When the CFO Has to Let Finance Staff Go

How do you let go of finance professionals affected by restructuring? This was the question that faced Lawrance Lee when international law firm Linklaters outsourced its general ledger and account payable processes in 2010. Because the business process outsourcing vendor in India will be doing their job, six finance staffers had to be let go.  

The problem was that the outsourcing project took much longer to complete than the promised three months – it took 18 months, to be exact. Lee, the company’s Head of Finance for Asia, had to scramble to keep the staffers temporarily on board.
In Part 2 of an interview with CFO Innovation’s Angie Mak (read part 1 here), Lee discussed the impact of outsourcing on Linklater’s finance staff, both those who were asked to go and those who remained. Excerpts:
At which point did you tell your own finance staff some of them were going to lose their jobs?
I think we told them when we were very close to signing with the outsourcing vendor in India. We communicated the news to all the finance teams globally, because this was a global project, not just an Asia project. London was communicating to their team and I was communicating with my team, all within the same day.
How did they react?
At the beginning, when we first announced the news, there probably was [some concern]. Probably not so much in Asia, but more in London. But prior to signing the contract with this vendor, the discussion on the contract itself also took a very long time, perhaps half a year.
The other issue was about the confidentiality of our data [that we would give to the vendor]. We needed to sort all those issues out, and that dragged on. Our employees already knew the outsourcing would happen, and they were asking, “When is it happening? When are you starting [to replace us]?” And we couldn’t give them the answer because we ourselves didn’t know.
So we had to do a lot of communicating, give them updates on what is happening. By the time the outsourcing started to take place, we said to them, “The vendors are coming in,” before it happened. By then, the staff had already prepared themselves.
How did you motivate the staff so the handover would proceed smoothly?
Telling my staff the news that we were outsourcing and saying how they would be impacted, I thought that would be hard. The implementation stage, the parallel run, turned out to be the hardest.
Knowledge transfer was not hard because the staff already knew how to do their jobs, so it was just a matter of telling the vendor everything that they knew. I thought my challenge would be that my staff would be quite resistant to transfer their knowledge to the outsourcing vendor but that was not the case, so that was great.
The challenge was that the parallel run kept dragging on, and a lot of the staff were frustrated with the quality of the vendors and the errors they made. But I wouldn’t say it was entirely the vendor’s problem. I was quite open with the team and told them that. Of course, I did this very subtly.
Somehow, I’ve trained the team to be very meticulous. They were actually checking every line in the GL and cost centres, and they were becoming very picky. The descriptions in the journal for invoices are quite subjective; anyone can type anything they want. But my staff were used to the way it was entered. To me, that was not inaccurate.
But to my team, that was a big deal. With that kind of issue, I had to tell them it’s not a big deal. I had to go back to them and say, “Guys, you have also made errors before. If the vendor had made errors in 2% of the work, you shouldn’t be screaming at them. You guys do make the same amount of errors too.”
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