Why HR and Legal Shared Services Teams are Critical to every Business

April 4, 2021

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For over four decades, large US businesses have relied upon the shared services business model for cost reduction and operational efficiency. Even now, the trend continues with over 80% of the Fortune 500 companies in the USembracing it for obvious reasons. Presently, Human Resources (HR) and Legal shared services teams have become increasingly popular due to their sensitive nature and the supportive role they play in the overall functioning of a business.

While the HR shared services support every individual in the business, Legal shared services support each and every transaction that the business enters into. One deals with risk mitigation, whereas the other is focused on organizational welfare — both of which play a crucial role in the overall success of a business. Despite these differences, both shared services teams face one common challenge and that is request management.

Why is Request Management Such a Big Deal?

Shared services teams receive service requests from executives at all levels and from all departments which means, prioritization is essential. As and when the requests pour in, they must be prioritized based on a predefined set of criteria which can be altered from time to time. When the financial year ends, the requests from the Finance department must be prioritized. Likewise, requests pertaining to the vetting of documents related to expansion and other revenue-generating opportunities must always be prioritized over everything else.

All of this and more can be done through AI-based solutions like StartingPoint which allow automation of workflow, creation of self-service FAQ section, and more. You can also use it to securely exchange files and to keep track of requests and feedback which are essential for measuring the success and contribution of the shared service teams. We shall now evaluate why HR and Legal shared services teams are critical to every business and how they contribute towards organizational success.

Legal Shared Services

What makes HR Shared Services important?

According to a survey, over 73% of the participants adopted some form of HR shared services model and for many reasons, this wide acceptance is justified. This service model’s ability to optimize resource management and to reduce service delivery costs is just the tip of the iceberg. As a matter of fact, it brings along a plethora of benefits that we shall now discuss.

Eliminates Redundancy and Duplication

As organizations grow, they tend to lose control over their resources which can be fatal for any business. In the case of HR, this often happens when redundant resources are not eliminated or when multiple resources are assigned the same tasks. It makes no sense to have two headhunters — one working with the Dallas unit and another at Palo Alto — shortlisting candidates from job portals. In fact, it only makes recruitment more expensive because two separate units of the same business are spending separately on multiple resources to perform similar functions.

By centralizing such functions, organizations can prevent such duplication of tasks and let one person handle it all from a single login. This may seem trivial but neglecting such discrepancies can significantly increase the overall hiring costs incurred by businesses. Currently, businesses in the US spend an average sum of $4,129 to recruit an employee and the numbers go up depending on the level of experience the candidate has. Therefore, the HR shared services model works far better than having your HR resources fragmented across multiple business units.

Increases Operational Efficiency

Companies growing at a rapid pace need a dynamic HR team that can keep up with their business requirements. Quite often, this requires multiple expertise that is readily available in shared services teams. Else, it could cause a decline in efficiency which could deeply impact overall business operations. If your business has been facing difficulties managing operational performance, consider involving seasoned business consultants to uncover areas for improvement.

Is Legal Shared Services necessary?

The Legal shared services department is one of the few which has nothing to do with customer satisfaction or cost reduction. Its primary purpose is to mitigate risk and help other business functions tap into opportunities without any delays. For the sake of clarity, we shall now discuss how this department supports an organization’s sales, product development, and managerial functions.

Legal Counsel

Enables Revenue Generation

Quick decision making and legal processing is the key to tap into growth opportunities like onboarding new clients, collaborating with other firms, licensing intellectual property, and so on. Each of these requires the drafting or vetting of legal documents to protect the organization’s best interests.

However, the communication between the concerned business function and the legal expert must be highly confidential because this is a phase in which the business is exploring an opportunity. There is no commitment which means the same opportunity can be grabbed by its competitors. So, it becomes inevitable to limit access to critical business information.

Unless business secrets are well-guarded, it could lead to loss of potential revenues, and the only way to prevent that is by having an in-house legal shared services team. Since businesses have little control over external service providers and their employees, having a legal shared services department seems to be the only viable solution.

Prevents Conflicts

A business has many engagements to live up to — with employees, external consultants, contractors, and so on. Therefore, every new association needs to be free from conflicts that may arise due to previous arrangements. Let’s assume that your sales team wants to sign up a service agreement with X, and the external legal consultant approves it because the terms seem agreeable.

In this case, it is quite possible that the legal consultant was unaware of your firm’s previous business collaboration related contracts which forbid you from hiring X for a certain period due to a non-compete clause. This could salvage the business relationship between your firm and other business associates and might even result in legal disputes.

Final Takeaway

If the development team needs a product specialist to be hired or a patent needs to be filed immediately, the HR and legal shared services team can take care of it. However, business leaders must take note of the fact that these departments work on tight deadlines and with limited resources. Also, the shared service business model requires them to remain accessible to all the departments. Therefore, these teams must be given access to be a unified platform in order to deliver prompt and systematic services to the various internal business units.