For several decades, companies have been shifting their services operations to locations around the world in order to leverage local talent and to achieve greater cost efficiency. These efforts, originally labeled as Business Process Outsourcing (BPO) or Offshoring, are now referred to variously as Global Shared Services, Global Business Services, Shared Service Centers, or Centers of Excellence, reflecting their evolution over time. As this industry has expanded, an increasing number of organizational functions have been transformed: customer service, finance, human resources, legal, R&D, IT services, software development, and so on.
From the beginning, there have been services contracted to external third parties as well as services delivered by internal subsidiary operations, with applications for both front-office (e.g., customer service) and back-office (e.g., finance) operations. Despite such complexity, many of these operations pass through three common developmental stages: Delegation, Ownership, and Leadership. Our focus here is primarily on in-house services—sometimes labeled with the unattractive term “captive”—rather than vendor-led efforts. For organizations to achieve their shared services goals, it is vital to anticipate and address the inclusion challenges that emerge with each stage.
In the initial Delegation phase, establishing accurate and effective communication can be a major obstacle. Shared services typically involve cross-border working relationships, and employees in all locations must learn how to be culturally agile in order to achieve their objectives together. The graphic below displays cultural profiles for six countries often involved in shared services operations and illustrates the wide gaps between them on five critical dimensions of culture.
Managers based in locations such as the U.S, the U.K., or Switzerland tend to have more independent, egalitarian, risk-oriented, direct, and task-focused cultural work styles. They provide what they think are clear instructions for the job they want to delegate, and expect their counterparts in other countries to ask clarifying questions as needed, and to make and keep commitments regarding deliverables.
Those on the receiving end of these communications, however, are often from cultures that are more interdependent, hierarchical, certainty-oriented, indirect, and relationship-oriented. Team members located in places such as the Philippines, India, or Poland are likely to value and expect joint problem-solving, be reluctant to ask too many questions to a more senior person (especially one who is located at headquarters whom they do not know well), and respond in an agreeable manner when asked about deliverables, even if they are not sure whether they can deliver. There is frequently a common understanding within shared services teams that it is better not to say anything that will upset people at headquarters and cause problems. Employees may also assume that because of a distant manager’s perceived tendency to “delegate and disappear” that the job assigned to them is not urgent relative to other priorities.
Here is an example that illustrates both sides of such an interaction:
Michael (Basel): Two weeks ago, I sent a report along to our team member in Surat with the raw data and information on the target audience. I followed up with a check-in call to make sure that Jas, the person in India assigned to this project, had gotten the documents and to see if he had any questions. I told him that, ideally, I needed the report in two weeks, and asked if he was okay with that. He said, ‘sure.’
Two weeks later, I got the report back and saw that while Jas had integrated the raw data, the implications had not been interpreted at all. The key messages were not clear and the nuances in the tone and language were just not right for my European audience. Actually, the report was unfinished in many ways. So it was now up to me to rewrite it, without any cushion time, which then impacted my deadline. I would say that this feels pretty typical of my interaction with the team in Surat, although they are supposed to be providing end-to-end report writing services.
Jas (Surat): The project with Michael could have gone better. When Michael called, I had not yet had time to look at the documents he had sent since I was working on a couple of other reports. So I didn’t have any questions at that time and figured I could rely on my team here in Surat to figure out any elements I didn’t understand. The thing is, I can constantly discuss and get help from my local team if I have an issue, but how can I do this with Michael? I don’t even know him. If I start out by asking a million questions, he will think that I don’t know anything and I will lose credibility with him.
There are several ways that Michael and Jas could each help to ensure that this task is being delegated effectively.
Many organizations seek to upgrade the quality and value of their shared services by asking employees involved in these operations to become more full-fledged global team members, provide their input during strategic conversations, and take on larger responsibilities with a sense of Ownership for achieving the team’s objectives. Remote team members with more interdependent and relationship-oriented cultural styles are often particularly sensitive to the question of whether they truly “belong” to the team or not. At the same time, hierarchical cultural norms may also shape a reluctance on the part of these team members to take initiative on their own, as they prefer to wait for clear directions and greater role clarity.
Here are comments from an employee at an organization in this stage:
Zofia (Kraków): There is a lot of talk about this whole transition to more ownership, about integrating us into the global team. But the reality is that we are not one team. Here we are still treated like an outsourcing center and do not have as much say or respect within the organization. Ultimately, I am working for someone else—so they have the final say in what is good or not. At the end of the day, it is their responsibility. They are paid the big bucks and work out of headquarters so they know what is needed. We are only providing a service, and because they are driving the decisions, it is their responsibility to tell us what they need and to provide detailed requirements.
Often they give us only a small amount of information and then get angry when we aren’t able to read their minds. If they would give me more information or be more readily available—or if we had a relationship—that would be different. But the work is still just thrown over the wall to me and then there is silence. I try to match the specifications they send, but they often want me to make things up out of thin air. It is not my job to be offering my opinions in this kind of task. I am just trying to give them what they want.
As shared services operations mature, they face new hurdles in recognizing and developing talent from around the world. Previous practices of filling Leadership positions primarily with headquarters-based talent become outmoded and could affect employee engagement: “No matter how long I’m here or how well I perform, nobody from my location is promoted into higher leadership.” Many talented service center employees, too, aspire to work in leadership roles, and they may choose to leave an organization where this does not appear to be an option. At the same time, reversing reporting relationships between headquarters and shared services employees, with the latter taking on leadership roles, requires careful preparation and skill-building.
Ingrid (London): When we originally went into India and the Philippines, the plan was really to outsource our business processes and make things cheaper. And it was cheaper initially, but then we started to move India from an outsourcing center into a more strategic position, with business and revenue driven out of the Bangalore office. We recently celebrated fifteen years in India. I was passed over for promotion, there was a structural change, and I started reporting to an Indian manager for the first time. My new manager Atul was also new to a global role, and was doing part of the role I used to perform. When I tried to give him suggestions on how the company worked, he would always say, “Let’s see what others say.” He wasn’t receptive to hearing things from me. Then he started micromanaging my team and they came to me panicking because they were used to being very empowered with my management style. So I sat down to tell him that the team knows their priorities in a day, please trust them to do this. He responded, “Ingrid, I’ve managed people for ten years, I think that you are new to this.” Any advice I offered was shut down because of the hierarchy.
Global Shared Services operations typically require major investments and incur substantial risks during each developmental stage. Managing these stages effectively is crucial not only to achieve anticipated cost savings, but also to avoid common pitfalls and to ensure higher levels of performance. Inclusion on a global scale is not easy, and employees at all levels and locations must be able to broaden their perspectives and their skill sets. Ultimately nobody wants to feel like a second class citizen, and it is far more powerful to have an organization of employees who perform as fully engaged global citizens. Shared services leaders will benefit from knowing what developmental stage they are in, anticipating key obstacles to success, and working proactively to promote inclusion at each step along the way.
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Thank you to Christie Caldwell for sourcing the anecdotes used in this blog. For more detail on this subject, see Gundling, Caldwell, and Cvitkovich, Leading Across New Borders, Chapter 2. Thanks as well to Torben Krogh, Vikki Olesen, Freeda Fernandes, and Anthony Greco for contributing their ideas and feedback.
