Flexibility Over Formality: The New Paradigm of Human Capital Resilience in Shared Service Centers

Deloitte's "2023 Global Shared Services and Outsourcing Survey" highlights the intensifying competitive landscape in the SSC domain. The surge in service center operations since 2021 suggests a tightening talent market. Faced with this scenario, talent acquisition has become more crucial than ever. To address this, many organizations are enhancing employee well-being initiatives (66%) and investing in upskilling programs (63%). These measures are vital in countering a severe talent shortage, with 77% of employers globally struggling to fill roles, marking a peak challenge not seen in the last 17 years.

This article aims to explore the interconnected strategies of fostering worker agencies, transitioning to boundaryless workplaces, and cultivating visionary leadership. We will examine how these approaches contribute to strengthening human capital resilience, enabling SSCs to not just endure but excel amid the dual pressures of continual innovation and operational efficiency.

In the dynamic world of Europe's SSCs, conventional job roles are evolving, becoming reminiscent of a past era. Deloitte's "2023 Global Human Capital Trends" report illustrates this evolution, showcasing how companies like Unilever are redefining roles not as static job titles, but as diverse skill sets. This reflects a wider industry trend where an astonishing 71% of the workforce is engaged in tasks that fall outside their traditional job descriptions, leading a move towards a more fluid, results-driven work paradigm.

At the heart of this shift is a fundamental redefinition of work. Organizations like Unilever are leading the way, embracing organizational agility to navigate the constant changes of the market. In response to the talent paradox, where a vast majority of workers are stepping beyond their defined roles, SSCs are cultivating a culture that values skill enhancement and cross-functional teamwork, thereby reinforcing resilience.

By adopting a skills-centric organizational model, SSCs are positioning themselves to be more adaptable and innovative. By moving away from rigid job roles, they can utilize their workforce more strategically, quickly adapting to new challenges and seizing opportunities. This approach resonates with the aspirations of the modern workforce, where job satisfaction is closely linked to opportunities for personal growth, learning, and contributing across various areas.

However, transitioning to this new model of flexible, skills-based work presents its challenges. With only 20% of organizations feeling fully equipped for this shift, it requires a comprehensive reimagining of work: its nature, execution, and the individuals performing it. For SSCs, moving beyond traditional job structures marks the beginning of a new era in human capital resilience, characterized by robustness, responsiveness, and a constant drive for innovation.

This transformation underscores the importance of worker agency, as an essential element in building a resilient human capital framework within SSCs.

The transformation of Europe's SSCs is significantly influenced by the rising power of worker agency, reshaping not only individual roles but the entire ethos of organizations. As highlighted in Deloitte's "2023 Global Human Capital Trends" today's workforce, especially millennials and Gen Z, are prioritizing roles that align with their values over traditional job security. Deloitte's insights reveal that an overwhelming 84% of business leaders recognize the importance of worker agency for success, but only 17% feel ready to effectively address it.

Companies are adapting to this shift by reexamining their core missions and purposes, leading to better employee retention and well-being. For instance, Novartis's "Choice with Responsibility" initiative allows employees to determine their work mode within their country, transitioning from needing managerial approval to simply keeping managers informed. This approach aims to optimize both personal and business outcomes. Similarly, the Commonwealth of Massachusetts has enhanced workplace flexibility to better attract and retain talent, using improved communication channels to address workforce challenges effectively. M&T Bank's initiative offering paid volunteer time enables employees to engage in causes they care about, aligning their values with the organization's goals. Haier takes this further by giving employees the freedom to join or create microenterprises, sharing the resulting profits.

The push for worker agency is fueled by technological advancements that enable individual value creation independent of specific jobs or organizations. Social media platforms amplify worker voices globally, urging organizations to align their values, strategies, policies, and actions with those of their employees and society at large. Despite the challenges of meeting diverse expectations, the benefits for workers, organizations, and society are substantial, underscoring the need to weave worker agency into the very fabric of the SSC work environment. To effectively leverage this agency and generate value, the focus should be on aspects like purpose, voice, and work. Deloitte’s report on Harnessing Worker Agency elaborates on how organizations can drive value and strengthen their relationship with workers by embracing this growing influence.

In Shared Service Centers (SSCs), there's a transformative shift towards boundaryless workplaces. This evolution is powered by digital and virtual technologies, including the emerging metaverse, which are redefining the traditional concept of a workplace as a physical space. The need for remote work during the pandemic has been a catalyst, demonstrating that productivity and collaboration can flourish in a digital, geographically unbounded environment.

Empirical data from Deloitte's 2023 Global Shared Services and Outsourcing Survey supports this shift, showing a significant embrace of remote work models: 52% of GBS organizations are adopting hybrid work, 44% are implementing flexible work hours, and 17% are investing in virtual work environments, a noticeable increase from 14% in 2021. A broader Deloitte survey on remote work, indicates that nearly 80% of organizations plan to maintain remote and hybrid work practices.

This new model prioritizes the "how" of work over the "where", focusing on work and worker needs, leading to a blend of home and office environments. This creates opportunities to rethink how workspaces are structured and used.

The move away from traditional workplace boundaries—such as defined processes, specific job roles, and work confined to office spaces—enables organizations to experiment and innovate, establishing new fundamentals for today's workplace.

Let's examine how various organizations are embracing this approach:

• Unilever has transformed its approach to office space, focusing on outcomes rather than physical presence, with policies that encourage collaboration through a mix of remote and in-office work.
• BMW has leveraged NVIDIA’s Omniverse platform to create a metaverse-based digital twin of its future factory, facilitating remote training and collaboration without the need for physical travel.
• FamilyMart in Japan uses remote-controlled robots for shelf stocking, allowing employees, including those with disabilities, to work remotely via VR technology.
• AdventHealth has introduced virtual nurses to its care teams, enhancing both workforce and patient experiences by enabling collaboration between virtual and in-person care.
• M&T Bank has centered its post-pandemic workplace strategy on community and connection, adopting a hybrid model that values both virtual and physical interactions.

These examples illustrate how leading organizations are adapting their workspaces to the evolving nature of work, showcasing the practicality and benefits of boundaryless workplaces.

In conclusion, the concept of a boundaryless workplace within SSCs represents a strategic move away from a static physical location to a dynamic, digitally connected framework. This innovative model empowers SSCs to leverage global talent, foster inclusivity, and nurture a culture of adaptability and resilience, crucial for navigating the challenges of the post-pandemic world.

In the "Flexibility Over Formality" narrative, effective leadership is the core element. According to Deloitte's "2023 Global Human Capital Trends," only 23% of business leaders feel prepared to manage current disruptions, highlighting a significant gap in the readiness of SSC leaders.

To address this, leaders need to transition from focusing on task execution to driving business outcomes and anticipating customer needs. The central office model presents itself as a viable solution for this challenge. For instance, a global consumer goods company has effectively halved its M&A integration times using this model, leading to significant cost savings.

The central office model is a strategic evolution from the traditional back office. It shifts the focus from task execution to a broader perspective that involves orchestrating business outcomes and proactively understanding customer needs. This model utilizes cross-functional talent and leverages comprehensive data to offer end-to-end services like procure-to-pay and order-to-cash. Additionally, it includes capabilities such as automation, analytics, and continuous improvement. Central to this model is the emphasis on customer experience, combining shared services efficiency with front-office agility and innovation. This approach enables organizations to swiftly adapt to market changes, enhancing their flexibility and responsiveness.

Deloitte's research on this model identifies three key aspects for successful leadership transitions: offering specialized capabilities as a service, navigating distributed technological landscapes, and focusing intensely on customer experience, beyond just efficiency. Their study found that companies with a comprehensive strategy for intelligent automation could reduce costs by 24% and increase revenue by 8%, far exceeding the performance of companies without such a strategy.

However, there remains a discrepancy, as 90% of shared services organizations acknowledge the need for more digital capabilities, but only 26% possess the required digital tools. Leaders in SSCs, therefore, need to prioritize the development and implementation of digital resources to improve service delivery and build a resilient culture. This is in line with the earlier discussions on agility and worker agency, reinforcing the need for leaders to adapt and evolve in response to these new workplace dynamics.

Our exploration across Europe's Shared Service Centers (SSCs) reveals a crucial link: the resilience of human capital is fundamental to the strength of organizations. We've seen the urgency to address talent shortages and competitive pressures, coupled with a leadership readiness gap that calls for strategic realignment. Deloitte's "2023 Global Shared Services and Outsourcing Survey" sheds light on this, stressing the importance of employee well-being, skill development, and the adoption of a boundaryless workplace for staying competitive.

SSCs are increasingly moving towards a model centered on skills and flexibility. Companies like Unilever are leading this change, utilizing digital technology to break down traditional work boundaries, which places a premium on worker agency and aligning values. This transformation signifies a significant shift in how productivity and collaboration are perceived, demanding a reevaluation of job roles and the very nature of leadership.
In this context, leadership within SSCs is evolving from mere task execution to a more strategic role of orchestrating outcomes and foreseeing customer needs. Considering that only a minority of leaders feel equipped to handle current disruptions, a strategic shift is essential. This shift aligns with the insights from Deloitte's four postures toward resilience.

Building resilience in human capital requires a multifaceted approach. Protective strategies, like Operational and Organizational Defense postures, are vital for immediate crisis management. At the same time, proactive approaches, Operational and Organizational Offense, treat disruption as a chance for innovation and a driving force for growth.

Investing in human capital resilience involves creating adaptable governance structures, emphasizing talent development, and nurturing a culture of open communication and continual innovation. By integrating these principles, organizations aren't just preparing to survive disruptions; they're positioning themselves to excel and lead in the evolving global business landscape.

In summary, the resilience of human capital isn't just a strategic asset; it's a transformative power that enables organizations to navigate uncertainties, seize opportunities, and chart a path of enduring success and leadership.