What is a Back Office, what tasks does it perform and where is it located in an organisation?
Smartpedia: The back office takes care of the administration and support of internal processes and usually has little contact with end customers.
Back Office – administration and internal support
The back office is part of an organisation that manages information and supports internal processes. Simply put, the back office takes care of the organisation within the organisation. In the past, it was colloquially referred to as “administration”.
The term “back office” comes from a time, when companies designed their offices in such a way that the front part – also known as the front office – dealt with customer interaction, while the back part – literally in the background – dealt with processes without customer contact. Even today, such “obvious” divisions can still be found in companies with physical customer contact, such as banks, insurance companies or car dealerships. Furthermore, there are back offices in numerous organisations and organisational areas, such as sales, marketing, project management, product development, human resources, accounting, etc.
Tasks in the back office
The tasks in a back office differ greatly from the field of application. It is often argued that these are not activities that affect a company’s core business. On the one hand, this is true, because the core business could be, for example, the sale of cars or the development of software. On the other hand, this core business could not function without internal support. Here are a few examples:
- Accounting: writing invoices, checking incoming payments, sending reminders or warnings of late payments
- Human resources department: selection of candidates, drafting of employment contracts, preparation of interim or job references
- Legal department: formulation of general terms and conditions and data protection declarations, internal advice on emerging business transactions, representation of the company in legal disputes
- Project management: project assistance, creation of protocols, documentation of risks, reporting, organisation of kick-off meetings
- Sales: sales assistance, maintenance of master data, creation of offer templates or offers, follow-up after sales transactions
- Product development: documentation of requirements, maintenance of backlogs, creation of a traceability matrix
- Process management: maintenance, documentation and automation of workflows, adherence to IT compliance
The list of tasks can easily be supplemented, especially as the tasks depend strongly on individual areas of the organisation.
The back office in the organisation chart
If the back office is part of an organisation, should it not also appear in an organisation chart or at least in the room allocation plans? But it does not, or if it does, then only in a few exceptions. This is because the back office – to put it more precisely, the employees who work in the back office – is not an organisational unit in the way we understand it today. Nowadays, there are areas such as accounting and human resources which mainly handle and administer internal processes, procedures and data records, but which operate primarily under their core activity – e.g. accounting. The term back office is therefore more of a colloquial description of activities that “keep a company running”. These are activities and roles such as project assistance, sales assistance or a warehouse clerk.
Customer contact in the back office
One criterion that contributes to understanding the back office is customer contact. It is often said that a back office has little or no customer contact. Such a statement, however, shows a certain vagueness, because if the back office takes care of the internal administration of information and the support of processes, then the employees of an organisation become customers. The project manager needs an updated project plan, the development manager needs a progress report and the sales employee needs a well-formulated offer that can be sent to the prospective customer. Project managers, development managers and sales employees are therefore customers of the back office. The back office might very well have regular customer contact, it rarely has end customer contact. The customer is the internal colleague who needs support.
And what about the back office’ s end customer contact? Yes, that’s not uncommon today either. End customers contact companies because they have questions about contract terms, because they want to book or cancel services, because something “doesn’t work as expected”. An internal organisational structure is secondary for most end customers. As a consequence, you could call it
- back office
- front office and
- middle office.
The middle office could be the area that is planned to communicate with end customers. In principle, the transition from back office, front office and middle office is fluent in most companies. Both internally in terms of work organisation and externally in the direction of the end customer.
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