Introduction
Shared Services are a means to recast overall business strategies to meet the competing demands of cost cutting and downsizing, while promoting shareholder value, quality, and improvements in customer service levels.
The initial shared service centers models were focused upon transaction processing functions such as accounts payable, payroll and data entry. Later expanded to a broader concept of an organization wide shared services model aimed at the provision of improved internal and support service levels across the company.
HR shared services are focused on customer satisfaction, efficient service delivery and value creation.
What are Shared Services?
What are NOT Shared Services?
Methodologies & Tools
Key Business Drivers
Shared Services are a means to recast overall business strategies to meet the competing demands of cost cutting and downsizing, while promoting shareholder value, quality, and improvements in customer service levels.
The initial shared service centers models were focused upon transaction processing functions such as accounts payable, payroll and data entry. Later expanded to a broader concept of an organization wide shared services model aimed at the provision of improved internal and support service levels across the company.
HR shared services are focused on customer satisfaction, efficient service delivery and value creation.
What are Shared Services?
- A support organization focused on customer satisfaction, efficiency, and continuous improvement.
- “Commonized” support processes and systems to provide better service to business operations.
- Re-designed business processes that emphasize value creation and measurement.
- An organizational evolution through which some support processes may be identified as good candidates for outsourcing.
- Research shows that reduced operational costs and improved customer service enable HR to become a strategic partner within the organization.
What are NOT Shared Services?
- A move to “centralize” internal support processes under one roof, operated by a corporate department.
- Re-engineering existing support processes without considering the context of the larger business processes that they support.
- Simple cost reduction measures achieved through process consolidation and FTE elimination.
- An internal push to have all non-core business processes performed by outside service providers.
Methodologies & Tools
- Service Expectations: A shared services organization treats the company’s business units as customers. It is typically structured as a cost center with a yearly negotiated level of service to be provided.
- Processing Emphasis: Typically, the shared services organization focuses on processing transactions as efficiently as possible while reducing costs and continually identifying how productivity can be further increased.
- Reduction of Process Exceptions: Recognizes that significant productivity gains can be achieved by standardizing a process within the limits of customer requirements.
- Process Focus: Shared services focus on company-wide processes and the importance of seamlessly integrating processes between shared services and the business units.
- Sourcing Options: Seamless shared services provided with in-sourced, outsourced, and co-sourced solutions.
Key Business Drivers
- Cost savings and improved efficiency as processes are streamlined and redundancies are eliminated.
- Improved service quality as employees has one HR contact within the center with standardized information.
- Increased strategic HR role as HR Staff within the organization can focus on performing more strategic tasks.
Benefits of Shared Service:
Financial Returns: The highest measurable return on investment can be achieved in the areas below selected areas using the right mix of transformation methods.
1. HR Business Service Centers
- Can achieve cost reductions due to economies of scale
- Operations that are traditionally handled in multiple locations
2. Workflow-Driven Processes
- Reduce duplicate and/or redundant manual entry of personnel information
- Ensure that processes are initiated
3. Self-Managed Services
- Allows information to be accessed by managers, HR, and employees
- Reduce dependency on the HR function for low value-added activities
- Increases employee satisfaction and empowers employees
4. Integrated Transactional Data
- Cost /cycle time reduction, productivity improvements such as EDI transactions (Electronic Data Interface)
5. Enhanced Analytical Capabilities
- Increase the quality of data analysis by providing the ability to “drill down” and analyze all Human Resource data
- Support planned increase of all staff with a position management function
6. Standardized Architecture Technology
- Allows integration with other systems internal and external to the organization, reducing the cost of technology, and supporting data warehousing initiatives
7. Reduced Compliance Issues
- Statutory reporting capabilities generally delivered with vendor software, reducing the need for custom application development
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Non-Financial Returns:
1. Cost Saving
2. Improved Service Quality
3. Increase HR Strategic Role
Primary Responsibilities for Implementing Shared Services
Reducing transaction & service costs, as well as improved customer service levels.
1. Cost Saving
- Increased standardization and comparability across the operating companies
- Significantly increased financial controls
- Achieved substantial reduction in inventory through improved supply chain planning
2. Improved Service Quality
- Established Business Services Help Desk metrics which became a company standard
- New HR infrastructure provided service improvements to employees and managers
- Significant improvements in order desk productivity
3. Increase HR Strategic Role
- Achieved faster global financial reporting with reduced consolidation effort
- Prepared organization infrastructure for continued growth through acquisition
- Manual HR processes have been automated
Primary Responsibilities for Implementing Shared Services
Reducing transaction & service costs, as well as improved customer service levels.
- Cost savings were cited by 45% of the respondents as the primary reason for shared services implementations.
- Over half of the respondents cited reasons other than cost savings as their primary implementation driver
- Operational flexibility and customer service are also important considerations, inferring that companies want to establish shared services to provide their core businesses the opportunity to focus more on value added activities
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Primary Reasons & Average Ranking
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HR Shared Services Delivery Model
Outsourcing
The strategic outsourcing of non-core competency functions and/or those that are more efficiently delivered by the third party allows the HR function to improve HR service delivery, while reallocating resources to more value-added activities.
Managers
Managers assume key roles in the delivery of human resources (e.g., HR reporting, employee appraisal, learning and development, employee counseling). Manager Self Service enables managers to process basic HR transactions (e.g., award a bonus) and retrieve HR data without the need to involve HR Business Partners or the service center.
Employees
Employees assume responsibility for their own personal data, career related issues, and proactively seek necessary information. Employee Self Service enables employees to process basic HR transactions (e.g., change address, enroll in benefits), retrieve personal HR data, and access general HR policy and practice information without the need to involve the service center.
The strategic outsourcing of non-core competency functions and/or those that are more efficiently delivered by the third party allows the HR function to improve HR service delivery, while reallocating resources to more value-added activities.
Managers
Managers assume key roles in the delivery of human resources (e.g., HR reporting, employee appraisal, learning and development, employee counseling). Manager Self Service enables managers to process basic HR transactions (e.g., award a bonus) and retrieve HR data without the need to involve HR Business Partners or the service center.
Employees
Employees assume responsibility for their own personal data, career related issues, and proactively seek necessary information. Employee Self Service enables employees to process basic HR transactions (e.g., change address, enroll in benefits), retrieve personal HR data, and access general HR policy and practice information without the need to involve the service center.
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HR Shared Services Delivery Model
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Centralizing Value-Adding Processes
- An HR Shared Service Center can be summarized as a centralized group of HR Staff that focuses on delivering a range of HR services.
- The scope of services that these centers perform can incorporate all HR plans, programs, and policies dependent upon management’s strategy.
- There are two main types of shared service center that are characterized by the populations that they serve, HR Service Centers and Centers of Excellence.
HR Service Centers
The primary focus of these shared service centers is the support of the employee needs. These centers usually support the benefits and payroll functions.
The primary focus of these shared service centers is the support of the employee needs. These centers usually support the benefits and payroll functions.
Centers of Excellence
These shared service centers are usually rolled out after HR Service Centers. They focus on servicing managerial staff. The Center of Excellence may support services such as recruiting, training, and compensation.
These shared service centers are usually rolled out after HR Service Centers. They focus on servicing managerial staff. The Center of Excellence may support services such as recruiting, training, and compensation.
