While many global organizations are trying to consolidate shared services and setting up global process offices to own end-to-end processes across business units, the role of the GPO often tends to be unclear. Global process owners frequently find themselves driving change and directing all aspects of the process improvement across business units, without being given a clear formal authority and mandate across all functional and business units involved in the project. A study by Tungsten Network and sharedserviceslink shows that more than half of GPOs find themselves in situations where they do not have the authority to mandate change.
Most processes run across multiple functional units, each in their own silo, reporting to a number of executives across global locations. Such silos tend to have their own pre-defined value proposition and success metrics, independent of other groups. Any attempt to optimize, or even standardize, their processes is likely to meet with resistance. Measured performance against key metrics clearly shows the negative impact this has. In the same study, the KPI measuring straight through processing showed a 93% improvement when GPOs had full authority to enforce change, as opposed to 52% improvement when the GPO did not have formal authority.
When the Formal Authority is Missing
Susie West, founder and CEO of sharedserviceslink, a community for leaders in financial shared services told Global Delivery Report “If the GPO doesn’t have the formal authority to see that other business units implement approved projects, it can be very challenging.” That may be the reason behind 74% GPOs responding that support from senior management is the most important factor enabling them to enforce change.
West explained, “If the GPO doesn’t have a formal position to mandate change, the GPO will have to rely on how influential they are, how well connected they are, whether or not they can identify people in the organization who have a significant voice. It can become quite political. It’s not ideal, but it’s also not uncommon for GPOs to rely on this informal structure.” She added, “If you’re relying on influence and contacts, this kind of informal approach can take longer to drive the change. If the GPO is new to the business it can take up to 6 months for them to just identify who the key players are in the business that can help the GPO drive the required change.”
Bonding Over the End Goals
David Hamme, Managing Director of Ephesus Consulting, a boutique consulting firm that focuses on driving initiatives for its clients, shared some techniques GPOs can use to overcome the lack of formal authority, “Immediately after a project is launched, I ask the team to draft an end state of the expected outcome. What are the steps in the end process? Who are the partners? What is the business case including all costs and benefits? My reason for this exercise is not to etch in stone the eventual outcome, but rather to serve as an icebreaker for the team—getting them engaged at a detailed level while building comfort with each other. Perhaps most importantly, having the team pull together the end state so early allows them to think freely about alternative paths to achieve an outcome before they are inundated with restrictions brought on by financial constraints, political barriers, or conventional norms.”
Customer Focus: Internal and External
A GPO who lacks the formal authority and backing from senior management is likely to face greater resistance from local business units. This can be due to the local business unit feeling threatened from loss of manpower and budget allocation, or because they do not see the benefits from a shared service endeavor. In such scenarios, it helps to work with them, to assuage their fears and shift the focus from them, to the end customers. Hamme recommended, “For a global process, think through how geographic or environmental factors may impact the process? Can a solution in one area be beneficially leveraged in another? What could be done to make the end state better? And always, put yourself in the customer’s shoes. How can you delight the customer, both internal and external?”
Again, involving the key stake holders from the local business units is crucial to moving ahead. Hamme elaborated, “My next step is to ask the team and key decision makers to think about the questions requiring answers before a definitive choice can be made as to the end state that delivers the greatest benefit. With an end state and a slate of critical questions, the team has unknowingly taken a giant leap forward towards a successful outcome. Already they are exploring ideas, plotting a path forward, and perhaps most importantly, working together.”
This article was originally published by NSAM sister publication Global Delivery Report