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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.
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.
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.
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.
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.