Front Office: Definition and Duties

What Is the Front Office?

The term front office is used to describe the customer-facing divisions of a firm. Customer service, marketing, sales, and advisory roles are often considered part of a firm's front-office operations, whereas the term "middle office" is used to describe the divisions that manage risk and corporate strategy, and the term "back office" refers to analytical, technical, and administrative support personnel.

The functions of the front office often generate the majority of revenue for a firm, as they have the most direct contact with clients. However, they usually rely on the support of and collaboration with other "middle office" and "back office" departments.

Understanding the Front Office

Front offices became necessary components of customer service when shopping trolleys were first introduced in 1936, expanding firms' and stores' availability to consumers. The meaning of the term "front office" evolved from addressing employees who dealt solely with customer satisfaction, and now often applies to the most critical staffers in a company, such as management and executives.

However, front office staffers typically have the most direct contact with clients. Often, the front office is the reception and sales area of the business for many firms. Front-office employees in the financial services industry are typically those experts who generate revenue for the company by providing direct client services such as wealth management.

Front Office vs. Middle Office vs. Back Office

Many firms are divided into three parts: the front office, the middle office, and the back office. The front office is responsible for performing sales and client service functions. The middle office is responsible for managing risk and corporate strategy, and the back office provides analysis, technical, and administrative support services.

In this conceptual model, the middle office and back office employees support the activities of the front office. Middle office personnel are tasked with ensuring that a company remains solvent and complies with regulations and ethical business practices. For a financial services firm, these departments might include corporate strategy, compliance, and financial control.

The back office includes administrative assistants, human resources staff, and accounting staff. The IT and technology departments are also critical to the success of the back office operations. In the example of a financial services firm, technology in the form of predictive analytics and algorithms might play a central role in supporting the work of the front office team.

Special Considerations

The term "front office" might have a more specific meaning in certain industries, such as investment banking and hotels.

Often, the term will specifically refer to the reception area in which customers first arrive at the establishment. In this example, the front office staff might be a receptionist, whose role is to communicate with the customers, confirm their reservations or appointments, or answer their questions.

In the financial sector, the term front office usually describes a revenue-generating role. Here, there are two main areas of specialization: investment banking and markets. Investment bankers advise organizations on mergers and acquisitions (M&A) as well as a wide array of capital-raising strategies. Individuals employed in market-type roles within the front office of an investment bank typically perform sales and trading activities or research activities.

The Bottom Line

The front office of a business enterprise is typically made up of employees who deal directly with its customers or clients. Responsibility for a good deal of a firm’s revenues rests on the shoulders of these employees.

The roles and associated pay can vary significantly by industry, but generally speaking, roles in sales, marketing, advisory or consulting, and customer services are considered to be part of the front office of any given company. In order to achieve business goals and facilitate smooth day-to-day operations, companies should ensure that their front office, middle office, and back office are working together collaboratively.