Transforming Metrics for Shared Services
Designing and implementing a robust performance measurement process is a key success factor for Shared Services or Global Business Services organizations. Doing so correctly involves more than simply adhering to a balanced scorecard approach, where you have defined measures for cost, quality, productivity, and customer satisfaction. Performance measures need to be tailored to meet the needs of a diverse set of users. When properly designed, metrics can become both performance guardrails, and incentives for managing growth and change while ensuring performance standards are achieved.
A PeercastTM discussion in Peeriosity’s Shared Services Leadership research area featured a large global company with $6B in annual revenue discussing their multi-year journey to transform their Shared Services metrics. During this process they identified three key benefits to having the right measurement system in place including 1) improving business results, 2) aligning processes with business goals, and 3) increasing the likelihood that decisions are made based on data.
Beginning in 2017 the company started on a transformation journey for Shared Services that was designed to support business growth by implementing end-to-end processes that were consistent globally, as much as possible. As part of this transformation, it was important that measurement systems and processes also were transformed to provide feedback that was appropriate for each level of the organization, including employees within Shared Services, Global Process Owners and related Governance Groups, Regional and Functional Leadership outside of Shared Services, and the company’s Senior Management Committee. The goal of the transformation was to simplify reporting and reduce the number of metrics shared at each level, so that each scorecard focused on the KPIs that were critical to decision-making for each audience, with an increasing level of detail provided from Senior Management to the day-to-day metrics appropriate for use within Shared Services. Here is a summary of the focus for each audience:
- Metrics for Shared Services employees focused on operational activities at the team level to assist in day-to-day delivery and process improvement opportunities.
- Metrics for Global Process Owners and Governance Groups focused on the health of end-to-end processes, and the health of individual processes within an end-to-end framework.
- Metrics for Regional and Functional Leadership focused on key customer outcomes for each process.
- Metrics for the Senior Management Committee focused on the overall performance of end-to-end processes and organizational health.
Tailored to each audience, scorecards were created for metrics in six measurement categories, designed to provide a holistic view of performance and progress in end-to-end processes, plus a measure of organizational health. The six categories identified include:
- Talent Development – metric examples: employee turnover, employee engagement
- Customer Measures – metric examples: customer satisfaction, number of late payments
- Financial Measures – metric examples: DSO, DPO
- Efficiency Measures – metric examples: invoices per FTE, days to close
- Effectiveness Measures – metric examples: first pass match rates, discounts taken vs. available
- Process and Program Management Measures – metric examples: process deviations, hours saved
When selecting metrics, the goal was to simplify, focusing on a few key metrics that drive the most important outcomes. The design of each metric started with a global view, followed by regional and local differences as needed, with the goal that metrics could be measured the same way globally as much as possible. Also important in the selection process was to pick metrics that could be automated, with minimal manual data collection effort required.
Another important design element was to have all metrics tracked against a specific target, with historical performance reported. Targets are set using “stretch” but achievable goals.
Also critical, is to have an ongoing review and changes to the measurement process, at least annually, to ensure selected measures are relevant and useful for monitoring performance and guiding improvement efforts.
For details, Peeriosity members are encouraged to sign into the members’ area to view the complete presentation and listen to the recorded Peercast.
Creating and administering a robust system of metrics isn’t a trivial exercise. The best Shared Services / Global Business Services organizations have dedicated resources, often led by someone with a title like “Performance Metrics Manager” or “Director of Performance Management”, to ensure the right level of focus and leadership is consistently applied to the performance measurement process.
Has your Shared Services / Global Business Services organization completed a transformation of your performance measurement program? What are the categories of metrics that you use, and do your metrics have a cascading level of detail, to best tailor the metrics to your audience?
Who are your peers and how are you collaborating with them?
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