At the start of the year the NOA predicted that we would see an increase in shared services as government organisations strive to meet the implications of massive borrowing.
In the current economic climate, spending of any kind is now under the microscope and the pressure to cut back is even more intensified in the public sector. This financial climate is leading to more government officials looking at shared services as a viable cost saving option.
This prediction is beginning to come into fruition as Glasgow City Council and seven neighbouring authorities announced that they would like to begin talks on sharing services. This is a bold and groundbreaking move towards increasing public sector efficiency something which the Scottish authorities seem to be making more progress with than their English counterparts.
Despite this recent predicted surge in shared services, there are some issues and pitfalls associated with this outsourcing strategy.
A report by employee relations consultancy, Marshall-James, highlighted shared services as a possible cause of a shortage in rounded HR professionals. According to the report’s author, Andy Cook, shared services limits an HR professional’s skill range to just business partnering or transactional skills.
As shared service is a good strategy for streamlining, it would be unreasonable not to consider it in this climate. However companies must be aware of the effects it has on employees and public opinion.
Continuous training should be invested in order for staff to feel as though they are broadening their skills base. During a recession valuable training can really help to increase morale and ensure that staff are working to the best of their abilities.
Rising unemployment and concern about job security across the whole country may also be an issue amongst those considering sharing services.
Job losses can be inevitable with any shared services strategy. If the shared service centre is set up privately then the location of the centre can be a very tricky decision to make. Depending on where the centre is based one organisation may stand to lose a large proportion of staff while the other retains its workforce. This will cause obvious tension and might result in public backlash.
If job losses are possible then it is crucial that organisations carefully examine redeployment opportunities and initiate early dialogue with union officials. Communicating the transition effectively and making sure that information and support is given well in advance of any change could help to improve a potentially volatile situation.
As always, outsourcing strategies can work really well, they just need to be implemented properly and always with best practice in mind.