5 Great Truths of Installing Shared Services, Part 1

“Will putting in shared services help us survive?”

We’ve heard this question now from clients and compatriots alike many times. So, we undertook to really dig into Turnkey’s past experiences to inform how we advise our clients on the issue.

I (Katrina) interviewed people who had lots of skinned knees from helping install shared services inside nonprofits. Here are the five great truths they affirmed for me.

First Great Truth: It’s Not Just About the Savings

Installing shared services can’t be about the savings alone. Savings (by itself) is not a good enough reason to go through the gut-wrenching pain that comes with moving to shared services.

Centralizing different services will save different amounts. But the savings are estimated by smart people to be about 10% once everything is said and done. The pain of getting there is greater than saving 10% will ever cover.

Of greater interest is, “Will our organization do this function better at the national level?” If we consolidate and bring a particular service under one roof, let’s say the purchasing and management of benefits, will we serve our internal clients better than all our chapters or affiliates doing it separately? How much better? Beyond cost savings, what will it mean to our employees? Will it create a work environment that will help them stay healthier and be happier? Could we increase the level of benefits if we collaborate this way? And will we do any harm if we centralize this function?

Of greatest interest is this: Will this collaboration release people to do other work? Instead of having a headcount that includes two people working on benefits, can we redeploy them to some other more fruitful tasks that will help us accomplish our mission more quickly?

It’s that last part of the First Great Truth where we get stuck in the mud.

Second Great Truth: 80% of the Work Is on the Humans

When you say “shared services,” I hear, “I’m losing my job.”

When you say “shared services,” I hear, “I’m losing control.”

This unfortunate response is 100% consistent. In a changing environment — regardless of why it is changing — there is fear. Some of that fear is rational; some is not. If you’re the person doing benefits management, most of your fear is rational — loss of a job, in our above example. If you’re the manager of the person doing benefits management, some of your fear is rational — loss of control. If you’re neither of those people, you’re just scared of the unknown — you fear the monster in the closet; undefined and even scarier because of it. We’re gonna call that one irrational. But they are all real. And they will all help kill your collaboration effort.

But no one will say “I am afraid” out loud. We humans create elaborate narratives for ourselves to make our fears seem rational or to feel more virtuous. We create these stories both for ourselves and for other people. We believe these narratives deeply. Most of them are truth covers, keeping out unwanted information that could lead to a painful conclusion.

Sometimes the fears are expressed like this: “Our employees are different here. They’ve come to expect a level of service that a national organization won’t be able to provide. I want to take care of my people better than a national organization will ever be able to do.”

Or imagine that you’re hoping to collaborate to create a standard event t-shirt to be used by all the chapters. You’ll hear things like:

  • “We need our chapter’s name on the back of the tee. Our sponsors demand it.”
  • “Our volunteers always design the tee. They will be very upset if they don’t get to do it.”
  • “There is no way you’ll get our t-shirts here on time, with all the sponsors on the back, the way we do it now.”

Expecting all this chatter, you’ll have the answers to those objections handy in your back pocket. Your answers will be clear, straightforward and absolutely correct.

But your answers won’t matter. In the moment of their fear, your answers will simply supply a stepping stone to the next objection. Psychology can help us understand how and why this happens.

A 2016 study from Northwestern University sheds light on why people believe the false narratives they construct. People easily store these narratives (e.g., “There is no way you’ll get our t-shirts here on time”) into memory because it’s faster than critically evaluating and analyzing other information. Then later, according to the lead author David Rapp, the brain pulls up the false narrative first because it’s less work to retrieve recently presented material. “If it (the information) is available, people tend to think they can rely on it. But just because you can remember something doesn’t make it true.”

Once a false narrative takes hold, a cognitive process called “confirmation bias” helps lock it in. You’ve probably heard of confirmation bias; we tend to favor information that confirms our previously existing beliefs. It leads us to place greater importance on the “evidence” that supports a false narrative, in this case.

So even when there is strong evidence to the contrary, our brains often rely on inaccurate or misleading information to make decisions.

Third Great Truth: The Chapter/Affiliate Executive Does Can Not Embrace Shared Services

Now the effort to collaborate goes further downhill because top executives (who would ideally be part of driving the collaboration) have the most to lose from a successful collaboration. Often, installing shared services is a stepping stone to further collaboration ultimately resulting in a consolidation. (Can you hear the “duh duh duh dummmmmm”?)

Every chapter/affiliate executive in the world knows this process. They know that your effort to install shared services will suggest the idea of collaboration and will put it top of mind. Then somebody someday is going to say it out loud: “We should align even more closely.” That means the forming of a single 501(c)(3)… a single corporation, with no more chapter or affiliate CEOs. Nobody likes losing that CEO title or the stuff that goes with it — autonomy, control, status.

So, the people in charge of driving a collaboration like shared services have the most to lose. This is not a winning game board. Ron Ekstrand is the current CEO of Easterseals Arkansas. Formerly he was the SVP for affiliate & network advancement at Easterseals and CEO of another Easterseals affiliate. He has the experience of years and various seats on the bus. Ron has thoughts about this paradox: “We need to have some way for key leaders to leave. We need not a golden parachute but a buyout. Having that would refocus the executive on long-term goals and the most important people — the client and those serving the client.”

“We need to have some way for key leaders to leave. We need not a golden parachute but a buyout.” — Ron Ekstrand

If we could refocus top executives on the organizational priorities (instead of their personal priorities) we could affect more and better change more easily. Who can I point you to as an example of an organization doing this? Please google “for-profit executive buy-out packages” for more information. The nonprofit sector (to my knowledge) has no such device in place, anywhere.

Regardless, there is a way forward.

Fourth Great Truth: Going Slow Through the Technical 20% Gets 80% of the Human Work Done

The technical work of installing shared services is figuring out what success looks like and finding the fastest and best path to it. Typically, that work is framed around: “What should we try to centralize and why?” From there, questions emerge that can be used to get buy-in and help people acclimate to the idea. And, while getting buy-in and accustomed to the idea, new information emerges to ensure success.

“What should we try to centralize and why?” — Ed Lord

Ed Lord, currently regional VP at the USO, led the American Cancer Society’s standup of shared services from 2001 to 2004. At that time, no national nonprofit had put together a shared services effort. Then, the American Cancer Society was not a consolidated organization and had no shared services. Ed’s first job was to sell the idea of shared services to the divisions.

Ed used a series of committees and workgroups to build a shared services plan. His first formal step was to form a group to study the idea at large. From there, he and his team formed user groups. He said, “We kept them focused on ‘What is essential for division or chapters to do themselves, and what is keeping them from it?’”

After that, user groups were composed to address major functional areas. He said, “My strategy was to give user groups input and have those groups put out reports about what was needed. That way, we had buy-in and also had insight into their pain points, even though we knew many of those already.”

“When we got pain points, we purposefully addressed their issues. It was about their pain and increasing efficiency.” These user groups eventually also helped take the message to the field.

Ron also used affinity groups to advance the work. The work got done even as fears eased. Easterseals’ approach through the workgroups looks like this:

  • Can we do this thing well at the chapter level?
  • Does this function require consistency across the organization?
  • Can affiliates do this function on their own for the same price? Is there a value add because of group purchasing?
  • Does centralizing this function save time and offer greater efficiency?
  • Is this a nonstrategic function that we can outsource? For example, we (Easterseals) are self-funding in insurance, but we are not building in house expertise.
  • Is this function easy or hard to centralize and make operational?

Ron said, “There is the political, the social side of it. Getting people to accept the decision is tough. We have to go slow to go fast. People must have a say in the process and must agree on the principles. If they make the decision, then they will follow the decision. Their involvement avoids sabotage. “

“People must have a say in the process and must agree on the principles. If they make the decision, then they will follow the decision. Their involvement avoids sabotage.“ — Ron Ekstrand

It is super easy to do a cost/benefit analysis and arrive pretty quickly at the conclusion that it makes a lot more sense to collaborate — and fast. But most humans can’t adjust fast, and some can’t at all.

We should rename this fourth one, “A Great and Unassailable Truth,” because there is no flexibility here. All your spreadsheets, all your PowerPoints, all your ROI analyses… none of them mean a thing when you have a bunch of scared humans around the conference room table, or worse, on the Zoom gallery view.

The only path to shared services (and any collaboration that has scary elements) is through giving control to those who are threatened. This is done by assigning the work to them, helping them along the path, and giving objective guidance to help them ease their fear. In the end, in their heart of hearts, they want to serve the mission in the best way possible. Help them bring that part of themselves to the fore.

This is done through meetings, groups, shared documents, listening sessions, assignments of the work, etc. They have to come to it on their own. The only path to shared services… is through the giving of control to those who are threatened.

But then, sometimes, even giving up control doesn’t work. Sometimes the humans can’t connect their decisions to the greater good, the mission. Sometimes the hold on personal autonomy is too strong. Sometimes, the narrative they create is too compelling. And in those cases, you’d be well-served to have great legal counsel. You may be in a position that demands, “do nothing.” If you’re in a position of strength you have to decide whether to use it. Will a heavy hand do more harm than good? Short term? Long term? These are decisions that moving to shared services and consolidation will inspire.

Fifth Great Truth: Find Agreement on What Success Looks Like

Imagine 10 people in a small passenger van. They are road-tripping together. They don’t agree on where they’re going. But they pretend to agree on the destination.

This is your shared services or consolidation work group. Ten people with 10 differing, undefined and unarticulated motivations. But here they are, trying to get to a place that each of them sees differently in their own mind. If this group’s task was “go get lunch,” everyone would starve.

Where do you start? Start with “Why are we trying to go somewhere?” The right answer is “our mission.”

Marcy Traxler offers an excellent example of doing this well. As the Easterseals VP of business development and service line strategy, Marcy’s group took a route to shared services through their strategic plan. And the strategic plan always starts with a conversation about what? The mission.

She said, “The strategic planning process was our path to collaboration. It was incredibly helpful in building trust. In 2019 we asked, ‘What do you think our priorities are?’”

“The conversation was anchored by impact on the lives of people we serve.” — Marcy Traxler

“We did a two-day meeting with 70% of our affiliate CEOs. We started talking about how other nonprofits had changed their structures and why. We reviewed all these different ways to interrelate in a network. The conversation was anchored by impact on the lives of the people we serve. We asked, ‘Can we measure our shared outcomes? What are a couple of key service lines we can begin to address?’”

These “Great Truths” were drawn from our experience at Turnkey and illuminated by our interviewees’ wisdom. The path from today to where our mission demands we go next has roadblocks that are hard to see. It’s not,“can we identify ways to serve better?” but rather “how do I overcome the aversion to change in order to serve my mission better?” That path is not a spreadsheet but a path of understanding, empathy, caring and clarity.

But wait, there’s more… Tune in next week for part two.

Katrina VanHuss and Otis Fulton have written a book, Dollar Dash, on the psychology of peer-to-peer fundraising. Click here to download the first chapter, courtesy of NonProfit PRO!

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