Shared, Service, HR, How, Organisation

How to set-up the HR shared services option in your organisation - Part II

02 Sep 2003 | (News)

by Tony Williams, Head of HR Shared Services, Royal Bank of Scotland Group Peter Reilly, Institute of Employment Studies

This article is the second of three instalments on how to set up HR Shared Services in your organisation drawn from our book. In the first issue we defined our understanding of what HR Shared Services is (and is not), why organisations may consider setting up a shared services approach and some key pitfalls to avoid. This time, we focus on the actual practical steps we believe are essential in getting it right and some of the key decision points to consider.

How do we set up HR Shared Services ?

The focus of this article is underpinned by two key themes;

1. The big design issues
2. The key steps to take.

In the first part, we look at the 10 key questions we believe you have to answer before knowing what your HR Shared Services offering will look like. Having established the broad design parameters we then look at our 8 key implementation steps.

The 10 big design questions?

Having looked at a number of European HR Shared Services offerings we believe that there are 10 key questions to resolve;
1. Do you carry out all the shared services activities yourself or do you outsource all/some for third parties to do on your behalf?
2. If you outsource, what sort of contractual arrangement do you seek – transactional, partnership or co-sourced?
3. If you retain the shared services work, how do you structure the activity – integrated into the rest of the company or separated as a subsidiary?
4. Do you want your shared services to make a profit, either from selling its wares internally or externally?
5. Do you link together with any other organisation to share costs and expertise?
6. To what extent, are you going to devolve people activities, previously done by HR, to line managers to do? This will impact on the nature of the work of your shared services centre.
7. What part will technology play in your shared services set up? Will it be limited to using a corporate intranet or will employees and/or their managers self serve?
8. Will you co-locate your shared services activities or disperse them geographically or in line with your organisational structure?
9. How will you go about setting the numbers to be employed in your HR operation? Which methodology will you use?
10. What approach will you take to designing the roles in your operation? Will you aim for maximum flexibility and aim for all rounders, will you prefer to create specialist position, or will you opt for a mixture of the two, depending upon the post?
The space within this article does not allow us to delve too deeply into the available answers to the questions and we have found that there are many, many variations of business models in practice across the companies we looked at. If we have one key learning from the many permutations that exist, we believe its that the final agreed model must be consistent with the organisational context in which it is implemented. In the Royal Bank of Scotland for example, the early implementation in 1998 of a mix of centralisation and co-sourcing with external suppliers was consistent with the overall business approach of flexibility and innovation of thought. This flexibility was able to be maximised during the acquisition and subsequent integration of NatWest. For other organisations such as BP, BAE Systems and BT, the need to provide balance sheet flexibility led to different business models developing where large outsourcing partnerships became strategic investments. Others such as Barclays, Shell, BA and IBM have gone for large internal shared services models again in keeping with the organisational context. Whatever the model though, the real issue is how well the implementation of HR Shared Services is delivered. This next section considers this point.

The 9 key steps to success

Regardless of what the end model is, the following implementation steps pretty much apply.

- make sure your senior managers are supportive – always the most obvious thing to say and often the one thing that we don’t spend enough time, energy and effort on. As setting up HR Shared Services inevitably means change, often from more favoured (but costly) locally delivered HR staff, the imperative of selling the overall purpose, objectives and outcomes of the model is key.

- get the resources to run a proper project and observe project discipline – it can be too easy to over-simplify the change and thus under-invest in the project team. Attention to on-the-ground’ task forces to embed the change of processes is a must.

- establish the quality of your current service – find out its faults. Once senior management are on board, establishing ‘base case’ can be seen as an unnecessary step in the plan. We believe that not setting up the base position gives ‘perception versus reality’ problems later and also does not properly allow appropriate resource planning to be adopted. Simple activity analysis and volume measures over a period before the change can prove invaluable after it.

- know your own HR staff – what is their current standard and what are they capable of. Not just the base delivery metrics (such as volumes, turnaround, processes and costs all found above) but critically and objectively assessing the capabilities of your HR team. Many HR Shared Services functions reverse out of internal staff administration functions such as payroll, pensions and training administration. Often the people involved in these processes are more technically orientated whereas in the new HR Shared Services environment, customer service (especially over the telephone) is king. This can result in a mismatch.

- assess your technology – what needs to be done to improve it. HR functions are notorious for being at the end of the food chain for technology spend (unless its your core business). Doing the base case analysis on your current HRIS is vital as the available cost savings found in shared services models can often pay for sizeable technology investments is systems such as Peoplesoft, SAP or Oracle.

- test your design ideas with your HR colleagues and customers, and formally consult with employee representatives at the appropriate moment. We think that the most difficult group to change is the internal HR people themselves. The more involvement in the early design phases you can get with the senior HR team, the more ownership you’ll have to make it work.

- get senior management backing for your firm proposals. So once you have got the details around base case and plans, revisit those senior managers and get them to sign up to the numbers. This is the final ‘sales drive’ before the real effort starts.

- design your jobs in detail. As obvious as it sounds but vital. The implementation of HR Shared Services will often result in radical process changes and accountabilities. Documenting these new processes and roles within them should avoid confusion post implementation and reduced error rates once they are embedded.

- ensure staff involved in the shared service activity are properly trained in their new roles and actively, and persistently, communicate to customers on what your offerings are and how they are delivered.

Conclusion

In this article we have offered our thoughts on the big design issues and the key steps in the implementation plan. We hope that this very pragmatic focus we have adopted in this article has been useful and in the final issue we will provide our opinions on what we think are the critical success factors, drawn from the various organisations we have looked at.

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