With public sector budget cuts still on the cards and an ever-increasing focus being placed on generating efficiency savings, it is surprising perhaps that more public authorities have not opted to go down the shared services route.
But a recent survey that we commissioned among 100 UK public sector representatives from functions such as HR, payroll, finance, purchasing and IT revealed that a lot of people tend to overestimate the difficulties of taking a shared services approach, while underestimating the benefits that can be achieved.
For example, more than two thirds of those questioned in the study entitled ‘HR and payroll shared services in the public sector – perception and realities’ believed that such a move would have a negative impact on job security.
Among those that had already implemented the model, however, just over half felt that it had had a positive effect in terms of both job security and career development. Four out of five respondents also said that it had been beneficial in areas such as skills development, while just under three quarters saw improvements in job satisfaction.
The top three drivers for initiating shared services, meanwhile, were to try and boost process efficiency, improve service quality and generate cost savings. These factors were also cited as being the top three benefits among current users, which would appear to suggest that many organisations are meeting their desired objectives.
The most common approach for HR directors wanting to provide a shared service offering to external partners, however, was to introduce an in-house facility first. Taking this tack enabled them to cut costs by rationalising internal processes and helped them learn from experience how it was possible to make the service more efficient based on the demands placed upon it.
Getting it right though involved analysing organisational goals and laying out a clear business case for sharing services in the first place. Without a coherent business case, it proved impossible for advocates to obtain buy-in and ensure adoption.
Allaying concern
The next stage of the process, if choosing to go down the outsourcing route, is to establish what the organisation is looking for in a partner. While geographical issues often take priority here, in practice, cultural and operational considerations such as mutually compatible ambitions, flexibility, an ability to compromise and whether you trust one another tend to be far more important.
According to training firm, Shared Service Architects, four out of five public authorities that have implemented shared services wished that they had spent more time establishing whether they were culturally compatible with their outsourcing partner before signing the deal.
But part of this process also involves working out whether you want to be the lead organisation that provides the service or the ‘consumer’ that simply uses it, or a combination of both. Many organisations fear the potential loss of control involved in simply being a consumer, but this option may make sense if the business has access to only limited internal resources.
Taking time from the outset to evaluate any possible challenges will likewise enable you to plan more effectively for how you intend to address them before implementation takes place. Most concerns centre around the human factor, with the top five worries being fear of losing control, anxiety around lack of job security, cultural matters and communication difficulties.
Therefore, to help ease employees’ concerns in this regard, it is vital to explain how any changes will affect them and what will be expected of them. Workers also need to be sufficiently motivated by management and receive enough training to ensure that productivity and service levels don’t drop.
Once a shared service is introduced, however, staff’s initial fears tend to be replaced by anxiety over technical issues, implementation times and the need to develop new skills.
As a result, before entering an agreement with a third party, it is important to ensure that all supporting technology is scalable and flexible enough to support organisational requirements. In our survey, some 86% of those that had already gone down the shared services route indicated that their systems had had to be configured to meet their own individual needs.
Finally, measuring the success of any initiative is vital to provide evidence that real benefits have been delivered. This means that metrics should be agreed and documented from the outset. To this end, our research shows that the top three measures of effectiveness are the introduction of consistent processes, being able to reduce duplication and also improving accuracy.
Karen Bull is product strategy manager at workforce software and outsourcing services provider, MidlandHR.
