Five mistakes that damage the effectiveness of Shared Services and how to avoid them - Part 5

Note: This is Part 5 in a 5-part series.  You can click here to read Part 1, Part 2,  Part 3 and Part 4.

5.  A strong governance structure is not implemented.

The creation of a Shared Service Organization is much more than the consolidation of processes.  It involves creating a distinct organization that is committed to creating value in the company by providing support functions more effectively and efficiently than if they were embedded in the business units.  For this to be accomplished, the Shared Service Organization must be guided by a governance structure that provides the oversight and control that enables Shared Services to achieve its vision. 

The top governing body for Shared Services should include representatives from the major business units and IT as well as representatives from the major support functions such as Finance, HR and Procurement.  This body typically goes by the name of Steering Committee, and it is responsible for ensuring that the Shared Service Organization is fulfilling its mission.  They do this by giving oversight to the SSO, providing adequate funding, and resolving high-level issues that prevent the SSO from performing at its expected level.  The Steering Committee also has responsibility for providing an on-going vision to create value as additional processes are migrated to the SSO.

Another governance body that enables the SSO is the Process Council.  This council is comprised of subject matter experts (SMEs) for a given process, such as Procure-to-Pay.  In this example, experienced personnel from areas such as purchasing, inventory management and accounts payable would lend their expertise to ensure that this process worked as efficiently as possible.  Process councils meet regularly (typically once a quarter) to resolve any process-level issues and to evaluate additional opportunities to enhance the efficiency of the process.

Regardless of the committee or council, it is essential that the representatives of these governing bodies have the organizational and moral authority to get things done.  If these roles are delegated to low-level employees then the governance structure will not be effective.  A truly effective Shared Service Organization is guided by a coalition that has the authority, experience and dedication to drive the SSO to high performance.