Making HR shared services work

Citation

(2000), "Making HR shared services work", Journal of European Industrial Training, Vol. 24 No. 9. https://doi.org/10.1108/jeit.2000.00324iab.015

Making HR shared services work

Making HR shared services work

Keywords: Human resource development, Centralization

You can save money by centralising a lot of personnel work – especially if it is just administrative. A lot of big organisations are doing it. Is it a fad? Does it work? And does it take the personal touch out of personnel? Human resources shared services certainly can work, but getting it right first time for all customers in an organisation takes a great deal of thinking through and planning.

HR functions are seeking to become more customer focused, more administratively efficient and integrated, and also more strategically positioned. Central provision of a number of administrative tasks (payroll, relocation, recruitment, benefits, etc.) along with information, advice or consultancy, and high level professional support, can help them do this, leaving a distinct corporate group to focus on high-level strategy, policy and management. But introducing shared services as the "latest thing to do", using call centres and intranet services, requires awareness of the risks, according to a new report from the independent Institute for Employment Studies (IES).

Peter Reilly, principal research fellow and author of the report, reminds those organisations using or planning HR shared services:

"Satisfying the customer" may not be so easy if line managers, employees and senior executives all have to be dealt with together. In designing shared services, does one put customer choice before organisational efficiency, or vice versa? Over-reliance on technology may not only be expensive in capital investment, but may lead to a depersonalised service that discomforts clients and HR staff alike. HR risks losing the "human touch" and direct understanding of how the workforce ticks. How can the HR function combine being the "strategic business partner" and still perform the distinctive role of "employee champion"? Can shared services be integrated into a holistic HR offering, or does the segmentation of activities prevent joined up delivery?

Offloading repetitive administrative tasks as part of centralised professional services can help HR to reposition itself as more strategic. Economies of scale and savings on overheads, the efficiencies of technology-assisted delivery and improved customer focus offer undeniable benefits. But where does that leave the HR function in relation to its customers? Business-facing HR managers may feel disoriented for a while, having lost contact with their customers, and perhaps some of the variety in their jobs. Perceptions of HR as strategic may take time to mature, with some interim loss of identity. Equally, line managers can feel dumped on if devolving activities comes without full support and training. Employees may feel they have lost a champion, as HR becomes more remote and business focused.

"HR shared services" typically offers common service provision where customers define the level and nature of the service. The content varies considerably. Administrative tasks are usually included, but information and advice to line managers on HR policy and practice, via a call centre or intranet, and project support can also be offered. It is a concept being implemented by a number of big companies in the belief that centralisation can cut costs and improve quality through centralisation and standardisation. The research is based on interviews with 15 organisations and a literature review covering both UK and US experience. The report not only describes the benefits to be obtained from shared services, but also challenges organisations to think through the implications of adopting this approach. Both short-term and long-term issues in creating HR shared services are addressed, along with a discussion of the future of the approach.

The report, HR Shared Services and the Realignment of HP by P. Reilly (IES Report 368, ISBN 1 85184 298 5) can be purchased, price £19.95, from Grantham Book Services Ltd, Isaac Newton Way, Alma Park Industrial Estate, Grantham NG31 9SD, UK. Tel: +44 (0)1476 541080; Fax: +44 (0)1476 541061.