Issue

Syensqo has financial Delegation of Authority (DOA) defined in various different ways across GBUs and functions, with different approval limits being mapped to roles, positions, or even named persons. Application of these multiple different DOAs is also fragmented, with many approvals happening outside any system, being recorded only in emails or documents such as spreadsheets. With the ERP Rebuild program there exists an opportunity to simplify and standardise the Delegation of Authority across the organisation to implement a single, clear and unambiguous policy and financial approval matrix which is standardised across GBUs and transversal functions, enforced consistently by IT systems for predictability and auditability, and which ensures that Syensqo's exposure to risk is managed appropriately. 

Recommendation

It is recommended to  Standardize and simplify the various existing Delegations of Authority (DOA) in to a single approval matrix aligned with job positions and bands in SuccessFactors. This approach will lead to a significant simplification and standardization of the DOA framework across all Global Business Units (GBUs) within Syensqo, ensuring consistency and clarity in decision-making processes throughout the organization, and a consistent approach to the management of risk by the organisation. 

By aligning the DOA with specific job positions and bands, the organization will establish a clear and consistent framework where financial and operational authority is systematically granted based on an individual's role and level within the company. Furthermore, standardizing the DOA will enhance governance over both the DOA policy and the financial matrix. With a consistent and well-defined structure in place, the organization will be better equipped to monitor, manage, and audit financial and operational decisions, thereby reducing the risk of errors and unauthorized actions.

In addition to improving governance, the standardization of the DOA will also facilitate the systematization of workflows within the new SAP systems. By integrating a single, standardized DOA into S/4HANA and other systems, Syensqo can automate approval processes, reduce manual intervention, and improve overall efficiency without incurring the sizeable costs of managing multiple, sometimes conflicting, GBU- and function-specific approval matrices in a workflow engine. 

Background & Context

Financial delegation of authority refers to the process by which an organization assigns specific financial decision-making powers to individuals or groups within the company. This delegation outlines who has the authority to approve financial transactions, such as expenditures, contracts, budget allocations, and other monetary commitments, and up to what monetary limit they can do so. Generally the DOA is used to manage the exposure of the organisation to financial risks, for example by limiting the size of financial commitments and risks which lower-level management  can incur on behalf of the organisation.

Following are some of the key criteria for Delegation of Authority in general:

Some of the key processes to which DOA approval is applicable: 

• Portfolio and Project Expenditure
• Capital Expenditure
• Sourcing / Procurement Expenditure
• Sales proposals, prices and contracts
• Customer credits and rebates
• Inventory
• Acquisitions and Divestments
• Treasury

Syensqo currently has various different Delegation of Authorities defined across multiple GBUs. Each DOA may have its own set of approver roles and thresholds, leading to a mix of systemized approvals and offline processes. This fragmented approach has created inconsistencies and inefficiencies across the organization, has led to excessive complexity and low predictability in workflows, or to off-system manual processes, thus making it challenging to ensure uniformity and accountability in decision-making processes. 

Provided below are some of the many DOA guidelines which exist across GBUs and transversal functions. Some of these DOAs are globally-applicable and GBU-agnostic, e.g. Procurement. Many others are specific to a single GBU. Some specify a DOA policy against the person's role in the organisation structure while others refer to approvers by their names. Implementing such approvals in a workflow system is extremely challenging due to the complexity, lack of a formalised structure for the rules, and the fact that many rules are not linked to underlying organisational structure data. Implementing a variety of different rules for different organisations also increases the risk of gaps or overlaps in coverage, and increases the development and maintenance effort of the resulting workflows. 

As part of the ERP Rebuild program, there will be a concerted effort to standardize job bands and positions across the organization. This alignment of bands and positions will further emphasize the need for a consistent approach to Delegation of Authority, ensuring that all employees, regardless of their GBU, operate under the same guidelines and have a clear understanding of their decision-making powers. This will also enhance the risk-management of the organisation as a whole by clearly defining the level of commitment and obligation, and thus risk, any employee is able to expose the organisation to. 

Assumptions

• Jobs, positions and bands will be standardized in SuccessFactors.

Constraints

• The DOA needs to be finalised before the build phase of the ERP Rebuild project so that workflows being developed or deployed by the systems in scope of ERP Rebuild can implement the rules. 

Impacts

• Downstream Systems: Once the Delegation of Authority along with the financial matrix is standardized, the downstream systems and applications if not already onboarded into the new ERP Rebuild landscape, that use the DOA should change and adopt the same
• DOA Ownership: In order to standardize and simplify the DOA policy, it needs to be managed and governed centrally. Ownership needs to be agreed and the function that owns the DOA will have to co-ordinate and finalise the DOA policy and financial matrix aligned with the positions and bands

Business Rules

The following Business Rules are proposed:

• The Syensqo Group Delegation of Authority Financial Matrix is a reference to all the DOA approvals within the organization
• Evidence of approvals will be stored in the respective system - as part of the workflow log, or as an attachment
• Job Bands and positions will be directly referenced from the HR Information System (i.e. SuccessFactors)
• Approval workflow tasks will be sent directly to the ultimate approver who is authorised, as per the DOA matrix, to approve the full transactional value within the relevant organization boundary. There will be no multi-step approval of lower-level managers en route to the ultimate approver. 
• Workflow tasks may be routed to a substitute in case of absence. Such a substitute must hold equivalent or higher approval authority than the original approver. Substitution to a lower-level employee is not permitted. 

Options considered

Following are the options considered for DOA

Option A: Keep the existing variety of DOA frameworks

No change is effected in the existing Delegations of Authority, and each GBU or transversal function will continue to have its own DOA matrix. 

These different matrices will be encoded in the relevant workflow rules engines of the systems being implemented by ERP Rebuild. 

In the case of conflicts or an inability to clearly determine the correct approval path due to misalignment between these separate DOA matrices, a workflow administrator will be required to resolve. 

Option B: Standardise and simplify the DOA to arrive at a single DOA matrix aligned to job positions and bands

As a part of this option, the DOA policy and financial matrix is standardised according to the harmonized job bands and positions. The standardization process ties the levels of authority — such as approval limits, spending thresholds, and contractual commitments — to specific job bands within the organization. Job bands typically reflect an employee's level of responsibility, expertise, and seniority, ensuring that those in higher bands have greater authority. For example, employees in senior management bands might have authority over large capital expenditures, while those in middle management might be authorized for smaller operational expenses.

The table below is an example of how the financial amounts might be mapped to a band into the standardized DOA. 

The exact DOA matrix will be determined during the detailed design phase in consultation with various stakeholders in the organisation. 

Evaluation

	Option A: Keep the existing DOA	Rating	Option B: Standardise the existing DOA	Rating
Consistency Across Functions	Can be tailored to fit the unique requirements of each department, allowing flexibility.  Inconsistencies can arise across departments, leading to potential confusion and inefficiencies.	Medium	Ensures uniformity across all departments, reducing confusion and enhancing coherence.  May not account for specific needs of each department, leading to overgeneralization. This is however overcome by adding the exceptions to the DOA process where applicable	High
Efficiency	May lead to delays as approval processes vary by department, causing bottlenecks. Offline approvals will still have to continue for some of the processes and some of the existing applications / excels will still have to stay as it is very complex to systemize the requirements	Low	Streamlines approval processes with clear guidelines, reducing delays. The workflows can be systemised and therefore the approvals can happen in the system	High
Clear Accountability	Accountability may be inconsistent, with varying standards across departments. Proof of approval is stored in multiple places	Medium	Establishes uniform accountability standards, making it easier to manage and audit. Proof of approval is stored in the system as part of the workflow process	High
Risk Management	Allows departments to implement risk management practices that are best suited to their specific needs.  Different approaches in different departments can increase the risk of errors or compliance issues.	Medium	Reduces risks by applying uniform controls and procedures across the organization.  May not be flexible enough to address unique risks in specific areas. Exceptions in the DOA will have to cover these unique risks and might need exceptions in the DOA process	High
Training and Compliance	Training and compliance efforts are more complex, as different policies may apply in different areas and training needs to be conducted multiple times	Medium	Simplifies training and compliance by having a single, clear policy to follow.	High
Scalability and Adaptability	Easier to implement changes in specific departments without disrupting the entire organization. As the organization grows or restructures, the policy needs to be revalidated / rewritten with the list of new DOA approvers	Medium	As the organization grows or restructures, a standardized approach to DOA and financial authority can be easily adapted to new positions or job bands. This scalability ensures that the policy remains relevant and effective as the company evolves, without requiring significant overhauls each time the organizational structure changes  Can be difficult to manage and scale, particularly in larger organizations with diverse operations.	High
Change Management	Minimal effort for change management as the current process	High	Requires extensive change management	Medium

See also

Insert links and references to other documents which are relevant when trying to understand this decision and its implications. Other decisions are often impacted, so it's good to list them here with links. Attachments are also possible but dangerous as they are static documents and not updated by their authors.

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