Embracing changes in HR delivery, such as self service and outsourcing, must be handled with extreme caution.
HR departments all agree that they need to become more cost-effective and improve the quality of their service delivery, and many are attempting to do so. However, the problem is that many are failing – and for avoidable reasons.
One reason is that HR functions are not making effective use of new technology. Many factors are conspiring to make HR departments invest too quickly in technology; the persuasiveness of IT salespeople, pressure from other business functions, the belief that technology can solve all our problems, to name but a few.
We must realise that only people add value, not technology. Technology is just a tool that people use. If the managers and employees are not prepared to use the technology it will not lead to added value, but the opposite.
We can be overwhelmed by technology. It needs to be introduced systematically, so that it can be adapted to meet users’ real requirements and people can learn to use it effectively.
The size and complexity of many modern organisations mean that technology is used extensively in other business functions, fooling people into thinking that HR can also be automated. However, successful automation requires certain pre-requisites. The level of development of the HR function as a whole must be considered to see whether the proposed automation is the next appropriate step, or is actually out of sync with the rest of the business.
Not enough attention is being paid to the underlying business processes in the rush to automate HR, with the result that technology merely helps the same old problems to turn around and bite us on the nose more quickly.
Another problem hindering the development of effective HR service design is the issue that the whole business to employee relationship is not being considered. Back in the 1990s, Jan Carlzon, chief executive of the airline SAS, started talking about ‘moments of truth’. He pointed out that the relationship a business has with its customers was not just defined by the corporate logo or advertising campaigns, but by every little exchange that the customer has with the business. He said that these ‘moments of truth’ happen every 15 seconds, and that each had the potential for enhancing or destroying the relationship. It was therefore vital that every single employee engaged positively with customers.
What does this have to tell us about HR? Well, think of the business as ‘people management’ and the customers as the employees. While HR can delude itself into thinking that by writing equal opportunities policies and keeping a record of everyone’s GPs that they are managing the business-to-employee relationship, the reality is that every 15 seconds, staff may be engaging with a different part of the business and changing their perceptions for better or for worse.
For example, think about your own organisation. Who deals with:
- pay – is this HR or finance or payroll?
- training issues – HR, another specialised unit, or line management?
- issuing security passes – HR or security?
- internal communications – HR, marketing or IT?
- employee relations – HR, another specialised unit, or line management?
The problem is that each individual and function may have a different perception of what the organisation is supposed to be to its employees. Marketing’s internal communications may not reinforce HR’s messages to employees. A line manager may address training in a manner not consistent with HR’s broader strategy, for example.
This becomes an issue when the HR function attempts to introduce new ways of working with its customers, since the project objectives tend to reflect HR’s perception of how the business to employee relationship should be managed, rather than how it is actually being managed. And unfortunately, if it is confined to its traditional narrow role, it may be quite difficult for the HR function to understand or influence the broader company approach. Some companies are moving to formally consolidate all aspects of the people management responsibility into the HR function to overcome this problem, but in the meantime it is accounting for significant deficiencies in the implementation of HR function change.
Another issue is that HR is too often rushing to implement self-service. It’s the same with gadgets. They seem such good ideas at the time that we all rush out and buy them, and then months down the line, we realise we have hardly used them at all. Why? Usually because we did not fully analyse what we would use them for.
What HR functions are failing to do in their haste is to look closely at how their business operates, and to identify what needs to change to allow self-service HR to be implemented successfully. Typically, these changes are extensive and affect not just how HR carries out work, but also how managers manage, and even how other functions engage with employees.
The reality is that while a business signing a multi-million pound contract with a system provider to implement e-HR makes good copy in the trade journals, the ensuing nightmare when it fails to deliver on its many promises does not. The company buying the system does not want people to know that it has made a ghastly mistake, and the system provider certainly does not want to advertise that its much vaunted e-HR system has turned out to be a turkey. We end up much less aware of the problems than all the promises.
As with self-service HR, outsourcing and shared services have become fashionable. They can bring a variety of advantages, including economies of scale, cheaper technology upgrades, and the benefits of shared knowledge. But again, as with self-service HR, the providers of outsourcing services and managers of shared service centres do not exactly fall over themselves to point out the potential pitfalls to companies looking to cut HR costs.
To successfully implement outsourcing and shared service centre strategies requires, at its simplest, a completely standard, technology-compatible set of HR business processes. Generally speaking, HR is not a good place to find such standardised practices. On the contrary, organisations trying to outsource the HR function have often found a plethora of country, business unit or department-specific policies and procedures. The outsourcer’s imposition of their version of best practice to sweep away all that variation is neither pain-free nor necessarily appropriate. People who have spent their entire working lives always doing basic things in a certain way suddenly find that the systems have changed. At the very least, the resulting chaos as the business changes things to standardise the shared service or outsourced work practices throws simplistic cost reduction calculations out of the window.
It clearly matters. Change is dangerous, and the wrong kind can be disastrous. On the other hand, getting it right can bring many benefits. A business case for redesigning the HR function to meet the current new challenges will enable HR to become more specific, provide better support for management, improve possibilities for collaboration and reduce administrative costs.
Changes in HR are going wrong because:
- technology is being taken on too quickly
- the whole business to employee relationship is not being considered
- the rush to self-service is not being thought through properly
- the risks of outsourcing and shared services are not appreciated