Posted by Brad Podraza on January 28, 2020.
For the past 20 years, Deloitte Consulting LLP has conducted a biannual global survey of shared services executives. While service delivery models are always evolving, the world’s largest companies are increasingly shifting to more digital, global, and multifunctional models that are expected to provide more nimble and efficient services, stronger customer service, and high-impact business outcomes. For that to happen, however, the talent side of the shared services center (SSC) or global business services (GBS) needs to be at the top of its game.
First, the good news. Nearly two-thirds (64 percent) of respondents in 2019 say their organization’s shared services center has had a positive impact on talent and capability development. Focusing on developing a strong culture has been the No. 1 method (72 percent) used to attract and retain talent, with benefits such as encouraging flexible workplace practices (49 percent) and education assistance (48 percent) also ranking high.
In line with our 2017 survey, 75 percent of respondents have considered alternative talent models in an effort to leverage new technology, increase productivity, and reduce costs. Contract and contingent workers have become more preferred, increasing 5 percentage points to 42 percent as compared with the 2017 survey. Notably, 7 percent of respondents considered crowdsourcing in 2019, a 100 percent rise from 2017. And there’s been a fivefold increase in the last four years in respondents measuring labor quality as a metric when considering a location for a new shared services center (34 percent in 2019; 7 percent in 2015).
Next, let’s look at three opportunities for improvement: comprehensive strategy, talent investment, and change management.
Opportunity 1: Setting a comprehensive strategy. Establishing shared services is more than just selecting the scope of services and sites and hiring a new staff. A true strategic shared services transformation goes beyond this and addresses the retained legacy organization as well. When doing so, successful organizations have addressed retained organization talent issues by providing clear job descriptions (51 percent), conducting training (50 percent), and improving communications (49 percent); however, very few companies have implemented a comprehensive strategy of doing all three.
Why is this important? Each of these actions addresses a different component of the transition/transformation to a shared services model, and without doing all three, or doing them piecemeal, you are likely to miss or underemphasize some component of engaging and preparing staff.
- Effective communications are the foundation for a successful transition, providing visibility, enhancing understanding, and bringing clarity to the who, what, why, when, where, and how of the shift. In the absence of messaging, the vacuum doesn’t last long and is typically filled by rumors and hearsay—creating a narrative that now has to be retroactively managed instead of proactively crafted. A comprehensive communication strategy lets you target specific groups of individuals with specific messages, using specific tools and approaches. Typically, this would involve a top-down campaign-like approach with multiple vehicles of communication—email, intranet postings, and even videos and town hall meetings. Recognize, too, that the need for communication is organization-wide, not just within the specific function (for example, HR, finance, or IT) that may be shifting to shared services. People throughout the organization will need to understand how the shift affects their interactions with both the shared services center and the retained organization in the future.
- Job descriptions are also an important form of communication, because what tends to happen when you’re going through a shared services transformation is that bits and pieces of work and activities get shifted from one location to another. In many cases, that means the work retained and what’s required of individuals to do that work will change, and different skill sets are required. For example, if clerical tasks shift to the shared services, the remaining jobs are likely to be higher-level and involve different skills, knowledge, and training. Being able to find or develop the right resources for the work that’s now required is why job descriptions are so important.
- Training serves multiple purposes. First, training may be necessary to prepare and develop people for the retained jobs (as outlined by those job descriptions). Second, people both within the function and in the broader organization may need training on how to interact with the new shared services organization. There’s an element of tribal knowledge at work in any organization—knowledge that people in the organization have built up over time based on their experience. Capturing, documenting, and sharing that knowledge is an important element of developing a training strategy.
Another risk of not doing all three of these is that the shift to shared services may not actually “take” long-term. The retained organization may slowly build back the resources that shifted to shared services, essentially creating a shadow organization duplicating the work of the SSC and eroding the intended benefits.
Opportunity 2: Investing in talent development. Survey respondents were asked how they use the savings generated by shared services productivity improvements. Half (49 percent) pass the lower costs onto the business, while 10 percent say they invest in talent development. While we can’t say the investment in talent development should be higher—it’s remained relatively steady over time—we do think organizations should purposefully consider this investment in light of their own situation. Anecdotally, what we have seen in our post-implementation performance assessments is that those investing in ongoing talent development are higher-performing, with less turnover and higher engagement than those that don’t make development a priority. The point here is to understand your people’s strengths and needs vis-à-vis the outcomes and results you expect from your shared services organization, and then invest in development accordingly.
Opportunity 3: Managing the change. When asked what changes they would have made along their shared services journey based on their experience to date, the majority of respondents (54 percent) said they would have practiced better change management. What we often find is that organizations shortchange themselves, thinking that change management is less value-added work or that they can do it themselves. When they do it themselves, it’s often a light approach, either not setting a comprehensive strategy or leaving it up to an overworked communications person or team to handle. While effective communications are certainly an important part of change management, they’re not the whole picture.
As many of our survey respondents have recognized in hindsight, a more effective approach is to purposefully manage the change as a distinct effort, including measuring progress over time. For example, Deloitte’s ChangeScout™ solution uses scorecards and a dashboard to measure and track how people are affected by a change and to manage the necessary interventions—communications, training, engagement— to move the needle on both change adoption and value realization.
In short, a comprehensive strategy always trumps a fragmented approach. Given the investment it takes to stand up and operate a successful shared services center, and the high expectations for positive returns on that investment, it doesn’t make sense not to holistically and strategically address the talent aspects of the shift. You can be sure we’ll continue to track progress on this front in future editions of our long-running Global Shared Services Survey.
Brad Podraza is a managing director in the Global Business Services practice of Deloitte Consulting LLP, specializing in large-scale, multifunctional shared services transformations.