In many companies the HR function undergoes a major facelift in order to close the gap with current business requirements. A critical part and in my view also a prerequisite for a successful HR set up is the establishment of an effective HR operations or HR shared service organization. With effective I mean an HR shared service organization offering client focused, responsive, cost effective and consistent HR services to managers and employees.
In this article I will zoom in on 6 major trends in HR Shared Service organizations based on my experience and learning’s from best practice companies.
1. Self service
Employee self service in whatever form is by now for most company’s reality. In still many cases these self services for employees (new, current and retirees) entail basic data change opportunities for personal data, insight in where to go for what and availability of relevant policies. Not many companies have extended these services towards a wider audience nor a broader service offering. And yet that is what best practice companies have or are currently doing. Not surprising if you realize that in terms of time spend and cost 60-70% of HR is transactional in many companies, from preparing contracts to executing employees releases. So if companies are able to reduce these efforts by providing self-services for managers and employees in the widest range of activities possible, this offers a huge potential for efficiency gains.
2. First and Single point of contact
Most companies have by now some kind of a back office focusing on specific HR services tasks. Often these are organized by site and/or by country. More and more companies realize the potential of leveraging the expertise and capacity in HR transactional tasks into one Global HR shared service organization. This entity can operate as the first point of contact for managers and employees for all HR related questions and tasks. This way of organizing helps managers and employees understand where to go and to experience the resolution rate and responsiveness they require. This concept which in other fields of the business already exists for decades, offers obvious advantages such as: efficient use of expertise, free up time for HR business partners to focus on business value add activities, reduce time spend of managers and employees on HR transactional issues, consistency and cost effectiveness. Most advanced HR shared service organizations offer their services via single point of contact with an HR portal with a second tier contact center and third tier experts supported by advanced technology. Often referred to as the HR service delivery model.
3. Integrated services
Talking to many companies I found HR services can also be more or less advanced in the actual service offering. Almost all medium and large companies have a dedicated entity for payroll, regardless of this is in-house or outsourced. Some basic HR admin and data functions are also quite often part of an HR service organization. Highly effective HR service organizations however, leverage the full potential of the HR service organization by offering the widest scope possible for the service offering. In the more advanced organizations HR shared service is responsible for: all HR solutions, process improvement, complete scope of transactional services such as in learning, recruitment, reward, talent management, HR data & analytics, payroll, organizational data management and more. More and more you also see the HR service organization providing fact-based feedback to the HR Centres of Expertise such as reward and talent. For example providing feedback on effectiveness of their policies and thus supporting improvements in the wider HR community.
4. Leveraging advanced technology
Already for decades HR like any other business functions is leveraging tools and systems. Usually the HRIS landscape consists of a robust business system including HR modules or a dedicated HR system with best of breed add-on’s for specific areas in HR, such as reward, talent and learning. On top of this various HR areas use their own expert systems. Many of these larger companies are now struggling with the heritage of this scattered system landscape and moving towards the next step with the implementation of an integrated HR solution, which is often in the cloud based. Many of these solutions are fit for mobile use. Hence allowing managers and employees but also HR professionals, to execute their HR tasks or questions at any time at any place. Best in class companies simplify their HRIS landscape and leverage these new technologies to improve and increase efficiency of HR services. Of course not all companies have the volume to justify these massive investments. These companies often choose to install tools to extract data from current systems. Whatever is best for your company the new technology in itself will never be the only answer for reinventing HR. It is just a means, a piece of the jigsaw puzzle.
Another example of leveraging advanced technology is the increasing number of HR shared service organizations that work paperless where possible leveraging expert systems like document- and case management solutions. This also means digitizing personnel files for all sites and countries. In addition to saving a lot of space for the company this allows HR professionals to work with direct access to always up to date files.
Lat but not least you see also more and more the usage of internet communication platforms and social media for direct interaction with internal clients but also to involve employees in improvement of services.
5. Data and analytics
HR data & analytics are being rightfully referred to as one of the major trends in HR. Mostly as a result of the ‘big data trend’ in business as a whole. The notion is of course not new as is true for many current trends. Already in the 90”s there was a strong drive for fact based people management. In many areas of HR this has also been achieved over time, e.g. in executive reward or performance management. Although there are expert fields in HR which developed in more fact based decision taking, the broader notion of developing and providing HR data & analytics that can directly add value to critical business decisions is still behind compared to other business functions. The reason HR fell behind and is only now gaining momentum has directly to do with the inability to access correct and meaningful uniform data. More and more HR can better fulfil this task because they have timely access to standardized data via their integrated HR solutions and HR shared service organization, with data experts to make the data meaningful.
6. Run as a business
Many of us will rightfully so claim that HR is the business, or more precise, HR is an integrated part of the business, like any other function. However that claim also means HR has the responsibility to run the function as a business. This is even more evident for the HR service organization. Depending on the size of the business HR shared services involve large chunk of the total HR budget and a significant number of the HR professionals. Leading these organizations effectively requires profound business skills. Maturity in this area is still growing but very rapidly. I have seen many HR shared service with some form of business acumen and practices. The most profound and advanced are the shared service organization which work with: clear business cases for investments, transparent multiple targets, budgets agreed with the business, business dashboards, client satisfaction monitoring, description of service offering, clear costing model, regular business and performance reviews with involvement of the business and so on. Part of running HR as a business is of course continuous improvement. Still in many HR organizations improvements are event driven and often lead to sub-optimization and thus seldom to the required client satisfaction. The more advanced HR functions choose to make HR services responsible for driving improvements integrally and across all HR processes using standardized methodologies such as LEAN.
Leveraging all these trends in an integrated manner is a journey, which needs a professional approach to your HR transformation. It will bring considerable benefits to the HR function and the business as a whole in cost, efficiency and quality of service. It turns a ‘must have’ back office into a ‘face’ towards the internal clients with clear competitive advantages. In addition it will generate organizational capacity for managers and HR to focus on big-picture issues that make a difference. Last but not least it provides companies with an expert organization that helps to support consistent implementation of policies and programs throughout the world.