Creating outsourced shared services arrangements: Lessons from the public sector

European Management Journal (2011) 29, 448– 461

journal homepage: www.elsevier .com/ locate /emj

Creating outsourced shared services arrangements:Lessons from the public sector

Ronan McIvor *, Martin McCracken, Marie McHugh

Ulster Business School, University of Ulster, BT48 7JL, Northern Ireland, United Kingdom

0263-2373/$ - see front mattedoi:10.1016/j.emj.2011.06.00

* Corresponding author. Tel.E-mail address: r.mcivor@

r ª 2011

: +44 28ulster.ac

KEYWORDSOutsourcing;Shared services;Change management;Relational contracting;Process redesign

Summary Shared services arrangements have been viewed as a strategy for achievingefficiencies and improved service in back-office functions such as finance and accounting,human resource, and procurement. Organisations have been increasingly turning to ven-dors to implement and manage outsourced shared services arrangements. Analysing theexperiences of a public sector organisation, this paper provides a detailed understandingof the issues involved in creating outsourced shared services arrangements. The findingshave the highlighted the importance of strong governance to drive standardisation andperformance improvement, and relationship building both internally with the staffaffected by the changes and externally with vendors. Failure to implement a standardisedapproach will hinder an organisation from fully leveraging the specialist capabilities ofexternal vendors.ª 2011 Published by Elsevier Ltd.

Introduction and conceptual background

Shared services arrangements have been increasing in prom-inence in both the private and public sectors, encompassinga range of back-office functions such as finance andaccounting (F&A), human resource (HR), procurement,information technology (IT), and facilities management.Shared services involve consolidating and standardisingcommon tasks associated with a business function acrossdifferent parts of the organisation into a single services cen-tre (Bergeron, 2003). These services are then provided bythe service centre to other parts of the organisation. Sharedservices centres can be owned and operated by the organi-sation, or outsourced to independent vendors. Although

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71375275..uk (R. McIvor).

many services provided by back-office functions are not vis-ible to customers, they have a major impact on service qual-ity, particularly when they are not performing properly.Shared services has been viewed as a strategy for achievingboth efficiencies and improved service performance levels,as organisations have strived to reduce costs and enhanceperformance in back-office functions (Davis, 2005). TheCabinet Office in the UK has estimated that there is scopefor saving 20% from the £7 billion expenditure on centraland local government F&A and HR services by implementingshared services (Davis, Fawcett, & Dodimead, 2007).

Unfortunately, the pace of shared service developmentsin practice has not been matched by that of academic in-quiry, particularly in the case of outsourced shared services(Redman, Snape, Wass, & Hamilton, 2007). Organisationsare increasingly turning to vendors to implement and man-age shared services, as they lack the necessary internalskills and experience. Although the drivers and motives foroutsourced shared services are well established in the

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Creating outsourced shared services arrangements: Lessons from the public sector 449

literature (Lepak, Bartol, & Erhardt, 2005; Woodall, Scott-Jackson, Newham, & Gurney, 2009) there are few studiesproviding detailed insights into the issues involved inplanning and implementing such changes. Shared servicesarrangements involve complex issues such as specifyingthe shared services delivery model, managing the expecta-tions of stakeholders, redesigning business processes,implementing standard processes, and driving and sustain-ing change (Lacity & Fox, 2008). The aim of this paper isto develop a detailed understanding of the issues involvedin creating outsourced shared services arrangements, andprovide lessons for managers considering such arrange-ments. In particular, the paper highlights the challengesof shared services, and potential strategies for dealing withthese challenges.

This paper analyses the experiences of a UK public sectororganisation (referred to as �the organisation� throughoutthe paper to ensure anonymity) that established an outsour-ced HR shared services arrangement. The shared servicesarrangement involved transforming the HR function acrosseleven government departments, replacing outdated IT sys-tems, modernising payroll and HR processes, and providingcentralised administrative HR services from an outsourcedshared services centre. This was a highly complex, largescale outsourced shared services arrangement involving al-most 30,000 users of HR services ranging from senior man-agement to clerical officer level. In line with much of therecent writing on the role of the HR function, the underlyingphilosophy behind the transformation was to create ashared services centre to handle routine queries and trans-actions which would allow the retained HR function in thedepartments to focus on more strategic HR activities (Lepaket al., 2005; Ulrich, Younger, & Brockbank, 2008).

Following this brief introduction, a review of the litera-ture on why and how shared services centres have emergedas a potential strategy for the delivery of organisationalfunctional services is presented. In the next section, thecase study organisation, which formed the arena for thedata collection and research approach taken, is discussed.The findings section, structured around the research ques-tions proposed at the end of the literature review, outlineshow the organisation created the outsourced shared ser-vices arrangement. In the discussion section the implica-tions for organisations moving towards such sharedservices arrangements are discussed. Lessons for managersare then proposed. Finally, in the conclusions section thecontribution and limitations of the research are outlined.

Shared services

Shared services arrangements allow organisations to reducecosts through process standardisation, and economies ofscale. Standardisation reduces process duplication, andeconomies of scale are achieved through combining pro-cesses previously carried out independently (Davenport,2005). A shared services centre can specialise in a func-tional area, which then allows it to provide better servicelevels to users in the organisation. Through transferringmany administrative and transaction-oriented tasks intoshared services centres, retained functions can take on amore strategic role and focus on more value-adding tasks(Quinn, Cooke, & Kris, 2000; Truss, 2008). For example, in

the case of F&A the retained function can focus on strategyissues, whilst the transaction-oriented tasks such as generalaccounting, accounts receivable, and tax processing can becarried out in the shared services centre (Cecil, 2000). Con-tinuous improvement is another important feature of sharedservices where specialisation allows the operator of theshared services centre to drive improvements in both effi-ciency and service levels (Forst, 2001).

Outsourced shared services arrangements have becomemore prominent as organisations seek to leverage the capa-bilities of specialist vendors (Lacity & Fox, 2008; Maatman,Bondarouk, & Looise, 2010). Although outsourcing offersattractive features including vendor continuous improve-ment capabilities, better technology utilisation and costsavings through scale economies, it exposes organisationsto contractual hazards such as excessive dependence on asingle vendor, knowledge loss, performance measurementdifficulties, and vendor opportunism (Currie, Michell, &Abanishe, 2008; Feeny, Lacity, & Willcocks, 2005; William-son, 1985). These contractual hazards increase whererequirements are difficult to specify, and there are frequentchanges required to the contract. Organisations attempt topre-empt contractual hazards by adopting relational con-tracting arrangements such as partnerships and joint ven-tures which are characterised by trust, joint problem-solving, and information sharing (McIvor, 2008).

Much of the existing literature on shared services has fo-cused on internal shared services implementations (Cooke,2006; Farndale, Paauwe, & Hoeksema, 2009; Janssen &Joha, 2006; Zeynep & Masini, 2008) with limited attentiongiven to outsourced shared services. Although there hasbeen a burgeoning interest in outsourcing, authors such asSako (2010) have called for more research to explore whatorganisations need to consider when opting for the outsour-ced option. Organisations have traditionally been inclinedto improve process performance internally by creating ashared services operation before outsourcing the ownershipand management of the shared service operation (Sako &Tierney, 2007; Woodall et al., 2009). Increasingly organisa-tions are opting for the outsourced approach, which in-volves working with a vendor to create a shared servicesoperation and transform the performance of the affectedfunction. However, this option leads to a greater depen-dence on the vendor, and the need for additional skills tomanage the contract to ensure performance improvementsare delivered. Furthermore, these types of arrangementscan be often difficult to develop and sustain over thelong-term (Mani, Barua, & Whinston, 2006).

A further challenge involves redesigning and standardis-ing processes that are dispersed across different businessunits and locations (Hesketh, 2008). Creating shared ser-vices often impact back office functions with thousands ofemployees, and involve major organisational upheaval inthe form of changes to complex functional structures andprocesses. The tightly integrated nature of an organisation�sinformation technology (IT) infrastructure with businessprocesses further compounds these challenges (Hagel &Brown, 2005). Standardising processes with links to tightlycoupled systems can be extremely time consuming andexpensive (Tanriverdi, Konana, & Ge, 2007). Moreover,organisations face considerable challenges in enhancingthe strategic value of the retained function (Lacity & Fox,

450 R. McIvor et al.

2008). Traditionally, personnel in support functions oper-ated in a transaction-intensive, supply-driven environmentwhere there was little emphasis on enhancing the strategicvalue of the function. Such an accusation has often beenlevelled at the HR function, with authors noting that HRprofessionals have been prone to adopting fads in theirquest to achieve greater recognition (Hope-Hailey, Gratton,McGovem, & Truss, 2005; Teo & Crawford, 2005; Torring-ton, Hall, & Taylor, 2005).

In implementing shared services organisations have todeal with change management issues, and attempt to changethe attitudes and commitment of employees to enhance thevalue of the retained function (Davis et al., 2007). Sharedservices involves significant internal upheaval and organisa-tional change, and organisations often encounter difficultiesin sustaining momentum and dealing with employee resis-tance in such change programmes (Buchanan et al., 2005).For example, McCabe (2010) has shown how �nostalgia� forthe old ways can be a very important source of resistancefor employees when they are faced with new organisationalrealities. Meanwhile, Loup and Koller (2005) argue thatorganisations need to use a series of strategies to build com-mitment to change to avoid resistance and compliance. Forexample, they note the vital importance of participationand engagement at all levels, through good teambuilding,and acknowledging and rewarding those who take what areperceive to be personal risks and engage with the changes.

Despite the prominence of shared services in practice, agreater understanding is required of how organisationsimplement process standardisation and enhance the valueof the retained function through shared services arrange-ments. Much of the existing literature focuses on the mo-tives and drivers for shared services, rather than providingdetailed insights into how shared services are implemented(Davis, 2005; Janssen & Joha, 2006; Wang & Wang, 2007;Zeynep & Masini, 2008). There are few studies in the litera-ture outlining how organisations deal with employee resis-tance and change management issues in large scale sharedservices. Although there are significant benefits from sharedservices many organisations have been disappointed withthe outcomes and in some cases have experienced failure(Redman et al., 2007). Moreover, as organisations increas-ingly consider the outsourced option a number of authorshave highlighted the need for further research in the areaof outsourced shared services (Cooke, 2006; Hesketh,2008; Sako & Tierney, 2007).

Therefore, the aim of this paper is to develop a detailedunderstanding of the issues involved in creating outsourcedshared services, which involves understanding thechallenges and potential strategies for addressing thesechallenges. The research seeks to answer the followingresearch questions.

• How is the outsourced shared services decision made?• How are processes standardised and consolidated into ashared services centre?

• How is the outsourced shared services arrangementimplemented and managed?

• How is the strategic role of the retained functionenhanced through shared services?

Research approach

A case study approach was chosen to undertake the researchwith the organisation. Use of the case study approach allowsan increase in the quality and quantity of data obtained andallows the researcher to analyse relationships and socialprocesses that is not possible via a quantitative approach(Gummesson, 1991; Yin, 1994). The organisation in this casewas chosen for a number of reasons. Preliminary interviewswith key personnel revealed that the organisation hadimplemented a large-scale outsourced HR shared servicesarrangement, which involved transforming the HR function,standardising and consolidating HR processes, and leverag-ing the skills of vendors to establish and manage a sharedservices centre. The preliminary interviews had revealedsome of the complexities and challenges of the arrange-ment, and the research team believed that important in-sights and learning could be gained to develop a fullerunderstanding of outsourced shared services. In addition,the research team already had strong relationships withthe organisation, which facilitated their full access and par-ticipation in the research. It was possible to gain access topersonnel who were involved in the project from initial ideastage through to full implementation.

A longitudinal approach was applied to the researchwith the arrangement being analysed over a three-yearperiod. Adopting a longitudinal approach allowed freshrecollections from personnel who were involved, and al-lowed the research team to study on-going events and alsobetter capture the complex reality of the situation over alonger time period. The data collected was analysed usingEisenhardt�s ( 1989; 2007) guidelines on case study analy-sis. The aim of data collection was to obtain insights intothe initial impetus for the arrangement, and understandfully the process through which the organisation estab-lished and managed the new outsourced HR shared servicesarrangement. A number of sources were used for data col-lection. Archival data in the form of internal memoranda,annual reports, strategy documents, trade and internalcompany magazine articles were also collated. In particu-lar, a number of published internal and external audit re-ports of certain aspects of the project were importantsources of data.

The primary source of data collection was via semi-struc-tured interviews. Twenty-one interviews were carried outwith personnel at both corporate HR and departmentallevel. An interview protocol based on the literature was de-signed prior to data collection and served as an interviewguide. This interview guide included questions on a numberof issues including the motives for the fully outsourced op-tion, business case development, approach to analysinginternal performance, procurement, contracting, designand implementation of new service delivery model, businessprocess redesign, change management, and approaches tomanaging the vendor. During the interviews personnel wereencouraged to share their experiences and outline lessonsthat could be learned from certain aspects of the arrange-ment, which involved suggesting how issues could have beendealt with better.

In relation to data analysis, the research team analysedthe data to determine common factors and themes. Case


studies were developed from the archival data and inter-views undertaken with the personnel involved in thearrangement. As part of this analysis, follow-up interviewswere undertaken to discuss both earlier responses and thoseof other informants. These interviews often involved addi-tional questions based on information obtained from earlierinterviews. A key strength of this approach was that it al-lowed the triangulation of data from multiple informantsin order to determine the key lessons that could be learnedfor creating outsourced shared services. This analysis thenformed the basis of the research findings, which are nowpresented.

Background to the case study

The key drivers for the organisation considering the sharedservices arrangement were the need to replace a number ofHR IT systems, and the recognition that HR service deliveryneeded to be improved. During business case developmentit explored a number of options including a fully outsourcedHR arrangement, but instead opted for partial outsourcingof the IT and maintenance elements. However, during alengthy procurement process it decided to increase the scopeof the project to a fully outsourced HR arrangement includinga shared services centre with a contact centre processing HRtransaction and casework, a managed payroll services, and amanaged IT services. The new arrangement would incorpo-rate a transformed retained function comprising a corporateHR centre and a retainedHR function in each department tak-ing on a more strategic role.

Contracting was extremely challenging as there were sig-nificant shortcomings in existing processes and systems, andthere was a lack of knowledge internally on contemporaryIT-enabled HR systems and service level determination.The organisation had to rely on both the knowledge of ven-dors and external expertise in contracting and service leveldevelopment. After detailed contract negotiations, aconsortium of four vendors was selected including a primecontractor who was responsible for the implementation,and overall management of the IT services, which involvedimplementing the Oracle software application to deliverthe HR services; a shared services operator who was respon-sible for managing and operating the shared services centrethrough a front-office employee HR contact centre, and aback-office operation providing transaction services, case-work and professional support to managers and employees;a specialist HR consultancy who was responsible for provid-ing support on deploying best practice, business process re-design during implementation, and driving transformation inthe retained HR function; and Oracle who was responsiblefor providing specialist Oracle consulting services, andworking with prime contractors development staff.

The structure of the new HR arrangement developedfrom contract negotiations with the successful consortium,and had a number of elements as shown in Figure 1. The cli-ent signed a public private partnership (PPP) agreement.1

1 A public private partnership (PPP) is an agreement betweengovernment and the private sector for the provision of publicservices or infrastructure. The goal of PPP for government is toaccess the management skills of the private sector, and reduce thecapital expenditure involved in large projects.

The contract was for up to 15 years with an option for theclient to terminate at any time after the 10th year. Thearrangement was projected to be cash neutral as the cashsavings achieved from implementing the new services andsystems would be allocated to contribute towards futurecontractor service charges. Previously, there had been 900staff involved in the provision of HR service, giving a full-time equivalent (FTE) ratio of 1:32.2 Under the new arrange-ment 350 staff were retained internally in the HR function,giving a FTE ratio of 1:80. Around 500 staff were redeployedinternally to other posts, and there were no compulsoryredundancies, or internal staff transferred into the sharedservices centre.

Research findings

How the outsourced shared services decision wasmade

The initial impetus for the shared services arrangement ar-ose from the need to replace a number of HR IT systemsincluding the payroll application. Internal analysis of exist-ing processes and systems revealed a number of significantproblems. Different systems were being used by the depart-ments to maintain personnel data, along with the central HRsystems, and some of these systems were automated, andsome were manual. There was a lack of consistency in theinterpretation of policies by departments. Although policieswere developed at corporate level, they were being applieddifferently by departments in areas such as special leave orsickness absence as evidenced by the following commentfrom a director at corporate level, �. . .there were lots of dif-ficulties because each department had been allowed toevolve their own interpretation of policies, and interpreta-tion of the rules. . .�. There was a lack of a coordinatedstructure for the delivery of HR services. Some departmentswere receiving HR services from another department, whilstpensions and external recruitment services were deliveredfrom corporate level.

Once the internal analysis was completed, the projectteam began to focus it attentions externally both to assessthe extent of internal weaknesses and potential solutionsfor improvement. Benchmarking was carried out by the pro-ject team along with input from the HR departments. Theproject team used published HR industry benchmarkingdata, which included data from specialist HR service ven-dors. A difficulty with this exercise was the lack of valid per-formance measures used internally to measure HR servicelevels as evidenced by a comment from a manager at corpo-rate level, �. . .for HR we had a very poor base line of integraldata to work from, so we couldn�t actually tell how good wewere, or bad at HR. . .�. However, benchmarking revealedsome major performance weaknesses as a result of underinvestment in technology, poor management of informationsystems, and process duplication.

The findings from the internal and external analysis werethe foundation for developing the business case. Thebusiness case involved a partial outsourcing of HR services

2 FTE ratio denotes the number of HR staff to employees in theorganisation.

Integrated HR Management Information System

Shared Service Centre Departmental HR

Corporate HR

Layer 1 Contact Centre

Layer 2 Transaction Support

Layer 3 Case Management

Single point of contact for HR queries and advice via email and telephone .Query handling and basic transactions on all HR processes.

Central pool of HR administrators .Query resolution management .Managment information reporting .Staff file retention and maintenance .

Pool of in-depth professional HR expertise .Support on complex case work such as grievance , discipline, absence, and equal opportunities .

Drive corporate HR strategy, policy and procedures .Maintain and operate agreed HR processes .Advise retained departmental HR staff .Build capabilities for change managementContract management .Manage HR operations at corporate level .

Lead departmental HR strategies , policies , and procedures .Workforce planning .Make decisions on complex cases from shared services centre .Engage with departments through partnering to support business planning and operational HR processes .Lead change initiatives .

Online Service

Self service functionality.Access to a single source of guidance and information on HR policies and processes .Access to personal data for reviewing and updating personal information , applying for leave, trawling for job opportunities , and booking training .Absence management .Training administration .Electronic pay slips.

Line Managers HR Managers Employees Applicants

Users

Figure 1 Structure of the outsourced shared services arrangement.


focusing mainly on the information technology developmentand maintenance elements. However, the scope of theproject radically changed when the project team went toprocurement. The initial dialogue and consultation withvendors was viewed as a valuable opportunity for exploringfurther ideas and suggestions on alternative sourcing op-tions. Crucially, the project team recognised that they didnot have the knowledge to specify clearly what they re-quired from the new arrangement, and believed they couldlearn from vendors as evidenced by a comment from a HRdirector, �. . .the explicit intention was to use the engage-ment with potential bidders to explore the best optionsfor delivery of the service. Pick their brains, pick theirexpertise, see whether there were different way of doingit. . .�.

The procurement process involved a market soundingexercise where potential vendors were invited and informedof the details of project. As a result of market soundingthree consortia comprising vendors with specialist expertisein HR shared services were invited to negotiate. A consulta-tion exercise then began in order to give each bidder theopportunity to understand the existing internal processesand organisation of the HR function at corporate anddepartment level. The project team organised a numberof meetings and over 200 workshops with the bidders andvarious HR service specialists across the departments, whichtook place over a three month period. Each bidder submit-ted a �blueprint� and outline costs for improving servicedelivery.

The consultation with vendors had a significant impact onthe overall direction and scope of the project. Following areview of the blueprints, site visits, and consulting keyinternal stakeholders the project team decided to expandthe scope of the project. The project team decided to invitebidders to submit bids for a fully outsourced serviceincluding a shared services centre with a HR contact centreproviding support on internal recruitment, employee rela-tions, HR policy and procedures; a fully managed payrollservice; a fully managed ICT service providing a personneldatabase and online information and self service facilitiesfor policy advice and decision support to line managersand employees; and professional HR support on caseworkon a consultancy basis. There were a number of reasonsfor opting for the outsourced shared services option.

• The project team believed that transforming the HR func-tion would not have been possible via the partial out-sourcing option. Through visiting vendor operations withother clients, the project team observed how a fully out-sourced option could deliver the required benefits andtransform the HR function. Examples were found of howoutsourced shared services centres were delivering effi-ciencies, and a demand-driven customer service culture.This would not have been possible through an internallymanaged shared services centre with existing employeeswho had been accustomed to working in a supply drivenculture, rather in a demand driven culture where the ser-vice is purchased at an agreed fee and service level.


• Transforming the retained HR function in the depart-ments would entail a major change programme, andthe organisation lacked the necessary internal skills andexperience to drive this change. In addition, it lackedthe depth and experience required to redesign and stan-dardise its existing business processes to create an effi-cient and effective internally managed shared servicescentre as evidenced by the following comment from amember of the project team, �Well we didn�t have theskills, we didn�t have the amount of resource that, totake the Oracle system and train the people up todevelop in the time frame�.

• There was a high degree of complexity associated withmanaging the different internal and outsourced servicesof the partial outsourcing option. Rather than attemptto coordinate and manage complex interfaces and inter-dependencies between services provided by internaldepartments and external vendors, the project teambelieved it would be better to have a prime contractorresponsible for managing the relevant services involved.

How processes were standardised and consolidatedprocesses into the shared services centre

Through consulting with vendors and observing contempo-rary HR service delivery models the project team believedthere was significant potential to eliminate outdated andidiosyncratic work practices, and achieve significant costsreductions via standardisation of duplicated processes.Moreover, it was a valuable opportunity to transform thestructure of the retained HR functions in the departments.Process standardisation and improvement involved analys-ing and re-designing the HR service processes that werebeing transferred into the shared services centre and thoseoffered online. The outputs from this exercise were used todevelop technical specifications for coding the informationtechnology element of the system. The project team haddecided that HR strategy and policy issues would be re-tained internally whilst the all the transaction-intensivetasks should be transferred to the shared services centre.It would also leverage the specialist expertise of the spe-cialist HR consultancy in contemporary HR practices to as-sist with implementing this plan.

However, it was recognised that there would be signifi-cant challenges with standardisation. There was an impetusto get the new processes right first time, as there would bevendor costs associated with changing processes during thecontract. There were significant process duplications andinconsistencies in interpretation of corporate policies bydepartments. The project team anticipated resistance tothe proposed changes from two main sources. Severaldepartments that had operated autonomously to a large ex-tent may resist agreeing to a standardised approach to cer-tain policies, and try to retain processes specific to theirown needs. Additionally, there was likely to be resistancefrom HR staff due to the required changes in roles andresponsibilities and the transfer of processes previously car-ried out internally to an outsourced shared services centre.

A number of strategies were pursued to deal with thesechallenges. There were no compulsory redundancies as a

result of the outsourced arrangement, and HR staff were gi-ven redeployment opportunities. The project team gave sig-nificant attention to gaining the support of HR departmentsin redesigning and implementing new processes. Crucially,HR staff had in-depth and specific knowledge of HR depart-mental requirements, which was of particular importancewhen transferring payroll processing to the vendor as evi-denced by a comment from a member of the project team,�We wanted them to come on side to completely dismantlewhat they had created, and really ask them to participatein breaking that down . . .Payroll in particular, the goodwilland expertise of the payroll team to transfer their knowl-edge to the vendor team and help us build new processes�.

The project team attempted to gain the commitment ofemployees at both corporate and departmental levelthrough involving HR staff in the design of the new arrange-ment. In addition, buy-into the necessary changes wassought through demonstrating the benefits of standardisingthe process. The specialist HR consultancy used its expertiseto show how process performance could be improved, andintroduced standard processes developed from working withother clients – often industry standard HR practices.

Despite this emphasis on consultation and engagement anumber of difficulties arose. As well as departments misin-terpreting some corporate policies, a number of policieshad to be changed as a result of outdated procedures or alack of consistency. Updating these policies involved pro-tracted renegotiations with a number of stakeholdersincluding unions, and this caused delays. This created ten-sions with the vendor as they failed to understand the com-plexities of making policy changes in the public sector. Amember of the project team commented upon the problemsthey faced with regards to this issue of complexity, �. . .they[the vendor] underestimated the complexities. Becauseprocess changes seem simple to an external vendor, butthey cut across our policies, and on our policies we haveto consult with the trade union side of it, and that is a very,very long process�.

Members of the project team admitted that they shouldhave been stronger in their approach and tried to make cor-porate policies more robust prior to standardisation. Forexample, it was acknowledged that there was some successwhen clear leadership and authority was applied to dealwith departmental resistance revolving around their havingto relinquish long-held HR practices. However, although thisapproach was successful in driving standardisation in manyprocesses, there was a view that too many exceptions wereincluded, and senior staff should have been more forceful indriving a standardised approach as evidenced by a commentfrom a senior project team member, �. . .I can�t say whetherwe were forceful enough . . . and maybe we didn�t have en-ough of the senior management present to say, well I�m sor-ry – I know you would like to put those three steps inbecause you are familiar with them, but they are not goingin because they are not needed. . .�.

Ultimately, at this stage in the process it became clearthat the major problem was related to the issue of organisa-tional complexity where the project team underestimatedthe level of autonomy some of the departments had,and found this to be a significant barrier to applying astandardised approach. Indeed one director summarised


this situation when he described how it was clear that:�. . .each of those departments could do their own thing. . .But more dictatorship would have been better�.

How the outsourced shared services arrangementwas implemented and managed

The project team faced a number of challenges during con-tract negotiations including weak service performance andthe absence of valid HR service performance measures.There was a lack of internal skills in contracting and servicelevel development. The project team were also consciousthat they had relied heavily on the vendors in the earlystages of procurement, and therefore sought externaladvice to assist with contracting. Therefore, externalconsultants were employed to develop key performanceindicators (KPIs) and service level agreements (SLAs). Thisfacilitated the development of a baseline position to mea-sure any future improvements, and provided a frameworkfor ongoing performance monitoring during the contract.Moreover, the project team lacked the legal skills requiredto translate the service requirements into appropriate con-tractual language. As well as seeking advice from other gov-ernment agencies, extensive legal input was necessary fordrafting and refining the development of requirementsschedules.

Table 1 summarises the key elements of the contract.Significant attention was given to agreeing a charging andperformance model in contract negotiations. However, itwas recognised by the project team and vendor that someof the performance measures and charging structures wouldhave to be revised as the relationship developed. Bench-marking was regarded as important for assessing andimproving performance from the shared services centre

Table 1 Key elements of the contract.

Contract element Description

Payment and performance Operational services were paid for oni.e. no service, no fee. The abatemeoperational services failed to meet tperformance

Charging A number of charging mechanisms weOne mechanism involved charging fousing the service. The shared servicequalifying employee.A further mechanism was based on acharged on a cost per payslip, whilstcompetition. There were two paymepost-sift list or post-assessment list;of final list).Specifically scoped packages of work

Benchmarking Provisions were included for benchmappointment of independent benchmall the services involved. The outcomaction plan, which involved a reviewreduced service charges, and plans f

Continuous improvement There was a commitment to continuothe specialist HR consultancy providiimprovement

and the retained HR function. The key objective of perfor-mance improvement was supported through the provisionof formalised structures (four FTEs to work with the partiesover the lifetime of the contract) to ensure that advice fromthe specialist HR consultancy was in place.

Although, considerable attention was given to developinga robust contract it was recognised that relational contract-ing would act as an important complement to the formalcontract due to the complexity of requirements and theneed for performance transformation in the retained HRfunction. The contract included a number of mechanismsto facilitate relational contracting including the equal shar-ing of efficiency savings annually, and opportunities for �gainsharing� during the contract period, where profits by thecontractor exceed a threshold profit margin of 7.5%. Signif-icant efforts were made at building strong inter-personalrelationships between the project team and key staff inthe vendor. Governance arrangements were put in placeat both senior and management levels in the client and ven-dor. In addition, the high level of dependency between eachparty on achieving a successful outcome created a powerfulimpetus for building a strong collaborative relationship.

The need for relational contracting became evident inthe early implementation phases of the arrangement wherethe project team and vendor staff had to work closely whendelays arose due to departmental resistance to processchanges. Opting for the outsourced option meant that newlyrecruited staff in the shared services centre lacked specificknowledge of HR policies and were taking too long to dealwith basic queries when the services went live. Some ofthese difficulties arose due to inconsistencies in policiesrather than a lack of knowledge of HR policies. These prob-lems were dealt with through the temporary transfer of HRstaff from the organisation to the shared services centre

the basis of availability and at the agreed performance levelnt regime was used to calculate the deductions required whenhe minimum required service levels for availability and

re employed:r the service on the basis of the number of internal employeess centre and ICT services were both charged on a cost per

llocating a unit cost per transaction. Pay and reward wasrecruitment was charged on a cost based on the type ofnt points for each type of competition: at pre-interview list,and at final outcome stage (e.g. issue of letters, publication

required by the client were charged on daily ratesarking at various stages in the contract, which included thearking consultants to undertake a full comparative study ofe of this exercise involved the client and contract agreeing anof service levels, reasons for under performance, possiblyor service improvementsus improvement in the contract, which was resourced throughng 4 FTEs to work with the client and contractor to drive


and the joint provision of additional training. When a num-ber of the services went live the organisation put in placeinternal mechanisms for monitoring the service quality thatinternal users were getting from the shared services centre.This involved working with the vendor to develop a score-card that included metrics highlighting performance levelsin the areas of customer satisfaction, operational and finan-cial performance.

The relational contracting approach was helpful in creat-ing flexibility and dealingwith some of the difficulties that ar-ose as evidenced by a HR director involved in managing therelationship, � . . .so we have a very close relationship. Nowinevitably there are tensions from time to time, we havemaintained a relationship and we have never fallen out.And we work very closely at an operational level day in dayout. . .� Relational contracting was important as the SLAsagreed during contract negotiations had to be amended dur-ing the implementation phase. During implementation theclient agreed to reduce the number of KPIs specified in thecontract, as it was felt they were over elaborate, and dilutedthe significance of what was being measured.

However, relational contracting alone could not resolveall issues that arose, and in a number of instances the con-tract had to be re-negotiated. During implementation thevendor missed completion dates for a number of milestoneevents which led to the client revising and withholding aproportion of payments, and in turn re-negotiating the con-tract. Difficulties continued to persist in the relationshipwith the vendor due to inconsistencies in corporate policies.For example, the majority of service user complaints werenot the fault of the shared services centre staff but dueto poor and inconsistent HR policies. Similarly, there wassome confusion on the tasks that were the responsibilityof the shared services centre and retained HR, which meantsome issues were not being dealt with effectively. RetainedHR found from the outsourced service delivery model thatthey had lost some flexibility in making process changesand had to be aware of the cost implications. However, apositive outcome was that retained HR had become moreformal in its approach to assessing its future requirementsin areas such as recruitment and workforce planning as evi-denced by a comment from a director at corporate level,�. . .It�s more formalised and it�s systematic, it has got thatadded edge of, this is the contract and there is money atstake here potentially. I think we are getting better, atpredicting the numbers and individual recruitments thatare going to be run. . .�.

3 Rather than deal with transactional support and routine queries,HR business partners act as consultants to the organisationproviding strategic advice to line managers and align HR with theneeds of the organisation. Refer to Ulrich, D. and Smallwood, N.(2005). The HR Value Proposition, Harvard Business School Press.

How the strategic role of the retained function wasenhanced through shared services

As well as reducing costs and improving customer service akey objective of the shared services arrangement involvedtransforming the retained HR function in the departmentsinto performing amore strategic role. Previously theHR func-tions at department level spent 80% of their time on adminis-trative type activities, and 20% of their time solving problemsfor departmental and line managers. Under the new arrange-ment the HR professional was expected to spend 80% of theirtime solving problems for line managers in areas such asabsence management, employee morale and motivation

problems. Senior management were attempting to effectan attitudinal change, and transform HR into a customer-ser-vice and strategically oriented function.

A number of strategies were pursued to try and achievethis transformation. Implementing the changes required atraining and development programme, which involveddeveloping new skills and competences in the HR profes-sional both at corporate and department level. HR directorsundertook executive development courses in areas such asbusiness partnering,3 change management, and projectmanagement. HR professionals at departmental level wereencouraged to take part in training courses on business part-nering, developing negotiation skills, data analysis, andcommunication skills. HR staff in departments that wereneither comfortable nor willing to move towards a businesspartnering role were redeployed to other parts of the orga-nisation. Expertise from the specialist HR consultancyagreed in the contract was employed to advise HR depart-ments on how to changes their bureaucratic structures tobecome more customer-focused, and act as a strategic part-ner delivering value-added services.

Despite these strategies some difficulties arose whichmeant it was difficult to really reinforce the changes inthe role of the retained HR function. There was evidenceof attitudinal resistance to the new arrangement amongstretained HR staff. It was apparent that many HR employeeshad difficulties with the decision to outsource. For one se-nior HR manager, their position was likened to � . . .turkeysbeing asked to vote for Christmas� who were expected to�come on side to completely dismantle what they had cre-ated. . . and introducing a new way of working that manyof them could not be part of because we were outsourcingthat element of the work� Reinforcing this point, anothersenior HR manager noted that the outsourced shared ser-vices centre was in effect replacing long accepted HR rolesin the organisation and even though there was goodwill onthe part of many HR professionals, there was still some�reluctance and a resentment of the fact that our work isnow being carried out by these people [shared services cen-tre], why should we bother helping them�.

The project team had to adapt their approach to stake-holder engagement as the project developed in order todeal with such resistance. The project team decided to dif-ferentiate between key stakeholder groups, as some stake-holders were more critical than others for communicationsactivities. For communications purposes, it divided keystakeholders into two categories including tier one keystakeholders who played a pivotal role in briefing othergroups of key stakeholders and included the HR directorand the deputy HR director at corporate level, the depart-mental HR directors, and departmental project managers;and tier two key stakeholders who were briefed by a tierone stakeholder as shown in Figure 2. For example, depart-mental HR directors were briefed very closely by the projectteam and then were responsible for briefing departmentalsenior management teams and HR staff. However, it was

Project Team

CorporateDeputy HR

Director

CorporateHR

Director

HR DepartmentDirectors

Minister

PermanentSecretaries

Corporate HR Management &

Staff

Unions

OtherStakeholders

DepartmentManagement

Board

Department Senior

Management Team

DepartmentalHR

Tier One Key Stakeholders

Tier Two Key Stakeholders

Figure 2 Key stakeholder category communication approach.


acknowledged that there should have been more engage-ment to reduce resistance from HR as evidenced by acomment from a HR director, �had there been betterengagement by departments, some of the difficulties mightnot have been as great�.

Some retained HR staff were also resistant to the businesspartnering role, and one business partner highlighted some ofthe sources of resistance where, �quite a number of peoplewithin HR, . . .are not sold at all on the idea of business part-nering, it�s quite an alien concept�. When asked why thismight be the case, he noted that �to some it�s seen as a bitof a fad . . . that they are not too keen to embrace�. Ultimatelyfor him the resistance to the business partnering originatedfrom the fact that �. . .it does take a lot of people out of theircomfort zones and so that, that makes the sort of uptake ofbusiness partnering very patchy�.

However, there was a more positive view amongst somesenior departmental managers regarding the changes to HR,and evidence of the changes being reinforced where moreconstructive relationships with business partners had beenforged with certain areas of the organisation. One seniordepartmental manager outlined how his business partner�understood the vision, the concept and the contract�. Aclear implication which emerged in the interviews was thatHR business partners had to work extremely hard to gaincredibility and respect to allow the business partner roleto take root and flourish. Senior HR managers were awareof this issue and encouraged business partners to play sucha proactive role: �. . .what we found is that the business part-ners that have been most successful have either sorted outan issue . . . or have just helped them with a big issue�. In-deed one business partner noted how he had built construc-tive relationships with line managers through doing a �bit ofa sales job� where he had to be proactive with managers inthe business areas �to say what [he was] here for, and buildup that level of trust because certainly some line managerscan be quite suspicious of HR�.

Ultimately however, there were divergent opinions be-tween line managers and those in more senior positions onwhether HR had become more strategic. For many line man-agers, their perceptions were rooted in their experiencesfrom pre-outsourcing days where HR was viewed as anythingbut a strategic partner, but more as an �another obstaclethat they have to overcome in order to do what they needto do to run their businesses�. However, as one might ex-pect in such a large and complex organisation, some linemanagers, were relatively open to the prospect of engagingwith a more strategically focussed HR function. Moreover,there was evidence that at the more senior HR levels HRwas perceived to becoming more strategic in its outlookand slowly departments were becoming more accepting ofthis status. For example, the most senior HR manager inter-viewed reflected upon the current scenario and noted that�most departments are now reorganised and restructuredand they now have set up the business partners and theyare thinking differently about how they do HR�.

Discussion

The findings provide some valuable insights into how theoutsourced shared services decision was made. Althoughthe organisation considered the internal shared services op-tion it lacked the necessary capabilities to create and man-age an internal shared services model. The organisationopted for the outsourced approach due to weaknesses inits internal systems and processes, and a significant skillsdeficit in areas such as knowledge of contemporary elec-tronic-HR, organisation change, and continuous improve-ment. A key factor in the process was related to theengagement which the project team had with the vendorsduring business case development. The outcome of thisearly engagement process alerted the project team to thepotential for delivering HR services electronically and


transforming the retained HR function and led to the recog-nition that they lacked the internal skills to deliver such atransformation in performance without outsourcing a majorpart of the HR functions work.

However, opting for the fully outsourced model createdchallenges in both requirements specification and contract-ing. Benchmarking and developing SLAs are recognised askey ingredients of effective outsourcing in the literature(Feeny et al., 2005). Poor internal performancemanagementsystems and a lack of experience in more contemporary as-pects of HR made it difficult to undertake benchmarkingand establish SLAs to ascertain a baseline performance posi-tion to measure future vendor performance. A number ofstrategieswere pursued to address these challenges includingentering into a constructive dialogue with the vendors duringcontracting, and employing extensive legal expertise totranslate the service requirements into a sufficiently robustcontract. Indeed, the findings here are consistent with previ-ous studies that have found that contract negotiations con-ducted in a spirit and openness can lead to a more balancedcontract and are an important opportunity to develop arelationship with the successful vendor at an early stage(McKnight, Cummings, & Chervany, 1998; Weeks & Feeny,2008).

Standardising processes and restructuring HR provedchallenging and led to resistance from several depart-ments. Rather than being technical challenges such as atightly coupled IT infrastructure (Hagel & Brown, 2005;Tanriverdi et al., 2007) or vendors lacking the requiredcapabilities (Currie et al., 2008), they were mainly behav-ioural in nature. Although key stakeholders were involvedfrom departments in order to win support, there was evi-dence of resistance, particularly amongst line managersand HR personnel, whose co-operation was crucial tomaking the new arrangement successful (Dany, Guiedri,& Hatt, 2008). Some of the sources of this resistancestemmed from the fact that the shared services arrange-ment was outsourced, and the HR function at departmentlevel traditionally had a high degree of autonomy. Theproject team had to compel line managers to take respon-sibility for HR matters, and used executive authority tocompel departments to relinquish outdated working prac-tices, which was not entirely successful. Standardisationwas further complicated and delayed due to inconsisten-cies in corporate policies, and the need for extensive con-sultations with unions (as is typical of the public sector)and other stakeholders.

The findings here support the need for relational con-tracting in the case of a complex, large scale outsourcingarrangement where there is heavy reliance on the vendorfor performance improvement (Sako & Tierney, 2007). Theorganisation was heavily reliant on the vendor to contributeideas and use its prior experience in designing the new ser-vice delivery model. There was a lot of novelty in areas suchas SLA development and charging models which would re-quire changes in the future, and therefore a relationshipwas required where flexibility could be achieved throughrelational mechanisms rather than having to continuallyrenegotiate the contract. Indeed, the need for relationalcontracting was evident during implementation as develop-ment was slowed down as a result of problems with corpo-rate policies and departments resisting adopting standard

processes. However, the findings have shown that buildingstrong yet flexible relationships amongst client and vendoris vitally important for implementing and sustaining anychange (Bachmann & Inkpen, 2011). However, it must beappreciated that in this case, the arrangement was alsounderpinned by a strong contract and formal governancearrangement between the organisation and vendor to dealwith any issues that arose. Hence the findings here supportthose in the literature who argue that formal and relationalcontracting act as complements rather than substitutes(Barthelemy, 2003; Poppo & Zenger, 2002).

It is recognised in the literature that enhancing the stra-tegic role of the retained function affected by shared ser-vices is achieved over the long term (Forst, 2001), and thefindings here support this view. To realise the benefits ofsuch changes managers need to be aware that such a changewill take time to bed-in and that they should prepare for theinevitable obstacles, barriers and resistance along the way(Kanter, 1992). The resistance to the changes brought aboutby the shared services arrangement stemming from out-sourcing proved to be a barrier to changing the attitudesof some retained HR staff, and some viewed new develop-ments as something of a fad. A further challenge in reinforc-ing this change and creating an environment where HRwould be transformed into a strategic function were theviews amongst line managers about the role and functionof HR. The findings have highlighted the importance ofensuring that middle level managers are working to supportchanges, and hence they should be clearly involved in deci-sion making and the benefits of shared services should beillustrated to them (Hope, 2010).

Lessons for managers

The experiences of the organisation studied in this paperhave highlighted strategies for addressing the challengesof creating outsourced shared services as shown in Table 2.In addition, there are a number of important lessonsfor managers creating outsourced shared servicesarrangements.

• Employ a structured project management approach –Clearly defined project objectives and strong leadershipis required at corporate level in order to gain the neces-sary commitment and support from departments andother stakeholders affected. The project team shouldbe properly convened with the appropriate mix of skills,and representation from parts of the organisationimpacted by the shared services arrangement.

• Engage with vendors to develop potential sourcingoptions – Organisations often lack the skills to determinerequirements and a detailed outline of the shared ser-vices delivery model. Engaging with potential vendors isa valuable means of exploring potential sourcing options,gaining ideas, and offering the potential to exploit theirspecialist capabilities to improve the performance offunctions affected by shared services.

• Leverage external expertise during contracting – Deter-mining KPIs and SLAs is a complex process, and requiresspecialist skills often lacking in the client. Contractingbecomes even more challenging where existing client

Table 2 Strategies for addressing the challenges of creating outsourced shared services.

Challenges of creating outsourced shared services Potential strategies for addressing the challenges

Making the outsourcedshared services decision

Poor internal information and ineffectiveHR performance measurement systemSignificant performance deficit in comparisonto contemporary HR in marketLack of internal knowledge ofcontemporary electronic HRLack of internal capabilitiesin specifying requirements

Information gathering and benchmarking to establish currentlevel of HR performance in organisationVendor engagement and marker sounding to assistwith requirements definitionUse of external consultants – Professional developmentbody engagementEngaging key stakeholders in key project decisionsto win support for proposed sourcing option

Process standardisationand consolidation

Getting process redesignright first timeResistance from HR function torelinquishing long held practices andadopting standardised approachHighly autonomous HR functionhas potential to hinder standardisationResistance to changes as a result ofselecting outsourcing optionInconsistent policies at corporate levelTime consuming to change policies dueto need for extensiveengagement with affected stakeholders

Leverage capabilities of vendor to deploy best practiceprocesses and allow time for iterationsWhere possible, design the contract toallow for process changesMinimise redundancies and plan redeployment strategyto limit potential resistance from outsourcingInvolve HR staff in redesign and standardisation processto allow their voice to be heardStrong governance arrangements to drive astandardisation and improvement agenda, andcontinuous communication to stakeholders

Implementing and managingoutsourced shared services

Poor internal performance measurementcreates difficulties inestablishing a benchmark forperformance improvement in the contractLack of internal skills in SLA developmentand contractingOver reliance on vendor to help withspecifying requirementsInconsistent policies straining therelationship with the vendor

Seek external expertise to develop SLAs and contractStaff transfers to deal with initial service problemsin the shared services centreEmphasis on performance improvement provisionsin contract to ensure required resource is committedEmploy relational contracting mechanismsto build effective relationshipUse flexible approach to amending SLAs and chargingmodels as relationship develops

Enhancing the role of theretained function

Change management issuesRetained function resistanceto new work practisesLine manager resistance tonew responsibilities andmethods of accessing HR services

Redeployment opportunities and training and developmentin area of business partnering and strategic HRStrong governance and leadership to enforce useof new systems allied with extensive suite of training anddevelopment opportunitiesLeverage skills of HR consultancy agreed in contractGive significant attention to engaging with staffaffected by new arrangement

458R.McIvo

retal.


processes and performance measurement systems areweak. External legal advice and expertise in performancemeasurement and procurement should be employed toaddress these challenges.

• Build relationships with key internal stakeholders – It isimportant to build relationships with staff at both seniorand lower levels that are impacted by the changes. Build-ing relationships through involvement in project decisionmaking and communication will help to create greaterownership of the new arrangement and obtain buy-infrom staff at lower levels. There has to be a clear andpersuasive communications strategy to ensure that fullunderstanding amongst internal stakeholders of therationale for such an arrangement is achieved.

• Plan and implement a process improvement strategy –Inconsistencies in corporate policies should be elimi-nated prior to implementation, and strong governancemechanisms should be established to drive through pro-cess standardisation and improvement, particularlywhere the affected function has a high level of auton-omy. It is essential to standardise as many processes aspossible to achieve the benefits of shared services. Incor-porating too many exceptions to standards, and makingchanges to corporate policies is likely to create complex-ity for the vendor, and increase development costs.

• Employ relational and formal contracting as comple-ments – The complexity and scale of outsourced sharedservices necessitates the development of a relationalcontracting arrangement. Strong inter-personal relation-ships between the client and vendor are important inboth the implementation and management phases ofshared services for resolving difficulties and creatingflexibility. However, negotiating a robust formal contractis an essential complement for dealing with issues thatcannot be resolved via relational mechanisms alone.

• Plan and implement a change management strategy –The perspectives and responses of employees affectedby shared services outsourcing arrangements have a sig-nificant impact on successful implementation. Much ofthe change management effort has to be directed atthe function directly affected. For example, a keyobjective of HR shared services arrangements involvestransforming the retained HR function into a customer-service oriented function, which requires a significantattitudinal change on the part of the HR professional.Training and professional development are importantelements of facilitating this change.

Conclusions

The research makes a number of important contributions.Although outsourced shared services can offer the benefitsof accessing superior vendor capabilities it is unlikely suchbenefits will be achieved unless the affected function buysinto the process. Where the function affected has a high le-vel of autonomy it will be more difficult to standardise pro-cesses, therefore diluting the benefits of shared services.Failure to implement a standardised approach will hinderan organisation from fully leveraging the specialist capabil-ities of external vendors. An organisation should improve itspolicies prior to implementation, as inconsistencies in poli-

cies will hinder standardisation efforts and create confusionbetween the client and vendor on the responsibility fortasks during the contract.

The research findings have the highlighted the impor-tance of strong governance to drive standardisation and per-formance improvement, and relationship building bothinternally with the staff affected by the changes and exter-nally with vendors. It is important to build relationships withstaff at both senior and lower levels that are impacted bythe changes. As authors such as Loup and Koller (2005) haveargued, building relationships through involvement in pro-ject decision making and communication will help to creategreater ownership of the new arrangement and obtain buy-in from staff at lower levels. There has to be a clear andpersuasive communications strategy to ensure that thereis a full understanding amongst internal stakeholders ofthe rationale and motives for shared services is achieved.This is even more important in the case of outsourcedshared services where the potential for resistance is greateramongst internal staff as a result of job security concerns(Buchanan et al., 2005). Moreover, building strong collabo-rative relationships with vendors is important in the pres-ence of complex client requirements and the need forperformance improvement.

There are a number of limitations with research. Inadopting a single case study approach, it is difficult to gen-eralise the significance of the research in relation to a widerorganisational population. The research in this paper fo-cused on a public sector organisation. Therefore, there isa need to carry out research in shared services across awider number of organisational settings, which would facil-itate the development or testing of research hypotheses orpropositions. Also, as is often the case with case study re-search, when combining much data from a wide variety ofsources, and over a long time period, the researchers�analysis of the findings is often a significant �reality� filter(Gummesson, 1991). Finally, the research focused on theHR function alone, and there is a need to carry out researchin other functional areas such as F&A and procurement toenhance our understanding of shared services.

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RONAN MCIVOR is a Professor at the Uni-versity of Ulster. He has carried out exten-sive research in the area of outsourcing andsupply chain management. He is currentlycarrying out research in the area of out-sourcing with a number of service andmanufacturing organisations. His work hasbeen published in a number of leadinginternational journals including the Euro-pean Management Journal, Journal ofGeneral Management, Journal of Opera-

tions Management, and OMEGA. He has authored a number of booksincluding the forthcoming Global Services Outsourcing, which isbeing published by Cambridge University Press. He is on the editorialboard of a number of international journals. He has been a visitingprofessor at the University of Missouri, USA, and has also taught onexecutive development programmes in Europe and the USA.

from the public sector 461

MARTIN MCCRACKEN is a Lecturer inOrganisational Behaviour at the University
of Ulster, N. Ireland. His research is focusedmainly upon Human Resource ManagementRestructuring and Strategic Human ResourceDevelopment. Dr McCracken also hasresearch interests in the fields of GraduateEducation and Employability and PublicSector Change, and is Editor of Educationand Training. He has published a number ofacademic papers and policy reports on skills
development and training transfer issues, and has played a key role

Creating outsourced shared services arrangements: Lessons

in carrying out UK and European Research projects commissioned by(amongst others): the Department for Education and Employment(UK); Sector Skills Development Agency (UK) and Leonardo Da VinciResearch Programme (EU).

MARIE MCHUGH is Professor of Organisa-tional Behaviour and Dean of the UlsterBusiness School at the University of Ulster.Marie read Psychology at Queen�s UniversityBelfast, graduating with a BA (Hons) in 1983.This was followed by an MSc in OccupationalPsychology in 1985, and in 1997 sheobtained a PhD in Organisational Behaviourfrom the University of Ulster. In addition toher roles at the University of Ulster,Professor McHugh is Editor of the Leadership

and Organizational Development Journal, and is currently Vice-
President of the British Academy of Management. Her mainresearch interests are work stress, organisational health andorganisational change, and she has published widely within theseareas. She has acted as a consultant to a variety of organisations,nationally and internationally.

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Creating outsourced shared services arrangements: Lessons from the public sector