- The service management organization is the shared services/BPO operation itself, undertaking the various transaction processing or administrative activities. Some shared services/BPO operations will deliver specialist and expert services. This organization may be an internal shared service center, serving one or many internal customers, or external, which is typically the outsourced/BPO option.
- The retained organization is the term used to describe what is left behind when the shared services or outsourced activities are transferred to the new service provider. There are two aspects to the design of the retained function. First there is a need to design an organization that is effective in “receiving” the service delivered by the shared service/BPO provider. This will require an organization where there is clarity of responsibility for inputs and outputs to and from the provider. Second, there is a need to design a retained organization that is effective in performing its role in supporting the business.
- The governance layer term refers to the activities that are necessary to manage a customer/supplier relationship, including the management of service level agreements, performance reporting, billing, and issue resolution.
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Where Does the Organizational Design Fit?
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An Approach to Organizational Design
- Organization structure
- Job descriptions
- Staffing and skill requirements
- Gradings
- Clarity about the boundaries with other organizational groups
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Strategic Vision and Design Principles
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The Operating Model
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- External customers (these could be suppliers, tax and regulatory authorities)
- Internal customers
- Other business units
- The corporate center
Organization Models
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Job Descriptions, Grading and Role Profiles
How OD Supports Organizational Effectiveness
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Organization and Links to Governance
Governance relating to the shared services
- Measuring and improving shared services performance.
- Cascading shared service strategy and goals throughout the organization.
- Providing resources to implement and improve the use of shared services.
Governance relating to user organization
- Aligning the shared service capability with the business strategy.
- Ensuring the shared service capability is adopted and fully used throughout the organization.
- Evolving the retained function to operate in a shared services environment.
- Decision making responsibilities should be clearly articulated and confined to the formal governance structure.
- Appoint recognized leaders to the governance team. Governance bodies need membership from the business and shared services/BPO communities with a mandate to represent their constituents.
- Implement a clear communication approach. It’s critical that mechanisms exist to collect information and disseminate decisions throughout the organization.
- The shared service/BPO governance structure should reinforce the roles and responsibilities of the business function and the shared services capability.
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- Senior customer representatives.
- Heads of profession for the key functions in the shared services.
- Senior representatives from the shared services operation.
- Set the policy for shared services/BPO.
- Champion convergence of shared services requirements.
- Determine the performance management regime to be applied and ensure links to broader performance management mechanisms.
- Moderate and approve plans, priorities and investment.
- Monitor delivery of shared services objectives.
- Approve framework commercial agreements.
- Address and resolve shared services issues which threaten to limit achievement of overall objectives.
- Consider and approve interventions required to deliver on shared services objectives.
Service Management
- Quality control to monitor standard processes and outputs on a day by day basis.
- Performance measurement to track volumes and adherence to service key performance indicators within cost parameters.
- Process improvement teams to manage change requests and to act to correct service non-compliance in a timely manner.
- Service level agreement (SLA) management to set up suitable SLAs that define the responsibilities between service provider and customer.
- Performance reporting of key performance indicators (KPIs) and balanced scorecards on a regular (normally monthly) basis to inform the dialog between the service provider and the customer.
- Customer satisfaction feedback surveys to measure baseline satisfaction with services on a regular basis (normally a sample approach across different customer sectors).
- Governance boards, which meet on a quarterly or half-yearly basis to review overall performance and prioritize new services for roll-out, improvements to be scheduled or investments to be made.
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- A customer-focused service center culture.
- An efficient mechanism through which performance against agreed-upon service levels can be managed and nonperformance escalated, as necessary.
- A focus on service performance and a continuous improvement mindset.
- A regular supply of data and analysis to ensure that the governance of the shared service arrangements is conducted in an informed, evidence-based manner.
Service Governance Team
Service Management Team
Service Development Team
Financial Management Team
People and Culture
- Being clear about the values of the organization and how these link to expected behaviors (so that the way that people are appointed, managed and developed is clearly driven by the values of the organization).
- Hiring decisions where appointments are made on the basis of attitude as well as technical skills.
- Promotion and succession planning where decisions on who gets moved are based as much on how an individual gets work done (their behaviors and demonstrated values) as on their ability to deliver results.
- Performance appraisal and reward where the focus on assessment is to identify and reward those who go the extra mile to deliver customer service or those who work with their teams to bring everyone to the same performance level. The performance management process also creates consequences for poor performers who are made aware of improvement requirements.
- Training and development where the training and development offerings are clearly linked to developing the behaviors and skills required to drive customer service for each role.
Planning
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The Evaluate Phase
1 Feasibility Study
- The concept of splitting the transaction processing activity from the retained function, with a service management “wrapper.”
- A general description of the service organization, with potential options.
- A high level description of the role of the retained function, the general competencies needed, and a description of how the retained function will buy services from the shared service center or service provider.
- A general description of the service governance principles and approach.
2 Strategy
- A clear organization model.
- Whether the organization structure should be oriented by process, customer or function.
- High level role outlines for devolved function and the retained function.
- Outline sizing of the organization headcount.
- Business as usual principles to be agreed for transition.
- Ratios and best practice guidelines used to size the organization.
- Basic volumetrics captured to verify sizing by ratios.
- Blueprint of key measures and SLA/OLA outlines.
- Outline description of governance and escalation processes.
- Formal estimates of likely redundancies.
- Proposals for a formal consultation process.
- Consideration of the TUPE implications (in based in Europe).
The Implement Phase
3 Detailed Design for Internal Shared Services
- Full role descriptions, including governance team.
- Final organization sizing.
- Completion of job evaluation exercise.
- Confirmation of pay and grading structures.
- Full definition of the key interfaces with the retained function/customers and third parties.
- Re-confirmation of headcount numbers by means of detailed volumetrics for both historic and forecast activities.
- Identification of key external recruitment needs.
- Finalization of business as usual teams.
- Detailed KPIs, SLAs and operating level agreements (OLAs).
- Definition of key interfaces and reporting and escalation routes.
- Confirmation of the TUPE situation (in Europe-based operations).
- Plan for individual consultation and briefings.
- Completion of formal consultation.
4 Build Activity for Internal Shared Services
- Populating the new organization.
- Setting up governance structures and processes.
5 Transition Activity for Internal Shared Services
- Launch of service management and governance activities.
- Fine-tuning job and role descriptions in the light of day-to-day operational experience.
6 Detailed Design for Outsourced Shared Services
The Evolve Phase
The Retained Organization
APPENDIX ONE
Organisation Design in shared services needs to be seen in the context
of the entire solution. So before describing how and when to develop an
Organisation Structure, it is important to have a common understanding and
definition of shared services (the end result and how to get there). The
Solution Framework is our way of defining this.
In the Shared Services Solution Framework set out below, the context,
strategy, and transformation components define which services and processes are
to be delivered through the shared services capability and what governance
arrangements will apply. The solution framework also encompasses the transition
plan and considerations for moving from the current state to the desired shared
services model.
Context
The context for a shared services solution describes the background as
to why a shared service approach is a good business decision. It should
consider the economic reasons for shared services, the demographics of the
existing workforce and potential customer base, any political considerations as
to the nature of a shared service solution.
Strategy
This component of the solution framework describes the shared services
strategy as it relates to a specific organisation. It describes a high level
approach to shared services and explores how shared services will meet the
needs of the organisation better than the existing arrangements. It will
describe the benefits expected from the shared services capability, how
existing investments and assets are to be utilised, and it defines a
procurement approach for how shared services are going to be sourced.
Transformation
For shared services to be transformational there are a number of
considerations beyond the creation of a shared services capability. These
include changing culture and behaviour of the retained function and that of the
customers of the service. This in turn will require changes to skills and
capabilities, the organisation structure, and the obsolescence approach for
phasing out redundant metrics and reward system. This level of change requires
a robust change management programme and an methods of working.
Transition
The transition component of the solution framework describes how the organisation is going to move from current service arrangements to the new shared services capability. It will include knowledge transfer, training requirements, employee transfer, and an approach for testing and ‘switching on’ the new services.
Shared service capability
• Management and Governance
The governance structure forms the critical strategic linkage between the supported organisations and the shared services capability. Although there maybe multiple functions represented in the shared services model it is recommended that there is an overarching governance structure to ensure prioritisation and investment decisions across the sector for common shared services components such as infrastructure, service delivery, service management approach, etc.
• People and Organisation
This component of the solution describes the culture and behaviours, organisation structure, workforce management practices and skills required to successfully execute a shared services capability.
• Services and Processes
This element will describe the components of the processes performed by the shared service centre, the retained functions and the employee or manager.
• Service Management
The service management approach includes defining the expected levels of service performance, the measurement process, and pricing considerations, if appropriate. It also describes the approach to supporting the customer base, how interactions are to be managed and the appropriate response times and turn-around times for interactions with the customers of the shared service capability. Service management will also define key performance metrics for shared service employees and be a critical component of creating a service culture within the shared services capability.
• Infrastructure
This component defines the technology and physical infrastructure that is required to enable the shared services capability to function effectively. It includes developing an architecture that allows services to be delivered to employees in any required location, at any required time. This component defines the delivery channels, telephony, and physical environment of the shared services capability.
APPENDIX TWO
The Retained Organisation
The future service delivery model has significant implications for the retained function. There are two key retained roles that will have significant interaction with the shared service centre or outsourced service provider. These are the functional specialists and the business partners who have the day to day relationship with the business customers.
Specialists (policy subject matter experts)
Specialists will advise on setting strategy and focus on policy development. They will not be involved in basic administration, and will have greater space to focus on more added value activities such as assessing the impact of future legislation and leading best practice to deliver appropriate policy changes as required. On the infrequent occasions when the most complex policy and process queries cannot be resolved by the shared service centre, these queries will be passed to the specialists for resolution. A mechanism for managing and tracking such queries will need to be agreed.
Business partners
The role of a business partner is to:
• be part of the business management team with specific responsibility for leading the development and implementation of solutions, in partnership with, and utilising the resources of the shared service centre or outsourcing provider
• champion, drive and embed the functional agenda with the business customers and ensure its inclusion in the business planning process
• support change initiatives undertaken by business customers
• manage relationships with business customers on a face to face basis (e.g. conduct regular discussions where customers can raise issues, concerns and ideas etc)
• roll out corporate policies which are the responsibility of the retained function
• act as a communications channel for major communications
• work with senior managers on issues
• consolidate and capture the customer feedback
• use trend reports provided by the shared service centre or outsource provider as the basis for advice to managers on local activity that needs to be taken
• act as a coach for business customers on all functional issues.
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