How many times in your organisation do you hear arguments about the front and back office? We need to keep overheads down, non-value adding costs lower. Yet I wonder if it is time to lose this term and thinking. Is this the business equivalent of the concept of ‘class’ in social science?
For it is, I think, a term that is losing it analytical and explanative power. What business is really able to deliver without its ‘back office’? Yes I accept that elements of back office have a less directly measurable impact on the front office, for example, marketing. This does not mean, however, that they are without value. No commercial company can really survive without understanding its markets or speaking to them?
The other issue is, how clear is it to divide a line between the front and the back office? I remember when I did my MBA and did the HR modules, that ‘HR’ was meant to be more business oriented and directed. This was compared to the old admin and ‘back office’, ‘personnel’. The same argument was being made about IT, marketing, estates and strategic procurement. For it is wrong that these previously administrative functions are still in the back office.
Equally the front office needs to really understand, in a meaningful way, the professional ‘back office’ skills. Commercial awareness is needed by all front office staff, an understanding of finance, IT, risk, legal, and HR are all needed. I am not sure all organisations have yet got this. Yet they are beginning to address the issue; the concept of professional functions having ‘business partners’. I still believe, to be successful, businesses need to employ more renaissance men staff, with a breadth of understanding or the whole gamut of business functions.
So, to internal audit. We internal auditors like to divide ourselves from the business. In particular as a governance function, rather than a management function. Non-executive rather than executive. So perhaps we are a ‘top office’ governance function rather than ‘back office’ function. Do I think that internal audit is a frontline business activity? I think our core skill sets are. Governance, risk management, control and value for money. I think internal audit is not a front-line function, but it can work much more closely to support the front line. It should be much closer to the issues and key risks of the day. It should really push and support the business where it really matters, now.
So just as I think the divide between the back and the front office is less relevant and overplayed, so I think the divide between management and internal audit is overplayed. Yes there are different roles, but they should be working at the same time on the current business issues of the day.