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  

 

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.