Seven Levers For Corporate And Business Function Success Introduction
For all of the changes that corporate and business functions—everything from HR and legal to finance and IT—have undertaken over the past couple of decades, the basic truth remains that they have a hard time fighting for limited management attention. Individual functions occasionally find themselves under the microscope: leaders may ask HR to automate the initial review of resumes, or IT to restructure application development to take advantage of specialized external talent.
When problems do arise, too many organizations skip over the arduous business of finding the real sources of underperformance and designing thorough solutions. Instead, they may do little more than impose arbitrary, across-the-board cost targets while ordering the functions to “do more with less.” Whatever the resulting improvement, it often dissipates quickly, particularly if a function then finds itself short of needed capabilities.
Part of what makes better cost performance possible is the recognition that while support functions may not be sources of revenue, they often are underappreciated sources of value—in ways that reach well beyond short-term efficiency benefits. For example, as part of an end-to-end effort to turn orders more quickly into cash, one organization’s sales support, legal, and finance functions collaborated to standardize negotiation practices (including establishing standard contractual terms and conditions) and billing procedures. As a result, administrative costs per order fell by about half, and the billing-to-collection time dropped by three-quarters. Yet the most interesting effect was the value created on the front end: Sales productivity rose more than 30 percent. Sales executives, freed from seemingly endless internal meetings to align on a negotiating position for each deal, could instead concentrate on completing more deals.
That means making a commitment. Based on the experience of over 2,000 organizations worldwide that have transformed support functions over the last decade, we find that the organizations that sustain meaningful performance gains do so only by attacking on multiple fronts at once. Grouped together, these changes form seven interconnected levers are, Implement demand, Consolidate and centralize support services, Adopt smart sourcing, Instill lean management disciplines, Enable IT, Optimize organizational structure and governance, Develop and align capabilities