The Centre That Can Explain Itself: A Shared-Services Compact for UK Groups
Photo: UK corporate boardroom meeting shared services finance team, via c8.alamy.com
Shared services are usually introduced with a sensible promise: reduce duplication, strengthen controls and give subsidiary teams access to specialist capability they could not afford alone. The promise is not the problem. The problem is that many UK groups centralise the work without explaining the deal. Finance, HR or IT becomes a cost line that subsidiary managers cannot read, a ticket queue they cannot influence and a monthly meeting that produces minutes rather than answers. The shrug follows.
A better approach is to treat shared services as a compact between the centre and the entities it serves. That compact does not need to be elaborate. It does need to be written down, reviewed and understood by the people who pay for it and the people who rely on it.
Why the shrug appears
Central functions often fail to earn affection because they are judged on two different scales. The parent board looks for cost reduction, control consistency and resilience. The subsidiary managing director looks for responsiveness, local knowledge and freedom to run their business. Without an explicit operating model, each side fills the gap with assumptions. The centre assumes demand should be managed through a ticket system. The subsidiary assumes a phone call should be enough. Both are disappointed.
The result is familiar: service requests bypass the process, costs are allocated by a formula nobody can explain, and the review meeting becomes a forum for grievances rather than decisions. Centralisation is not inherently wrong. Undocumented centralisation is.
Begin with a service catalogue, not an organisation chart
The first practical step is a service catalogue written in plain business language. It should list what the centre provides, who is eligible to receive it, what is included, what is excluded, the standard turnaround and the named service owner. A catalogue for a UK group might cover transactional finance, management accounts, payroll, HR advisory, IT service desk, procurement support and regulatory reporting. It should not attempt to describe every task. It should describe the services that subsidiary teams actually consume and the boundaries that matter.
A good catalogue answers questions before they become disputes. If a subsidiary wants a bespoke board pack, the catalogue shows whether that sits inside management reporting or is a chargeable change. If an HR query is about a complex restructure, the catalogue shows whether it is advisory or a project. The document becomes a communication tool, not a compliance artefact. It should be version-controlled and published where subsidiary managers can find it.
Set service levels around risk, not aspiration
Service-level agreements have a poor reputation because they are often long, numerical and ignored. A workable set is short. It should distinguish routine work from priority work and statutory deadlines. Payroll accuracy, query response times, month-end timetables and critical incident response are more useful than a sprawling list of every possible interaction.
Fewer measures, reported consistently, build more trust than a thick SLA that nobody reads. The centre should publish performance monthly and explain misses without defensiveness. The subsidiary should know the escalation route when a statutory deadline is at risk. For a UK group, that route should reach the group finance director or chief operating officer quickly, not disappear into a service desk queue. The purpose of the SLA is predictability, not punishment.
Make chargeback transparent and stable
Chargeback is where shared services most often lose credibility. A subsidiary receives an allocation that seems to bear little relation to the service it uses. The centre cannot explain the cost pool. The argument moves to the number rather than the service.
The remedy is not necessarily a more complex model. It is a more transparent and stable one. Common methods include direct usage, headcount, transaction volume, a fixed subscription or a hybrid. Simplicity usually beats false precision. The group should publish the cost pool, the allocation method and any exceptions before the financial year begins. It should separate run costs from change costs, so that a subsidiary requesting extra reporting can see the consequence. A predictable charge is easier to plan around than a perfectly precise one that arrives as a surprise.
Govern through a compact, not another committee
A shared-services compact can be one or two pages. It should state the principles, refer to the catalogue and SLA, explain the chargeback basis and set out how performance and demand will be reviewed. A quarterly forum, chaired by the group finance or operating lead, can then focus on performance, demand, risks, change requests and cost. Subsidiary representatives should have authority to speak for their business. Decisions should be recorded, with actions and owners.
The forum should also ask whether an activity still belongs in the centre. Shared services are not a one-way journey. Some activities may be better returned to a subsidiary, outsourced or automated. A compact that cannot be revisited becomes another layer of rigidity.
A short diagnostic for group directors
Directors can test the health of shared services with a simple red-amber-green review. Ask whether each subsidiary can name the main services it receives and what they cost; whether a current catalogue sets out inclusions and exclusions; whether service levels are few, measured and reported; whether managers know the escalation route; whether the chargeback method is published before the year begins and remains stable; whether exceptions are approved and priced; whether the review forum makes recorded decisions; and whether the group has tested whether each central activity should remain central. Mostly green suggests the compact is working. Several reds suggest the centre is relying on hierarchy rather than explanation.
The test of earning its keep
Shared services earn their keep when they are legible. That means a subsidiary manager can see what they receive, what it costs, how performance is measured and where to go when something matters. It also means the centre can see demand, risk and cost in one place, rather than learning about problems through escalation. In a UK group facing continued scrutiny of overheads and controls in 2026, that clarity is not administrative tidiness. It is the difference between a central function that is trusted and one that is merely tolerated.
