You’re a young, ambitious corporate finance professional and you receive a job offer to go and work in a shared service centre. Will taking up the role give you a good grounding in the fundamentals of corporate finance, or kill off your career before it has even begun?
With the promise of lower operating costs, improved efficiency and greater control, it is clear that Shared Service Centres (SSCs) have a lot to offer the finance functions of today's multinationals. But do they also have something to offer finance professionals in terms of career development?
Many people will tell you the answer is ‘no’. That was the overriding sentiment conveyed in a qualitative study published last year by the Association of Chartered Certified Accountants (ACCA) that looked at whether senior shared services experiences can offer good grounding for those with the ambition of becoming a CFO. Although the picture is often more nuanced – as the report acknowledges – a clear majority of the finance professionals interviewed believed, at least initially, that taking up such a job assignment would not be a very smart career move.
“When I was asked to go into a SSC role, my first reaction was ‘you must be joking’. I called it the graveyard of ambition; there’s no progression, no career,” said Nigel Coffey, now a Senior Director of Finance Process Transformation at Pepsico, in what was one of the more colourful responses published.
It is not difficult to understand where Coffey is coming from on this. When businesses decide to migrate some of their in-house functions to a SSC, the low-hanging fruit is often back and mid-office functions – such as the admin around transactions or the reconciliation of cash flows; rarely, if ever, is it the strategic decision-making functions performed by those at the top of the corporate finance hierarchy. So the big fear, it would follow, is that by working in a SSC one might be pigeon-holed as somebody suited to the backwaters of the organisation, perennially overlooked for the more strategic positions you might aspire to.
“I would say that most people probably don’t have a desire to go and work in a shared services environment since, by the nature of the work that is moved out there is often very process driven,” Mike Richards, Managing Director of treasury recruitment specialists MR Recruitment. “It’s not just the repetitiveness of the work, but that fact that it is usually very close-ended too.”
Over the years, Richards has taken numerous candidates out of SSCs in places such as Eastern Europe (where the candidates in question have been working for large Western European corporates including the likes of Colgate or Diageo). Some of these candidates he says were very good, thorough professionals with an excellent understanding of one or several particular processes. Nevertheless, he could see a problem with many of their CVs. “What I would say is that, with many of these candidates, their overall experience of treasury is somewhat limited,” he says.
This is obviously not ideal for any person with aspirations to reach the upper echelons of the profession. But is a lack of general treasury experience always to be expected with candidates from SSCs? Often it is, but there are exceptions to the rule. Indeed, SSC roles do tend to be much more focused on specific processes compared to what is the norm for a conventional corporate finance department (this is precisely where advances in efficiency and productivity stem from, after all). But this limitation should not necessarily preclude the development of the skillsets needed by corporate finance professionals to move onwards and upwards. SSC models – and by extension the responsibilities of staff – can vary significantly. And, as such, it would be wise to consider exactly what the employer is offering before ruling anything out.
Richards recalls one treasury professional he worked with who, many years ago, was involved in a project to set-up a centralised cash management process for 20 European countries from one SSC in Prague, Czech Republic on behalf of a US multinational corporate. “His was the first SSC role that I had heard of that actually enhanced his CV quite radically,” says Richards. The wide range of responsibilities he took on – payroll, banking relationships, cash and liquidity – Richards says goes to show that if the company is offering the senior people that work in the SSC the chance to get their teeth into suitably complex and varied work, such roles can actually strengthen career prospects.
“If you are going to be in charge of the centralisation of cash and liquidity for an entire region, concentrating banking partners and so on, then clearly that’s a different matter,” he says. “These are things you could possibly get working in-house, but candidates will probably get more in that kind of SSC because they will very likely be the only person operating at that level. In that sense, they might even get some better experience than somewhere where everybody is fighting for that kind of work.”
Victor Lam Chee Peng, the Group Head of Sime Darby’s Global Services Centre believes that there can be further career advantages of working in a SSC. Even if the job scope is narrower, as it is in the SSC at Sime Darby, an employee is more likely to be dealing with an activity that covers multiple business units and countries compared to peers in conventional finance departments. For those who want to climb the career ladder in corporate finance, this exposure could be very advantageous. Being moved between different jobs once in a while also helps, both in terms of keeping the job interesting and avoiding that limited overall experience of treasury Richards earlier alluded to.
“For high performing talents in Sime Darby’s Global Services Centre, career progression can be fairly rapid with opportunities for job rotations and working on projects to drive improvements in efficiency and productivity through business process re-engineering, automation and standardisation,” says Peng. Sime Darby’s Global Services Centre, by way of an example, recently concluded a project it had worked on with Group Treasury and the company’s cash management banking partner to introduce new and innovative ways for the handling and transfer of funds both internally and externally, such as the use of cash pooling, multi-currency bank accounts and virtual accounts.
Experience of such activities are, as Peng points out, good things to have on one’s CV. “This, coupled with the exposure to country-specific requirements with regards to payments and transfers of funds both internally within a country as well as across countries, provides a strong foundation for someone who wishes to pursue a career in corporate finance,” he says.
Ultimately then, much of what SSC experience can offer a financial professional will come down to the culture of the particular company in question and how they perceive the SSC function. But there is another point to make here beyond the career implications of staff working in a shared services environment. The approach companies take when organising shared service centres, especially how functions are delegated, can impact the development of the staff competencies that organisations need to succeed.
The advent of shared service centres has meant there has been an increasing move towards specialisation early on in the careers of some finance professionals. There is little doubt that this division of functions, where staff are encouraged to focus exclusively on one or several activities, can contribute to greater efficiency and higher productivity, but it also has the potential to create a supply/demand imbalance in strategic support roles. As a 2012 report by Odgers Berndtson says, “This leads to situations where very few individuals in the finance functions end up acquiring the complete set of skills and experience required to become a truly effective CFO.”
In the shared service environments created by Sime Darby and the US multinational that Richards referred to, where employees are rotated between different activities and offered the opportunity to get involved in interesting projects beyond the repetitive, process-driven work that is the norm in some environments, it would be reasonable to conclude that this is not going to be so much of a problem.
As the authors of the SCC report write in their final remarks: “Some organisations prize the value that finance transformations bring to an organisation, while others still view shared services and outsourcing merely as a factory for transactional, rules-based work”. The SSCs of companies who fall into the latter category are likely to find it difficult both to attract and retain finance professionals who aim to progress to leadership roles.