As we return to the workplace and attempt to emerge from beneath the shadow of COVID-19 we will see that, for most organisations around the world, the pandemic has laid waste to the P&L and Balance Sheet to the extent that they now both exhibit significantly more red than black. Undoubtedly, planning for and executing a successful recovery will cost money. So, every function in the organisation will now be under scrutiny. Not least those functions previously classified as “indirects” or “back office” such as finance, legal, human resources and information technology, etc. Because money is tight, and the capital markets are hesitant to lend on reasonable terms in the present uncertain times, all internal costs will become a focus of attention.
Traditionally, indirects or back-office functions have been forced to play a subordinate and often reactive roll in “supporting” the main mission of the organisation which is to design, develop, produce and deploy its resources to create, market and support products and/or services. Despite these functions carrying out necessary important internal and external obligations such as audit, tax, legal, corporate reporting, health and safety and assisting with general team coherence and collaboration they have become a “grudging necessary cost of doing business”, which by far undersells what could be their true contribution to the organisation. As such, they are labelled with the mantle of “cost centres” and appear on the debit side of the accounting equation. However, the new vogue in many leading organisations is to challenge them all to demonstrate value rather than cost, and the issue then becomes how best can they respond to this challenge?
Because these indirect or back office functions, for most organisational designs, operate orthogonally to the others which focus on saleable output they have a tremendous breadth of view of the business since they touch, and when suitably empowered, can positively influence most parts of it. The trick is understanding what “value” the organisation is expecting from its indirect or back office functions. On the one side expectations from internal and external stakeholders are to continue providing management support, optimising costs, and ensuring the business is operating within defined risk limits. On the other side, core business functions would like to see them operating more proactively to help them achieve their objectives, strategies and the overall business imperative instead of being just a historical reporter, governance operator or administrator. To strike a balance between these two tensions is critical for the mutual benefit of the organisation where other business functions are still receiving the required support whilst allowing indirects or back office functions to also be more actively involved in decision making and setting, monitoring and controlling the strategic direction of the organisation.
To apply a customer centric model, where indirects or back office functions act as the supplier and the main business functions act as the customer, and re-defining work done accordingly is one way forward. This migration should be supported by defined expectations and a balance between what are desired and required outcomes. Furthermore, under this model, indirects or back office functions should also be focusing on future aspects of the organisation and not limiting themselves to scenarios focusing only on historical events, data and outcomes. In the brave new world of the post COVID-19 era things will need to be substantially different.
“Most of us understand that innovation is enormously important. It’s the only insurance against irrelevance. It’s the only guarantee of long-term customer loyalty… It doesn’t matter much where your company sits in its industry ecosystem, nor how vertically or horizontally integrated it is — what matters is its relative ‘share of customer value’ in the final product or solution, and its cost of producing that value.”
- Gary P. Hamel
Whether we like it or not, COVID-19 has been the single largest market disrupter in living memory. It has and will continue for some considerable time to affect all markets and all sectors of the economy. But, as the world of work emerges from under the veil of its self-imposed lockdown, those organisations who will be the winners will be the ones who can demonstrate a revolution in the disposition of their traditional indirects or back office functions, and use them to create business agility and significant additional organisational value.
Here at Centigo, we have 300+ consultants who are highly qualified, well trained and deeply experienced across a wide range of industries that can be deployed rapidly to help you put your business back to work in a safe, structured and compliant manner. We can: -
• Work with your executive team to help create a range of pragmatic, actionable options for your newly reorganised indirect or back office functions to declare and deliver immediate value to the business.
• Help you select, from the range of options available, a suitable model that meets the specific needs of your stakeholders, workforce and customers.
• Simulate, test, evaluate and de-risk the new model and create a compelling business case for change.
• Use well tried and tested state-of-the-art software tools help you to identify, evaluate, report and mitigate the current indirect or back office costs you are sustaining.
• Evaluate your readiness for change and identify issues and weaknesses.
• Help you create a transition plan to implement your new indirects or back office model.
• Support you through the people, process and technology implications of the implementation of your new working practices and lead you into successful stabilisation with ongoing access to the necessary highly skilled and experienced professionals to de-risk your journey.
• Be on hand after stabilisation to react swiftly to address emerging problems in the strategy, people, process and technology dimensions of your transformation and enable you to accurately account, declare and manage your new value proposition to the business.
Every business is, of course, quite different and will need the structure above tailored to meet your specific needs. Getting back to work will need the application of different skills and expertise depending on your market sector. To find out how Centigo can help you successfully return to competitiveness quickly and safely please feel free to contact us.