Top Tips for Successful Shared Services Governance

Understanding Service Proposition Documents and Service Level Agreements; do’s and don’ts for introducing SLAs or Operating Level Agreements; what should a good SLA include and how should you brand it in the right context? governance and reporting.

When you have made the decision to move to, or upgrade, a shared services model for your enabling functions, be it Finance, HR, IT, Procurement or indeed an integrated Business Services, it makes good sense to set out your store and crystallise what it offers, and how it works, when the processes and services will be delivered and who does what within the functional teams. Most important is that a dialogue takes place between representatives of all the key stakeholders – those who have a vested interest in the effective operations of the shared services model to be deployed.

What you agree can be recorded in a Service Proposition Document – which should primarily be seen as a business partnership agreement about who does what, when, and with whom, and how the transactions are measured, costed and charged. The document is an output of an agreement, and a point for future reference in governance of that agreement – it is not in itself the driving force to make things happen.

Typically a Service Proposition Document proposes, at the executive level, the following items:

• Purpose and Mission of the Shared Services function
• Who are the customers of Shared Services?
• What is the business case for introducing Shared Services?
• Which processes are covered, and which services and products are delivered by shared services?
• Overall business model measures of success
• Costing and charge-outs for the Shared Services operations – often referred to as the Commercial Model
• Who are the parties to the agreement, what is the review mechanism and duration of the agreement?

The target audience for the Service Proposition Agreement are the decision makers at the senior level within the function – for example, in the HR function it would be the HR Leadership Team, and for an integrated enabling functions organisation the Business Services Leadership Team. Ideally, however, a review board – often referred to as The Customer Board, which has representatives from business heads who receive service from the enabling functions, is a good forum for getting the relationship right from the beginning.

Many companies make the mistake of being too insular when getting ready to launch their Shared Services function, seeing only their own function heads as the customers of the services. In reality, of course, all managers and employees of the business will be consumers of the products and services of Shared Services. So whilst it is right to ensure your own function is fully aligned and has bought into the new Shared Services model, it is equally important to go directly to the business heads when shaping the service – particularly, when agreeing the business purpose and measures of success for the Service Proposition, and the charge-out method for the Commercial Model . These tend to be the big-ticket items where strategic alignment is key to success.

A Service Proposition Document, or Agreement, does not have to be long and bureaucratic. It is not War & Peace! It’s an executive summary agreement, which needs to be readily accessible and quick to read. The best SPDs are at most 6 or 7 pages in length.

So what about the detail at the operations level below this executive agreement? How best to ensure that the right things are happening, in the right way, on the ground as well as 30,000 feet up in the sky? How best to manage customers’ expectations regarding what’s in and what’s out of scope? And, how best to create a common understanding about processes, products, services, and responsibilities?

This is where the Service Level Agreement has a role to play. It is a document with a lot more detail than the Service Proposition itself. Your SLA gives your Service Proposition legs!

Branding your agreement in the right context at your company.

A Service Level Agreement, which describes the working relationship with third party vendors, is sometimes referred to (for purely internal operations or captive HR shared services) as an Operating Level Agreement. Whatever your business context or whatever language used to describe your OLA or SLA, there are some fundamental principles to build into your thinking when designing and agreeing this document.

It is vitally important to see the SLA /OLA as a communications tool, an output of an agreed way of working between the stakeholder parties at an operations level; something that by its clarity helps to prevent conflict and that provides a way to measure service effectiveness. The document that encapsulates all of the above in word and spirit should be seen as a living framework for an evolving and organic relationship of transactions between the stakeholders and providers. Don’t see it as something to file away or to be used to hit people over the head with when things go wrong! See it as something that will be amended and adjusted by agreement, on a predetermined frequency. As Shared Services evolves and grows and continuous, improvements are made to process effectiveness, leveraging technology and new ways of working so these can be updated and reflected in the document.

What should a good SLA or OLA include?

1. The processes to be included and the products and services of those processes
2. A list of the processes which are out of scope at this point – to manage customer expectations
3. Conditions of service availability - hours of opening, days of operation
4. Service standards – times for delivery of services should be recorded in number of working days (rather than say 24 or 48 hours) to manage expectations and be clear about closures of operations for bank-holidays or weekends
5. A R-A-C-I matrix – to show who is Responsible, Accountable, needs to be Consulted and Informed, regarding process steps. This ensures role clarity in completion of tasks
6. Cost versus service trade-offs, to manage expectations about "work-arounds" or "just as a favour" requests
7. Clear escalation procedures and timelines so that when something goes wrong it can be resolved by the right person, in the right role, at the right time

Governance and Reporting

For governance of the SLA /OLA it is also important to be transparent about how service effectiveness will be tracked – KPIs and metrics of outputs based on time, quality and cost effectiveness criteria are included here. In addition, it is vital to report on service effectiveness to key stakeholders using agreed formats and frequency. See my article on Measuring Effective Shared Services Performance on the SSON website for more examples. One-page Dashboards; Billboards with lots of colour and headline only statements; and Traffic Lights (showing mostly green of course!), are effective ways to visually represent service and operating levels.

Measuring service satisfaction through quick customer surveys and focus groups which engage with the customer on an emotional level are just as effective as hard output metrics, which keep the score on time, quality, and cost effectiveness of delivery.

Here are some do’s and don’ts for the introduction of SLAs /OLAs:

Do

• Discuss first with your customers, colleagues and stakeholders before you document your thoughts.
• Gather information and insights about what can practically be delivered by the Shared Services Centre before making proposals on service and service levels.
• Understand the complexity of processes by mapping them "As is "and where possible to streamline "To be". Size up the volume of work and resources required to manage the processes to be included in the Service Proposition.
• Consider a phased approach to introducing processes into your shared services operations – some now, some later … rather than the "big bang", all-at-once, approach. Be clear about what is not in scope in Phase 1, and record this in the Service Proposition and Service Level document.
• Establish ground rules and ways of working with your customers and stakeholders so that the mindset is that of "partnership," and "win-win together", not "us versus them".
• Do build in sufficient time to complete your SLA and SPD. Time to understand the processes, agree who does what, establish tracking mechanisms, agree supporting materials (eg, process maps), debate to gain consensus, gain approvals, sign-off, run pre-launch education and briefing sessions, etc, can take around three months under good circumstances.

Don’t

• Introduce SLAs simply as a way to plug the gaps after a complaint from a customer – it’s not a document to hide behind. Meet to sort out underlying problems first, rather than paper over the cracks with a written document.
• Write an SLA without any input from your customers. Ideally, involve them in reviewing first and second drafts, which themselves are written following discussions, customer interviews, or process review workshops.

Finally, remembering the famous Oscar Wilde quote, "You don’t get a second chance to make a good first impression", do see your SPD and SLA/OLA as an output of something you do with the customer, not something you do to the customer. Get as much face time as you can with customer representatives in the design of your Shared Services. These documents will then follow as the icing on the cake!

• Simon Brown writes a regular column for SSON. Future topics will address:
• Selecting your Shared Services Team - some pointers for success
• Boss Quality - Ensuring the best from your Shared Services Leader
• Stakeholder engagement -why is this so important? Some tips to do it well.
• To outsource or not to outsource -That is the question! Some factors to consider
• What can go wrong when starting up shared services? Some key learning points.