Organisations strive for efficiency and cost reduction in their support functions, yet transformation programs often fall short of expectations. Fixation on quantifiable financial impacts often neglects qualitative long-term costs and benefits, leading to unintended consequences.
In this blog post, we explore the qualitative long-term costs and benefits that companies tend to insufficiently consider when evaluating whether to implement transformation programs, programs that often entail increased specialisation, centralisation, and offshoring. It draws insights from a wide range of experiences and proposes a holistic approach for organisations to consider.
Neglected Qualitative Long-Term Costs:
- Talent Challenges: Myopic pursuit of financial cost reductions through increasing specialisation, centralisation, and offshoring result in narrowed job roles in support functions post-transformation- often perceived as unstimulating, repetitive, and limiting career growth. Additionally, top talent resent the elimination of regional and divisional leadership roles as it restricts the path to top leadership. This results in reducing an organisation’s ability overall to overall talent attraction and retention.
- Leadership Pipeline Limitations: Increasing specialisation in support functions reduces the breadth of experience for talents, thus hindering talent development in end-to-end capabilities. The resulting limitation of capabilities may then necessitate hiring externally for top management positions, incurring higher costs and demotivating existing staff.
- Coordination Complexities: Offshoring roles can impeded effective communication and collaboration as a result in the introduction of cultural, language, and geographic differences. This may result in decreased service quality and a perception of the support function as less credible.
Undervalued Qualitative Long-Term Benefits:
- Scalability and Efficiency: Efficient scaling with business growth becomes increasingly achievable as support functions transform to be more specialised, repeatable, and efficient. Centralisation allows consolidation of additional headcount requirements, reducing the need for local teams to expand.
- Enhanced Business Partnering: Specialisation and centralisation transform a support function’s business partnering capabilities, enabling them to play a more strategic role. For example, a specialised financial planning & analysis (FP&A) team can focus on advising key business decisions, enhancing overall business partnering effectiveness.
- Reduced Compliance Risk: Transformation programs can improve internal control environments through the segregation of duties, reducing the risk of non-compliance. Standardised global processes facilitate audits, and knowledgeable staff better ensure compliance with corporate policies.
Approach to Consider Qualitative Long-Term Costs and Benefits:
To ensure a comprehensive evaluation of qualitative long-term costs and benefits, organisations can adopt a strategic approach:
- Align with Business Strategy: Transformation programs must align with the organisation’s business strategy. When program deviates from business strategy, it suggests lack of fit-for-purpose and organisations must then explicitly evaluate and justify the rationale for such transformation.
- Thoroughly Evaluate Costs and Benefits: Establish mechanisms to identify and rigorously consider material qualitative costs and benefits during ROI analysis. Allocate sufficient time for discussion, assign roles for thorough analysis, and seek feedback across employee levels.
- Mitigate Costs, Amplify Benefits: Develop plans to mitigate identified costs and amplify benefits before implementation. This ensures that considerations are incorporated into the operating model design and provides clarity for a holistic cost-benefit analysis.
In conclusion, support function transformations can yield significant benefits if organisations approach them strategically. Temus, with its vision-to-value framework, human-centered design, and leveraging of technology, has helped clients generate substantial cost savings while maintaining employee engagement and aligning capabilities with business strategy. By recognising and addressing qualitative long-term costs and benefits, organisations can navigate the complexities of support function transformations successfully.
Do connect with us to explore the transformative possibilities that lie ahead. Your journey towards enhanced efficiency and strategic alignment begins with informed decisions and proactive collaboration.
