Shared services: HR in firing line as MoD sets £280m cost-cutting target

The Ministry of Defence (MoD) expects to save more than £280m over the next 10 years by slashing its civilian HR function and introducing a shared-services centre.

The scale of the move means it will be watched closely by other big employers considering similar shared-services initiatives.

The MoD’s new structure will see a People, Pay & Pensions Agency (PPPA) launched next month to run transactional HR services, a centralised corporate function for HR strategy, and business partners positioned all across the organisation.

The shake-up will see the total number of HR staff at the department fall from about 3,000 to an eventual figure of 1,500, according to Deborah Loudon, director-general, civilian personnel.

“There will be job losses,” she said, “but I’m hoping most will be through natural wastage and retirement. Where possible we want to redeploy people [in the department].”

The PPPA, based in Bath, will take on the vast bulk of the MoD’s transactional HR services for its civilian workforce of about 80,000 staff. It will be responsible for providing support to line managers on issues such as recruitment, development and career management.

Loudon admitted the new structure would be a huge culture shock for many staff, particularly line managers, who will have to shoulder much more responsibility. “But we are not dumping on line managers as they will have high-quality support from the new agency,” she said. “There will be extensive training for them as well.”

By April 2007, the new agency will also take responsibility for dealing with HR casework on issues such as grievances, harassment and disciplinary action.

The MoD is mirroring moves by the Department of Transport and the Prison Service, which are currently engaged in similar projects under a cross-government shared-services drive.

How to ensure success in shared services

David Stephens, director in consulting at professional services firm Deloitte, said the key for any large shared-service project was how the devolved agency engaged with the central HR department. “There needs to be consistency between the two [bodies] in the advice they offer and how they interact,” he said. The next logical progression in the public sector would be cross-sector agencies delivering transactional HR services to a number of different government departments, he predicted.

Comments are closed.