CHANGING HR FUNCTION
HR shared service centres are here to stay
Human resources departments are increasingly favouring a shared services approach to the transactional elements of HR, a survey of 97 multinational organisations has shown.
Research from Hewitt Associates indicates that the majority of HR shared service centres (SSCs) are in a “growth phase”, with 84% of organisations that use them having plans to extend their scope in the near future.
%ADVERT%
Background
Shared service centres originally became popular among finance departments in the 1980s, for handling basic administration, such as invoicing and payment services. Over the past 30 years they have become an increasingly popular technique across other business support functions.
Shared services are now widely recognised as a cost-effective way to manage transactional and administrative tasks, says Hewitt.
Hewitt’s findings showed that the success of HR shared services is finally lowering the administrative burden for HR professionals; an important step in freeing them to start adding more value and enabling them to plan for the future.
Key survey results
Shared service centres are here to stay: Three-quarters of organisations surveyed, confirmed that they have increased the scope of their shared service centres since they were established - both in terms of activities performed (payroll, benefits administration, HR information services etc) - and internal clients served.
New emphasis on customer satisfaction: HR shared services are now much more focused on effectiveness, not just efficiency. The top priority of those polled was to improve end-user satisfaction (78%), with cost reduction as a secondary priority (70%).
“Us-versus-them” culture prevails: There is often a problem with integration of shared service centres into the overall HR function. “Activities performed in the HR SSC should be viewed by the whole HR function as part of an end-to-end HR process that adequately supports the business,” says Hewitt. However, the research showed that HR in the business often views administrative tasks as “no longer their business” when an SSC is in place. This hinders the realisation of efficient processes and related cost savings.
Struggle for effective performance management: Shared service centres have yet to find a reliable set of practices that can improve planning and provide better management insight. Two-fifths of respondents confirmed that they do not currently use customer satisfaction indicators to measure performance. Just under a third of the respondents were dissatisfied with the management information available to measure performance.
A final word
“For years HR has been preoccupied with trying to put its house in order or dealing with criticisms of past performance. This has come at the cost of preparing for important issues or building a closer relationship with the business. By ensuring that routine HR activities are carried out in an efficient and effective way by SSCs, an organisation’s HR function can service the business much more effectively.
In the past we saw that transformation efforts had an over-emphasis on cost and efficiency benchmarks at the expense of relevance and effectiveness. But it is interesting to see that HR executives are now putting SSC effectiveness higher on their priority list. Cost reduction alone had many drawbacks. It’s now recognised that the true business case for HR service delivery is achieved by giving employees the level of service they need at the lowest possible cost.” - Iain Slater, UK & Ireland Practice Leader, Human Resource Effectiveness at Hewitt Associates.
Want to know more?
Title: The Next Generation Shared Services Research, Hewitt Associates.
Availability: To find out more about the survey, email: enquiries@hewitt.com or tel: 020 7939 4000.
For more than 65 years, Hewitt Associates has provided clients with “best-in-class human resources consulting and outsourcing services”. Located in 33 countries, Hewitt employs approximately 23,000 associates. For more information, visit www.hewitt.com.