Over the past decade, Shared Services has become an effective model for countless functions around the world. Organizations are turning to Shared Services to drive consistency, improve quality, improve employee satisfaction, maximize technology potential, and realize cost savings. Models of varying shapes and sizes are now commonplace throughout the world.
Shared Services provides small businesses resources as needed at the most cost-effective rate.
Shared Services benefits include:
- Saving executives and managers time
- A primary benefit is that it will free up valuable time and energy of senior employees to focus on business strategic needs.
- Ensuring quality processes and best-of-breed tools and technology to support employees, managers, and executives are being utilized
- Technology continues to play an increasingly critical role in managing business processes and delivering services
- Enhancing visibility and insight through measurement and metrics, dashboards, and monthly reporting
- Enabling on-demand access to specialist expertise cost-prohibitive to most individual business units
- For example: every HR customer segment – from leadership to first-time employees to retirees – has unique requirements that can place different, and sometimes contradictory, demands on the business - the flexibility and expertise of Shared Services
- Providing more cost-effective programs (average company reduces functional cost by a third and saves more than $100 per employee per month)
Shared Services have been adopted by 50 percent of enterprises with more than $100M in sales and are in place or scheduled to be implemented in some capacity during 2008 for 30 percent of the small business market (what functions Human Resources, Information Technology, Financial, Accounting, Procurement, Distribution, Logistics varies). Properly executed Shared Services leads to improved workforce productivity, happier employees and customers, increased brand equities, and increased profits.
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The evolution of Shared Services has occurred simultaneously with broader changes within the HR function as business’ are looking to maximize their people and financials.
A Model for Assessing Shared Services
Experience shows that using a purely financial perspective to determine whether to adopt a Shared Services approach does not give one the full picture. A business case taking into account the following key drivers most influence the decision.
- Focus and Expertise. How much time should executives and managers spend on non-revenue producing activities? What expertise gaps could cripple the business if not mitigated or effectively accounted for?
- Financial Drivers. The factors of scale, labor cost and scoping are critical drivers in determining the effectiveness and size of the business case and the ongoing cost opportunity.
- People Requirements. Does the organization have enough leaders and supervisors to grow for the next 2 years? Are people productive and utilized to their potential? Are recruiting and retention costs optimum for the business, the industry, and competitive environment?
- Cultural and Organizational Fit. Does the business want to grow? Does it currently outsource other functions such as payroll, accounting, or IT?
For more information about HR Shared Services best practices, review white papers and research reports from our HR Resources Center.
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