HR shared services – the missing links

The past 10 years have seen a major increase in the introduction of HR shared services across all industry sectors.

While shared services and the Ulrich business partnering model have become more widely understood across the HR community, there is a broad range of variations on this theme. Many HR functions are still unclear of how the model works, and line managers and businesses even more so.

Often, there is a lack of understanding of the context in which shared services should operate. Is it there to empower the line, and if so, how? Provide a more focused and value-added service? If so, what is it? Are the business and line managers ready for a major cultural shift from traditional HR to a more proactive and strategic HR function? If not, how do you manage the transition?

In addition, to the above, there are often even more fundamental issues not thought through or implemented. Some of these are listed below, although, there are many more issues and questions to be asked.

Some of the most frequently encountered questions:

  • How does the shared service provision link into the HR and business strategy?
  • How effective is your current HR service offering, HR skill levels and IT technology?
  • Do you understand what processes need to be in place and is this the most efficient way of delivering the service?
  • Have you project and change management skills within your department?
  • What model of shared service will you develop? Outsourced, in-house, or a combination – and what does this mean in terms of service level agreements and key performance indicators you set?
  • What technology will you use and how will it be implemented? For example, manager and/or employee self-service, fully-automated processes, HR analytics and so on.
  • Have you a clearly defined communication plan to engage the business, present a clear case for business benefits, and clarify the roles, responsibilities and accountabilities of both the HR team and customers?

Successfully introducing a world-class shared service function which has the flexibility to deliver what the business requires demands a holistic and structured approach.

A model for this introduction is below, showing that a number of activities need to be carried out concurrently, such as process mapping service delivery areas and assessing HR systems.

View larger diagram

The key to success involves adopting a five-pronged approach. This covers diagnostics, process flows and measures, operations/culture, systems and communication.

While no area is more heavily weighted than another, particular emphasis needs to be placed on understanding organisational culture and its impact on the structure and implementation of a shared service. Communication also needs to be tailored to engage both HR and business customers and to help each respective area take accountability and responsibility for its own area of delivery. These aspects are often neglected in the rush to ‘save money and reduce headcount’.

Without attention to these aspects, far from feeling empowered, line managers may feel that extra ‘HR work’ is being dumped upon them; the HR administration team may feel that their job has been deskilled, and the HR business partners may feel stressed because they are trying to cling on to the elements of their old role with which they feel comfortable and/or feel daunted by their new more strategic role.

Another area which has been overlooked by many HR functions and in which there is frequently a shortage of skills and knowledge is in project management, Lean efficiency measures and Six Sigma. These techniques can eliminate considerable duplication and waste, saving costs as well as delivering superior service to the front line business through quick, easy, and transparent information and self-help tools.

A key enabler as always is technology, and in many instances only about 10% of existing HR systems are used and understood by both HR and the business. Ultimately, shared services needs systems which offer both manager and employee self-service, as well as automated processes, decision support tools, HR analytics and CRM interfaces. In many cases, these functions already exist with the current systems but are not used, so you need to check with the systems provider where they are or how they can be fully utilised. In some cases add-on packages can be bought, or as a last resort, new systems introduced.

Finally, by adopting the shared service model, you will have captured all of the key aspects you need to consider when setting up shared services. Even if you decide that shared services are not for your HR function or the business at this time, you at least will have a template to improve HR efficiency and quality of service levels to the business.


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