Shared Services - Should they be voluntary or mandatory?

The idea of sharing services is by no means new and in the current economic climate, it still presents a genuine opportunity to generate efficiency savings. However, the number of councils that have considered, let alone made a success of a shared service arrangement is still relatively small. So if councils are not voluntarily looking at the option of shared services, should central government make it mandatory?

Where shared-service partnerships have been unsuccessful, many of the stakeholders involved still believe it was a missed opportunity, but that for a variety of reasons the initiative failed.  Chief Executives and senior officers often cite the importance of both political and managerial buy-in if shared service arrangements are to be a success. However, in a recent example (a two tier pathfinder pilot for shared support services), the business case identified 10% savings and when it went to market for a joint venture, two shortlisted bidders were identified that could offer 15% savings over the course of the contract; but then three of the partners dropped out due to concerns that the bidders would move jobs outside the area. The mistake had been failing to get staff buy-in to the arrangements as a result of poor consultation and communication.  Even though the business case may be sound and stack-up, there has to be genuine commitment to the principle and practice of shared services for it to work and be sustainable.

Other reasons why taking this pragmatic approach results in failure is because every council wants to be the lead, particularly when the arrangement is between the county and the districts. Similarly, in another example where it was estimated that each council would save £350,000 a year, the project collapsed because they wouldn't share all the savings, and there were also fears about a loss of identity and sovereignty.  In another recent example, the proposal was for two districts to share Chief Executives and various services collapsed amid political turmoil between two parties within one of the councils.

Cultural obstacles are regularly cited to.  Councils are typically risk-averse and have become very comfortable with the current delivery arrangements for back office and frontline services.  Certain organisations and indeed individuals want to get their hands on power, and the last thing they're interested in is diluting this through a shared service arrangement.  Officers themselves can create and actually become a barrier as they want to protect their jobs. It can require a huge leap of faith for individuals to see beyond the problems and so cultural change is essential if this is going to happen.

Council's also need to stop thinking in organisational terms as this can severely limit their thinking.  Local people do not care which organisation is providing the service as long as it is delivered efficiently and to their satisfaction. While it is critical to establish the potential efficiency opportunities that could be realised through a shared service arrangement, it is equally important to ensure any review of current services also focuses on whether councils are meeting the changing needs of their customers.  But it appears that there is still too much organisational defensiveness and 'patch protection' in local government to embrace the opportunity that shared service arrangements presents.

What is not an option into the future is the requirement for local government to deliver significant savings. The question therefore remains, if shared services are a key vehicle in the drive for greater public service efficiency, how much longer will this be a voluntary exercise before it becomes a mandatory requirement, introduced after the General Election by the next political leadership.

For more insight or details on how we could support your organisation with a shared service venture, contact us on 01642-661940.