Q&A | October 18, 2022 | 1 min read
Can an evolved approach to shared services help companies thrive?
Companies have long sought to increase efficiency and reduce costs by streamlining how they operate support functions like human resources, legal, finance, and IT. Offshoring and single-function shared service models helped move the dial, but hard-to-escape silos have persisted. That’s given rise to the global business services (GBS) model, which, when done right, can help turn cost centers into drivers of innovation with wide-ranging benefits across the entire company.
Workflow spoke with Deborah Kops, co-founder and principal of Sourcing Change, a consultancy that advises corporations on how to build and staff GBS organizations. She shared some approaches that companies are taking to maximize value when transforming their processes and operations, and how the uncertain economic outlook could affect companies’ embrace of the GBS model.
GBS is a term of art. It can mean different things to different companies. But when it’s truly evolved, it runs end to end, it encompasses multiple processes, it is automated, and it’s one organization. It can be an operational construct, like I just described it, or more often it is an organizational construct. That basically entails taking on the back-office operations of every function and putting it under one leader, but without ever breaking down the silos—a lift and shift. Today, most GBS organizations today are organizational constructs, not operational constructs.
You could put almost any process in a GBS. There’s a large drinks company that makes tequila, but there aren’t enough agave farmers, so they have someone traveling around Mexico to sign up new producers, and the GBS organization now runs a unit to figure out how to pay them in cash. I have a client who’s got an ambition to put 61% of all the corporate processes the company runs into the GBS.
Many of them are looking to increase cost efficiency and effectiveness, which are GBS table stakes. Some are looking for the ability to integrate acquisitions quite quickly. And then there are others that believe GBS should be a capability engine for the organization, because where else in the organization are you going to find highly evolved change management, program management, or automation capabilities?
The hire-to-retire employee journey is a great example. You have one process owner who looks at all the process flows: how long they take, the default rate, and where the breakdowns are, all the way from when a prospective employee goes to a jobs fair through to when they’re part of your alumni group. You map the whole journey, including when the employee is assigned a workspace, gets their laptop, participates in a wellness program, whatever they need. That process owner is also responsible for implementation and operation of the process. HR shared services disappear in favor of hire to retire.
Not often, because most companies are still focused on the organizational rather than the operational GBS construct. The kind of operational transformation that’s necessary takes investment. And remember, the initial impetus behind the GBS model, although we’re moving away from this, was labor arbitrage. Let’s move jobs from Des Moines to Delhi. Then the focus shifted from moving where the work was done to improving how it was done, harnessing Six Sigma, continuous improvement, and similar tools. Next it was about getting more insights out of the work, and later, how can we automate the work. Today, the buzz is about end to end.
I think GBS organizations have an opportunity to help recession-proof their companies. They can support customer retention, which is probably going to be an issue in some sectors during a downturn. They can help reduce the churn of talent and the costs associated with it. GBS is well-positioned to help companies figure out how to navigate a recession.