Leadership Foundation

Shared Services in the Public Sector

2011 Shared Services Survey (Local Authorities), Browne Jacobson LLP 

• The shared services journey can be arduous and demands strong leadership from those at the very top for it to succeed. There are opportunities to work with the private sector to be exploited, and major obstacles still to overcome. It is also clear that a shared services approach will not suit every case. But where it does, those authorities exploiting shared services can reap significant rewards.
• Before an authority or agency proceeds with a shared service opportunity it needs to be clear about its objectives:
  -  Service enhancement, resilience or cost cutting (or a combination).
  -  The quality that it is seeking, and what it can afford.
  -  Its willingness to redesign processes.
  -  How it will support and treat its workforce.
  -  The accountability arrangements it requires.
  -  The delivery model – social enterprise; jointly owned public authority company, outsourcing or joint venture with the private sector (on or off-shore) or even securing the services on a commoditised basis from a provider.
• Shared service arrangements are unlikely to produce major savings in the first year or so. There will be transition and possibly procurement costs.
• Simply aggregating inefficient services or activities will not necessarily reduce costs. To gain the most from shared service arrangements financially it is necessary to underpin them with service and process re-design.
• Winning the hearts and minds of those directly affected is clearly uppermost in the minds of the managers we talked to. Greater transparency is fundamental to ensuring much needed public and political buy-in, as is a robust business case. A lack of political and public buy-in was seen as a major hurdle with almost three in ten cases (28%) identifying it as the biggest barrier.
• The vast majority of senior managers (84%) agree that the long term rewards from shared services justify the short term pain.
• However, major concerns over implementation remain with 77% claiming shared services arrangements between public organisations are ‘attractive but hard to deliver’. 

Shared Services in Local Government: improving service delivery
Ray Tomkinson, 2007 

• Definition - “the shared provision by more than one local council of a specified service in which service aims and objectives are mutually shared and for which local people are the end customers.”
• While most commercial organisations share services internally (So there is an HR and finance team for the whole company), local authorities often have separate service teams (an accountant and HR for example) for a number of different service departments. Sharing services between councils is still uncommon, although external pressures are increasing and the opportunities are there.
• Evidence about the types of services suitable for sharing in this way include those where:
  -  The service is an administrative overhead not a service which is strategic to the business
  -  The service is based on standardized outputs
  -  The service is low risk
• Four models of shared services relevant to local government are presented (although many shared services in practice, are mixtures of more than one of these):
  -  Intra-service model: collaboration on specific and or specialist services where only part of a service is shared, for example procurement.
  -  Service model: where one sharer transfers responsibility to another, so that the entire service can be shared, but the organisation is not itself changed to adapt to the sharing.
  -  Corporate: where the sharing involves a formal agreement and change to the local council’s organisation (for example setting up a new management group).
  -  Super-corporate: where a new or separate organisation is created to deliver or support the shared service. 

Shared Services Strategic Framework
Dexter Whitfield, European Services Strategy Unit, May 2007 

A new six-part 'Public Sector Shared Services Typology' is proposed based on the type of relationship between public sector organisations.

1. Collaboration and shared procedures between two or more public bodies.
2. Corporate consolidation within a public sector organisation at regional or national level.
3. Lead authority on behalf of a group of public bodies.
4. Jointly managed services between a group/consortium of public bodies at Sub-regional or regional level.
5. Strategic partnership or joint venture with the private sector.
6. Outsourcing and off-shoring.

The paper also presents sections on:

• Principles for shared services
• Potential benefits of shared services
• Shared services risks
• A public sector shared services strategy
• Democratic governance and accountability
• An evidence-based strategy
• Regional/sub-regional collaboration on economic development and regeneration
• Quality jobs
• Comprehensive appraisal criteria and impact assessment

For more information about the Knowledge Resouces contact:

Eleni Stamou, Research Manager