Shared services UK
Shared services is frequently described as the consolidation of back office functions from a variety of sites to a single processing centre. Indeed, a principal advantage of successful shared services is the elimination of duplication and, therefore, dramatic cost reduction.
However, what distinguishes shared services as being different from centralisation is the provision of these services as a business with a customer oriented culture. Only this way will the provision of these services be viewed as valuable and truly accountable. This shift in dynamics will break the cycle of functions being farmed out into the business units, only to be re-centralised when the culture change is not achieved.
The areas most frequently mentioned in connection with shared services are Finance and Human Resources, because these are typically the biggest generators of what are seen as low value high volume processes that are common across the organisation: disciplinary, payroll, benefits etc.
A fundamental step in moving to a shared services model is the establishment of buy-in from the function heads in the business units, who may otherwise resist the loss of process ownership to the Shared Services Centre (SSC). This is impossible without sponsorship from the highest level, and a new management and reporting structure that alters the existing dynamics to produce accountability. Shared services implementation needs first class communication and leadership, but without endorsement from the top it will not be successful. These changes will enable the management of shared services centre employees to see their role not as guardians of the bureaucracy, but as service providers.
Research has identified three possible reasons for introducing shared services into Human Resources.
1. Reducing cost by centralising transactional services provides economies of scale. Cost is saved through headcount reductions, reducing premises costs, centralising purchasing arrangements etc.
2. Improving service levels by bringing activity under a single management structure. This enables a more consistent service to be delivered. In some instances, this may also mean a higher standard of service.
3. Enabling organisation change in line with Dave Ulrich's model defining four roles for Human Resources. In particular it is the roles of strategic partner and change agent.
It is this final reason that creates the need for business partners and the need to develop a business partnering capability in order to deliver successful shared services.
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