Q&A: Brad Siler, CFO, Graebel Companies

For years now, Shared Services News (SSN) has been reflecting the trials and tribulations, as well as successes, of those tasked with running shared services organizations. We’ve heard from inhouse SSO leaders, from those managing outsourced processes, and from consultants and academics. But who are the sponsors behind these teams? How are we reflecting their vision and support? As part of a series on CFO profiles, this month SSN speaks with Brad Siler, CFO of Graebel Companies, Inc.

SSON: Brad, how was shared services introduced to Graebel?

Brad Siler: We are a global relocation and moving organization, therefore, some form of centralized activity was required. I have been with Graebel for 14 years, and cannot recall a time when centralized accounting was not in place, albeit on a small scale compared to today. In Wisconsin, the birthplace city of our Company, a business center handled accounting activities for 59-years. It was from this center that we built and expanded our centralized shared services operation. Our reasoning was simple. Relocation is a low margin business and oftentimes services are deemed commodities, causing already high discounts to be volatile and making margins thinner. To remain competitive we had to drop more to our bottom line through back office cost reductions. So stage one was migration of our national accounting activities and functions to Wisconsin.

SSON: How directly are you involved with the shared services operations? What is the reporting structure?

Brad Siler: My office is at our world headquarters, in Colorado, whereas our shared services team is in Wisconsin, so there is a geographic separation. I visit the Wisconsin center six to eight times annually, and work closely with Dave Kordonowy, VP of shared services. Shared services reports to me, and I report to the executive team and board of directors.

SSON: Do you view the shared services role as providing transactional services or as a more strategic tool?

Brad Siler:The initial driver for our shared services operation was transaction cost reduction. That was fairly elementary: do the same processes, but cheaper. And over the last three years we’ve capitalized on that strategy and captured those efficiencies. But this is just the initial stage.
I’ve come to understand that shared services can have a much bigger role in a company, for example a shared services business model can ensure a Company’s strategic initiatives are implemented and performed according to established standards.

Looking forward, we are poised to take shared services to the next, more strategic level. Instead of looking in-house, the next step for us is to have shared services look outward, to our multiple divisions, and encourage each to comply with the standards set in place so we will be more efficient overall. So it is really about impacting operational changes administratively, in the shared services group. Put differently: As things get more competitive, we will drive out transactions costs and make sure that we are operating as efficiently as possible company-wide. We have successfully proven that we can do it in administrative functions. Now we are extending the shared services vision and strategy to our sales and operations performing or managing relocation and moving services for our national and globally active customers.

SSON: Is outsourcing something you’ve considered, perhaps pressured by current market conditions?

Brad Siler: No, we haven’t explored outsourcing. We invested significant monies and have invested significantly in our people to ensure successful in-house shared services. Exporting any or some processes has not been an objective or consideration.

SSON: We’ve seen a slow down from an investment standpoint at the moment. Are you finding that you are distracted by more pressing corporate concerns and are unable to give shared services the focus it needs?

Brad Siler:Absolutely not. Quite the contrary at Graebel. Given any economic environment in which one needs cash, and the resulting focus on monitoring and improving cash flow, it’s intuitive that a fully-functional shared services environment presents a huge advantage.

Right now I’m thinking, ‘what additional functions can I merge into shared services to improve cash flow?’ And that’s not just from a transactional, but also from an operational perspective. If any event in the field is delaying cash flow, the question begs itself what can we do in shared services to improve our field performance, and ultimately cash flow? Without a doubt shared services has a great impact at Graebel today, and will have even more so in the future.
In terms of investments, everything that we do is carefully evaluated for efficiency, and from a cash flow perspective. This means, if we consider a new system, we ask: Will it improve efficiency and cash flow? If the answer is yes, it is our strong inclination to invest, even in today’s environment, because if one does not invest wisely, one will most certainly fall behind.

SSON: Do you think CFOs are getting enough information about shared services, either at conferences targeting them or even directly, through other media?

Brad Siler: Well, on the one hand, every CFO today will have efficiency gains at the top of his or her agenda. But specifically, I do not feel that I am getting enough shared services information. At the onset of advancing our shared services project, I did some informal networking with companies such as BellSouth, but I think the obvious step is for organizations such as SSON to broaden their net and include the C-suite in discussions. If an organization like SSON discusses an agenda with just one group, you’ll always risk missing best practice changes evolving at the corporate level. I believe that it is mission-critical to reflect executive agendas across this medium, as well as for executives to be invited to listen in on, and contribute, to such forums. Here, Dave Kordonowy and I have worked closely together and remain in close communication to ensure that Dave and our shared services team are aligned with the executive team’s agenda.

More information on Graebel Shared Services Organization

Graebel SSO is a captive organization established in January of 2005 and presently employees 183 full-time employees.

Mission Statement: To be a customer focused organization that provides the highest quality administrative and accounting services that are efficient, cost effective and increase the overall profitability of our internal customers and the corporation.

General Ledger Accounting
Interstate Shipment Processing
Non-Interstate HHG Shipment Processing
Commercial Services Shipment Processing
I/C & TSC Administration
Claims Settlement and Administration
Credit & Collections
Accounts Payable
Cash Applications
Business Services (Tariff maintenance, customer setups, etc)
Payroll Processing
Performance Reporting & Quality Control
National Account Customer Service

Shared Services -
Key Performance Indicators

Key Performance Indicators are used to measure the efficiency and cost effectiveness of each administrative function in Shared Services. Management uses these indicators to review the cost effectiveness of each department and their individual employees. Some examples of Key Performance Indicators as based on 2008 results are:

Cost per Invoice Issued
Household Goods : $60 per invoice
Commercial Services : $33 per invoice
Accounts Payable
Cost per Check Issued : $4.58 per check
Cost per transaction: $0.67 per invoice entered
Independent Contractor Administration
Average number of contractors per month: 660
Cost per I/C per month: $83.70
Claims Settlement:
Total claims settled: 15,586
Cost per settled claim: $143.57
Payroll Processing:
Average number of employees paid per month: 1,756
Cost per employee paid per month: $15.17
Performance Reporting:
Completed evaluations: 9,247
Cost per completed evaluation: $12.81
Cash Transactions:
Number of cash applications: 120,209
Cost per cash transaction: $2.22

Shared Services – Key Initiatives
Provide recommendations to Graebel Companies for improved processing procedures in all areas of our business
Improve cash flow and reduce interest expense
Reduce administrative expenses throughout our organization
Communicate effectively with field operations in order to capture more revenue on services performed while honoring our clients contracts
Reduce bad debt write-offs due to accounting related issues
Improve our customer service relationships with our clientele
Communicate with internal and external customers our Quality Control and Claims ratios as well as our initiatives to improve quality and reduce claims frequency and severity.