Get Both the Value Proposition and Delivery Right with HR Services

[Former Member]

Any company can begin to improve the management of human resources simply by doing the basics better. The most practical way to start is by performing all the routine ongoing personnel activities with extraordinary care.

– Wickham Skinner, 1981

An ironic fact known for decades by social scientists is as organizations increase in technological sophistication, managing their human resources actually becomes more complex. Since early 1990’s, this relationship has been better understood by businesses, and as a result HR is regularly included in many organizational transformation efforts. One area where such transformation efforts have been successful is in HR’s own shop, with the implementation of computerized HR systems in partnership with IT. By sharing computing and staffing resources, both functions reduce both costs and redundancies, while streamlining cross-functional processes. In many businesses, such a partnership helps develop competencies that can later create competitive advantage for the firm, by virtue of increasing the unique technical and knowledge assets of their companies.

HR’s move toward efficiency and automation of its own operations by means of IT investments has achieved some benefits for many businesses. Yet the aim of freeing up HR to become more strategic requires a holistic and partnered approach, and greater participation in the rest of the business. As Institute of Employment Studies’ Director of HR Research Peter Reilly stated, “In HR, there has been too much obsession with structure and process and not enough about capability of employees.”[1]

Another area where the partnership of HR and IT brings value is establishing structure and standardization to emergent aspects of organizational performance, albeit in the short term. Yet sustainable value cannot be achieved solely through structural changes, or efficiency gains obtained as afterthoughts to other corporate activities. As Valuentis’ CEO Nicholas Higgins stated aptly, HR should be “getting its value proposition and delivery right.[2]

This article discusses how to get delivery right, by means of a common shared services platform (SSP), and how an SSP helps achieve the aim of freeing up, and in many cases reallocating resources for HR to be better able to focus both on strategic and other activities that add value for employees.

The right way to adapt

Successfully implementing HR shared services is a part of the overall evolution of a business organization, including the expansion of business functions, development of computing technologies, positioning of organization resources, accumulation of knowledge management resources, and support of distributed working styles such as virtual collaboration. While these elements may add complexity to the HR function, the HR shared services organization needs to keep things simple for users in order to create value for the business. Simply providing shared services is not the end goal. HR should aim to be a facilitator of change, continuously supporting the needs of the business and anticipating how business evolution will affect the workplace.

A fundamental notion is that although business activity flows through many channels and is delivered on multiple platforms, critical HR activities should be consolidated and delivered through a single channel. Such a feature facilitates a many to many system of information sharing and use, where efficiency gains can be realized, and precise understanding of core versus peripheral activities can be shared with senior managers across functions.

The role of the HR professional thus becomes one of an organizational expert or consultant, focusing on the behaviors of people, and not what they are entering into a ticketing system. While the competencies needed for such expertise may vary by organization, a set of soft skills in communication and hard skills in communications technology remains constant.

Closely related to consolidation around key processes is consistency, both in efficiency of delivery and the actual information that is actually communicated to users. When executed properly and consistently, and with a human touch, shared services increases the stature of HR within the organization, and enables strategic collaboration across functions.

In a global setting, consistency, consolidation, and high standards of communication in SSP create a robust organizational mechanism for sharing universal values, delegating tasks to the most appropriate levels, and signaling which behaviors are most critical to executing strategy.

The wobbly three-legged stool

Much of the conversation regarding the proper tasks for HR shared services has been dominated by the three-legged stool model, in which the platform of a transformed HR function is supported by three distinct, mostlyexclusive roles: shared services, centers of HR excellence or expertise, and strategic business partners. While a durable and influential model, it has nevertheless come under much criticism in recent years.

One of the most common shortcomings is that the division of HR tasks into administrative (shared services), operational, and strategic (business partnering) components is unrealistically simplistic, and leads to excessively high expectations of future cost savings or efficiency gains from shared services implementations. Simultaneously it ignores the high up-front switching costs and organizational change that needs to occur as a precondition for successful deployment.

There is even evidence that the three-legged stool model is infeasible in many organizations. For example, a 2007 Chartered Institute of Personnel Development study of 781 UK-based organizations found that less than 20 percent of respondents fully adopted the three-legged stool model, and 60 percent adopting only one or two of the three legs specified by the model.[3]

Another criticism is adopting the model causes disruption of the unique roles, accumulated knowledge, and stability of many HR departments. At a high level, the three-legged stool model may introduce a false conflict between nascent HR roles, which needs to be overcome with multiple new professional identities for HR professionals. In practice, this leads to HR departments becoming fragmented into segregated areas of competence, causing career interruptions for junior- or apprentice-level HR staff, who have little hope of gaining the skills in the service area necessary to progress into an HR manager role.

It is clear that in many organizations, greater flexibility of roles than is prescribed by the three-legged stool model is needed, particularly as the workplace becomes more collaborative, and cross-functional partnerships become commonplace. Contrary to the specifications of the three-legged stool model, many HR departments are staffed by persons each of whom is administrator, manager, and change agent. For organizations where professional roles often merge into one another, shared services need to provide the stability and structure to support flexible roles, departments and organizations.

Building organizational capacity

A successful shared services implementation involves a partnership with HR and other business functions, frequently IT, and is implemented with the aim creating a single environment so as to eliminate redundancies and inefficiencies. IT seems to be a particularly attractive partner in human capital intensive industries, where the partnership often generates unique capabilities that drive competitive advantage at little marginal cost, thereby increasing organizational capacity without the burden of increasing variable costs.

Shared service implementations may occur as part of initiatives that include outsourcing of processes and functions, which in turn can bring about greater centralization of an HR department’s core competences and functions (e.g., learning and development in corporate universities), as well as increased standardization of processes regardless of whether managed internally or externally.

There are numerous benefits of a single integrated environment. Complex HR activities are not confined to rigid roles, such as those prescribed by the three legged stool model, and can be assigned according to HR competencies, and not familiarity with the software. A common infrastructure can be made available for diverse tasks, which in turn standardizes information collection and reduces garbage in garbage out reporting situations. Collaboration between business units and teams becomes more feasible through a common platform, enabling organizations to be more agile and ultimately more competitive in the marketplace. Of particular interest to the HR function, SSP allows HR professional to provide better internal customer service, leading to increased employee engagement.

Likewise, a single, integrated HR work environment enabled by a SSP is favorable to a system of multiple platforms, and supports the aim of more strategic human resource management, by virtue of better operational performance and efficiency. Additionally, handling administrative and transactional tasks by an SSP affords the opportunity for HR to provide better service, releasing more time for HR to interact with line managers and field personnel, and understand the core operations of the organizational units and where the opportunities are to build people assets. HR department resources may also be freed up for value-added HR activities, yet it is not the main advantage. On the other hand, idiosyncratic HR processes conducted on piecemeal systems interfere with trend spotting, and afford little insight or increased analytic capacity. Standardization can neutralize some inefficiencies associated with such idiosyncratic processes, while promoting regulation and compliance, and improving predictability of service.

Two key takeaways

While investigating social sentiment toward HR, SAP marketing strategists todd.wilms and teldridge found an overall high regard for HR’s effectiveness in delivering services. According to their infographic, it is by far the most-liked characteristic of HR. In light of such a finding, they suggested that HR suffers more from an image problem than a value problem. Taking HR’s strengths instead of its weaknesses as a point of departure, HR can get both delivery and the value proposition right by doing for itself what it is already doing effectively throughout the organization.

1.      Get involved at the operational level

A well-functioning SSP provides a two-way information flow that makes use of the HR professional’s tacit knowledge about how the business operates and where many value-creating behaviors occur. At the other end, SSP supports the transfer of some specific management activities from HR to line and field managers, who are dealing directly with employees.

Such an arrangement presents a unique opportunity for HR to increase its perceived value in the enterprise, representing an organic means of properly dividing roles among HR and other managers, as opposed to the artificial and disruptive effects of the three-legged stool model. Additionally, decentralizing HR tasks has been shown to increase HR’s contribution in both operational effectiveness at the business unit level and strategic planning at the senior management level, as well as the enhancing the influence and performance of the enterprise-wide HR function.

2.      Take care of your people, especially your own

To ensure that shared services personnel retain the skills necessary to provide quality service, substantial attention must be paid to providing a career path throughout the shared services center. Otherwise staffing becomes a revolving door where new, untrained personnel are responsible for interacting with employees and managers. Having a clear career path within the services center becomes an important part of providing high quality service on an ongoing basis, and maximizing the return on SSP investments.

---

[1] Peacock, L. (2008, April 20). Pointless reshuffling of the function leaves HR staff high and dry. Personnel Today, 4.

[2] Bentley, R. (2008, April 1). From hero to zero. Personnel Today, 20-22.

[3] Reilly, P. (2007). Facing up to the facts. People Management, 13(19), 42-45.; Reilly, P., Tamkin, P. and Broughton, A. (2007). The changing HR function: Transforming HR? London, UK: Chartered Institute of Personnel and Development.