Global Factory - Centralization is the efficiency driver..
Business Case:
In many organizations, enabling functions such as Human resources, Quality, Risk and Reporting embedded into each of the functional units. Even though, there are arguments about the Pros and Cons about this arrangement, centralized setup brings in lot of synergies into the operations.
The benefits are the standard approach followed across units, Economy of operations, Talking in one single voice on strategy, and better command and controls struture, tilt us towards a centralized structure.
Let us see, the Pros and Cons, and How do we enable this as part of the long term sustainable journey?
Pros for Decentralized setup:
The general argument of the manager's in support of this arrangement are:
Managers lack autonamy in their respective functions.
My department had grown. Hence, decentralization will be good.
My area is specialized. It requires special skills to handle the process
Not getting enough time from the centralized team, hence required
The customer needs are not met immediately - Customer complaints
Cons in Decentralized Enabling functions:
Lack of standardization in the processes and limited competencies with the Unit level managers
Lack of skills at the unit level to handle the functions and the unit level team neither accountable to either of the team
Functional managers lack skills to effectively oversee them and limited thought process to take the processes to next level
Cost of enabling functions and sustainability in the long run and the central & Unit level resources are not seeing eye to eye
Case Capsule:
This case study refers to centralization of delivery efforts rather than piece meal distribution of the same function across different units. This method creates efficiencies, enables specialization and opportunities for standardization.
When this approach was implemented in one of the large organization, this resulted in better turnaround, transactional accuracy, quality reporting process and keeping the customer in mind. This is a best practice that ensures seamless service delivery.
How do we go about?
Devise a project plan for integration. Involve stake holders from the central unit as well as units for synergies
Have a clear time bound plan for implementation. Review critical project milestones for efficient implementation
Follow a step by step approach and ensure cultural integration plan clearly laid out and followed by every associates
In change projects, there can be more detractors then supporters. Get the detractors play a crucial role and accountable.
Let us not see the project success as the success of the Programme managers. Celebrate the success is of every participant.
Examples of such Projects:
A Global reporting factory - Reporting unit centralization serving all reporting needs in Banking or Finance.
Internal Audit and Control team across verticals providing critical assistance and support for key functional areas
A Centralized Transactional Quality team setting up Programmes, processes and systems across functional towers
A common Technology implementation team across the organization where the central team organize & implement
A centralized Customer service or customer help desk unit to address customer complaints.
Key benefits:
New system implementation in terms of New technology, AI, Robotics or other new generation technologies
Depending upon the size of the organization, the centralization may provide upto 40% benefits in terms of resources
Reduced conflicts among managers, if implemented successfully and properly overseen by the centralized leadership
Long term benefits in terms of Standard processes and controls. Scattered processes will be centralized and controlled
The change management process in the future will be relatively easier in view of the centralized command & control structure.