General, Mills, Lawrence, James

Case story #1 – James Lawrence, CFO, General Mills

01 Sep 2003 | (Case Study)

James Lawrence became CFO of General Mills in 1998. His challenge: to transform the 83-year-old, US $ 7 billion cereal giant into a well-oiled machine. General Mills was plagued by a hierarchical and inefficient finance department. Employees were dispersed across the company’s various departments – and administrators spent more of their time gathering data than finding out what it all meant.

During the summer of 1999, Lawrence put together a task force charged with improving the performance of General Mills’ finance department. Members of the task force spoke with unit managers, examined the results of a recent internal survey, and opted to move the finance department into a shared services centre. The task channelled General Mills’ dispersed finance department into three divisions. They then moved the company’s 65 transaction processing division employees from isolated departments into one new unit. Employees at the shared-services unit set their own hours, are self-directed and work in close conjunction with the company’s various business units.

Two years after moving its finance department to a shared services centre, the General Mills’ finance team spends less than a quarter of its time gathering data. Professional staff turnover has dropped drastically. In recognition of his efforts, Lawrence earned the 2001 Excellence Award for Finance Leadership, Development and Training.

Making large companies leaner and better

Executives must assume more responsibility for the operations of their company. Some may be reluctant to take this step, believing that when everything is running fairly efficiently, it is always risky to begin restructuring. But when your competitors begin to strip down and optimise their administrative functions, you would be wise to take heed. Now that many companies have successfully moved to a shared services model, the concept is no longer revolutionary – it just makes good sense.

This is especially true for big organisations, which are often running on large, outmoded and unwieldy business models. Now is the time to optimise the structure of your company and no one is more qualified to assess the current state and to investigate new business models than a CFO or CEO, who have the oversight to explore new models, the knowledge to assess them and the authority to implement them.

“Now that many companies have successfully moved to a shared services model, the concept is no longer revolutionary – it just makes good sense.”

Exploring new business models

Today’s corporate leader must summon the innovation and courage to at least consider a next generation business model. Executives must learn the dynamics of their organisations’ assets – find out where time, energy and money is being wasted and begin to explore ways of optimising business processes. Then they must work within the limitations of their organisation in order to streamline operations and optimise resources.

Companies are always working to optimise their resources but many executives do not criticise, or take the time to look outside, their own business models. The excuse – that their company is already successful, that it got where it is on a certain model and doesn’t need to try newfangled techniques that haven’t tried the test of time.

CFOs and other leaders are learning that new models can transform old companies without disrupting a time-tested corporate culture. Take for example business process outsourcing (BPO) – moving in-house services to a shared services centre. Organisations such as EDS, First Data Corp. and General Mills have consolidated dispersed administrative departments into shared services centres, and as a result have reaped the benefits.

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