Corporate staff functions were established to integrate related disciplines which dealt with employee matters, and were united under common management to take advantage of interdisciplinary synergies. What emerged was a “command and control” orientation, provider-driven and sanctioned by upward bosses.

When management decides to outsource a service in response to internal customer complaints or cost reduction pressures, the tendency is to assume the problem has been solved, but often, the problems are only beginning.

Management may mistakenly believe it is no longer responsible for customer satisfaction once a service has been outsourced, a serious oversight. Many companies fail to define, redesign, and correct broken processes before outsourcing them, another fatal error.

Internal staff organizations are under fire. Support functions account for up to 40% of total costs at some companies yet business units complain of inadequate service. Corporations have tried to solve the problem through a variety of initiatives but when the dust settles, serious structural problems remain.

A dramatic upheaval in the healthcare maintenance industry forced Kaiser Permanente to address operational inefficiencies. The healthcare giant called in The Amherst group to explore a Shared Services approach, which included amassing comprehensive baseline data, implementing new design teams and reorganizing staff support services.

At companies like Amoco, Monsanto, AlliedSignal and Rhone Poulenc, Shared Services has generated a sustained 20-40% cost savings combined with Lexus-like internal customer satisfaction ratings of 70% or more.

Improving internal staff service is vital because it can account for up to 40% of a company’s costs! Many companies tackle costs by focusing on headcount but this approach frequently backfires because the organization lacks a paradigm that provides a true understanding of the costs and the need for improving services.

While most Shared Services companies tie the delivery of internal staff support to cost reduction and productivity improvement, many now recognize the importance of becoming service-oriented, business-based, contribution-valued and partnership-integrated. Defining and understanding Best Practices is an integral step in achieving these objectives.

Just as companies have varying reasons for implementing Shared Services, they also tend to think about Best Practices differently — lowest per unit cost, highest satisfaction rating, optimal organizational design, best work flow, reduced cycle time, most motivated staff. Those that adopted Shared Services within a narrow framework tend to approach Best Practices similarly. They rush to compare information with other organizations without considering what constitutes comparability.