Award-Winner Interview: John Gregory, Kellogg's SSC

(In May 2008 the Kellogg's Shared Service Center in Manchester, UK, took top honors at the annual shared Services Excellence Awards for Europe, being recognised as Shared Services Organisation of the Year - having already taken the award for Shared Services Employer of the Year. Now SSON catches up with SSC Director John Gregory to find out a little more about the journey to internationally recognised shared services success, and the value of "people, passion, pride"...)

SSON: John, let’s start off on a personal note: how did you get into this business?

John Gregory: I fell in, really! I was working as finance director in Kellogg’s for our European Convenience Foods business. The European roll-out went so well that the business and my role was pushed into the existing market structures earlier than we had thought. At that point in time the European Shared Service Center Director role was available in Kellogg’s - I got asked if I would like to do it, and the rest is history!

SSON: How old is the Kellogg’s SSC?

JG: Eleven years.

SSON: And what was the first function that was implemented?

JG: The strategy was to bring all market back office finance into the centre on legacy systems and processes. This was then rolled onto the Oracle Consumer Packaged Goods solution which we were developing jointly with Oracle at that time. Perhaps our learning was that we were a bit too ‘bleeding edge’ on the technology front and we certainly should have put more focus on processes and standardizing them for Europe. That took us from 1997 to 2001 and the result was a European ERP solution but with many localizations at the process level. Between 2001 and 2003 we started to standardize and automate process. Successes were a scanning and workflow initiative on payables and an automated expense solution. The business at that time had bigger priorities on driving growth and the centre was very much left to automate on a piecemeal basis. All that changed at the end of 2004 when we took Oracle out and installed SAP for the whole of Europe in nine months; the implementation was so fast that many of our localized processes became standardized almost overnight – there was simply no time to configure localizations.

SSON: That sounds a massive task: what was your role in that?

JG: I was the project implementation lead for back-office finance for the whole of Europe.

SSON: And what were the biggest obstacles you had to overcome?

JG: I think to be honest it was just keeping people in position and keeping everybody happy. The great news about it was that there were no customizations being put in so I didn’t have to deal with any of my customers who wanted to put various tweaks in for their own markets: none of that happened. That was supported by the fact that this was led by our CIO and COO, and there was a very clear message from the top that "this is going in vanilla, it’s going in fast and we’ll sort any issues out as they arise".

SSON: What sort of working relationship did you have with senior management?

JG: Well, I was having weekly meetings with the European CFO. I built a very close relationship with the UK FD; he and I actually set the scene for the rest of the front office implementations across Europe. We did the UK first - which was 50 per cent of the business - and then we went out with the message that "it works for the UK so it’ll work for the rest of Europe". In association with that, I was over in Chicago, at our global IT headquarters, about six times that year and was also having weekly conference calls with our CIO. He was a man for this time – without his autocratic style this project could not have happened in the given timeframes. This was a period of great personal development for myself and my team.

SSON: What was the next stage then?

JG: What I’ve been trying to do for the last three or four years is to imprint a Balanced Scorecard approach to shared services on my team. Whilst the business remains closely focused on Quality and Control, to achieve this I constantly need to manage and develop our people resource, give great customer service and have a strategic eye on what’s next for my SSO.

SSON: What functions are there now in the finished SSC?

JG: We’re still finance-based. In addition to that we control elements of our master data tables and all European Travel plus expenses associated with that. We do constantly debate the pros and cons and priority of putting other business related services into the centre.

SSON: Let’s talk about people now. When you picked up the award for Shared Services Organisation of the Year you said "it’s all about people" and "people, passion, pride"…

JG: Yes, that’s our motto. What makes us different, what differentiates us from most SSCs is that most organisations talk about talent management, but I think that sometimes the execution gets missed. When it comes to looking after the development of people it’s almost top of the agenda all the time with us. It all starts at recruitment. We have really got a talent-starved market - especially at the qualified level - in Manchester. Coupled with that is the pressure of having about 20 or 30 SSOs within about ten miles of us, so we’re all fighting for the same sort of resource.

Therefore we do a great deal of proactive recruitment: we regularly give lectures at local universities, we go and talk to students about careers in Kelloggs, we work very closely with CIMA – we’re a CIMA partner. We do a lot of branding of Kelloggs and the SSC which is something we never did in the past. We’re actually branding our adverts, branding a career with Kelloggs. We are constantly looking for new and innovative ways to touch the potential candidate. In the past we have been overly reliant on agencies. Having said that it’s still very difficult to find really good qualified accountants and we’re still having to go down the agency route occasionally despite the added cost.

So recruitment’s a major deal for us. We do try to recruit people not just for technical skills - because we believe that if they’re a qualified accountant or even a graduate they have an inherent level of skill to do the job – we’re looking for a lot more. We do a great deal of work at the interview stage to try to gather information on leadership besides technical competencies. That doesn’t mean future directors necessarily; it means people exhibiting the traits that will help get things done smoothly in a company of our size and also who show signs of having the ability to develop broadly and hence further up the organization.

One of the messages we send out to all the teams who are recruiting is: "recruit for the future not just for the gap." For example, during our SAP implementation things were so fast-moving that at times we felt that we were literally dragging people in off the streets. It was the best that we could do given the circumstances but doesn’t necessarily strengthen the organization! We’re constantly improving our process to try to get to external talent that doesn’t necessarily know it wants to come to Kelloggs. We also recruit ahead of the gaps; which means that we do need a bit of leverage on head-count from time to time. However, whilst unquantifiable in financial terms, I’m sure that the benefits of pro-active recruitment more than outweigh the costs.

I have an actual head-count of about 120, but I can recruit up to 125 if I see the right caliber of people. Once they’re in, obviously we have an induction program that everybody has to follow – this is a tool that I would say most organizations should have but again execution is key. Every new starter is given an induction pack and a buddy on Day 1. Events are ticked off as they happen. Within the first month at Kellogg’s I meet with every new starter and welcome them to the company. I also take them through our company’s strategy and how that links into the SSO strategy and hence their role.

Within the first twelve weeks we’re talking to them about their Personal Performance Plan - setting the targets for the year. Soon after this we discuss their Individual Development Plans. At this time we sit down with our people and take them through the Kellogg’s leadership attributes. Specifically we discuss areas of strength and areas for development. Up until about three years ago this used to be a once-a-year exercise: it used to be "oh, it’s IDP time; we’ll just fill in those forms, get them on the internet and that’ll be it". Now we’re reviewing this at least quarterly with a view to helping people carry out their own personal development plans. We try to facilitate the learning environment and the opportunity.

We have a great operational effectiveness team who actually help us with internal training courses to enhance our leadership competency development (although our ethos is that we should only formally train around ten per cent of the time). Most development is achieved by putting people in the right sort of roles that will give them the right sort of experience for the development they need, or by giving them - especially the high potentials - some special projects to work on which takes them outside comfort envelope.

SSON: How hands-on are you personally?

JG: We have two People Development Committees in finance. PDC1 is led by our CFO. I sit on this one along with two or three other finance directors and our HR business partner. The remit is to set the tone for the development of the finance organization and to look at the development of our high potential employees at the higher levels of the organization. This means that we are usually talking about a talent pool of around 20 individuals across Europe. The aim is to move those people around through various roles to give them the right sort of experience to go to the next level in the organization. One of the things we’ve been guilty of in the past is pushing people up silos thinking that they’re really good at what they’re doing - but finding that actually they’re high-performers in role rather than high-potential for the organization. So the learning for us has been to move them around at a much earlier stage in their careers. We give them all the tools to help them so that when they are put into new situations they’re ready and know how to deal with new experiences.

So that’s PDC1. I then chair PDC2 which runs on a similar format as PDC1 but looks at our organization from the new starter to the newly qualified level – this PDC also spends a lot of time on the internal training of the finance organization and monitoring recruitment campaigns. Our remit is always to recruit straight from university or newly-qualified accountants and develop them into either people-managers or leaders or both. We believe that if we’re recruiting at the manager level we’ve done something wrong.

SSON: Do you never recruit at manager level?

JG: Well we have had to a couple of times in the last two years, but not often. Where we have tripped up isn’t at the manager level: it’s probably higher up at the FD level, and the reason is that we just can’t get the mobility. We’ve developed a team of good people who could do these roles, but then if a job turns up in an overseas market for example we do struggle to find internal candidates who are mobile.

SSON: As a mature – and award-winning – SSC, what do you now see as your biggest challenges moving forwards?

JG: I think my challenge is to prove to the organization that I am not a transaction processing factory with no value-add. My main drive now is to show the company that the SSC is adding value into the organization and can be a trusted business partner to them. An example of this would be the leverage we have on payables and receivables. We talk a lot about cash in Kellogg’s, and about how cash is king, but we spend so much time focusing on profit that sometimes the focus on cash delivery is diminished. Because we control payables and collections in the SSC we can have a big say in the management of cash delivery. This is one of many areas where we think that we are moving up the value chain.

I think another area where we’re moving closer to the business is in managing our treasury processes, the complex funding instruments that we utilize and the financial systems and control necessary to make this work effectively.

SSON: Finally, John, what advice would you give to people just starting out on the shared services journey?

JG: Get senior buy-in, definitely. Make sure that people are prepared to have the tough conversations and deliver the tough message. Try to get a standard ERP solution but put standardized processes on it. But throughout, keep focusing on your people; developing your team and retaining what you’ve grown in your organization rather than someone else’s.