Shared services model pays off for Minnesota State Colleges and Universities

This blog summarizes the key takeaways from our fiscal resiliency podcast, episode 10.

How do higher education institutions take steps towards fiscal resiliency using a shared services model? A 2021 survey by The Chronicle of Higher Education/Workday noted that 41% of college and university leaders, in part because of the impact of COVID, state they are looking to expand their shared services agreements, including in areas such as IT, enrollment and human resources (HR).

Baker Tilly’s recent Higher Ed Advisor fiscal resiliency podcast features Eric Davis, vice chancellor of human resources for Minnesota State College and Universities (the System), with podcast host and fiscal resiliency specialist Christine Smith and Carla Hirsch, Baker Tilly risk advisory practice manager. Together they explored the positive and the challenging aspects of shared services models for university systems. Eric leads the enterprise shared services operations for the System, the third largest educational system in the country. The System is home to 340,000 students and 15,000 employees, including seven universities, 30 colleges, and 54 campuses across the state.

Benefits and challenges

Hirsch noted that the most common perceived benefits of shared services are enhanced effectiveness and efficiency. A shared services model can lead to the reallocation of resources to more strategic functions and the ability to perform tactical functions with more efficiency given increased employee specialization. However, significant cost savings were not realized in the short term and may be less than anticipated by some in the long term. While efficiency is definitely a benefit, whether immediate resource savings should have ever been expected is something that is still up for debate.

Davis emphasized that being clear on intended benefits of shared services and then properly communicating them and the anticipated timeline to put them in place to employees and the larger community is important to achieve the proper buy-in. Hirsch added that it is important to establish how performance relative to those intended benefits will be measured and communicated throughout the process.

The reality

Minnesota State found that the redundancy and standard approaches inherent in the shared service model made it much easier to handle one-time, large-scale changes. The most impactful benefit realized was the positive impact on risk mitigation that came with a more centralized approach to human resources (HR) transaction management.