Transforming to a Shared Services Model – The Hershey Company’s Journey
By John Potts, Jeff Kemmerer, and Tim Rund
Organizations can now streamline processes, stay connected regardless of location, and through technology, can maximize resources on a global scale. Technology’s rapid innovation and adoption cycles has a direct impact on how organizations manage lines of business and ultimately, transform the way we define shared services.
One such example was the transformation of The Hershey Company’s business processes to a Shared Services operating model. The transformation included process automation, technology infusement and labor arbitrage, but at its core, the transformation was about building “trusted partnerships.” Jeff Kemmerer, who served as Hershey’s Vice President for Global Shared Services (GSS) during the transformation effort, invested himself in the challenge of building this culture from the ground up with a goal of customer-focused partnerships for success, while integrating people, process, and technology.
From our experience, the challenge of working with others to ensure service delivery excellence and an ability to adapt to changing customers’ wants and needs are core elements of today’s customer-centered “services economy.” Everything gets done through people, but people become more efficient through rapidly evolving technology such as virtualization and automation. Successful shared services transformation requires the building of “trusted” partnerships in which service providers and customers jointly commit to the execution of effective and efficient business processes to make organizational objectives a reality.
An example of shared services at a private company
The Hershey Company is one of the largest chocolate manufacturers in North America, but needed to expand its business into new global markets to sustain growth. To do this efficiently and effectively, the company’s internal infrastructure and operations needed to be recalibrated. Hershey’s leadership team determined that a multi-functional, shared services capability that leveraged economies of scale would allow the company to be more responsive and service oriented all while delivering better value to its customers.
Jeff Kemmerer was responsible for leading, directing, and managing shared services to leverage resources on a global scale to reduce costs, optimize customer service, and build new capabilities within the company. When Jeff created the Hershey shared services capability, he transitioned functional business activities to multifunctional, “end-to-end” business processes.
These processes empowered Hershey with a single, global owner for each process area. This effectively integrated all activities within processes, eliminated “siloed” behavior, and improved business process execution across the entire company. This was paramount to supporting global, sustainable growth since the business environment was previously a localized, Pennsylvania-centric operation. Integrated end-to-end process activities established credibility and enabled Hershey Global Shared Services to reach beyond standard back office operations and take on more complex “front office” responsibilities.
Jeff and the GSS team assisted Hershey’s international growth from $5.3 billion annual revenue in 2009 to $7.4 billion in 2014. The company now sells over 80 brands, with products in more than 70 countries.
Why were Hershey’s changes so impactful?
Jeff knew that while processes, systems, and structures were important, it’s all about execution – Hershey employees themselves ultimately determined success or failure. The vision was to execute activities so that it did not matter where service was performed as long as the team delivered operational excellence and focused on the customer experience. Technology changed the game and enabled the Global Shared Services team to support key stakeholders and customers from any location.
Employees were empowered to question existing processes, question managers in pursuit of understanding why they did what they did, challenge customers via partnership to create win-win solutions, and find balance between customer service and the need to be effective and efficient. Additionally, recognition of the positive actions taken by employees was a primary focus and expectation of leadership. Celebrating is an often-overlooked but critically important part of any transformative effort.
Hershey employees’ holistic systems thinking generated by the move to multi-functional shared services demonstrates the transformative power of shared services. Team members started thinking not just about their specific activities but how each team member’s actions affected their teammates, causing them to think as one team. No longer were team members thinking of themselves as part of the finance or operations team per se, but as members of the team responsible for receiving and processing customer sales. This brought changes in behavior and new opportunities for process change.
As a result of earning customer trust, Hershey significantly leveraged GSS capabilities and GSS’ workload continued increasing. This customer-driven growth created a complimentary cycle that extended the value shared services could deliver and expanded the global reach of the corporation. A key element to GSS’s success with the customer in this transformative global effort was the focus on culture and employee development. Hershey established a culture that insisted on each and every member of the team acting as a leader, and they invested in leadership skills and change leadership training for their employees. This was a significant investment, but a worthwhile one for Hershey Company.
The future of shared services
Within the shared services realm, the future and potential for growth are unlimited. Leaders redefine the limits on how shared services capabilities can deliver value. As more activities are integrated into shared service organizations, the opportunity to leverage scale to execute similar activities increases the opportunity to deliver value all while enhancing customer experience.