HR Strategy Forum

The dilemma

The public sector has been subject to considerable structural change in recent years. New organisations have been formed, others were abolished or merged, while some have grown in size and complexity and others have been reduced and simplified.

Governance and management arrangements have also changed with new chief executives and directors appointed.

The capacity to plan and manage this change is often pushed to the limits, trying to balance the development of new organisations with new cultures and responsibilities, and the day-to-day job delivery of high quality public services.

As part of the process of reorganisation, our HR services that were previously provided in-house solely for our organisation are now provided on a shared basis between three or four similar ones working in the same geographical area. These vary in size, from a few hundred employees, to more than 1,000.

This is seen as a cost-effective way of accessing HR services in smaller organisations that may be unable to sustain an in-house service.

The services have not been outsourced to a private provider; they are hosted by one organisation, and provided to the others in the cluster under a service level agreement. These vary, but generally, servcice level agreements are set up to encompass the entire HR spectrum, including administrative, interventional and strategic HR.

Although this works well in some areas, there is widespread concern in others that this new shared service model isn’t delivering.
In one business unit, there is talk of abolishing the service altogether if things don’t improve.

This would involve the redistribution of staff. It is unlikely that any more money or resources would be available to fund a sustainable function in each of the constituent organisations.

As a newly-appointed HR director overseeing the shared service, what should I do?

Solution 1 –  by Dean Royles, head of HR capacity and employment at the Workforce Directorate

It is tempting to accept that the situation simply needs to improve and place an emphasis on improving quality standards such as response times and reliability of advice, but this is unlikely to resolve the concerns.

Step 1

The first step is to understand the nature of the issues. In shared services that are established in this way, there are normally problems in how different organisations react. They are trying to establish themselves as distinctly different from what preceded them. Speak to directors, managers and employees to assist in your analysis.

Step 2

After identifying the real underlying concerns, present your findings to the boards and seek agreement on the route cause of the concerns. Be explicit in demonstrating how a well functioning HR service can contribute to the success of the enterprise. You also need to link organisational goals to HR goals, as this is crucial for buy-in. Some will argue that what is required is a tighter SLA that allows both parties to hold each other to account. However, this will not resolve the underlying problem.

Step 3

Present the boards with a solution to the problem they have agreed exists. Paint a picture of what ‘good’ looks like, and make sure there is a shared understanding of that term. The solution may not involve a simple choice between shared service and in-house provision – it may be that the shared service encompasses administrative and interventional HR, but strategic HR should then be devolved back to each organisation.

Step 4

After getting agreement from the board of directors, make sure you continue to involve the middle managers. These people are going to be your greatest advocates and your worst critics – there is no middle ground here. Ensure they remain signed up to the solution and the implementation plan.

Step 5

Deliver the solution. In any change process there will be tensions. While the idea of trying to improve by being more responsive or tightening up the SLA can seem very appealing, it is just putting off the inevitable. Follow through and remember personal credibility and the ability to deliver are seen as one of the most important aspects when CEOs are asked to rank the attributes of effective HR directors.

Solution 2 – by Andrew Mayo, director of Mayo Learning International

This is an opportunity to carry out a thorough review of the effectiveness of the processes under your remit. A new person has every reason to ask questions on the basis of learning and at the same time identify where problem and issues exist, if any.

Step 1

The first step will be to have discussions with each of the customers of the shared service, and to assess their view of the delivery compared with the SLA in each case. At the same time, the new HR director should undertake a fresh review of the HR needs of each organisation, particularly in terms of the volume of transactional needs, and the nature and requirements of interventional support.

Step 2

Each SLA needs to be reviewed against this criteria, as do the associated cost agreements. Organisation by organisation, SLAs may need to be renegotiated.

Step 3

In the case of HR strategy, it is very questionable that this should have been outsourced in the first place. Since the host HR director is providing the HR service to their own organisation as well as the others, they will need to keep close to their own line management team and its strategies. It is difficult to do this for four organisations. So, whereas the smaller ones may not be able to sustain full HR functions, the arguments for the value that can be added from at least one strategic HR partner should be made to the respective CEOs.
A public sector organisation’s key resource is its people, and it is both a false economy and a dangerous delusion to see HR’s contribution as merely transactional. Such a person would identify the initiatives and projects needed to support the goals of their management, commissioning the necessary resource and help from the shared service.

Step 4

This assumes the resource available in the shared service is appropriate to the needs. So, after the client assessments, there must be a thorough review of the capabilities available, and the balance of in-house support and contracted expertise.

Step 5

Once the resources have been correctly apportioned, the new HR director needs to set some clear internal performance measures that will back up the SLAs. As always, it is preferable to set these with the staff involved rather than impose them, and also to involve them with the ongoing assessment of customer satisfaction.

How the forum works

The HR Strategy Forum, which is supported by some of the industry’s most experienced people is Personnel Today’s major initiative to help readers become more strategic in their day-to-day operations.

Over the coming months, Personnel Today will give a unique, developmental opportunity to hone your strategic skills using a wide range of HR scenarios submitted by senior HR professionals. Our panel of experienced practitioners and consultants will provide solutions to a typical strategic HR dilemma.

Get involved by sending in your own problems, marked ‘strategic dilemmas’, to ptod.content@rbi.co.uk (contributors will remain anonymous).

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