How to Maximize Shared Service Effectiveness and Efficiency
Reed Deshler | March 29, 2017
Many businesses look to shared services to optimize their performance and help them meet the bottom line. When properly designed and implemented, shared services can increase efficiency, cut costs, maximize synergies, improve performance, and/or enhance your services and capabilities. With so much to be gained, it is worth making sure you get the most out of your shared services design.
Getting the most out of your shared services starts by aligning them to your business strategy. In our book, Mastering the Cube, we talk about how to align your shared services to your business strategy by, “Protect[ing] strategically vital work from becoming engulfed by the transactional work that characterizes so much of what must get done on a daily basis.” Recognizing, separating, and protecting your strategic work is the first step in creating shared services that will enable marketplace differentiation and success.
In addition to strategic alignment, we characterize four practical steps that help ensure shared service success:
Start with the work. Before you can focus on your strategic work, you must define what it is. To get shared services right, you must sit down and identify the work that you do and categorize it as either strategic or more transactional. Doing so allows you to put resources where they will have the most impact for your organization. It also helps you resist the temptation to fall prey to what I call “functional goodness” or overly developing shared services only to receive little return on your investment.
Identify capabilities. To make shared services successful, you need to have the right capabilities in the right place. And, by capabilities I don’t just mean people and resources. Instead, think more holistically about the many parts of your organization. Think about your processes, structures, linkages, metrics, employee incentives, continuous improvement mechanisms, and your company culture. How can you leverage capabilities from each part of your organization? How can you improve them? What capabilities don’t seem in line with your company strategy? What capabilities may be too good for your organization’s need?
Defining the right capabilities for your shared services according to your strategy can identify places to maximize efficiency and deliver greater value for your organization.
Create together. You need the right people involved to get the best results. It is easy to think that those working in the Shared Service organizations are the right ones to design and optimize the shared service organization. However, business units that rely on the shared service functions must be part of the design process too. There are a lot of best practices espoused in the literature for shared service organizations; however, designing shared services that enable your organization’s unique strategy is the key to shared service success. Driving efficiencies in areas that really matter to the business can be detrimental, while overinvesting in capabilities that aren’t needed to differentiate the business can have the same deleterious effect. Utilize customers and those working directly with them to tailor your shared services to customer’s needs. Customizing your shared services to meet customer’s needs ensures less wasted resources, better services where they count, and more market differentiation.
Plan and manage change. Even the best changes for the right reasons can be difficult for an organization. Employees and customers will need to buy-in to changes in shared services and sometimes the difference between success and failure depends on how quickly you can get key stakeholders on board and realize the promises of the shared services organization.
To be successful, designing and/or altering your shared services requires proper change management. To get the most from your shared services, your organization will need to completely embrace and embed changes—the faster the better.
It is never too late to get the most from your shared services, but it requires rigorous organization alignment to your strategy, commitment to the change, and the right tools to get you there. Join us for a free webinar on Friday, March 31st, 2017 where we will further explore shared services and how to help them deliver the optimal balance of effectiveness and efficiency for your company.