Thought Piece

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, 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.

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.

Banks are not charities. But they do calculate the lifetime value of the customer and they understand the reputational risk to themselves of the slash and burn exercises they are sometimes accused of.

That brings us to the role of the banks, so often the largest creditor and certainly the one with the most intimate knowledge of how a company is faring. We all love a stereotype and the heartless, faceless bank pulling the plug on sound businesses over a minor blip sits deep in the business consciousness. But not all banks fit this caricature. "We want to work with management of a business facing difficulties to help identify the issues and provide solutions to get them back on track," says a senior manager with a leading retail bank. "We can make the most impact when the problems are identified early. We are keen for management to be open with us."

Banks are not charities. But they do calculate the lifetime value of the customer and they understand the reputational risk to themselves of the slash and burn exercises they are sometimes accused of. Most solutions to business difficulties involve access to more funds and/or different products (hedging, leasing, factoring) and that all adds up to continued and profitable involvement for the bank.

A Repositioning Turnaround may mean divestment of a troublesome subsidiary. It may mean embarking on (yet another) cost-cutting exercise, including turning away revenue opportunities if they are not of a sufficiently high margin. It most certainly involves a first step of getting an impartial and pragmatic overview of what the problem actually is, from Turnaround Professionals who also know the kind of language with which to talk to banks. The moment you take this kind of decisive action, you're likely to discover that there's no crisis, no drama, only urgent action that must start now.

Peter Charles 2010