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Amit Garg

Internal service departments in a company, such as HR, Finance, and Quality, are meant to make the company go places. Is your company on the path to progress?

THE establishment of internal service departments (HR, Quality, Finance etc) is often a landmark in the development of an IT organisation. For a growing, entrepreneurial firm, these are proud signs of financial stability, organisational development and a commitment to professionalisation. Many CEOs take personal interest in the establishment of these functions and expect them to be the cornerstones of future growth. Indeed, for many successful organisations, you are quite likely to hear legendary stories of their internal strategies, policies and systems. The big three of Indian IT have been forerunners in at least one of these areas. For instance, TCS is known for its rigorous training programme, Wipro for the focus on Six-Sigma and Infosys established new standards in investor relationships.

Yet, few IT organisations seem able to replicate such success stories. Almost every company considers its internal service departments to be below par. Across companies, a discussion on HR, Quality or Finance tends to invite a guarded, or cynical, response. The functions that were expected to be institutional pillars are viewed by most as bureaucratic, unhelpful, inefficient and generally responsible for all the ills that exist in the company!

Not all the blame exists with the departments themselves. It is easy to blame HR for the quality of engineering recruits — even though the company itself may be unattractive to fresh graduates. Similarly, it is fashionable to berate the lack of superior quality processes — while employees pay lip service to documentation and produce unreadable technical manuals.

But some of the blame does lie with the departments too. Many practitioners of such functions choose to become policemen instead of facilitators. There is often a tendency towards empire building and complicating processes. At the same time, such professionals come up with new ideas or initiatives of their own. They do nothing to help the general perception that exists.

Can this matter be resolved? Can service departments be turned around and become valuable assets for the organisation? Fortunately, the answer is yes. But the path is not easy and requires serious CEO/COO awareness and commitment to make it happen. HR, Quality and Finance — all of these typically report to the CEO. This increases their influence significantly. As CEOs hear several complaints about these departments, they start becoming immune to them and are normally quite reluctant to act upon them. They believe (rightly, in many cases) that all the complainants are just passing the buck. However, if service departments are to be improved, the impetus has to come from the CEO. No one else in the organisation is empowered to do it.

Priority tasks

An area where there is almost bound to be improvement potential is in processes. Process restructuring should, therefore, be the first area to tackle. Many organisational processes exist for historical reasons — with little relevance to the present time and business. While there is a periodic review of business practices, there is less attention paid to internal organisational processes. As a result, most service departments are handling jobs that no one even considers worth doing (and therefore get no credit for them either!). A careful re-look at processes and `defined' role requirements would help cut the administrative burden and free time for more constructive pursuits.

Think of the activities performed by your quality team. Are they adding value or are they simply administrative in nature? Do you really need all the documents they produce?

The next task, and often the toughest one, is to develop a supportive culture among service departments. One of the best ways to do this is to ask for organisational initiatives to be designed and led by them. This helps change the mentality from one of control to one of facilitation. GE, for instance, uses its Finance department to drive several organisational initiatives. Since the Finance people have access to all the numbers, it becomes easy for them to identify areas of improvement. HR's focus should be shifted from personnel problems to genuine HR issues. In essence, each department must have performance objectives that include progress on initiatives. The list of initiatives must be designed along with the senior management team and must reflect the organisation's vision and goals.

Some more suggestions

The third aspect of the reengineering should be to provide the departments with the right resources. Many service functions are either woefully understaffed or grossly overstaffed. Similarly, they either have uncapped budgets for pursuing initiatives or they are starved for any discretionary expenditure. The middle ground is seldom found. If under-staffed or under-funded, it is hard to do anything other than the routine work. HR cannot build organisational capabilities if it does not have a training budget! Overstaffing, on the other hand, leads to compartmentalisation of responsibilities and bureaucracy. Having rationalised processes and added initiatives, it is important to also re-assess the role requirements and funding needs of the service departments.

The fourth issue for the CEO is to ensure that the right skill levels and attitudes exist within these departments. Although training is high on most companies' priorities, very few invest any rupees in training for the service functions. For instance, when is the last time your Finance team attended a training session? Given the expectations that we have from these roles, there should be a clear skill upgrade plan in place too. Some of this upgrade may also happen through the induction of fresh blood. Although most IT companies fight attrition, a certain amount of churn is not always a bad idea (and in some cases, may be very necessary!).

Finally, one needs to institutionalise feedback and health checks into the system. Service functions should regularly be provided feedback from their user departments. This may be done through performance appraisal systems or third-party status checks. Such feedback is one way for the CEO to know whether the change is in line with expectations. In more mature organisations, it may also be feasible to openly share such findings within the company.

The problem of under-performing service departments is not unique, nor is it unmanageable. Like most business problems, it can be addressed with a renewed focus on objective setting, process improvement, resourcing and feedback systems. The benefits are immense and can place the organisation on a new growth trajectory. Will 2004 be the year for your company to begin that transformation?

The author is a Bangalore-based General Management Consultant and can be reached at amtgrg@rediffmail.com

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