Why shared services departments suffer from a bad perception and several ways to improve their perception.

The pursue after efficiency created shared services functions in most organizations. After all shared functions like IT, HR, financial, legal and other needed by any business units. Providing them from a central group that should serve all other business units makes a lot of financial sense.

In reality, the concept of those departments is moving more toward organization units that create slower business processes by being heavily based on bureaucracy. The perception gets an extra push because shared services are service providers. From the internal customer point of view, they are paying for those service providers and they expect to get in return maximum support.

One of the basic roles of all shared services is risk reduction and governance. Two functions that won’t help agility and fast response. Even if the need for governance and risk management understood by other business departments (which is rarely the case), they still perceive shared services functions as inefficient departments that have a negative impact on their ability to generate more revenues.

Creating shared services silos increases the negative perception of those departments. Each shared service group had people experts in one domain, a domain that is not specific for a certain business. They have the option to move to another HT, IT or legal group in different industries. Something that is harder for any person in other business units. 

Shared services, when structured in dedicated groups, start to develop their own goals, needs, policies, and practices that unnecessary service the need of the business units they were created to support. Both the separation from an expertise point of view and shared services unique needs create the impression that shared services are less committed to the company goal. After all, they can easily find a new job in different companies. This perception impacts and increases the negative perception of shared services. 

I know that part (or even most) of you, reading it and disagree. You are sure that in your organization it’s different. Well, start to speak with people that doing the business work and you’ll find out that the reality is even darker than my description above. 

Most of the companies I know simply ignore the perception. They see shared services as a way to improve business profits by reducing operating costs. While this approach works for many companies, it is building slowly but surely negative interactions and impacts that will surface in the first crisis the company needs to deal with. Eventually, this pressure will create significant damage or destroy years of effort.

Clear boundaries between shared services and business units (and between shared services groups) create an interaction based on contracts and Service Level Agreements (SLA), not on the partnership, collaboration and willingness to achieve one business goal. A system like that will work as long as the company doesn’t need to deal with complexity. But once complexity will arise (and it’s just a matter of time) the boundaries will prevent the creation of group abilities based on all the expertise in the company. As more diversity exists in a group, the higher and better group properties are. Group capabilities are key for dealing with complexity.

There are two ways to improve shared services perception. The first is to find a balance between 100% central shared services model and the decentralization of shared services into business units. The second is a focus on changing shared service perception as a detached service provider of professionals to the organization. 

Both ways depend on embedding people from shared services in business units. There are many ways to implement this change. Different ways will impact how many shared services people and for how long we should embed them in business units. To get a better understanding of what will work for each shared service group and business unit there is a need to understand interactions, impacts, and flows between people that are part of different business unit processes. This knowledge enables to adjust the right solution for each given need.

Galaxies is proud to provide a framework that will help you depict interlinks between people, groups and technologies. Depicting interlinks will help you understand what level of embedding shared services needed. It will also help you see issues and challenges that are hiding under the hood and cause recurring complex problems.

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