Choosing the right leader for Global Business Services (GBS) is a critical decision, since it has the potential to make the GBS strategy succeed or fail - or at minimum significantly delay its benefits. The profile of a GBS leader is not a one-size-fits-all. The following explores a framework that can help choosing the GBS leader most suited to the organizational strategy and maturity. The findings draw from a unique body of knowledge based on the analysis of thousands of business services leaders and the organizational strategy of hundreds of enterprises.
A big decision with too little science behind it
Making the move to a Global Business Services (GBS) environment from a more traditional shared services construct represents a substantial transformation within an organization. Selecting the wrong GBS leader can have catastrophic consequences, including a multi-year, enterprise-wide aversion to the concept, and dilution of the impact of a potentially powerful organizational strategy. Not surprisingly, numerous studies have weighed in on the topic of GBS leadership.
For example, in late 2013, KPMG and HfS Research conducted comprehensive research on the GBS industry. The survey asked a sampling of CEOs, SVPs, and VPs, “To what extent are the following impeding your development toward a more centralized and empowered operations framework, such as Global Business Services?” Of all the options provided, an overwhelming majority (72%) cited lack of talent and capability to lead and implement higher-value services as somewhat of an impediment or a major impediment.
Sourcing Change and Deloitte collaborated on another study that postulated there are four paths to shared services leadership: “The Moonlighter,” “The Loyalist,” “The Expert,” and “The Lifer.” Although each profile contains certain characteristics valuable for establishing and operating a GBS organization, the study’s overarching finding, “expand the existing shared services model, maintaining the same quality of operations” presents that the optimal set of capabilities - and the related leader profile - depends on the strategic mission for the new operating model, and the enterprise’s organizational characteristics.
Taking stock of the status quo
In an attempt to provide a more robust framework for making such a critical choice, business process services provider Genpact, formerly part of General Electric, and Heidrick & Struggles, one of the premier providers of senior-level executive search and leadership consulting services, reviewed lessons learned from more than fifteen years of operations management and sixty years of leadership consulting and executive search experience in running and collaborating with GBS, and poured through the data from thousands of GBS leadership searches.
The largest percentage of the candidates for the positions came from finance, especially shared services finance (see Figure 1a and 1b). This is not surprising since most pre-GBS shared services organizations were rooted in transactional Finance and Accounting (F&A) activities, which is also the starting point for many GBS organizations today. Next in line in terms of candidate percentages, and increasingly frequent, are IT, with a tie between CIOs and those responsible for shared services, and HR. Executives selected from these functions to run GBS organizations also make viable sense; to be strategically valuable, GBS must extend far beyond F&A into other functions and across all business units.
Analysis of age and sex also show interesting patterns (Figure 2). The average leader in this space is about 49 years old (female leaders are slightly younger at 47). Younger leaders have been found in consumer goods, capital markets, telecom, and pharma. Older ones came from healthcare, hospitality, transportation, and insurance.
The average current leader is male (Figure 3). However, some emerging economies (China and Turkey) as well as Scandinavia (Finland and Sweden) have a higher proportion of female leaders.
This data and other materials written on the topic provide valuable insights into executives’ concerns, possible profiles of GBS leadership talent, and executives currently in roles that may position them to move into GBS leadership roles.
The path to a better decision: The defensive/offensive framework
However, this evidence does not address what we believe is fundamental to GBS success: that the background, capabilities, and operating style of a potential GBS leader must be in sync with the corporate strategy to be supported by the GBS organization.
There is most certainly no one-size-fits-all GBS leader. However, we posit that companies that view their corporate strategies through the lenses of “defensive” and “offensive” will select a better key leader to run their GBS operation.
Defensive strategy organizations share many of the following five traits:
1. Their process orientation is not very mature
2. They do not face major inflection points that require a major retooling of their services delivery capabilities
3. They do not rely on a strong inorganic growth play
4. They are leery of transformation risk
5. They are not yet ready to take an offensive operating model play
Offensive strategy organizations are those that have little choice but to, or have a very strong desire to, make major changes to their operating models. For example, banking and financial services firms today need significantly different cost structures and enhanced operations. CPG businesses are mired in a volatile environment, and their leaders are becoming highly aggressive with IT and corporate activities. And a given organization may really want to radically enhance the Finance Planning and Analysis (FP&A) function without the requisite operations, talent, or C-suite backing to leverage advanced analytics at scale. The trailblazers that fall into this category have the vision to use GBS as a real engine to fuel optimization of the full enterprise value chain.
Defensive and offensive GBS leaders do not come from, or go to, the same place
Offensive and defensive players have very different skills. Defensive players are likely great operators, and are able to stabilize operations and keep them stable. No-news-is-good-news is possibly a desirable state for them. Their ability to keep stakeholders happy will manifest itself through tight governance and good networking. They want GBS to be a cornerstone of their company’s operational stability.
Offensive players are likely seeking to maximize the scope of the GBS organization as a means to maximize the value for the enterprise. They act as business leaders, and they want stakeholders to be excited about the possibilities. They want GBS to be an engine for innovation and corporate agility.
The future paths of defensive and offensive leaders are also likely different - a critical consideration, as future career channels can either incentivize or demotivate the best of candidates.
Although the topic is delicate and related choices warrant expert advice, the following table (Table 1) is a useful analysis of the origin and destination of such individuals depending on the type of GBS leader required. The table also formulates a hypothesis that future data may be able to validate.
A new, more strategic view of GBS leadership
GBS is the next step for enterprises that want to use the organizational construct in a strategic manner for growth and competitive purposes. A significant component of successful GBS planning and execution is based on selecting the most advantageous leader for this all-touching, far-reaching function. However, many companies fail to consider that the individual selected to be the GBS leader must have a vision and managing style that knits well with the business’s overall GBS strategy. By viewing selection criteria through a defensive or offensive lens, companies stand a far better chance of choosing the right person to lead. In the process, enterprises may also discover that GBS can be a useful opportunity for developing management talent.
This paper was authored by Gianni Giacomelli, Chief Marketing Officer, Genpact and Lorraine Hack, Partner, Heidrick & Struggles.