HR down the line

The growth of shared service centres have pushed HR transactions to call
centre staff. Caroline Horn asks if customer service skills will take priority
over HR knowledge and talks to the people in the front line of an HR revolution

Setting up a remote operation to deliver an effective HR service is a major
undertaking. While organisations have for many years been outsourcing
transactional pro- cesses such as payroll and pensions, dealing with issues
such as sick leave and recruitment over the telephone or via a computer is a
very different issue.

The potential rewards for an organisation which succeeds in doing so, in
terms of cost savings and efficiencies, are great – but then so are the risks.
Getting it wrong could result in a poor HR service and dented staff morale.

Shared service centres are very much in their early days and companies are
having to make tough decisions about whether to outsource the centre or keep it
in-house. For HR people, the trend poses big questions about whether the HR
call handler signals the demise of the traditional personnel officer.

A number of corporates have set up separate or joint ventures to handle
day-to-day HR operations. PricewaterhouseCoopers, for example, has a bespoke HR
service centre in Potters Bar, Hertfordshire, which provides HR services to
Equifax and other clients, while Exult handles BP’s transactional HR services
from a centre in Glasgow. IBM, meanwhile, has developed its own HR service
centre in Portsmouth.

There are other corporates that have set up joint venture operations with
similar long-term aims, to take on other corporate clients. Together, a joint
HR services venture between Xchanging and BAE Systems, aims to take on HR
provision for other corporate clients as well as BAE Systems itself. So does
e-peopleserve, a joint venture between BT and Accenture that is already
handling the partners’ HR services.

The main driving force behind outsourcing HR in this way is generally the
cost savings. Brian Dunton, BT account director for e-peopleserve, says,
"BT was always looking at ways to decrease costs and the easiest way was
to reduce the number of people. However, we reached the point in HR where
people and technology couldn’t be reduced any further without reducing the
service. The answer was to take it outside the company and leverage those costs
with other customers."

Dunton adds, "The value you get from outsourcing is through the
integration you get with a fully equipped outside company." Once services
such as recruitment, health and safety, benefits management, redundancy and
pensions are outsourced to one provider, economies of scale lead to cost
reduction.

When BAE Systems decided to set up Togethr, with Xchanging handling HR
services, cost savings and efficiencies were part of the equation, says Chris
Dixon, HR director of shared services at BAE Systems. But handling HR services
through a joint venture offers a number of other advantages too, he says.

"It gives us the opportunity to create a new company that could provide
outsourcing services. But it also means BAE Systems has greater opportunity to
influence how the venture develops and gives development opportunities to HR
staff."

It also leaves the remaining in-house HR teams to focus on strategic,
value-added issues. This could include issues such as group policies on pay and
relationships with trade unions.

But despite the advantages, handing over a significant proportion of one’s
HR operation to a separate organisation is a major undertaking – and a hard one
to reverse. Those that have chosen to outsource have, inevitably, experienced
teething problems, generally in how to streamline many different processes and
departments so that HR functions can be handled by one operation. So what is
the best way to get it right?

Some companies have decided it is not a sound strategy to hand over HR
transactions to a partner organisation. IBM decided against outsourcing its
operation and instead set up a separate service centre to handle some of its
own HR requirements. Martin James, EMEA HR service centre manager, says,
"Half of our business is service – we are a people business, so HR is
critically important to the business and we would not ever outsource all of
it."

Nor could the company consider outsourcing its HR service centre. "At
the time we set up three years ago, no-one had done this. Because we wanted to
set up a European centre, we weren’t sure how it would turn out or how the
detail would work," he says. And there were simply no suppliers we could
have gone to." This is not to say that the company has ruled out
outsourcing part of its HR requirements in the future. It may also offer its
facilities to other corporates that are looking to outsource.

If it does, it will join a growing number of suppliers that can now provide
a wide range of HR services. The choice of partner for those who want to
outsource HR services is growing, as groups such as PwC, Exult and
e-peopleserve develop their HR service operations.

Some will offer a "total package". e-peopleserve, for example,
offers "total end-to-end HR services", says Dunton, with a service
provision that moves higher up the value chain. "As well as a call centre
that provides easy access to HR services, we can offer advice and provision of
specialist HR services."

Exult also offers a one-stop shop, from training and recruitment to
compensation and benefits, with some of these specialist services – such as
pension provision – outsourced. Little says, "We have tried to develop a
semi-standardised model that can be configured to meet the different needs of
our clients. That gives us better economies of scale."

It is not just the commercial aspects that need to be right, says Dixon at
BAE Systems. "We chose Xchanging as the parent group for a number of
reasons. The commercial agreement seemed to be beneficial, but also we tuned in
with its thoughts about how to develop the relationship with the company and
the role of IT."

The size of the operations often means it will take time to develop.
e-peopleserve, for example, looks to do business with corporates of 10,000
employees plus, that operate in the global corporate market. As a result, says
Dunton, "From a standing start, you are looking at between a year and 18
months to get everything up and running. It’s a complex HR solution that isn’t
going to be put in place in a couple of months."

BAE Systems and Xchanging have developed a five-year programme to complete
the Togethr operation, says Dixon. "Most benefits will come in year two
and three. By that time, we will have done a lot of process rearranging and
have a lot of common processes throughout the UK."

Togethr aims to establish standard HR procedures across the group and
install appropriate IT systems to access HR functions online. The company is
also considering setting up separate operations to act as the main HR centres,
with some regional sites. The roll-out of Internet-based technology is just
starting, with common processes expected to be established in the next two
years.

Providing a single site as the main point of contact for HR services is often
part of such a package. e-peopleserve has brought BT’s HR service operations on
to one site at Milton Keynes. "There existed a set of disparate services
in HR that provided everything we now do, but in a disjointed way,"
explains Dunton. "We identified 45 single different points of contact for
the service. The challenge was to bring those areas together."

Now, he says, there is one point of access. "When a caller reaches the
centre, they can select the service they want by pressing numbers on their telephone.
If an operator can’t deal with the enquiry immediately, they will pass the
caller on to someone who can."

Exult has also moved more of its service provision to self-service, says
Little. "We have created that as much as possible, via the Web, and by
basing our service centres around ‘life and work’ events." In other words,
when someone joins the company, the whole package – from recruitment to
initiation, pension contributions and start salary – can be found on one
website, rather than each function being tracked down separately.

Behind the Web is the service centre with customer service assistants
available via fax and e-mail, or telephone. Little calls this the "contact
centre" rather than a "call centre". As soon as the caller comes
through to the right person, the service provider is given all their details
onscreen. A customer relationship management system will open up a ticket for
every request that is made, so that every request can be tracked through the
system.

To date, such service centres have been staffed largely by employees from
the customers’ HR department. Most of those employed by Togethr, for example,
came from BAE’s existing HR departments and are HR specialists. At PwC’s
service centre, that figure is about 50 per cent and at Exult it is even
higher.

Little says, "Most of the people Exult employs at the shared service
centre have an HR background because people do need a capacity to interpret the
situation and to understand the philosophy of the company behind the
decisions." The "front room" staff at the centre will have a few
years of HR experience, and will be backed up by skilled HR specialists.

But knowing about HR is just part of the equation and the skills base at
service centres is becoming broader. At Exult, Little says, "We also look
for people who are interested in using technology and can navigate the Web, as
well as customer service and client-handling skills using the telephone."

The third skills set is adaptability and flexibility. "We are a young
company and as we add to our customer list, we need to be able to leverage our
skills base and move people into new roles. Our staff need to develop
multiskilling over time because parts of the work involve peaks and troughs, so
they will need to be prepared to be moved around."

Little argues that the service centre environment offers HR specialists an
exciting environment in which to develop. "We look for people who actively
want to leave a large corporate environment and get into a new organisation
that is trying to push the boundaries."

To enable staff to develop multiskilling, Exult develops an individual
training package. Also, staff are motivated through ownership via share
options.

Yet many consider that the future trend among service centres will be to
focus more on customer service skills. Steve Bayliffe, director of European
employee services at PricewaterhouseCoopers, says, "We want people who
have a general interest in HR but the way we have worked the processes means
that customer service capabilities are important – we can teach the processes.
People working in this department can come from all walks of life."

The company has a bespoke training package for those working on its Equifax
account, most of which is hands-on with training taking about six weeks.

While e-peopleserve has HR specialists to deal with specific functions such
as pensions or pay management, less than one-third of the company’s staff have
an HR background. Even where an HR grounding is perceived as important, other
skills are sought, says Dunton. "We discovered that you don’t need to have
trained HR people in the centre. It is more critical to have customer
service-focused people and provide what they need to know using
technology."

The company generally employs people who have worked in call centres as
their "front-line" staff who are given on-the-job training, and train
towards NVQs. They can steer calls for specialist services to HR-trained staff
in the back offices.

But even though customer service strengths are important, working in the
service centre remains a very different environment from that of traditional
call centres. At e-peopleserve, Pat Jones, head of consumer experience services
for Europe, says, "It is different from traditional call centres because
we are not trying to sell; rather we are here to support."

Dunton adds that while there are some similarities – "the time taken to
answer the phone is important – we don’t like queuing". "It is all
about giving service at the point of contact. We don’t want to have people
being called back – we want the issue sorted out there and then."

Staff, he says, have to be aware that they are providing a service. "If
BT’s pensioners call for a ‘chat’, then that has to be respected and handled
with sensitivity. It is about brand protection for the customer’s
clients."

But the climate is still high-pressured and tight deadlines have to be met.
"It’s not routine and the kind of queries you can get from clients are
more varied than in typical HR departments," says Bayliffe. "We don’t
provide a script – we rely on the knowledge of our people."

Where service centres also differ from traditional call centres is in the
opportunities for development. At e-peopleserve, says Dunton, "People who
have dealt with customers in the service centre and have an appreciation of HR
can train to become part of the professional HR team in the back office. Some
people didn’t know they would want to work in HR before they joined. As a
result of those promotional opportunities, our staff turnover is a lot lower
than in typical call centres."

And for staff who are already skilled in HR, Bayliffe comments, "One of
the biggest motivational issues at the service centre is that they are in an HR
environment rather than back-office HR in a corporate. Here, they are among HR
professionals all the time." A young crew also contributes to a
motivational environment, with performance also rewarded by bonuses and
competitive salaries.

People working in such centres will also need to be prepared for constant
assessment, as part of a centre’s requirement for performance measurement.
"PwC works hard on service and operating level agreements with our clients
and we want staff to meet those," says Bayliffe. "We measure various
areas of transactions – answering the phone, speed in which a letter is issued
and so on. Most activities are measured."

e-peopleserve’s service centre is monitored through the group function.
Dunton explains, "We produce standard monthly reports and there is a
review board. There are also regular reports to monitor things like service and
costs."

He adds, "We measure the performance of our service centre in
traditional ways, but concentrate on clearing calls at the point of contact on
the transactional side." The company aims to resolve 80 per cent of issues
at the first point of contact. "But we also provide an advisory service on
things like pensions, employment policy and leave entitlement which take more
time to deal with."

Exult studies a range of performance targets, including cost, operating
efficiency and satisfaction. "The most important thing to measure is
customer satisfaction on the part of all employees who are users of the
service," says Little.

"Underlying that are operational measures for things such as response
time on calls, accuracy and timeliness of payroll completion. We also check the
number of queries that are not resolved in the first bite."

But the service centre can have a much wider role too, says Little. "We
want to know staff are satisfied with our service, but we also ask whether
managers feel it is helping them to be better managers, and if the information
is helping the HR department to be better planners,"

The new face of HR?

"We discovered that you don’t need to have trained HR
people in the centre. It is more critical to have customer service-focused
people and provide what they need to know using technology"

Brian Dunton, BT account director, e-peopleserve

Meet the managers

Steve Bayliffe
Director,European employee services, PricewaterhouseCoopers

Bayliffe started his career with
British Coal, before studying European Business at university. He moved into HR
at ICL as personnel officer, becoming personnel manager, and then joined
Norwich Union where he was group service HR manager – looking after non-core
activities including fleet, catering and IT.

He first became familiar with handling non-core activities for
corporates at Media Accounting Services, a joint venture created by
PricewaterhouseCoopers and EDS to handle the BBC’s finances. From that came his
present operational role at PwC, working in PwC business process outsourcing.

His day-to-day role as director for European employee services
encompasses developing strategy for the three departments – payroll, HR general
transactions and resourcing – as well as general leadership responsibilities,
such as motivation. He adds, "We are also very strong on client
relationships – if you take on someone’s core HR department, they need to feel
there’s a connection, so that represents about half of my role and takes up
about half of my time."

He also enjoys the more commercial approach to HR that this
kind of venture represents. "I like being in an HR department that is run
as a business," he says. "Sometimes in an in-house department it is
hard to measure the satisfaction of the organisation you work for but now we
can tell easily if we are meeting our targets."

Jim Montgomery
General manager, Exult

Montgomery gained his experience in
shared services when running KPMG’s shared service practice. "I set that
up from scratch and got it running as a successful operation, and was then
contacted by Exult to run its European services."

Montgomery’s background, however, is in accounting rather than
HR and his career has been spent mainly in IT, working around the world for Sun
Microsystems in a range of areas, including manufacturing and logistics.

At Exult, he says, the business brings together his experience
of consulting for shared service operations, and making the service
operational. "I enjoy the challenge of things constantly changing and the
transformational process we are about to go through from doing low-level transaction
work to value-added services."

The centre has been operational since July and much of his
day-to-day work will focus on developing the operation to run "more like a
business" than the operation that was inherited.

"We need to develop common processes and services. We are
making sure that globally we can present a consistent offer to clients, and I
represent that side of the business in Europe."

He says, "I like doing start-ups, I have already done five
or six in different parts of the world, and it’s a challenge to hire good
people and build teams who are focused on change."

Pat Jones
Head of consumer experience services for Europe,  e-peopleserve

Pat Jones has worked in HR for 20
years, largely at BT, covering a variety of areas from employee relations and
training to policy development. It was while working in the corporate policy
unit for BT that he was approached to become an account manager and to manage
the account for HR at the corporate headquarters of BT.

Within a year, he was asked to set up the service centre and
deliver the front-end side of the e-peopleserve operation. That became
operational in August 2000.

"Setting up the service centre was a great challenge and
great fun," he says. "It involved putting together a team of people
who had previously been working in specialised areas of HR and convincing them
it wasn’t a ‘call centre’ environment."

On a day-to-day basis, he says, "My job is to work with
management to ensure that we meet our performance measures for clients. I am
also looking for ways that we can flex the front-end capability – for example,
by introducing Web technologies, or migrating transactions into the first point
of contact so they can be dealt with there and then." As well as
entertaining potential clients, Jones also needs to be available to support
existing clients.

There are many parts of the job he enjoys. "I get a buzz
from delivering excellent customer service. HR as a function is not generally
given much positive feedback, so when you do get it, it’s very rewarding."

In this kind of operation, clients are more likely to recognise
HR as a service.

Martin James
EMEA HR service centre manager, IBM

Martin James has worked at IBM for 27
years, after a brief spell in a bank, and BA’s HR department. When he was asked
to set up IBM’s service centre three years ago, he was the HR manager of an IBM
software laboratory. Getting the service centre job, he says, was "a bit
of luck, but also due to my experience. I have spent time in most parts of HR,
such as compensation, personnel administration and so on."

A good understanding of how HR functions has stood him in good
stead in handling the different parts of his job – checking that the operation
runs smoothly, that it provides an efficient service across Europe, and that it
develops strategic goals. "We have made big changes in the last three
years, so where do we go from here?"

The focus of his daily activities, though, is management.
"We have a team of bright young enthusiastic people, so that’s important
to maintain." In terms of time, his job is split equally between the above
areas. He says, "I think it’s particularly rewarding working with a young
team and seeing them develop. It’s fascinating seeing how we can take what we
have, and use it to its maximum."

The next step in the centre’s development will be to take more
HR processes on to the Web and develop self-service tools for its customers.
James is also looking to bring areas such as payroll and other HR expenses to
the service centre. "There are plenty of challenges to come – I don’t need
to look too far afield for those."

Service operations

Exult  

BP Amoco agreed to outsource a major part of its global HR
operations to Exult in December 1999. Exult offers a one-stop shop, from
training and recruitment to compensation and benefits, with some of these
specialists services – such as pensions provision – outsourced. The operation’s
service centre is based in Glasgow.

PricewaterhouseCoopers  

PwC has a bespoke HR service centre in Potters Bar, which
provides HR services – payroll, HR general transactions and resourcing – to
Equifax, Nortel Networks and other clients. The company’s service centre in
Potters Bar became operational at the end of 2000 and provides HR services for
Nortel Networks and Equifax in the UK and across Europe. PwC also handles other
outsourced areas such as finance, accounting and procurement.

Xchanging

The company set up a joint HR services venture, Togethr, with
BAE Systems, that aims to take on HR provision for other corporate clients. BAE
Systems and Xchanging have developed a five-year programme to complete the
Togethr operation, including establishing standard HR procedures and installing
appropriate IT systems to access HR functions online. The company is
considering setting up separate service centres, with additional regional sites.

e-peopleserve

This operates as a joint venture between BT and Accenture to
provide HR services to large UK-based or global corporates. e-peopleserve
became operational in August 2000 and now offers a total package of HR services
and e-HR, including HR advice, specialist services and training. Initial HR
queries are handled online, with a service centre in Milton Keynes offering
further advice and specialist HR services. e-peopleserve’s initial clients were
BT and Accenture but announcements on additional outsourcing contracts are said
to be imminent.

IBM Service Centre

IBM created its own service centre in Portsmouth three years
ago. Today, it services operations across Europe and handles some 300,000
enquiries annually. HR services include compensation and benefits, workforce
management and staffing, and training. The operation is also taking more of its
processes, such as recruitment, online and developing its Web functionality.
IBM has not ruled out outsourcing some HR services in the future – or
developing its service centre to take on other commercial clients.

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