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Excellence in Global Corporate Performance Management
In this article, CEO Pablo Contreras shares valuable insights into managing a complex organization delivering on equally complex customer requirements. He shares how InterComp leverages and adapts CPM tools, the Strategy Map and Balanced Scorecard to provide multi-cultural, multi-linguistic, and multi-faceted services across its sprawling, high growth enterprise. Contreras's Russian operation has taken the use of these tools to new heights. Its customers are a Who's Who's globally including Adidas, Motorola, Continental, IBM, Wrigley, Shell, RusAl, KMB-Bank, to name a few. And yes, InterComp's Customers love to see their Balanced Scorecard results. InterComp Chairman George E. Reese, voted "Outstanding Business Person of the Year" by the American Chamber of Commerce in Russia offers the following insights on the Balanced Scorecard, "The Balanced Scorecard is vital to a startup and early stage company for it provides the roadmap and focus for employees as they deal with rapid change and high growth and concurrently delivery outstanding results".
Why is CPM important in today's Global Market?
How well does your organization link, align and motivate a distributed employee base? How would you know? Is it measurable? Are objectives and performance getting lost in the translation across country borders? How well do your customers understand your service levels? These are a few of the challenges facing multi-nationals today. InterComp provides a template for not only addressing these issues but also maintaining high customer service levels in a high growth, very competitive global market.
Who is InterComp and why is it sought after by global corporations?
InterComp offers a complete line of payroll outsourcing (PO), financial administrative outsourcing (FAO) and human resource outsourcing (HRO) to multi-national companies across Europe, Middle East and Africa, with special focus on the Commonwealth of Independent States (CIS) covering a broad range of industries and organizations. Founded in Houston, USA by prolific entrepreneur Ted B. Miller, InterComp has been operating in the Russian and CIS markets since 1994. Mr. Miller states, that in 2004 the investors were at a decision point; either sell the Russian operation which was the largest payroll and related outsourcing company in Russia or use the knowledge learned in providing PO to primarily western multinational blue chip customers as a platform to launch a truly multi-jurisdictional PO platform into a global enterprise. Virtually none of the large BPO or payroll providers were providing a true multi-jurisdictional service particularly to small and medium size employee population bases. Given that Europe, the Middle East and Africa (EMEA) is now beginning to accept HR BPO as a business concept and given that PO is the most accepted of HR BPO processes the timing seemed perfect to launch a global strategy in the EMEA region. As a result InterComp has begun opening regional shared service processing centers in Europe and the CIS with more to come in the Middle East and Asia. InterComp was the first to introduce PO, HRO and FAO services to the Russian market in 1994 with just a few employees. Today InterComp features a staff of over 300 and collaborates with over 400 companies. InterComp performs monthly payroll processing for over 45,000 employees of its corporate clients. InterComp's success is based on its long-standing experience, the steadily growing demand for its services, its unique technical and methodological basis, the professional expertise of its staff, and its deep knowledge of market specifics in Russia and CIS. The company's experts came up with an unparalleled Multi - jurisdictional solution for PO. This comprehensive solution allows the calculation of employee payroll for client personnel worldwide using a common database platform for employee profiles and multi-jurisdictional payroll legislation.
InterComp's proprietary payroll technology platform is a truly multi-lingual, multi-terminology, multi-currency and multi-employment application, and is at the core of why multi-nationals are seeking its services. A key component of InterComp's unrivaled success lies in it ability to leverage the Strategy Map and Balanced Scorecard to measure and manage its own multi-cultural, multi-location employee base and to partner with customers in this effort.
The Balanced Scorecard is a management framework that translates company strategy into objectives and measures across four perspectives, two perspectives consisting of primarily lagging indicators (financial and customer), and two perspectives consisting of primarily leading indicators (process and people). The four perspectives form the basis for "balanced" management. Fortune magazine reports nearly 40% of Fortune 500 companies today have a Balanced Scorecard program to manage performance. The "Strategy Map" for an organization is a one page pictorial representation of the company's strategy observing the same four perspectives of the Balanced Scorecard. It consists of 15-20 objectives and is meant to be read from bottom to top; illuminating a causal pathway for employees and management to see linked and aligned objectives. Together the Strategy Map and Balanced Scorecard form a potent management framework that not only focuses on performance but also accountability and vertical and horizontal alignment of objectives, measures and targets, regardless of physical location. (We refer the reader to Drs. Kaplan & Norton's global best selling book[1] for a more complete discussion).
How does InterComp use the Strategy Map and Balanced Scorecard?
InterComp engaged its global employees at strategy focused off-sites to secure their input on its Strategy Map to define its strategic objectives and Balanced Scorecard measures. CEO Contreras shares, "keeping up an extraordinary responsiveness to clients from such a culturally diverse and geographically spread team requires that we all speak the same language when making decisions, and that we all understand decisions quickly and in the same way. Our Strategy Map and Balanced Scorecards were built bottom-up and re-deployed top-down, and provide the common language we need to make our internal communication efficient".
Observe InterComp's Strategy Map below. Reading the shaded objectives, from bottom up, People Objective (P3) Develop Personal Scorecards focused on individual and team accountability to execute core processes. Objective P3 therefore enables achievement of Internal Process (I3) Improve Core and Support Processes, the core operating processes. Solid execution of I3 will lead to higher levels of Customer Satisfaction shown in Customer (C3) Accurate Service. High levels of accurate service will in turn result in larger customer orders noted in financial objective (F4) Grow Payroll Revenue which naturally supports (F1) Grow Profitability. Collectively, understanding the causal links among and between these objectives provides InterComp leadership and employees the ability to align and share a common vision with clear set of objectives. In this construct, if performance is low on objective I3, InterComp has an early warning system that this poor performance will eventually show up in C3, and vice-versa. In this way, InterComp understands what drives C3 and can effectively invest and focus on I3 and P3 to ensure high levels of customer satisfaction. This logic extends to rest of its Strategy Map and the related objectives. CEO Contreras notes, "each employee matters and the strategy map and corresponding balanced scorecard will tell all of us and will tell any employee how each of his action is linked to a measurable customer impact ".
In short, InterComp's multi-cultural, multi-language, multi-location based organization can all get on "one" page Strategy Map to drive a strategy to deliver its multi-lingual, multi-terminology, multi-currency and multi-employment services to multi-nationals.
How does InterComp know how well it is performing?
InterComp employs a Balanced Scorecard to measure its progress toward
achieving the foregoing strategy. The portion of the scorecard below is
shared with Customers to measure InterComp, thus showing the degree of
integration between InterComp and its customers. For instance, 3.01
Quality measure of the "Accuracy of Pay delivered to (customer)
employee" is weighted 10 points (out of 100) and Defects per Million
(DPM) must be below 2,000 to earn all 10 points. By the way 2,000 DPM
translates into a 4.0 Sigma level (for our six sigma readers), a very
high service level attained by few companies. This Balanced Scorecard
measure aligns nicely with the Strategy Map objective I3 Improve Core
and Support Processes and will be a lead indicator of how well
InterComp's customers will later rate their satisfaction in C3.
InterComp's Finance Managing Director Ekaterina Demyanova was an early adopter of the Balanced Scorecard and facilitated its use in Russia. She comments on her experience using this strategic framework, "It is vital for any Company to have clear, measurable and interrelated objectives. We have built the cascade of goals across various departments. By doing that we turned organizational processes into matrix type, made it easier to focus on really important targets. I think, implementing BSC two years ago allowed us to start building a truly multinational organization with matrix approach. We are extrapolating our CIS experience with BSC onto our Global business units across functions currently. For shareholders it brings extra company value, adds to process and goals transparency. For managers it helps to concentrate on the weak areas first - BSC makes it visible how good we are progressing. For employees such system clarifies how their success is measured and assures them that they work uniformly towards the same ultimate goal. I had experience in other companies of implementing BSC and other goal achieving/motivation systems like MBO (Managing by objectives) for example. I clearly see the benefit that stands BSC system apart from other linear counterparts. BSC mixes in a right proportion various quantitative and qualitative goals making a tree, a cascade of targets. Of course, it's a challenge to implement and top-management team needs to be eager and ready to align all processes.
Similarly, Natalia Stolnaya, Managing Director, BPO is responsible for key accounts and offers her thoughts on the use of the Balanced Scorecard, "We are a service organization seeking excellence in service delivery and a partnership approach to clients. Therefore we invest a lot of time in measuring what we do, how we perform and how clients see us. We also invest a lot of time structuring and re-acting to everything we learn from those measures. And at the end clients can see and appreciate the results of such a thoroughly managed continuous improvement attitude."
Customer Success with ViewSonic - A large, complex multi-jurisdictional client
ViewSonic is a worldwide leader in visual display products for today's business, consumer electronics, education and professional markets. The company offers an innovative LCD and CRT desktop displays, digital televisions, projectors and visual devices that are all designed to make the customer's visual experience easier and more enjoyable. ViewSonic remains a leading monitor brand in the United States and has won more than 2,000 awards from independent global publications and organizations. Head of the ViewSonic office in CIS, Stephanishin V.A, had this to say about Intercomp:
"ViewSonic Europe Ltd. (Great Britain) represented by its Moscow representative office would like to express its gratitude to InterComp Technologies LLC for their support in business process outsourcing, including payroll, accounting and HR administration.
InterComp has proved to be a professional and reliable partner rendering high-quality services to ViewSonic. In the course of our cooperation with InterComp, our company has optimized its HR utilization, and minimized its risks associated with timely payroll services delivery.
We would especially like to express our gratitude to InterComp managers who work with our company - Maria Litvinova and Svetlana Denisova - for their professionalism, attention, and high-quality services."
In summary, Intercomp has achieved "Excellence in Corporate Performance Management" through use of the Strategy Map and Balanced Scorecard. InterComp Technologies has aligned employees vertically and horizontally from Moscow to St. Petersburg and from Budapest to Geneva to strategically manage its meteoric growth while achieving global customer satisfaction. InterComp's CEO Contreras effectively manages innovation across multiple cultures and geographies with diverse employee base to meet customer requirements in partnership with some of the world's largest and most successful organizations. He extends InterComp's managerial processes to share Balanced Scorecard measures with its key customers to jointly monitor results and increase transparency strengthening its partnering relationships. Finally, InterComp's multi-cultural, multi-language, multi-location based organization can all get on the same page to drive a strategy to deliver its multi-lingual, multi-terminology, multi-currency and multi-employment services to multi-nationals.
For more information about Intercomp visit: http://intercomp.ru/en/main/
About the Author:
Bob Paladino, CPA: He is a long time thought leader and executive in the Corporate Performance Management and Balanced Scorecard space. He is Managing Partner of Bob Paladino & Associates, LLC and author of a best selling book, "Five Key Principles of Corporate Performance Management" (Wiley 2007). He is regularly quoted and published, and speaks globally. Contact: bobpaladino@paladinoassociates.com
[1] Drs. Robert S. Kaplan and David P. Norton, "The Strategy Focused Organization - How Balanced Scorecard Companies Thrive in the New Business Environment", 2001, Harvard Business School Press.