The document discusses running HR like a business through operational excellence. It begins with an agenda covering the beginning, financial scenarios, operational excellence in HR, and results, challenges and success factors. It then discusses transforming the HR organization to a business-driven model with HR experts, business partners, and a service delivery focus. The document presents a client case study and outlines challenges around technology, talent, globalization and intangible assets. It proposes applying best practices like standardized processes, self-service, and technology to increase service levels while reducing costs. Finally, it compares sourcing scenarios like an internal HR service center, managed HR services, and full business process outsourcing to achieve benefits like cost reductions, improved customer satisfaction, and

1. 1
Run HR like a business
Drs. Anita Lettink
GBG Seminar
Amsterdam, April 13th &14th, 2005

2. 2
Agenda
1. The Beginning
2. Financial Scenarios
3. Operational Excellence in HR
4. Results, Challenges and Success Factors

3. 3
You certainly already know this...
HR Transformation
Evolving HR Organization (1)
HR Organization
Evolvement

4. 4
1. Is there a case?
Why should HR change?
Is it worthwhile to invest company money in it?
2. How to move from current to desired end-state?
Which are the steps to take?
... but how do you answer
the following 2 questions?
HR Transformation
Evolving HR Organization (2)

5. 5
Business Driven
Run HR like a Business, including Experts
(R&D), Business Partners (Sales&Mkt) and
Service Delivery (Production)
Operational Excellence
Efficiency gain through focus on
operational excellence and optimized
sourcing mix: Each party must focus on
delivering the best value & quality for
money
Optimization of internal
cash flow
Administration
Guidelines
Procedures
Consulting
Planning
Strategy
HR Shared
Services
Business
Partners
HR
Experts
&
3 Key Principles
Optimize Internal HR Cash Flow: spend
the HR budget on processes that add the
most value to the business

6. 6
Client Case:
Challenges for HR
Technology War for talent Globalization Intangibles
The external economy
 All core
processes are
restructured
and in ERP
 Virtual teams
 Not everyone
has access to
IT
 Large employers
in the area
 Readiness for
job changes
 High demands
on job contents
and working
conditions
 Aging workforce
 Great interest in
incentives and
performance
related pay
 Mobile staff
members
 Cultural
diversity
 Integration
 Ability to
change
 Knowledge
and
competencies
are far more
important
than material
assets
 Ideas are
crucial for the
company´s
result
 People are the
prime source
of competitive
advantage

7. 7
Business Driven HR:
Contribute to company results
Business Goals and Objectives
Prepare to
incorporate
acquisitions
Prepare to
incorporate
acquisitions
Growth
strategy &
eliminate waste
Growth
strategy &
eliminate waste
Support and
replace aging
workforce
Support and
replace aging
workforce
Business Results
HR
Contribution

8. 8
Business Driven HR:
Contribute to company results
HR Role
Business Goals and Objectives
Employee-
Related
Processes
HR is Business
Partner to
Managers and
Employees
HR is Business
Partner to
Managers and
Employees
HR is Service
Provider to the
organization
HR is Service
Provider to the
organization
Engagement,
Interaction,
Collaboration
Engagement,
Interaction,
Collaboration
Transaction,
Administration,
Support
Transaction,
Administration,
Support
HR is
Expert for
the Business
HR is
Expert for
the Business
Recruiting,
Mobilty,
Development,
Retention
Recruiting,
Mobilty,
Development,
Retention
Business Results

9. 9
Client Case:
Business Driven HR goals
Business Driven HR
transforms the service that HR provides with focus on assisting managers
and employees in their working activities to achieve business results
Current Environment
 Administrative waste
 Paper-driven processes
 Control orientation
 Legacy processes – long
process cycle times
 Inflexible legacy support
systems
 Information and systems not
user friendly
Target Environment
 Lower cost of operations
 Self service
 Customer orientation
 Innovated processes on
Internet time
 Flexibility and mass
personalization
 Information becomes a
strategic resource
 Strategic partner contributing
to competitive advantage

10. 10
Client:
Applying Best Practices
Apply Best practices to…
 Increase service level (both number & quality) at a reduced cost and enabling
technologies:
• Redesign process components and place where they are most valuable or cost
effective (be that at the call center, a center of expertise, or the business unit)
• Support redesigned processes by applying standardized ERP and web-enabled
technologies
 Enable a focus on value-added services driving to “employer brand”
• Focus on HR leadership to achieve business return on investment
• Change management to obtain leadership buy-in and employee commitment
 Benefit from other potential outcomes, such as:
• To pilot an approach to enable similar benefits for other non-core functions
• To develop an approach that can easily be repeated to incorporate acquisitions
• To participate in a profitable business (if equity partner)

11. 11
Agenda
1. The Beginning
2. Financial Scenarios
3. Operational Excellence in HR
4. Results, Challenges and Success Factors

12. 12
HR Business Plan
Benefit cost 269 6,8%
Social cost 476 12,1% Facility cost 187 4,8%
Performance
related pay
0 0,0% Personal IT cost 221 5,6% IT cost 136 3,4%
Annual base salary 2.265 57,5% Function cost 113 2,9% Third party cost 275 7,0%
Direct staff cost 3.010 76,3% Indirect staff cost 522 13,2%
Direct process
cost
411 10,4%
Total HR FTE's 65,3
3.943
HR Cost in (k€)
HR process costs in %
27%
7% 9% 9%
28%
11%
5%
4%
Personnel administration Payroll
Communication w ith Employees Benefits and compensation
Recruitment HR reporting
Time & Attendance Others
Activity distribution per process (relative distribution)
Basic
Absences (illness)
Exit Management
Employee communications
Payroll
a
Value
Competence Management
Performance Management
Performance Management
Strategic
Enabler
HR Reporting
Enabler
21% 21%58%
Administrator Specialist Generalist
Total HR FTE
Workforce Planning Vendor Management
Benefits & Compensations
a
Health & Safety
Labour & Employee Relations
a
Recruitment
Training
HR Strategy
Personnel administration

13. 13
Client Vision
Our Vision for HR:
To maintain only what’s needed in-house, and outsource or use self-service for the
majority of the workload
10%
30%
60%
Strategy
• Compensation & Benefits
• Career & Succession Planning
• Function Evaluation System
• Identification of Staffing Needs
Consultative Services
• Training
• Customer Reporting
• Recruitment
Procedures & Administration
• HR Administration
• Payroll Accounting
• Legal reporting
• Service Center Transaction Processing
HRM
Core
Competence
Push to
Employee &
Management
Desktop
Outsource

14. 14
Sourcing scenario’s
Full BPO
Outsourcing of
multiple HR
processes
Vendor Mgt
Center of Expertise
Transfer of both
Technology & Staff
Outsourced
HRSC
Managed Payroll
(including Subject
Matter Experts)
HR Service
Center
Managed Payroll
HR Admin
Outsourcing
Discrete
Processes
(regional)
Recruiting
Payroll
Benefits
Technology
Outsourcing
(ISO)
Application
Maintenance
Outsourcing
(AMO)
Payroll Handling
As Needed
Special
Processes &
Local Projects
Inhouse
HR projects

15. 15
Organizational Framework
Corresponding to the vision, the organisational model
included an external partner.
HR Leadership
Employee and Manager Self Service
Employ-
ees &
Manager
HR
Consultants
• Payroll
• Compens
ation
• Benefits
• Time
Con-
tact
Center
• HR
Adminis-
tration
• Reportin
g
• Recruitme
nt
• Training
Career &
Successio
n
• Competenci
es
• Management
Developmen
t
Technology Center
HR Policy
Experts /
Process Owner
Central
Manager
HRSSC
HR Leadership
Employee and Manager Self Service
Employ-
ees &
Manager
HR
Consultants
• Payroll
• Compen
-sation
• Benefits
• Time
Con-
tact
Cen-
ter
• HR
Adminis
-tration
• Reporti
ng
• Recruit-
ment
• Training
Career &
Successi
on
• Competenci
es
• Managemen
t
Developmen
t
Technology Center
HR Policy
Experts /
Process Owner
Central Manager
HRSSC
Manager
Technology
Centre
Account
Manager
HR Internal Shared Service Center Managed services Full BPO
1 2 3
PartnerCompany
HR Leadership
Employee and Manager Self Service
Employ-
ees &
Manager
HR
Consultants
• Payroll
• Compen-
sation
• Benefits
• Time
Con-
tact
Cen-
ter
• HR
Adminis-
tration
• Reportin
g
• Recruitme
nt
• Training
Career &
Successio
n
• Competencie
s
• Management
Development
Technology Center
HR Policy
Experts /
Process Owner
Central
Manager
HRSSC
Account
Manager
Manager
Technology
Centre
Account
Manager

16. 16
Benefits of Future Scenarios
Scenario 1
Internal HRSC with
In-Country Centralization
Scenario 2
Managed
HR & Payroll Services
Scenario 3
HR Business
Process Outsourcing
Tangible Benefits
(impacting
financials)
HR Headcount reduction due
to proposed organizational
model
IT costs reduction due to
centralization of IT
infrastructure and IT support
(Savings associated to
hardware and manpower
mutualization)
Cut off of multiple vendor
contracts (elimination of
contract services)
Same as Scenario 1
Initial investment costs can
be pre-financed
Additional HR Headcount
reduction due to proposed
organizational model
transferring HR Operations
activities to the provider for
the processes concerned
Additional IT Headcount
reduction due to proposed
organizational model
transferring Application
Maintenance activities to
the provider
Same as Scenario 2
Additional HR Headcount
reduction due to proposed
organizational model : full
HR Support & Operations
activities and Application
Maintenance for the
processes concerned
Intangible Benefits
(impacting
customers,
processes and
competence)
Efficiency due to process
standardization
Improve customer satisfaction
due to standardized service
model
Better governance and
measurement
Benefit from high standard
technology
Better prepare for tomorrow:
next steps - Scenario 2 and 3
Same as Scenario 1
Better cost control due to
limited usage of variable
costs on the processes part
being outsourced
Rely on a professional to
retain necessary skills and
focus people on core
competencies
Same as Scenario 2
Total cost cost control due
to extended usage of
variable costs on the full
processes partly outsourced
Extend easily the model to
all HR processes
Full process handled end to
end

17. 17
Client Business Case
As-Is Baseline
X.X m€
Cost (m€)
Investment (m€)
2003 2006 2006
HR FTE Company xyz
Retained
x.x
x.x
x.x
x.x
x.x
Internal
Centralized
SSC
As-Is
Situation
x.x
Cost Reduction
Company xyz
HR Employees
Business
Process
Outsourcing
x.x
x.x
Internal SSC
X.X m€
Managed HR & Payroll
Services
X.X m€
2006
x.x
Managed
HR & Payroll
Services
x.x
x.x
Business Process
Outsourcing
X.X m€
x.xx.x x.xAnnual Savings (m€)
- X.X
m€
- X.X
m€
- X.X
m€
X.X m€
X.X m€
X.X m€
X.X m€
Provider
Client
Client
Client
Client

18. 18
Agenda
1. The Beginning
2. Financial Scenarios
3. Operational Excellence in HR
4. Results, Challenges and Success Factors

19. 19
Transition Approach
What ?
How ?
With what ?
26. Bearbeitung Familienheimfahrten
27. Bearbeitung Telefonkostenzuschuss
28. Erfassen Prämien BVW/KVP
29. Zuschuss Haushaltshilfe
30. Überzahlung (z.B.EADS-Aktien)
31. Berechnung und Überw. der
Erfindervergütung/
BVW/KVP an nicht Betriebsangehörige
32. Zahlung von Trenngeld
33. Versand DEÜV (Inkl. Jahresmeldung)
34. Steuerkartenaufkleber (altes Jahr)
35. Erstattungsantrag ATZ
36. Beitragsnachweise an KK inkl.
Rückfragen
37. Überprüfung der Jahresentgeltgrenze
38. Cluster: Bescheinigungen
a) Bescheinigung Arbeitslosenhilfe
b) Bescheinigung BG Entgeltnachweise
c) Bescheinigung BfA/LVA Arbeitsentgelt
d) Bescheinigung Bundeswehr/Zivildienst
e) Bescheinigung Erziehungsgeldantrag
f) Bescheinigung Gerichte und Sozialhilfe
g) Bescheinigung Haushaltshilfe
h) Bescheinigung IGM unbezahlte Freistellung
i) Bescheinigung Kindergeld Ausbildung
j) Bescheinigung Kindergeld Fortdauer + Ende
k) Bescheinigung Krankengeld
l) Bescheinigung § 312SGB III Arbeitsamt
m) Bescheinigung Unterhaltssicherung
n) Bescheinigung Verdienstausfall
o) Bescheinigung Wohngeld
p) Zwischenbescheinigung
26. Bearbeitung Familienheimfahrten
27. Bearbeitung Telefonkostenzuschuss
28. Erfassen Prämien BVW/KVP
29. Zuschuss Haushaltshilfe
30. Überzahlung (z.B.EADS-Aktien)
31. Berechnung und Überw. der
Erfindervergütung/
BVW/KVP an nicht Betriebsangehörige
32. Zahlung von Trenngeld
33. Versand DEÜV (Inkl. Jahresmeldung)
34. Steuerkartenaufkleber (altes Jahr)
35. Erstattungsantrag ATZ
36. Beitragsnachweise an KK inkl.
Rückfragen
37. Überprüfung der Jahresentgeltgrenze
38. Cluster: Bescheinigungen
a) Bescheinigung Arbeitslosenhilfe
b) Bescheinigung BG Entgeltnachweise
c) Bescheinigung BfA/LVA Arbeitsentgelt
d) Bescheinigung Bundeswehr/Zivildienst
e) Bescheinigung Erziehungsgeldantrag
f) Bescheinigung Gerichte und Sozialhilfe
g) Bescheinigung Haushaltshilfe
h) Bescheinigung IGM unbezahlte Freistellung
i) Bescheinigung Kindergeld Ausbildung
j) Bescheinigung Kindergeld Fortdauer + Ende
k) Bescheinigung Krankengeld
l) Bescheinigung § 312SGB III Arbeitsamt
m) Bescheinigung Unterhaltssicherung
n) Bescheinigung Verdienstausfall
o) Bescheinigung Wohngeld
p) Zwischenbescheinigung
Content and Processes Service
Catalogue
... transactions will
be performed and
what services will
be offered by the
HR SSC?
IT-Systems /
Infrastructure /
Data
...technology
support and tools
will the HR SSC
operate and the
work be performed?
Organization
... will the HR SSC
be organised and
how will the
transition be
managed?
?? ?
Change Management
As-Is To-Be
HR Leadership
Employee and Manager Self Service
Employ-
ees &
Manager
HR
Consultants
• Payroll
• Compen-
sation
• Benefits
• Time
Con-
tact
Cen-
ter
• HR
Adminis-
tration
• Reportin
g
• Recruitme
nt
• Training
Career &
Successio
n
• Competencie
s
• Management
Development
Technology Center
HR Policy
Experts /
Process Owner
Central
Manager
HRSSC
Account
Manager
Manager
Technology
Centre
HR Leadership
Employee and Manager Self Service
Employ-
ees &
Manager
HR
Consultants
• Payroll
• Compen-
sation
• Benefits
• Time
Con-
tact
Cen-
ter
• HR
Adminis-
tration
• Reportin
g
• Recruitme
nt
• Training
Career &
Successio
n
• Competencie
s
• Management
Development
Technology Center
HR Policy
Experts /
Process Owner
Central
Manager
HRSSC
Account
Manager
Manager
Technology
Centre
Scan Station
(Kofax Ascent Capture)
Service Center NL
WebTop WebTop WebTop
WebTop
Client Site
WebTop WebTop
Database
(Oracle)
ContentServer
Application Server
(Tomcat)
File Server or SAN Kofax
Scan Server
Brussels Data center A
AcrobatPDF
Rendition
Content Rendition
Services

20. 20
Reports
HR Roadmap
Service
Delivery
Model
Process
design
Responsibility
matrix
Standard
Operating
Procedures
Roles &
Staffing
Service Level
Measurement
Service
Level
Agreements
Manage
Build
Detail
Design
ContinuousEvaluation

21. 21
Guiding Principles
Process Technology
Circle of Influence
in Process Design
Enables
and restricts
Defines and
simplifies
Guiding Rules in HR Process Design
 Don‘t automate, obliterate
 Start with visioning, don‘t start getting stuck in the as-is situation
 Simplify and standardize as much as business requirements allow
 Use IT as an enabler for process simplifications, value-adding variations and
innovations
 Assess the As-is situation for current weaknesses and adress quick wins first
The Importance and Benefits of
HR Process Design
1. Simplification and standardisation
 key enablers for efficiency and
productivity benefits
2. Value Analysis
 unified view of global HR business and
chance to improve value-adding
processes and eliminate non value-adds
3. Flexibility and Quality
 react to increasing needs to deliver high
quality HR services and to be flexible

22. 22
Process Level Overview
Level 1: Company
model
Level 2: Process
Hierarchy
Level 3: Main
Activities &
Responsibilities
Level 5: Work
instructions
Level 4:
Detailed
Activities & Roles
LevelofDetail
Recruiting
0. Human Resources
Workforce
Planning/
Needs
Assessment
Planning and
Sourcing
Selecting Onboarding Evaluation
Recruiting
Sourcing
Planning
Create
Candidate
Pool
Selection
Process
Negotiate
and
Make Offer
Joining
Measurement
& Feeback
Center of
Expertise
Service
Center
Business
Partner
Manager
Employee /
Candidate
Approved
vacancy
4.1 Detail
approved
vacancy
4.1 Detail
approved
vacancy
Performance Mgt.Performance Mgt.
Career Mgt.Career Mgt.
4.2 Identify
sourcing
channels
4.3 Initiate sourcing
and communication
of open position
(in/external)
4.4 Manage
initial application
and queries
(in/external)
4.4 Manage
initial application
and queries
(in/external)
4.5 Screen
applications for
appropriate fit
4.6 Initiate
interview
process
1Dependent on
level of position,
to include job
description,
competencies,
compensation,
timeframe
Dependent on
level of position,
to include
- telephone
- face-to-face
- assessments
- testing
LineManagerSSC(T1/T2)
Recruitment: Selection
HRBusinessPartnerCandidate/CurrentE,ployeeInterviewTeam
ARINSO International
PROCESS TRIGGER
STEP 1
Candidate
Pool
Process
Select
Interview
Team
members
Set up interview
dayschedule
and logistics
Travel
arrangements
required?
Receive notification
of interview day
schedule and
logistics
No
Arrange traveland
accommodations
Yes
Conduct initial
interview
Update RMS
with interview
notes
Viable
candidate?
Notify
unsuccesful
candidates of
outcome
No
Conduct
interviews
Receive
notification
and invitation
Accept?
No
Review job
specifications and
targeted selection
questions in RMS
Yes
Yes
Update RMS
with interview
notes
Review RMS
interview
notes
Discuss
interview results
and identify top
X choices
Notify
unsuccesful
candidates of
outcome
Is final
interview
needed?
Conduct final
interview
Yes
Make final
selection
Notify
unsuccesful
candidates of
outcome
Negotiate
and Make
Offer
STEP 2
STEP 2A
STEP 2B STEP 2C
STEP 3
STEP4 STEP 5
STEP 6
STEP 6A
STEP3A STEP7 STEP 8
STEP 9
STEP 10
STEP 9A
STEP 11
STEP 12
STEP 10
No

23. 23
Process Approach
Global Process
Designs
(Level 1-3+)
• Started with Best Practice Global HR Process Designs
• Global Focus
• HR SMEs
• 4 Weeks of workshops
Local Process
Designs
(Level 4-5)
Standard
Operating
Procedures
Ongoing
Process
Optimization
• Addressed local and regulatory requirements
• HR SMEs
• Validation Client & ARINSO
• 12 Weeks of Workshops
• Detailed procedures for
Service Center
• Based on Global and Local
Process Designs, Client SME
Input, and existing ARINSO
Standards

24. 24
Evaluating inhouse versus outsourced
1. Is this service from outside vendors difficult to find in the market place?
2. Is this activity non-repetitive, low-volume, and requiring significant
professional judgment?
3. Does this activity contribute to developing the knowledge capital within the
company (i.e., does doing it in-house truly enhance company’s
competitive advantage?)?
4. Does this activity require significant company knowledge/expertise?
5. Does this activity require a large degree of interaction inside the company
businesses?
6. Is this activity difficult or expensive to measure? Does having a
measurement add value to the organization?
7. Are the individual transaction costs difficult to define/identify?
8. Does this activity have a low level of standardization/harmonization?

25. 25
Agenda
1. The Beginning
2. Financial Scenarios
3. Operational Excellence in HR
4. Results, Challenges and Success Factors

26. 26
Transatlantic Service Delivery

27. 27
Call Distribution
67%
11%
3%
19%
T1 processed Redirected
T2 processed Cancelled etc.
Calls are mostly handled
by Tier 1 agents
N = 22,916 calls
0
500
1.000
1.500
2.000
2.500
3.000
3.500
jan feb mar apr may jun jul aug sep oct nov dec
Distribution of calls
over time
T1 processed
Cancelled
Redirected

28. 28
Functional Ticket Distribution
Payroll
46%
Benefits
15%
HR Admin
31%
ESS
7%
1%
Payroll
Benefits
HR Admin
ESS/MSS
(T)BPO & Misc.
Distribution of Service Center inquiries
(‘tickets’) across functional areas
22,916 calls have created a total of 18,699 ‘tickets’
The difference are employees calling on the status
of an existing ticket.

29. 29
0
200
400
600
800
1000
1200
1400
1600
1800
jan feb mar apr may jun jul aug sep oct nov dec
Benefits
Payroll
HR Admin
Benefits
17%
HR
Admin
62%
Payroll
21%
Distribution of ESS
transactions across functional
areas
N = 10,280 MSS/ESS
Transactions
(transactions only, no page
views)
Distribution of ESS
transactions over time
ESS Distribution

30. 30
30%
32%
38%
0%
Tier 1 T2 HR & Bene T2 Payroll T3 (T)BPO
Ticket Resolution
Resolution of Service
Center inquiries
(‘tickets’) across ESC
N = 19,276 Tickets (IVR)
(a limited number of tickets are
created by T2, most by T1)
0
500
1000
1500
2000
2500
3000
3500
4000
jan feb mar apr may jun jul aug sep oct nov dec
T3
T2 Pay
T2 HR & B
T1
Resolution of Service
Center inquiries
(‘tickets’) over time
T2
Payroll
T2 HR &
Ben
T1

31. 31
Some of the challenges we faced...
In working with Employees and
Managers
 Computer illiteracy
 Wide range of computer experiences
 Expectation of service of former service
provider
 HR program, Payroll
 Lack of understanding of service levels
 Acceptance of new processes
 Confusion on roles: whom to call in
which case?
 Incidentally: perceived lack of proper
training
In working with HR:
 Standardization and centralization is
new
 ‘This is not the way we are used to do
things around here!’
 HR-, Benefits-, and Payroll-resources
were affected by the transition to BPO
 ‘Why would I care?’
 Most processes are ‘spread out’ over
several parties
 ‘Why are you asking me? You guys
should solve this issue!!’
 Significant reorganizations were
expected: sabotage?
 ‘It’s not my problem anymore!’
 Additional implementation phases
might be coming up
 ‘I don’t have time for that’
 Tired of change

32. 32
Success Factors
 Accurate As-Is financial information and monthly business case update
 Factual discussion of all possible scenarios including outsourcing
 Provide security and direction
 Clear management decisions
 Early warning for dismissals (but not too early)
 Individual development plans
 Dialogue: many individual talks/meetings
 Walk the talk
 Involvement of all affected persons in on-site and process workshops
 Free up staff for project duties and have them work in the project room
(hire external help)
 Clear structure and documentation
 High management attention

33. Drive & Commitment
Unique blend of Consultancy, Technology and Outsourcing
Global company, local presence and knowledge
Dedicated to HR since inception
ARINSO KEY DIFFERENTIATORS