Re-think Core Processes

Leaders risk undermining their transformations if they don't re-shape the work to fit the re-sized organization.

When leadership says all the right things to make a transformation successful, but they keep operating as if nothing has changed, transformations can get derailed. If you have ever heard the old cliche, “people just have to do more with less,” you know exactly what we are talking about. In the weeks and months that follow a major restructuring or reduction in force, it is critical to stabilize the workforce and begin to “turn the page” by making visible changes to operating practices that reflect the newly constrained resource pool.

While there are a multitude of ways to achieve “more with less,” transformation programs that aim to accelerate value realization and break corporate inertia require management teams to catalyze meaningful, near-term changes to how work gets done and how the business is managed. If leadership is willing to think differently, improvements are possible without large investments in process redesign or technology. In fact, change can be quite straightforward. Below, we offer three examples of actions that can relieve pressure on your downsized teams.

Change Risk Tolerance

Much of the work that gets done in companies, especially in “overhead” departments, is driven by a company’s risk tolerance. Here are a few real-world examples:

·         Type and value of financial accounts requiring reconciliation.

·         Value of departmental budget variances requiring explanations.

·         Thresholds for automatic payment of invoices.

·         Financial forecasting details.

·         Number of operational compliance audits.

·         Value of purchases requiring a formal RFP process.

·         Number of interviews a job candidate must complete.

·         Threshold for capital expenditure approvals.

·         Reviews for approving customer credit limits.

This partial list of seemingly tactical processes drives a material amount of work based on management's view of risk. Risk tolerance tends to be lower when times are good, as management rationally wants to sustain the status quo and has ample resources to handle the resulting work. However, when resources become constrained, companies can provide much-needed pressure relief by re-evaluating their assessment of risks and the processes used to mitigate them.

We worked with a large retailer with hundreds of stores across the U.S. that had a dedicated compliance team responsible for visiting a significant number of these stores in person throughout the year to conduct operational audits. This team grew proportionally with store openings and drove substantial costs both in terms of personnel and travel. As part of a larger restructuring, the leadership team conducted a thoughtful cost-benefit analysis of their operational compliance program and ultimately reduced not only the number of operational audits, but they also changed the methodology for selecting stores to be audited as well as the underlying process for conducting the audit.  Collectively, these changes were key to enabling material cost savings in their compliance function without impacting operations.

The key takeaway is that transformation leaders should work with all their functional leaders to identify business processes that are driven by materiality thresholds or otherwise explicitly risk-based. Each of these should then be reassessed to see whether the process of mitigating the risk can be redesigned or if the risk assessment can support a less stringent standard.

Adjust Frequency for Critical Processes

Just as there are opportunities to reduce work by increasing risk tolerance, there are also areas where even critical processes can be adjusted to lighten workloads.

In certain functions, especially Finance, core business processes are viewed primarily in terms of improved visibility and control, with less regard to the costs involved than in other areas. For example, most CFOs and Controllers rightfully look first to the effectiveness of their processes, like closing the books or forecasting, before they even begin questioning the resources necessary to deliver it. However, we have seen companies achieve meaningful savings in their finance functions by adjusting their approach to forecasting and monthly close processes.

Public companies must maintain “hard” closes on a quarterly basis to support their SEC filings and follow a similar cadence for forecasting when offering guidance. However, executives often want more frequent, detailed forecasts, and CFOs appreciate the certainty associated with a hard monthly close. However, just as giving teams more accountability to manage to their own budgets can give them a greater sense of ownership, we have seen that adopting a “risks and opportunities” approach to monthly forecasting can give finance groups more time to help drive business growth rather than focusing their efforts on detailed forecasting. Similarly, allowing accounting teams to perform soft monthly closes (with higher materiality thresholds) frees up resources both to better investigate real issues in the business and to devote more effort to process improvements. Both create a virtuous cycle in which the time freed can be invested in further time reductions.  

The key takeaway is that core business processes do not have to operate linearly throughout the year. By throttling the work effort according to more carefully tailored requirements can create capacity in your teams.

Cull the Reporting Herd

Report proliferation is a massive drain on organizational efficiency. Today, companies are deploying a wide array of powerful self-service reporting and analytical tools like Tableau, PowerBI, and Qlikview. These platforms, often concurrently deployed within a company, are incredibly effective at connecting disparate data sources and producing very useful reports and dashboards. However, this technology duplication, coupled with the ease of deployment, makes governing new reports and dashboard development difficult. In most companies, the result is reporting redundancy across functions as well as competing versions of the truth, further draining efficiency.  This is compounded after a meaningful reduction in force, especially when leadership continues to demand the same ongoing reporting and analysis.

In our experience, an important first step to solving this is to work with your IT teams to create a comprehensive inventory of reports. These reports and dashboards should be segmented by business purpose, frequency, sources, level of effort, and qualitative assessment of value. You may be surprised to see hundreds of recurring reports across the enterprise, many of which address the same business purpose. It is essential to share this information with leadership so they can arrive at a more manageable, standardized way of looking at the business. Ultimately, casting daylight on the amount of work that goes into reporting enables management to “cull the herd” of recurring reporting and analyses. It also has the by-product of getting disparate parts of a company to work together more effectively.

Be Assertive

When management teams embrace working differently, even in these seemingly tactical areas, they demonstrate their commitment to change and telegraph to the broader organization that the new ways of working are welcome. As such, transformation leaders should be assertive in surfacing not only mid- to long-term changes around process, technology, and organization design but also near-term improvements around risk, frequency, and reporting.