Ashridge, Headquarters, Staff, Corporate, Research, Shared

Ashridge research looks to the effectiveness of headquarters staff

02 Sep 2003 | (Survey)

Two recent publications from the Ashridge Strategic Management Centre provide a wealth of information including benchmark data relating to shared services operations based on a survey of over 100 UK corporate headquarters. Both publications report on the UK component of an ongoing programme of research into corporate headquarters in seven countries that will provide data on over 600 companies.

"Effective Headquarters Staff", by David Young and Michael Goold, provides an overview of the Ashridge research which identifies the provision of shared services as one of the three key roles of corporate headquarters.

The report reveals that the extent of shared services varies substantially from company to company, depending on corporate strategy. Typically, about 45 percent of headquarters staff provide services for the businesses within the company. Almost all corporate functions can involve some element of a shared service provision, but the highest proportions of shared service staff were found in pensions, payroll and benefits administration, training and education, purchasing, property services, information systems, and insurance - risk management.

Young and Goold report that in practice shared service provision tends to be linked to the "influencing and policy making" role of corporate headquarters. Headquarters that have a strong influence over decisions affecting the business divisions within the company tend also to provide more extensive shared services.

The Ashridge report provides an analysis of how headquarters functions recover their costs. This was seen as an important litmus test of the relationship between headquarters and the business divisions. The authors' believe that direct charging (charging for work done, or charging according to an annually negotiated agreement) gives divisional managers a degree of control over the purse strings, and is one way of maintaining a healthy relationship. The analysis showed that functions that have high numbers of service staff are more likely to employ direct charging. Surprisingly, it was discovered that direct charging is not used as widely as it might be. Even when there are 20 to 50 service staff in a headquarters function, direct charging was used in only 40 percent of cases.

Ashridge's analysis of trends provides an interesting insight. It showed that over the last five years, headquarters that have been concerned about cost effectiveness have tended to cut shared services; but headquarters that have been concerned about the their ability to support corporate strategy have predominantly extended shared services.

The report also gives advice for designing an effective headquarters. It argues that a review of headquarters staffing should be grounded in a clear understanding of the company's corporate strategy and that a headquarters review will be much easier if shared service activities are clearly distinguished from other corporate activities. The criteria used to judge the effectiveness of service staff, and their relationships with the business divisions, will be different from those of other corporate staff.

The second report, "Benchmarking Corporate Headquarters Staff", by David Young and Kay Dirk Ullmann, provides extensive benchmark data for 24 headquarters functions. It is primarily aimed at managers and their advisers who are engaged in reviewing and restructuring corporate headquarters staff. The report includes guidelines for calculating benchmark staff levels for a wide variety of circumstances.

If you are interested in obtaining further information on either of these reports please look to the Ashridge website found at www.ashridge.org.uk or telephone their office in Britain at +44 20 7299 3927.

Related Content: