Shared services: success or failure?
Most of this month I have been talking to Revenues and Benefits Managers around the country to discuss how they are going to meet the challenges of 2010.
Whilst avoiding clichés about ‘interesting times’, I could not but help notice that there is a lot of change in the air.
Many of you are waiting to find out from powers that be, what the shape of your organisation is going to be and whether you will be entering into a shared service scenario, either internally or with one or more neighbouring authorities. It seems like a good time to play devil’s advocate and ask the question – Do shared services really work?
Those in favour talk of increased efficiencies, reduced headcount, economies of scale and the resulting cost savings. For authorities keen to appear lean and who want to freeze or even reduce council tax, the model is very tempting. But how real are those savings?
The first hurdle comes with technology. Ensuring that everyone is working on the same IT system immediately throws up significant procurement and training costs. Inevitably a back-log will build up during data migration usually requiring extra staff to cover whilst permanent staff get to grips with the new system.
But no real surprises there as that kind of cost can be predicted, built into project planning and budgeted for. It’s the hidden costs we are really interested in. So let’s talk about people, your people. How do they feel about all this looming change?
My conversations with you all leave me with the distinct impression that people have had so many change projects and organisational re-configurations aimed at them over the last decade that by now they are wearily resigned to whatever comes their way. The threat of job losses hanging in the air de-motivates even your most loyal managers. And let us not underestimate the effect of ‘survivor’s guilt’ when the dust has settled. All of which has an impact on performance.
The problem with top down change projects is that staff can feel undervalued and often cynical about outcomes. A lot of this feeling can be mitigated by clear and frank communication at all levels of management throughout the change process and proactive events to encourage staff buy-in. None of this should cost the earth; unfortunately management consultants do. At this time they are often called in to help with business process re-engineering, then charge a fortune for conducting what are essentially time and motion studies and recommending changes that existing managers already know need to happen.
So perhaps staff are right to doubt the outcomes, after all many of them have been here before, they know the difference between quality and quantity. Unfortunately where cost savings and increased efficiencies are the drivers for organisational change, success is likely to be measured solely by volume of transactions. Wonderful only if you are a private outsourced service whose contracted revenues are based on that volume.
But what accountants often forget is that volume is not value. Streamlining operations often results in the loss of knowledge and experience and a resulting impact on service. If clients are not receiving the service that they actually need on first contact, then they will require more time and resources further down the line. This is where we encounter John Sneddon’s ‘demand failure’, where the volume of transactions or client demand increases but the value of service declines because you are dealing with issues that should have been resolved at stage one.
The greater volume or demand (though it might bring bigger profits to your outsourced service) becomes symptomatic of a drain on resources rather than increased efficiencies. All this impacts on staff morale and performance and can have a knock on effect on other services, for example housing.
This would seem to suggest that some shared service models could actually have hidden built-in cost increases that are not detected for some time. Champions of the model are less likely to spot those costs because they simply do not want to see them, they are ’in denial’.
What is your experience of shared services and does any of this ring true? Do you have any ideas on how to improve the model, re-configure systems and ways of working? Or should it all be scrapped and Revs and Bens services be left to design their own efficiency models? – after all you know more about what your clients need than a Whitehall mandarin or a management consultant. Let us know your thoughts, open up the debate and perhaps share ideas with your peers.
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Niall Shanahan
Niall has over 12 years’ of professional training experience, designing and delivering training solutions to support management development, leadership programmes and technology upgrades, including bespoke IT and telecoms training. He also spent 4 years as a sales training manager for a leading training provider. As a result he has developed an acutely commercial appreciation of the training cycle and the need for genuinely consultative relationships with clients.
Blog date
25 February 2010
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