How do centres of excellence work for businesses
Rapid globalization, intensive competition and the growing popularity of the multiple-SBU model have significantly augmented the corporate HR’s role. HR, once regarded as a latent support function, is now directly contributing towards strategic organizational objectives, such as technological leadership, product innovation and process improvement.
To achieve these objectives, HR executives have had to redesign and intensify their focus on their conventional mandates of talent management and capability building. The Centers of Excellence (CoEs) approach has emerged as a winner when it comes to achieving organizational objectives by focusing on these mandates.
What are CoEs?
CoEs are quasi-autonomous divisions within large organizations, that are dedicated to building new organizational competencies. These competencies may translate into new products, better processes, improved customer experience, enhanced technological integration etc. They are aimed at giving the organization a strategic edge over its competition.
CoEs bring together the right talent and resources, create the correct relationships among them, and provide them expert mentoring. They encourage people to explore new ideas and test them out in an incubated setting. The successful initiatives are then transferred to the concerned business unit and taken live.
How they are structured?
CoEs consist of several verticals, each of which is dedicated to a specific strategic area. These verticals are headed by industry experts in the area. The overall control of the verticals is vested in a centralized CoE team, which is managed by the corporate HR.
The verticals take up new initiatives that are generally inspired by people within the vertical. People are encouraged to lead the development of their ideas and test their lucrativeness to the overall business. Project leaders are guided by the vertical head along the way, and encouraged to polish their ideas to make them ready for being employed by the company.
Support and guidance
CoE’s key function is to ensure that adequate support is provided as needed to multiple business lines in the company. At times, businesses have to pull resources from wherever they can. Getting subject matter experts on issues that cause a slowdown in decision-making could help those businesses. In some organizations, all stakeholders involved in a project are brought together by the CoE to tackle deadlocks. This is done over an intense session over two days to move forward.
Shared learning and measurements
Another key role that a CoE can play in multiple lines of businesses is to share knowledge from multiple internal and external resources. An efficient intranet could be a centre of excellence in that context. A resource tool that goes all the way to help line managers tackle prickly situations can make a huge difference to the productivity in an organization. Identifying the right output metric and showing the way a difference is made to line businesses is critical for the CoE. A way to ensure measurement of the impact is a must.
CoEs as talent cultivators
CoEs help organizations bring together good talent and provide talented people the opportunity to realize their full potential. In the process, the organization gets new resources that it can utilize to plow ahead. CoEs are like laboratories where employees introduce new ideas and take leadership of their small projects. They help organizations build a capable pool of capable future leaders. CoEs are all about discovering and capitalizing on new ideas. They remove the fear of failure that may haunt employees when working on mainstream organizational projects.
A centre of excellence usually starts with a function that influences every department. Research and innovation top the list. If you do not excel here, you cannot have that cutting edge in the market place. In most companies, the initiative is steered by a group or a committee formed by picking up talented individuals from various businesses or departments. They create a broad innovation vision and agenda for each department. They recommend allocation of the right human resources and talent to ensure that businesses secure the edge needed to compete. They make innovation a core agenda for everybody and invite participation from employees.
The Bajaj Finserv example
The CoE team at Bajaj Finserv has seven independent verticals: Product Innovation, Product Management, Campaign Management, Business Intelligence, Digital Intervention, Customer Obsession, Learning & Development. These verticals are managed centrally and are on a constant lookout for attractive opportunities that can be capitalized on. The verticals focus in particular on opportunities that can help with process optimization, product excellence and better customer service levels.
The CoE team translates these opportunities into time-bound projects and assigns project leadership to the best-suited people. It regularly monitors project activity and creates parameters to measure the success of the project. The CoE team tests these projects on a live business environment and transfers them to the respective business unit once the optimum results are obtained.
This being an ongoing process, the CoE team is equipped to constantly build capabilities and be a true breeding ground for new growth avenues for its various SBUs.
The combined effort of all these verticals will enable businesses to fully leverage existing capabilities within the organization, build new capabilities based on industry practices and enhance business delivery by bridging the gap between strategy and execution.
As a vital byproduct, the CoE model will also create a deep pool of functional experts and future leaders who would have already led and contributed to a number of pilot projects of varying descriptions. These people will emerge as true growth champions for the SBUs once their projects are assimilated in the SBUs.