functions will all breed CFO contenders… Expect that leaders are cycled through roles in each of these groups to develop rounded skillsets for their executive CFO role.
  • The next decade will be the time of the Finance Business Partner.  This rare breed, of commercial savvy, strong influencers with excellent communication skills will be developed through extensive targeted training and in larger organisations… an increasing proportion of these business partners will not have a core finance background.  They may have started out as data scientists, commercial managers, lean process black belts or learning communications and influencing within sales organisations.
  • Digital, analytics and technological nouse will set finance high performers apart from their peers along with strong influencing skills.  A word to the wise, any finance professionals should start brushing up on those skills now!

I’m looking forward to helping CFO’s on this roller coaster journey to the finance function of 2030 :-).  see you on the journey…  reach out to me with your thoughts and comments on the future of the Finance function by contacting ean.evans@au.ey.com. 

3 Megatrends from the 2015 Shared Service Summit Melbourne: Economic Imperative!, Global Business Services has arrived and Untapped Value!

I was lucky enough to participate in this years Shared Service and Outsourcing Network Summit in Melbourne this week.   I came away intrigued and inspired at the further opportunities for ANZ businesses to deliver tangible value from shared services and take steps towards integrated Global Business Service Models.  I saw three megatrends:

1) Economic imperative: the current economic and competitive climate makes optimising shared and Business Services essential

An excellent presentation by Huw McKay (Senior International Economist, Westpac) highlighted the challenges the Australian economy faces in the coming years.  to adapt Driving further value from shared/business services will be an important part of cost optimisation in Australian business.  In my opinion, this cost pressure will also drive an increased focus on offshoring / outsourcing and ensure clients drive a hard bargain with their vendors!

Some of the key economic point I took away included (and there were many more in this excellent session):

  •  The Australian Dollar is likely to lose value against the US Dollar and only be worth $0.73-$0.76 in 15/16.  Clients looking to lock in/renegotiate existing contracts will follow fluctuations with interest!
  • Forecast Capital expenditure in the Australian economy is trending downwards toward 2016, with Services (which form the majority of our economy) switching from growth to contraction.  A clear bellweather of sentiment in the economy!
  • Across the Asia Pacific Huw highlighted some interesting insights relating to India.  Indian inflation and wage increases have been lower than many other offshoring destinations.  The market has reacted favourably to the appointment of VR Iyer as head of the Bank of India.  Indeed Wipro, Infosys and TCS have been holding wage increases for their staff to 2% – a signal that India will remain a cost competitive destination for the forsee-able future!

Global Business Services models are becoming the logical next step for Australian organisations regardless of scale

I chaired an expert panel with representatives from BP, ANZ Bank, Rio Tinto and MMG to evaluate the relevance of Global Business Service models for Australian businesses.

The largest organisations in Australia, which include RIO, BP and ANZ have all established multi-tower business service models providing a range of support and customer facing functions.  They are continuing to evolve these organisations and due to competitive and economic pressures are expecting to seek further ways to deliver value, not just from efficiency gains, but from effectiveness and delivering  value-added insight for the business.  Some key points made that I found interesting:

  • Ken Jefferd (BP’s Leader of GBS ANZ) and Marcantonio Maglione (Global Process Champion Finance from Rio Tinto) highlighted the “hybrid” nature of their business service models with services delivered by onshore, offshore and outsourced teams.  They stressed the importance of effectively communicating, collaborating and continuously working with remote/offshored teams to maximise value and relationships.  Marc also highlighted the importance of ensuring that work is appropriately allocated across BPO vendors and they stick to their defined scope.
  • But scale is not a barrier to GBS!  Lara Higson (GM Business Services) from MMG demonstrated how an Australian business can make a Global Business Service model work with as little as 100 FTE across 4 global locations.  Key factors in this success include Executive sponsorship, alignment to company strategy and common governance/oversight to ensure that each shared service acts in a coordinated way.
  • All of the speakers in the panel discussion highlighted that GBS was an ongoing journey and additional business value continuously needs to be found.
  • David Cecil (Group General Manager GBS at ANZ) highlighted the importance of the alignment of GBS vision, strategy and execution to the overall business strategy.
  • Ken Jefferd made an important distinction.  BP look at internal stakeholders within business units as partners, not customers – for them this is an incredibly important distinction and permeates in the nature of relationship that they have with the business.
  • The speakers highlighted that each of their businesses were working towards delivering further value from GBS – through provision of greater analysis, insight and more value-add activities – there was agreement that there is a lot of further opportunity to do this.  All are moving up the value curves across each of the functional areas in scope.
  • Marc Maglione from Rio Tinto highlighted the importance of Global Process Ownership and the importance of organisations shifting their focus to  process to gain maximum value from Business Services.

Untapped value: opportunities abound for Australian shared service organisations to improve.  Some great pointers on on future direction were on display

What really struck me walking around the conference was how much latent value organisations in Australia can extract from shared services.  Below, a few factors that reinforced this sentiment:

  •  Only 9% of the attendees at the conference considered their organisation to be ‘top quartile’ in terms of operational excellence.  Whilst there may be a few harsh markers… this says it all.
  • Shared Service first generation stalwarts such as Accounts Payable automation remains a major topic of interest for attendees at the conference. Mark Spazani (Finance Manager Shared Services for Victoria Police) and Cynthia Singh Head of Business Services at Downer EDI, and previously Arrium) highlighted the value that can be optained by moving away from paper, increasing EDI and developing an optimal AP transactional framework to ensure invoices are treated appropriately (EDI, P-Card, Three Way Match etc).
  • Clare Lezaja (Finance Director Retail products at Telstra) highlighted the importance of an effective shared service centre as part of enabling Telstra’s redefined operating model.  Without an effective and efficient shared service group (a hybrid onshore/offshore/outsourced team), Telstra will be unable to shift the majority of the focus of their finance function from value preservation to value creation.  Telstra are currently building their finance business partner capability to capitalise on the value creation opportunity.
  • I loved the vision that Morag Eyles (Head of HR Shared Services, ANZ) and team have painted for their team.  With a key factor being helping the business predict the future. For me, predictive analytics and insight will be key factors in all successful Business Services teams delivering value as we move forward.
  • ANZ also demonstrated that Recruitment process offshoring can work.  With Australian based staff coordinating the process with end customers with  Philippines (search/screening) and Indian Based teams (checking e.g. references, financials, and contract completion).  Whilst ANZ are on a continuing journey, significant value and customer satisfaction has been delivered thus far in delivering their more than 17,000 annual positoons.
  • And finally… Robotic Process Automation, its coming!  It was great to hear from Nigel Clarke (Assoicate Director – Global Accounts at Tyco) that Tyco and their outsourced partner IBM are evaluation Blue Prism’s robotics solutions for use in their business services organisation.  I’m excited about the possibilities of Robotic Process Automation (RPA) and can’t wait to see the results.

All in all, I think the future of shared and Business services in ANZ is both challenging, exciting and critical for ongoing business competitiveness.  Watch this space!

If you have insights, takeaways, thoughts from the conference or just alternative perspectives I’d love to hear about them at eanevans@deloitte.com.au .

What Australian businesses can learn from leading Global Business Services organisations

I was lucky to recently to attend a site visit of a leading Global Business Services ‘GBS’ organisation with one of my client teams.  The visit made me pause and consider what lessons Australian businesses learn as they progress towards Business Services or extending their shared service operations.   I’m excited about advising, implementing and optimising these models across the Australian business landscape to deliver shareholder value.  Some key takeaways emerged:

Shared Services/GBS is a journey, and there is no ‘one size fits all model.

No matter what the starting point, shared services or GBS is likely to be a multi-year journey.  Along the way there may be some false starts and periods of change but moving to a fully formed GBS model would be a massive change for many ANZ businesses, and like an elephant may need to be eaten in many little chunks.

Many of the leading GBS case studies highlight that changes and model optimization take year often, not just months, and businesses need to be brought along and buy-into the journey.  Organisations such as  Shell, BP, DHL, Siemens, Proctor & Gamble and Nestle are engaged in a relentless journey to optimise their business service function, improve business support and develop competitive advantage within their GBS team.

Shift of focus towards economic value added

Many shared services and GBS businesses are built initially on a cost-reduction platform.  Over time, leading GBS organisations shift that focus towards economic value added/delivered – whether measured in cost, working capital, revenue or EBIT terms.  Its not just a pure cost play, leading GBS organisations align their actions to group strategic direction and actively measure their ‘value add’.

Opportunities lie way beyond transactional back-office activity

Many Australian businesses still have a deep rooted mindset that shared services teams undertake transactional activity whether that be Finance, HR administration or IT.  Leading GBS businesses are at the forefront of pushing the envelope further up and down ‘end to end’ process value chains and engaging in activity that in some organisations might be considered ‘front office’.  Examples include:

 

  1. Customer service
  2. Sales, marketing support and outbound telesales
  3. Logistical support
  4. Procurement
  5. Analytical insight e.g. customer or product insight

A common theme remains however of the business retaining its accountability for judgement based activity where proximity to a business unit is essential.

Enhancing the scope of GBS may unlock scale benefits for many Australian clients 

The average ASX 200 company may only have a finance team of ~100 full time equivalents.  Any shared service built in that functional pillar will have limited scale, footprint and be challenged to put in place adequate career pathing and cross training

A GBS organisation, taking on multiple end-to-end value chain segments is likely to create greater scope and organisation scale.  Scale ultimately will be critical for many Australian businesses to put professional management structures, drive a GBS culture and effectively share GBS foundational initiatives across multiple service streams.

GBS when effectively delivered flips traditional functional structures on their heads

Deloitte global surveys suggest upwards of 60% of traditional functions activities are delivered via Shared Services or Centres of Excellence.  My recent site visit confirmed this and in this major GBS organisation the activity split was even starker:

 

  • The strategic finance business partnering being delivered by a lean CFO and business performance analyst team, responsible for judgment call type decisions / activities made up ~25% of total finance headcount
  • The business service team for Finance (~75% of total finance headcount) effectively closed the books, processed transactional accounting and journals and preparing any back-ward looking reporting, and populating trending forecasts for the consideration of the retained finance organisation.

As Australian businesses move in this direction, this will have a profound effect upon career planning, leadership development and succession planning in many functions of Australia’s businesses.

People and Service are at the core of success

GBS teams really are dependent upon their people, leadership and service culture.  Leading GBS teams successful create a lasting ’employee value proposition’ that makes employee’s ‘stick’ for reasons other than purely for their monthly pay-check.  Increasingly we are seeing flexible working, outcomes based performance management and in-house and external customer and employee satisfaction as key levers to attract, retain and focus personnel upon exceptional service.

Supporting the people agenda in major GBS organisations is a strong focus on individual performance, celebrating successes and focusing upon making customer service part of the team’s DNA.

Increasingly the stigma of shared services personnel being ‘second class’ citizens is being overcome in major organisations as they begin to recognise their GBS team’s professional expertise in driving processes, continuous improvement and efficiency and effectiveness

Many aspects of developing the people and service culture are scalable beyond the traditional functional shared service boundaries that exist in many Australian businesses, e.g. core service training is equally applicable for IT shared service team members as it is for call centre and finance teams.

GBS leadership may be a ‘right of passage’ for future Finance, HR and Operations leaders

Back office career paths are changing in major corporates.  The traditional growth vertically through the ranks in a function will be challenged.  Indeed some major global organisations with GBS teams, see a stint in leadership within GBS as as prerequisite for top-jobs in the C-suite.  Indeed, in many cases GBS will provide the opportunity for executives to experiencing manage large teams – this will become increasing more difficult in the retained organisation as these team become more aligned to strategic matters and not process delivery excellence.

So if you’re wanting to become a CFO, COO, CPO or a CHRO, a stint in shared services or a GBS team may actually be a plus on your resume.

If you have any queries or would like to discuss Global Business Service concepts in more detail, please don’t hesitate to contact me at eanevans@deloitte.com.au  

 

Global Business Services – Six reasons Australian business has to sit up and take notice

© Ean Evans 2014

Global Business Services organisations have become ever-present in global businesses such as Mars, Proctor & Gamble, BP, Diageo, DHL/Deutsche Post and Siemens. They have delivered significant tangible benefits to these organisation.  I believe these models are highly relevant for Australian businesses and that we will be seeing more of these operating models in Australian businesses and the public sector in the coming years.

 

Is there more to it than just creating a snazzy ‘Global or Group Business Service’ title? 

 

At their core, Global or Group Business Services (GBS) represents a marked shift in how organisations structure their support functions.  In essence, rather than a mixture of separate functional siloes, each with a variety of shared service centres and/or outsourcing arrangements, GBS models deliver value through integrating governance and common business practices across the entire organisation.  GBS organisations typically demonstrate the following characteristics:

 

Multi-function: incorporating multiple functional processes including the typical candidates of IT, Finance, HR, customer service and operations but also industry specific functions such as claims processing (Insurance) and brand design services (Fast Moving Consumer Goods).  Importantly there is high degree of end-to-end integration across processes and GBS teams are often aligned along end-to-end process lines rather than functional lines.

 

Multi-location: typically have multiple locations to deliver services each tailored to the enterprise’s needs.  Common models include: hub-and-spoke, a ‘follow the sun’ network of global centres or the bulk of activity in one (or more) low cost Asian hubs.

 

Multi-sourced: The combination of traditional shared services, outsourcing arrangements and Centres of Excellence within their operating model.  The more sophisticated organisations leave the decision around sourcing choice to the GBS team, whilst holding them accountable to robust service level agreements.  Vendor management techniques are typically common across multiple outsourcing arrangements.

 

Multi-business: Serving a range of internal business customers, selecting leading practices from across the entire organisation and providing them to all business units.1

 

There is lots of good literature on Global or Group Business Service models.   To find out more, see Deloitte (http://bit.ly/1wMX7zQ), International Services Group (http://bit.ly/1vgrCn0) or the Association of Chartered Certified Accountants (http://bit.ly/1BIDTU9).  Definitions aren’t however the focus of this blog.  I’m more interested in what practical GBS lessons Australian businesses can learn and why CFOs and business leaders need to consider them.

 

 

Six practical GBS lessons for Australian business

 

I see Group or Global Business Services as a natural evolution from shared services and functional process outsourcing.  Done right, GBS will help Australian businesses more effectively achieve scale economies from common processing, governance structures and technology enablement tools. At the same time it can deliver operational excellence to internal customers and third parties in a consistent, scalable fashion.

 

I see six key GBS lessons that are applicable to Australian businesses:

  1. A shift in mindset to end-to-end processes:GBS teams are often a catalyst for an organisation’s switch from traditional functional demarcations to true end-to-end process alignment.   This is obvious when you look at the composition of many GBS teams – instead of classical share service team and process groupings such as HR (employee administration etc), or Finance (Accounts Payable etc) GBS organisations are usually defined by process groups such as Hire-to-Retire or Purchase-to-Pay.  This is deliberate.  Typically they also nominate an end-to-end global process owner governing process standardisation and aligning continuous improvement activity that is supported by cross-functional teams.  This will be a major shift in mindset for many Australian businesses and will challenge CFO’s, CHRO’s, CPO’s and CIOs as their teams’ focus and reporting lines evolve.

 

  1. Its more than about just cost saving, but this remains a key driver:All the classic shared service and outsourcing benefits apply:

 

  • Proctor & Gamble’s GBS mantra is enlightening… “The GBS model is all about the AND. We want lower costs AND improve quality AND innovation AND productivity”.  This team also delivered more than US$800m of benefits to its customers.2
  • In another example Siemens’ GBS leader summarised one of the primary drivers for GBS as doing more ‘faster’ and enabling faster deployment of technology and solutions3.
  • In Australia, I’ve seen organisations in the public, not-for-profit and private sector moving to successful Group Service constructs with as few as 150 FTEs across multiple end-to-end processes.  Australian business leaders should be wary however, GBS teams at the smaller end of the scale mean that the implementation needs to be effective first time – the business case may not readily support a ‘second try’.

 

  1. The increased importance of effective vendor management:Australian businesses are seeing an upsurge in outsourcing with many ASX companies outsourcing components of their back office, customer service and operational activity.  This trend means Australian organisations need to learn to equip themselves to effectively manage multiple vendors onshore and offshore and ensure quality and efficiency are delivered hand-in-hand.  As an example,  Suncorp as part of its GBS journey has a central ‘Partnering’ team of more than 25 permanent / contract staff to consistently manage its multiple onshore and offshore outsourcing vendors across Finance, HR, IT, Claims etc.

 

  1. Functional careers and operating models will change: GBS models will challenge traditional back-office functions like never before.  Functional leaders have to re-evaluate their team’s evolving role and pass responsibility for some process delivery to the GBS team.  This delivers a great opportunity for Functional teams to focus on value-added business partnering and business decision support – it shouldn’t be squandered.  At the same time, effective career path development and tailoring of talent development in GBS teams needs to be a key focus.  For Australian businesses an additional challenge will be securing leaders with experience of world-class GBS models to maximise the chances of effective implementation first time.

 

  1. Common governance will test leaders’ ability to influence and drive change:  A challenge particularly for businesses used to high degrees of autonomy and federation – not uncommon across the Australian business landscape.  As Deloitte’s Peter Moller in the UK has stated: ‘Trying to implement finance shared services is like herding cats. And if you’re trying to implement GBS initiatives it’s like trying to herd cats, sheep, goats, dogs at the same time.’.  A strong vision, exceptional leadership and CEO commitment and Board Support is likely required to drive and sustain the change required.

 

  1. Australian businesses can choose to ‘leapfrog’ stages in organisational development: Generally the trends in shared services and outsourcing evolution flow from West to East (from the USA, through Europe and onwards and into the smaller APAC markets such as Australia and New Zealand).  Organisations’ such as WorleyParsons have managed to ‘leapfrog’ by moving directly to Global Business Services and setting up their first significant shared service as a multi-function Global Business Service centre of ~400 seats in Malaysia.   Opportunities abound for organisations and leaders who are bold!

In summary, Global Business Service models can provide significant benefits to Australian businesses who commit to the journey and make GBS meaningful, rather than just a ‘snazzy’ title…   I’m excited at having the chance to watch and support organisations make the most of this opportunity.

 

If you have queries about Global Business Services please contact me directly at eanevans@deloitte.com.au or on +61420546741.

 

Sources:

1 Adapted from Deloitte’s white paper GBS – Better Together.

2 https://www.pg.com/en_US/downloads/company/PG_GBS_Factsheet.pdf

3 How Siemens transitioned to global business services – Michel de Zeeuw, CEO Global Shared Services, Deloitte Shared Service and BPO Conference 2013.

 

Don’t forget the second S… Service

There are many flavours of shared service organisation with huge varieties in functional scope, complexity level of transactions and scale.  In my opinion one thing that sets the better shared services apart is their focus on the second S… namely Service.

High performing shared services I’ve come across often demonstrate six common Service attributes:

1) Their leaders and teams actively seek,  listen and act customer feedback on a regular basis.  They use this as a key input to better align their service offerings to evolving customer needs.  Even in periods when customer feedback is expected to be negative, they actively seek it out!

 

2) They go to often incredible lengths to get to know the business that they are serving better.   A major Fast Moving Consumer Goods who has a Finance and Accounting captive centre in Manila routinely flies and seconds shared service team leaders (and “agents of the month”) into Australia to meet and better understand the nuances of their Australian business.

 

3) They look to exceed customer expectations, every day.  A prime example of this is a major oil and gas business which actively monitors customer personnel who are seeking out information on the Group Business Services intranet site.  If their search takes too long and they are clicking through too many web pages, the shared service team pro-actively make an outbound telephone call to see if they can help them and resolve their issue.  Whilst I wouldn’t advocate this approach in every situation, it provides a clear example of how some shared service look to wow their customers.

 

4) They seek to make it as easy as possible for their customers to follow the ‘happy route’ through each shared process.  Often with Australia’s geographically dispersed workforce this needs careful consideration.  Traditional channels of email / intranet may be inappropriate for some ‘blue collar’ operational teams and alternative channels involving mobiles and handhelds may yield better process adoption, increase transaction speed and reduce errors.

 

5) They “walk in their customers’ shoes” and look to the outcomes their customers are seeking from each process.  They seek to tailor their service levels (within cost/efficency constraints) and  continuous improvement programmes  and engagement channels to each customers segment’s process goals.

 

6) Finally, and possibly most importantly, they train everyone in their shared service team on service with the associated skills of phone and email etiquette,  listening, influencing and managing (and then exceeding) customer expectations.

 

Increasingly I’m seeing shared services in Australia take a greater service focus.   I see this as critical to a successful shared service organisation.  If you have any perspectives on great (or poor) shared services or outsourcing customer experiences, I’d love to hear about them.  Please contact me at eanevans@hotmail.com.

 

Three common shared service challenges and potential remedies

There is no secret sauce to stabilising and optimising a shared service centre.  It typically involves a lot of hard graft, leadership, focus on process and technology optimisation and the development of an effective team culture.
Working with a range of clients in Australia and beyond, I’ve seen three challenges that have held many shared services teams back.  Each of these, along with some suggested steps to begin remediation are outlined below.

1) Overtime levels higher than expected post transition:
Often post transition, the shared service struggles to execute the process to the same level of efficiency as the business team who previously delivered it.  During the initial month and a half post transition this is acceptable – however, beyond that period it becomes a priority to resolve to:
  • Increase process effiiciency
  • Minimise overtime and  project benefit leakage
  • Ensure that shared service teams aren’t burnt out
  • Maintain customer satisfaction.
If your overtime levels are running over 5-8% alarm bells should be ringing…
Suggested potential remedies include:
  • Review staffing levels; have you got the right level of resource to match against the actual volumes of activity passed over from the business?
  • Pro-actively quarantine legacy issues/ backlogs.  You want to demark which activities are business as usual processing and which are not and make this clear to your customerss.  Establish backlog ‘clearance’ plans, treat these as a project and if necessary seek investment to remedy.
  • Review process metrics carefully and identify root causes of delay, waste and inefficiency. Check if processes and all exceptions have been documented appropriately during transition, if necessary update work instructions and train operatives accordingly.
  • Above all, be transparent with your customer.   Highlight volumes versus baseline, backlogs, process efficiency and effectiveness metrics, root cause analysis and agent effectiveness if necessary on an individual basis.  Develop and work on a plan to address and resolve together.

 


2) Attrition levels are too high impacting effectiveness and efficient

A level of attrition in a shared service centre is not necessarily a bad thing.  Managed attrition provides avenues to enable continuous productivity improvement benefits to be realised without having to pay out redundancies.   In addition, some movement of shared service personnel to roles within customer business units is actually one of the biggest complements for a shared service team, and furthers business relationships.
Unfortunately when attrition rates are creeping over 10-15%, there is a huge cost to the business – in terms of retraining, business knowledge leakage, unsettled teams, morale and culture.  It also can be a huge management distraction.
Suggested potential remedies:
  • Try to assess root cause:  Ensure your exit interviews and employee satisfaction survey’s are capturing reasons – investigate and understand these.  Try to isolate the issue, is attrition prevalent across every team, grade or type of role? or is there something in a segment of your organisation that needs to be addressed e.g. a leader, nature of a role, workload etc.  Once identified put an action plan in place.
  • Look at the type of people you are hiring, are they the right fit for the role?  As one of my clients found, they were hiring accounts payable clerks who’d just arrived in Australia – what transpired is that once they had a job for six months, they used this as a stepping stone to an assistant accountant role in other businesses.  Think carefully about your requirements for each role.
  • Put yourself in their shoes? Assess the centre, culture, management and job opportunities through their eyes – would you want to work there in their role?  What would get you down?  Once you’ve done an honest assessment, look to optimise.
  • Seriously consider the non-monetary incentives for your team members.  Could they be rewarded in different ways? do they receive ongoing training? Is there a career path for them?  Do they know how their role/responsibilities will look in 1 or 2 years time? Are they respected by their customers and peers? Consider what you can do to make a difference to their careers.

 


 

3) Roles and accountabilities are unclear, leading to confusion or finger pointing

Often, roles and accountabilities between the shared service and business team become blurred.  Scope creeps and initial service level agreements and responsibility frameworks become outdated.  This can lead to a number of challenges, including:
  • Inefficient hand off of work between business and shared services (often involving multiple phone/email interventions to resolve)
  • Mis-aligned expectations – making it hard for the shared service team to ‘win’ in the customer’s eyes
  • Poor shared service team morale as they constantly try to ‘paper over’ the cracks in the end-to-end process.
Suggested potential remedies include:
  • Review and refresh your Service Level Agreements and service catalogue with each of your customers on an annual basis.  Get them to sign off annually. This provides an regular reset of expectations and can be used to reinforce roles and responsibilities.
  • Clearly communicate roles and responsibilities for each end-to-end process and reinforce this regularly with the business teams.  If necessary consider refresher training or remind stakeholders in other ways with desktop quick reference guides on how to engage with the shared service.
  • Coach your team in how to respond to change requests/scope creep versus your service catalogue.  Instigate a transparent, pragmatic process that captures required changes and ensures all parties are clear about the amended roles / responsibilities.  When changes are made, ensure docuemented work instructions are also updated.
  • Review your performance reporting and ensure it contains metrics that measure compliance with both shared service and business unit responsibilities, as well as overall end-to-end process measures.  The old adage of ‘manage what you measure’ is never truer than in a shared service context.  Regularly monthly reviews of performance will help you to work with your customers to align their teams behaviours to their agreed responsibilities.

Feel free to contact me at eanevans@hotmail.com if you are experiencing other challenges with your shared service organisation and want a perspective on potential remedies.