Potential barriers and challenges

There are four main barriers and challenges that organisations often experience in establishing successful shared service arrangements. They include:

  1. finding like-minded partners
  2. being clear on why
  3. transition funding, effort and advice
  4. managing the change.

Finding like-minded partners

The first barrier often encountered by organisations who are interested in sharing back-of-house services is finding a like-minded partner. It is important to partner with the right organisation(s). The ‘right’ organisation will differ for each NFP, but generally may include:

  • œ which you have worked with before and with whom there is a level of mutual trust
  • œ that has a similar values
  • œ who requires similar back-of-house services.

It’s important to remember that the ‘right’ organisation might not necessarily be someone from your sector. Cross-sectoral shared service arrangements work (in fact since cross-sector organisations don’t usually compete for funding, they sometimes work better) if all organisations share a similar vision and mission and have worked together before.

Competition for funding and clients can prevent organisations working together. It can also stall shared service arrangements if organisations are not willing to share information or cooperate. That said, there are some good examples of organisations that compete for funding and work together in a shared service arrangement.

If you do not have a good established relationship with an NFP or a group of NFPs you should consider building this first (e.g. by taking on less complex shared services such as an informal peer support network).

To overcome the issue of finding a like-minded partner consider taking the following actions:

  • discuss the possibility of shared services with your peers
  • establish an informal arrangement with an NFP or group of NFPs (such as a peer support network) if you do not have strong working relationships with other NFPs
  • call your peak body to register your interest in shared services and find out if anyone is interested in sharing services.

Being clear on why

Managing and coordinating shared back-of-house services is a role in itself. The benefits outweigh the [effort], but it is important [to understand] that collaboration is in [and of] itself, a time consuming process.
— NFP organisation

Shared services is sometimes seen as the solution to all problems. This means understanding the costs and benefits of your ‘current state’ and comparing this with a particular shared services arrangement and making an informed business decision as to whether or not shared services offers value.

Shared service arrangements that do not have a joint and well-identified need can experience some of the following issues:

  • parties do not put enough effort into the arrangement because they’re unclear on the benefits
  • parties have different expectations about how they will benefit and push for different outcomes
  • no consistent ‘story’ told to staff and stakeholder about why the shared services arrangement was established
  • one or more organisations pulls out of the arrangement. 

To overcome the issue of ‘being clear on why’:

  • develop a business case at the outset
  • develop a stakeholder management strategy that identifies how you communicate the purpose of the arrangement
  • induct new members when they join the arrangement – ensure they understand the history of the arrangement and why it was established. 

In practice it takes time and effort to establish shared services so it is important that you and your partner(s) have a well-identified need for shared services that is jointly understood by all parties.

Transition funding, effort and advice

The process of establishing shared services can involve considerable effort and expense. It is important to have a comprehensive understanding of what costs will be associated with establishing services. This will include what internal resources will need to be diverted from business as usual and potentially what external expertise will need to be sought. Further details on the effort and steps to implement are detailed in Section 6 below. A realistic evaluation of the long term benefits that will be derived from the immediate efforts to implement is a crucial precursor to undertaking a transition to shared services.

Managing change

Shared services can result in considerable change in an organisation, especially if it leads to the consolidation of staff, changes to people’s job descriptions and day-to-day business processes.

Depending on the size of the change, and the degree to which staff are affected, changes may be met with varying reactions – shock, denial, anger, worry, among others. How this process is managed can make or break a shared service arrangement.

Common pitfalls to avoid:

  • engaging staff too late in the process – Staff are more likely to resist change if they feel like it is being done without them. It is important to engage staff early, but be clear about your purpose for engaging them
  • not giving staff an opportunity to ‘have their say’ – Before you can begin something new, you often need to end what used to be. Quite often it may not be the changes that people are resisting, but the losses and endings that go with it, so it is important to discuss these. Equally, staff will want to have a say in designing the future arrangements
  • not explaining the reason why – People need to be reminded of the situation that was facing the organisation, and why the changes have occurred and the new beginning embarked upon. This may include reflecting on what might have occurred had the changes not been introduced.