This post is a repeat of one from June 4 – because it has a readability glitch.
One test of a good operating model is the process owner test: “do you have a list of your most important processes and does each have an appropriate process owner?”
One of the issues concerns the definition of “appropriate process owner”. This blog focuses on this issue drawing on an article by GENPACT a consultancy that works on finance processes. GENPACT open their article with
“World-class finance and accounting services are built on a delivery model aligned to organizational goals and business needs. For some, standardization means a single roof with centralized services. For others, it could be a mix of global, near-shore, regional, and in-country resources organized to deliver the most effective services at the best cost.
There is one common characteristic of world-class organizations, however. These companies give responsibility for end-to-end process capabilities to a single person who is directly accountable to the CEO, the COO, or the leader of Global Business Services (GBS).
The importance of the GPO role should not be overlooked. World-class global processes, whether finance and accounting, procurement, or any other end-to-end value chain, incorporate multiple foundational elements: standardization, globally enforced policies, metrics benchmarking performance to industry standards, technology that enables improved processes, and an operating model that matches skill sets to requirements and that accommodates fluctuations in demand. All of this is driven by a GPO focused on end-to-end performance, working with multiple stakeholders in harmonious collaboration to achieve a common goal.”
The article then talks about the skills and authorities that a GPO needs to be effective.
First, the GPO must be able to dive deeply into any process that has a material impact on business outcomes, analyze where bottlenecks and leakages occur, and determine which metrics are suitable to measure the desired outcomes. This requires capability and authority. Often the GPO’s role is constrained or the GPO’s skills are too narrow. Authority is needed not just to get access, but also to challenge policies. GENPACT give an example, “Existing policies can hinder efficient process execution, as in the case of an Australian company whose shipping policies contributed to orders sliding into the next month for payment. This led to Sales offering unauthorized discounts to entice customers to order early. A diagnostic of the end-to-end Order to Cash (OTC) process provided a clear view into the problem and enabled a more efficient process design.”
Capability is needed to do the analysis and to judge whether local variations are necessary to support local operating models or not. A services team is usually needed to support the GPO, providing analytical skills, redesign skills and governance expertise.
Second, the GPO should have a global remit. The GPO should have the authority to define global standards and approve or not local variations. This should also involve the power to conduct training and development activities across regions.
To execute this remit, the GPO needs an open mind and a deep knowledge of business models and operating models. It is easy for the GPO to steam roller a standard approach. It is much harder to find the right balance between standardisation and local variation. The GPO also needs a team who can lead the training and development, and who are also sensitive to local differences.
Third the GPO should be responsible for performance outcomes even when he or she does not “own” the teams executing at the transactional level. This requires sufficient authority to influence the people who do own the resources, and to hold them accountable for their pieces of the process. It also requires good information flows and the skills to spot areas of poor performance and counsel those concerned. The GPO needs an “operations controller” to help with this work.
Process standardization requires “big picture” thinkers. GENPACT worked with the CEO of a global pharmaceutical company who understood the challenge. He appointed one of the company’s most influential business unit CFOs to spearhead the process standardization project. He was given a central authority with clear responsibility for achieving the company’s Finance transformation goals. Because he was able to take both a global perspective and the perspective of a business unit, it was easier for stakeholders to agree on objectives and cooperate to get fast resolution of issues.
Choosing the right person, giving that person sufficient authority and supporting the person with sufficient capability is necessary. Once a transformation is completed, the on-going process owners can have other jobs as well. But during times of change, the GPO is a big and challenging role that is often mishandled.