CGMA insights: Quality control

CGMA insights: Quality control

We are conducting interviews with leading members of the cgma community to gain insights into future ways of working within organisations.
T.V. Somanathan, a director at the world bank based in India, shares his personal views about the open workforce, and outlines the importance of ensuring that quality is not compromised. 

How do you decide what to outsource, or to use shared services? 
Quality is the focus for me. I think that shared services, for example, work best for processes that are relatively constant and can be documented. 

How do you manage your shared services centres effectively? 
If they are performing an activity that can be precisely defined then it means you don’t need to get engaged in micro managing and more discretion can be left to local management, but if it is something that cannot be clearly specified then I think you need the main process owner to exercise a greater degree of control. 

What is driving your increasing use of shared and outsourced services?
I think there are significant cost advantages in terms of specialisation. We will never be the best at performing non-core operational tasks but through sharing of services and/or outsourcing we can create a win-win situation whereby we pay less than it would cost us to do the job in the conventional way in-house and we get a higher quality service.

How do you assure the performance levels of external partners?
We try to have dedicated teams within the external organisations. This means we can invest some time in training certain people within those organisations to get them ingrained in the ways of our organisation.

What role can CGMAs play in managing the open workforce?
I think that the techniques needed to monitor the performance of an open workforce already exist within the body of management accounting, but they have not been deployed very much. They need to take existing cost control techniques and adapt them to these new situations so they can measure all of the costs, activities and contributions connected with this part of an operation. 

And what part will data play in this? 
I think data needs to be used in a more targeted way. There is not enough information on the end-to-end costs of doing things one way versus another, in terms of direct versus indirect costs and benefits. There is not enough rigorous cost accounting data – either within firms or across an industry – that looks at the total cost of service under different workforce models.

Are you concerned about risks associated with the open workforce?
I think the risk varies depending on whether you are outsourcing a core or a non-core function. While this may not apply to the World Bank which is focused on poverty reduction, loss of knowledge is the key risk as external people can transfer knowledge from your organisation to your rivals when they go on to work for someone else.

Do you have effective ways to protect against this?
Obviously there are privacy and copyright protections such as trademarks you can seek, but you have to be aware that there is a certain level of knowledge that cannot be protected in that way.

What changes are needed if organisations want to adopt flexible working?
I think they will need more mid-level supervision to monitor productivity than we currently have. If there are 10 people working at home, perhaps you’ll need one person in the office monitoring outputs. Also, if you can refine how you measure the effort required for particular tasks that are done remotely, it becomes much easier to monitor those people and to ensure productivity is where it should be.