No longer fit for purpose–time to change the GBS organization construct

By August 1, 2023Archive

Deborah Kops,

Lately, I’ve been sleepless about the fact that GBS evolution appears to be stuck in a rut. As much as we talk about integrated or digital GBS, moving along the path to a more evolved state seems to be stalled or even stopped. Innovation at best seems to be incremental. The pursuit of cost savings rather than other sources of value still reigns. And the talent construct is so very 2010.

Now I have to confess, I always believed that if a GBS collects a merry band of smart people, the organization structure didn’t matter very much. I thought in such platitudes as “the cream will rise to the top” or “they’ll figure it out.” After all, GBS is a model and not hardwired into the enterprise, with a set-in-stone hierarchy of managers, supervisors, controllers, and business partners. But as we’ve matured, and gained more acceptance in the enterprise operating model, have we become dead-set in our ways, digging into organizational structures that are no longer fit for purpose?

In the early days of shared services/GBS, the big lever for value creation was moving work offshore to obtain labor arbitrage. As a result, two design principles drove our organizational construct—functional alignment and regional relationship management/delivery control. Since we started our journey as single function shared services organizations, usually starting with finance and then adding new towers, we continued to replicate the structure by adding tower leads, giving them a great deal of decision-making authority. And, as the imperative to manage regional stakeholders and supervise near-and offshore delivery became apparent,  we added regional delivery leads to our structure.

Fast forward 15 years or so, and not much has changed. If we’ve moved beyond single-function shared service models, we more often than not look like a consolidator of functional shared services delivery operations under one roof, usually with a thin team of enabling capabilities at the top of the house—think governance, performance management, maybe change or service management. GBS has become an organizational construct—put everyone who leads a functional back-of-the-house operation under one leader and hope that the whole is larger than the sum of the parts.

But today the drive is to move to operational GBS constructs. Our organizations must evolve to bring more value by delivering end-to-end, driving experience, moving rapidly to digitization, and providing new capabilities to the enterprise. Are our organization structures able to deliver? Or are we restrained by the way we are organized? How do you unleash the power of the team with a dated organization structure?

And the inability to evolve creates another challenge for GBS organizations. When the focus is on functional shared services, it’s very easy to deconstruct a GBS.

Here’s a bit of a litany of GBS organizational heresy:

  • We shout our ambition to move to end-to-end delivery, but we support a functional tower lead structure, for whom any change usually disrupts their kingdoms. Service tower leaders in most GBS organizations work in silos, call the shots and own the majority of the decision rights
  • We talk about the criticality of pan-GS enabling practices, but we allow functional leaders—or sometimes their regional counterparts—to embed capabilities such as project, change, and transition management—in their towers, getting in the way of pan-GBS leverage and the development of consistent methodologies
  • We say change management is the key driver of GBS success, but we hire inexperienced juniors, focus them primarily on transition tasks, and bury them levels down under a transition or transformation leader
  • We say our customer is the business, but we align delivery to the function, often unable to create the benefits that the segments and regions are looking for
  • We say one of our major goals is to move to a pan-GBS digital service experience, but at best we set up digital centers of excellence that are allowed to advise and warn, with no teeth because each tower defines experience separately
  • We push to promulgate a “one GBS” brand, but empowered functional leaders focus on delivering what their functional masters demand
  • We try to convince our stakeholders that a GBS model in and of itself creates a new quantum of value, but with the way we align, we cannot calculate the numbers that support the proposition

If GBS evolves its organization constructs, what’s the upside?

  • The organization aligns with the strategy There’s no more wallpaper at the top of the house with each function pursuing its own agenda, but rather one big picture and playbook for the entire team
  • End-to-end becomes a reality If the GBS organization is serious about E2E, as opposed to functional delivery, it aligns the power to the GPO organization, eliminating strong functional hierarchies that are resistant to change
  • Investment goes where it should It’s about putting one’s money where one’s mouth is. Budgets, no longer fully allocated by functional silo, can be focused on the delivery of GBS programs and priorities that benefit all delivery
  • GBS increasingly supports the business’s objectives No longer a consolidation of functional shared services, GBS organizations change their focus from making the functions happy to driving value for the business
  • There is greater leverage of capabilities and talent No longer tied to functional silos, talent is more effectively leveraged and cross-trained. New, more exciting career pathways can be devised both in and out of GBS
  • The GBS brand is consistent and clear With the same objectives and increased interoperability, stakeholders are no longer confused by different ways of working, and the brand is no longer tied to personal relationships
  • Decision rights are aligned with GBS program objectives The level of debate is reduced

Not convinced? Let your survival instincts kick in. When the organization’s prevailing design construct is functional shared services silos, it’s very easy to deconstruct a GBS and repatriate them to the functions they serve. But when the GBS organization’s structure aligns with such design principles as E2E, service experience, and digital, it becomes harder to pull it apart.

Now I’m not saying change is easy. When a GBS leader is able to take out a clean sheet of paper and start from scratch, hiring for new ways of working, implementation is much easier.

Undoing even as few as  10-15 years of organizational received wisdom will be challenging for most. But GBS’s strongest attribute is its agility—agility to adapt to ever-changing business conditions and context. Do we have the agility to evolve our organization structures when they get in the way of delivering upon its promise?