Efficiency could save employers £2,000 a year per full-time worker

UK companies could save up to £2,000 a year for every new full-time employee by managing their staff processes more efficiently using HR shared services, a report out suggests.

New data, from consultancy PricewaterhouseCoopers (PwC) in its annual HR Shared Service Index, measures how efficiently companies recruit, pay and manage their people through centralised HR departments, and how the cost varies between organisations.

The report claims:

  • Payroll administration costs some companies less than £30 per full-time employee a year, and others nearly £80.

  • Administration of long-term absence costs some companies more than £850 per full-time employee a year, while others spend only £350.

  • The exit process can cost as little as £10 per leaver, but as much as £95 for some firms.

  • Organisations spend between £20 and £100 per full-time employee on training and development administration annually.

The biggest differences are seen in recruitment administration. It costs some HR shared-service departments an average of about £700 to recruit an external candidate, while others report nearly triple this rate.

The findings also indicate that cost efficiencies across these activities usually take three to five years to materialise once the department has moved to shared services. The report said this is partially explained by the costs of new infrastructure, IT systems and major process re-engineering.

Richard Phelps, a partner at PwC, said: “There is clear evidence that successful execution of the shared-service concept takes between four and five years to start paying off in these terms.

“Companies wishing to attain these benefits and savings need to measure, track and benchmark their performance in this area. Effective and efficient administration of HR is a cornerstone of a higher performing workforce.”

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