Trouble Ahead: Hazardous Waters for GBS and Shared Services

By January 19, 2022December 12th, 2023Archive, Models, Viewpoints
No smooth sailing in 2022. Is your GBS prepared for rough waters?

by Deborah Kops

As optimistic as I generally am about GBS and shared services, I try to temper my enthusiasm with a dose of reality. In March of 2020, no one would have anticipated how well the model would hold up—closing the books on time, acting as information central for global enterprises, and proving to the enterprise that virtual and global is not only possible, but it’s the operating model of the future.

Euphoria can be dangerous. Because GBS and shared services are not hard-wired into the enterprise org structure like other functions, it is susceptible to the vagaries of executive whim, taste and fancy, always under the microscope. Gotten crosswise with an important regional president? His access to your CXO can nibble away at your legitimacy. Experience a rocky transition of a new solution? The decision maker can reduce scope as quick as you can say Jack Robinson. Ambitious automation program not (yet) delivering the business case as forecast? The funding spigot could be turned off tomorrow.

Yes, readers, COVID crowned GBS and shared services models with a level of legitimacy heretofore lacking. However, corporate memories are short; GBS models should operate as if they are always on thin ice. And business conditions have changed drastically in the last three years.

Are you prepared for what I am calling the Scary Six—the obstacles that might come your way in the coming year? Forewarned is forearmed.

  1. Models will retrench Consider the fees strategy and management consultancies have been booking over the past 30 months to verify the number of enterprise transformation initiatives in flow. But PPT slides and business cases aren’t dynamic; what looked like a sure business strategic bet months ago may no longer be viable in light of Omicron, fragile supply chains and rapidly changing business and consumer preferences. Now the full reality of the price of change is becoming clear; disruption, the cost of technology implementation and a wobbly line of sight to an ROI in a reasonable time period will make placing a bet on a future prize less attractive. As a result, GBS model aspirations, the pillar of many transformations, may be slimmed down or even taken off the table.
  1. The firm hand on the operations tiller could slip off There’s a good/bad news story here; as GBS took on more scope, operational focus was naturally redirected to transition and transformation. Talent is in short supply and benches aren’t deep; no organization that I know of is staffed for the peak load requirements that services growth represents. It’s not the time for delivery to falter; all the good karma of the past three years could dissipate very quickly.
  1. Cultural fissures will start to appear GBS teams might divide–if they haven’t already—into old and new guards, those that joined pre- and post-COVID, creating a two-tier talent class system. Down the line, this will have ramifications in succession planning, career pathing and talent development. So many senior roles require corporate context; those post COVID joiners will be hard-pressed to master cultural nuance and secret handshakes. The one GBS team mindset—so critical to model success—will start to be challenged by this dual citizenship construct—those who understand corporate context from pre-COVID tenure, and those who don’t. And they’ll likely get what folks consider the plum jobs, breeding discontent that will take a herculean effort to counteract.
  1. Newbies will depart in numbers It’s about those newer team members again. Pay particular attention to the folks you hired 12-18 months ago; they are likely to attrit at greater numbers than the rest of your population. Why? Firstly, these team members have little concept of the institution they joined; the buddy systems, fuzzy slipper contests and virtual happy hours are merely feel-good eyewash and don’t substitute for the alignment with your corporate mission and assimilation into corporate culture. Second, as a generational cohort, they look at a job as a transaction as opposed to a rung on a career ladder. With many GBS and shared services organizations still dependent on people rather than automation for production, this risk can’t be underestimated.
  1. Seasoned leaders will throw in the towel Here’s another worry, folks: bonus payout season is upon us. With so many enterprises paying out annual incentives in the first quarter, once cash is in their pockets and another year of vesting has passed, long tenured or experienced managers may decide that 2022 is THE year to explore other pastures, hang up their spurs or put their considerable experience to work for a (much) higher bidder.
  1. Budgets will become strained During COVID, the exigencies of the crisis meant that do more with less was not always the prevailing enterprise mantra for GBS.Expect this year to be different– budgets that were assembled back in the third quarter of 2021 will be stressed by rising salaries to remain an employer of choice, the very real need to pay retention bonuses to keep existing team members at par, and inflationary pressures on expenses. Programs expected to move the dial on the GBS roadmap may be sacrificed on the altar of cost reduction.

Will these scary six transpire for every GBS or shared services organization? Not necessarily, not to a worrying degree, and perhaps not right now. But, to paraphrase the old saying— “the road to true love never did run smooth”—expect that your operation will face some very real challenges in the near term.