The Boundaryless Organization by Ron Ashkenas & Dave Ulrich & Todd Jick & Steve Kerr

Author:Ron Ashkenas & Dave Ulrich & Todd Jick & Steve Kerr
Language: eng
Format: epub
ISBN: 9781119177876
Publisher: Wiley
Published: 2015-06-10T16:42:37+00:00

Shared Services in Action: An Evolutionary Approach

Starting in the late 1980s, Albert F. Ritardi, then vice president of corporate administrative services at AlliedSignal, began a multiyear transformation of the services unit from a traditional functional staff group to a series of shared services. His three-phase process illustrates what it takes to use shared services as a vehicle for permeating horizontal boundaries.

When Ritardi first took over Corporate Administrative Services, it had a corporate staff of several hundred who managed pension services, administration, HR information systems, aviation services, travel, real estate and facilities, transportation and distribution, payroll processing, and security. Some functions supported headquarters staff while others covered the entire corporation. All, however, were performed along traditional lines—through establishment of policy and procedures, monitoring of those procedures, and hands-on implementation of day-to-day tasks. Costs were high and service mentality low. In fact, most of the staff felt the key to doing their jobs better was to get the operating people to cooperate better.

Given the potpourri of functions, Ritardi’s first phase was what he called “census reduction and traditional problem solving.” In essence, he took the existing functions and tried to make them work better and less expensively. He consolidated some units and tightened up certain policies and procedures (vendor contracts, for example) to gain immediate cost reductions.

In the process, Ritardi realized that the services fell into two categories—centers of scale (our service centers) and centers of expertise—and that he needed to treat the two categories differently. Centers of scale could reduce costs through consolidation, standardization, process changes, and technology. Therefore, he made activities such as payroll check processing, travel services, transportation and distribution systems, and HR processes such as corporate benefits administration into centers of scale. Meanwhile, centers of expertise could improve service through leveraging advice across the company and getting business units to pay (charge-back) for center services. Ritardi applied this approach to real-estate and property tax consultation, facilities management, benefits consultation, and the development of HR systems applications, among other services.

After two years, Ritardi had reduced the unit’s overall headcount by 40 percent and saved the corporation $12 million. However, by this time, he understood that the support processes in the unit represented only a fraction of the support processes performed in the corporation. AlliedSignal was a conglomerate with three semiautonomous sectors: aerospace, automotive, and engineered materials. And in each sector, many of the same support processes that Ritardi’s organization managed for corporate staff were being duplicated for sector personnel. For example, he found that Corporate Administrative Services managed only 30 percent of the company’s total pension services, only 10 percent of the payroll, and only 20 percent of the security services. Each sector even had its own corporate jets.

Armed with this information, in 1991 Ritardi began a second phase: “consolidation and performance improvement.” With the support of AlliedSignal’s new chairman, Larry Bossidy, Ritardi set out to bring duplicate support processes together as shared services. Focusing on processes, he and his people identified which part of the corporation handled each key process best.

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