[HROA Essentials] Shared services: An in-house HR solution

Submitted by web editor on Thu, 2006-11-16 06:55

Shared Services is commonly defined as the standardization of common administrative functions and transactional processes within an organization, and the use of Shared Service Centers (SSCs) for HR management administration and transaction management has seen a dramatic increase in recent years. Many major corporations have consolidated HR back-office functions into lower-cost domestic or offshore SSCs, and recently the US Office of Personnel Management announced the launch of a major initiative to open Shared Service Centers to support the HR functions of government agencies. The concept has tremendous appeal to organizations these days for several reasons such as:

  • Rapidly rising HR costs
  • Inadequate HR service levels
  • Duplicate HR functions within an organization's operating units
  • Inordinate amount of time the HR function spends on administrative tasks
  • Need for more strategic HR focus
  • Poor communication among employees about where to go for employment related information
  • Desire to automate administrative tasks and activities
  • Poor vendor utilization
  • Globalization and need for 24/7 access
  • Significant differences in benefits and services available to domestic and international employees 
     

Shared Services capabilities can help organizations achieve significant economies of scale and service standardization through consolidation. Additionally, they can improve the accuracy of employee information, accelerate the HR functions ability to respond, facilitate greater access to HR services and improve employee satisfaction by creating a "one-stop-shop" solution.

Organizations can realize a cost reduction of between 30% and 50% by consolidating services in an SSC, but they are not a panacea. Implementing a shared services center (SSC) should be made on a case-by-case basis looking at the organizations needs, structure, culture and whether it is large enough to support an SSC solution. When using an SSC to support the HR function (as opposed to F&A, IT, etc.), it is also important to consider the possibility that centralization may de-personalize the services offering.

A few elements are essential to ensure the success of an SSC environment for HR. Some of these are:

  1. Have a clear vision of desired outcomes and build a strong business case that takes into account the cost of transitioning to a SSC model
  2. Define the services delivery architecture and build the appropriate technology infrastructure
  3. Identify core processes and redefine them to fit the new services delivery model.
  4. Address the issues of people, process and technology. Be clear about how each area will be impacted.
  5. Develop and maintain metrics with which to monitor and manage results
     

For more information contact Ben Trowbridge at ben.trowbridge@alsbridge.com 
Source : www.alsbridge.com

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