Overview of HR Shared Services

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  • 1. Meeting notes from the
    IQPC 9th Annual Asian Shared Services & Outsourcing for HR Conference
    May 4-5, 2011
    Kuala Lumpur, Malaysia
    www.asiahrblog.com
    1
    Overview of HR Shared Services
  • 2. Objective of Shared Services
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    2
    Combine common HR functions to for advantages
    economies of scale
    cost-savings
    Front-line HR focus
    HR strategic work
    business partner w/ BU managers
  • 3. Shared Services Continuum - Centralization
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    pull together “back-office” administration under one roof in a single location, managed as a single team
    efficiency gain from
    elimination of the work that was previously done in multiple groups and locations
    processes reengineered
    optimize business workflow for results
    in most cases, work is simply relocated to a new location but, workflow largely remains the same before the centralization
    Generally speaking, centralization doesn’t go far enough
  • 4. Shared Services Continuum –Shared Services
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    focus on customer service delivery by
    developing service level agreements (SLA)
    with performance metric score-cards
    cost is managed
     a true shared service model looks at end-to-end processes globally
  • 5. Shared Services Continuum –Off Shoring
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    Companies are increasing their presence in the global marketplace
    The consequence for HR
    delivering global policies relevant to the new market
    weaving in corporate policies with local practices
    Companies gain by leveraging the consistency of a shared service model globally in disparate locations
  • 6. Shared Services Continuum –Out Sourcing
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    Companies with matured shared services
    May look for further cost-reduction and labor arbitrage
    Turns to third-party service providers
    manage the organization’s transactional tasks
    may outsource a specific function such as payroll or staffing
    A more aggressive a strategy may outsource the entire shared services function
    only the strategic and business partnering function remains in-house
  • 7. Foundation for Shared Services
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    Process Reengineering
    Is the process by which HR organizations thoroughly evaluate, assess and align HR policies
    Global consistency is a strict requirement
    Only critical country exceptions are allowed, typically for legal purposes.
    Allowing for business process exceptions, continuing to do things they used to be, creating process excursions, erodes the benefit of shared services.
  • 8. Foundation for Shared Services
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    HRMS
    A common infrastructure allows for “sharing”
    business processes, service delivery and knowledge-base across the globe
    maintains all data related to the entire employee life-cycle
    rely on “employee self-service”
    Self-service is built on the premise of consistent policies which applies to employees globally
    reduce reliance on in-person contact with HR for basic queries and administrative services
    Moving HR to the intranet is an accepted practice
  • 9. Foundation for Shared Services
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    Change Management
    Managing expectations is essential
    employee wants the same level of direct one-to-one contact
    convince management teams the value of offloading tactical work
    while line managers will want to see higher strategic work delivered by HR
    HR team will need to be retrained
    Skills to perform in a shared service center
    front-line HR will need to develop strategic consulting skills to work with business units.
    Any change will require executive sponsor such as the CEO and CHRO
  • 10. HR Culture Shift
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  • 11. Shared Services Functions
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  • 12. Shared Services Functions – HR Administration
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    HR Administration: the various administrative work required of HR
    Transactions may include
    interview arrangement, training course scheduling, benefits management, and performance review processing
    strategy can reduce manual transactions
    Requires standardization in processes and policies
    coupled with an automation strategy
  • 13. Shared Services Functions – Employee Queries
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    Employee Queries: Ad hoc employee requests
    take up a significant portion of an HR professional’s time
    Business group managers want HR to respond and provide service to the organization
    HR can provide value on strategic level but
    administrative and first-line response can be delivered in a different manner
  • 14. Shared Services Functions – Vendor Management
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    Vendor Management: Many HR already outsource certain aspects of services
    may be benefits administrators, payroll processors or recruiting agencies
    A central management team to
    contracts negotiations, management of services and performance indicators
  • 15. Shared Services Functions – Data Transaction
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    Data Transactions: All HR functions require access and use of relevant HR data
    ad hoc requests or silo data reporting slows down an organization’s ability tap into organization HR metrics and indicators
    ideally, HR functions can leverage on a single data platform
  • 16. Location Strategy: Global Service Centers
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    Americas: The Americas region, particularly in the US, have the most established shared services models
    technology, common language, standardized policies make it easier to migrate towards a shared services platform
    Latin America: Depending on the size of the organization and growth strategy in Latin America countries, differences in culture and language may present challenge to shared services
  • 17. Location Strategy: Global Service Centers
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    EMEA: Advancement in shared services has been slowed due to the region’s cumbersome regulatory and data-protection environment
    HR technology platforms are beginning to allow pan-Europe approaches to payroll and recruitment administration
    APAC - China: For many US MNCs, China presents the biggest market share potential for growth
    China is in its infancy stages of developing shared services organizations
    But, as companies grow, they invest in setting up infrastructure for shared services.
    focus on Greater China (China, Hong Kong and Taiwan)
    as teams have more experience, many companies are moving their Southeast Asia organizations under the China umbrella
  • 18. Location Strategy: Global Service Centers
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    APAC India: As the global leader in business process outsourcing, India has developed core expertise in managing services for large multinational corporate clients.
    this may include benefits management, payroll processing, employee records and HR reporting
  • 19. Transformation Challenges
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    A clear decision and direction set for by head of HR will help set the stage. Items to address:
    Why make any changes?
    What are the business and HR imperatives driving the change?
    How will the organization gain with this change?
    Define what is changing
    What stays the same?
    What changes?
    What are the desired results?
    Roles and Capabilities
    Define and train for skills needed for new roles in shared service center
    Develop new skills for those front-line HR professional remaining in the business partner role
    Employee Feelings/Emotions
    Helping employees through the change process
  • 20. Conclusion
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    HR is required to evaluate its own service delivery strategy to meet this demand
    Business is growing in sheer size and complexity
    Expectation of HR service delivery is unprecedented
    A strategic assessment of HR structure can go a long way in optimizing HR
    both in terms of services and business partnership
    shared services model allows HR to deliver excellence in both the tactical and strategic aspects
    neither of which can be accomplished well if kept under existing conditions simply by adding more HR headcount
  • 21. References
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    “New Era for HR Shared Services,” Business Week Research Services, September 2007 http://mediakit.businessweek.com/Products/Research_Services/White_Papers
     “Finding your place on the HR shared services continuum,” Mercer, 2008 http://www.mmc.com/knowledgecenter/Finding_your_place_on_HR_shared_services.pdf
    “Beyond Centralization: Driving High Performance Through Fully Realized Shared Services,” Accenture, 2007 http://www.accenture.com/us-en/pages/insight-beyond-centralization-fully-realized-shared-services.aspx
    IQPC 9th Annual Shared Services & Outsourcing for HR - HR Transformation Summit. May 4-5, 2011 http://www.ssohr.com/Event.aspx?id=442780