Too big for their boots?

By Peter Charles

Finance directors need to think carefully about the limits of shared services. They are increasingly being asked to put aspects of the finance function into shared services, and while much of this is logical there is also evidence that shared services are extending their remit and may even be overextending themselves.

The golden rule is that the shared service cannot, should not, and must not take business decisions.

At a practical level, it may make sense to have a project manager working for the FD to facilitate any move to shared services. From a strategic perspective of the logical limit of which activities should take place in the business and which in the shared service, there should be absolute clarity and absolute agreement.

The golden rule is that the shared service cannot, should not, and must not take business decisions. It is simply not appropriate. Shared services are remote from the business in both management and physical terms and so do not have enough information to take business decisions. And, of course, business decisions are not just about information, they also require insight that the business alone can have.

A shared service centre (SSC) is a great place to collect and collate data. It can even help with compiling that data in order to provide information for decision-making

A shared service centre (SSC) is a great place to collect and collate data. It can even help with compiling that data in order to provide information for decision-making, and present the business with a list of pros and cons. But there are some activities that shared services just don't do well. What an SSC should not do is make or express business judgements.

When the Peter Charles team goes into an SSC that needs fixing, one of its first actions is to look at whether the centre is taking any decisions that should be taken by the business. If it is, then the decision-making is taken away from the shared service and handed back to the business. The result is that the tension that had existed between the business and the shared service is dissipated.

Without clear boundaries shared services could easily find themselves out of control

Directors of SSCs serving large multinationals have started to tell us of a tendency for the centre to suggest it can do more and more. They should tread carefully with such claims, avoiding any accusation that they are becoming too big for their boots. At an HR level, if the shared service seems to be trying to take over a wide range of activities, it will soon find itself facing everything from resistance to outright hostility in the business, especially if the list of the shared service 'can dos' seems to be ever growing but without any strategic clarity. 'Where will they end?' can be a legitimate question.

Shared services often complain of such resistance from the business. Sometimes it is possible to see why that is happening. A shared service that takes business decisions is not a shared service at all, but a centralised business function.

Without clear boundaries shared services could easily find themselves out of control to the detriment of their activities and the business.

Also by Peter Charles