Part 2: Shared service - Ulrich 20 years on

Written by
Professor Nick Holley

22 Feb 2016

22 Feb 2016 • by Professor Nick Holley

Create a shared service centre

I bet you don't know why figure skating is called figure skating. The answer is because in the past part of the score was based on drawing figures consistently and accurately on the ice using your skates. These compulsory figures on day one didn't win the gold medal, the triple salchows and double toe loops won the gold on day three, but if you didn't get them right you wouldn't even get the chance to compete for the gold. In HR we need to get these compulsory figures right before trying to win the gold medal for the strategic enablement, that in our recent research, CEOs value the most from HR .   

In many organisations the answer has been to create a dedicated HR Shared Service Centre, the second leg of Ulrich’s three-legged model. In part one of this series I looked at the first leg; HR Business Partnering. One thing I noted was that HR Business Partners ‘must have confidence in transactional HR’. In my research one HRD put it perfectly: ‘My credibility depends on running an extremely efficient and cost effective administrative machine...If I don’t get that right, and consistently, then you can forget about any big HR ideas’.   

What have the drivers been?

•    Improved service – more consistent, timely, accurate data, higher service standards.
•    Cost reduction – economies of scale, avoiding duplication.
•    Increased HR credibility –doing the basics and freeing up HR time to work on strategic issues. 
•    Knowledge management – the chance to share best practice across the organisation.

Already you can see the potential for a conflict between better service and lower cost, indeed in talking to organisations there have been some common problems with implementation:

•    IT implementation and integration, systems that don't do what they say on the tin.
•    Operational issues around unclear lines of accountability and an overly rigid implementation of a model which does not take into account the needs of different internal customers or cultures.
•    A focus on project delivery that loses track of overall HR strategic goals.
•    Line management frustration with a perceived lack of support, who hanker for the ‘good old days‘ when their dedicated HR person was at their beck and call.
•    HR Business partners not buying into the model as they feel they have lost control over their core HR roles or, in some cases, the things they’re actually comfortable doing.
•    A reliance on process or cost driven SLAs that don't take into account the need to deliver a business outcome that can't always be measured as a number.

What can we do next?

So what? As with the first article it’s easy to criticise but what can we do:

•    Determine a clear case for creating shared services that is based on the value-added to the business not just cost.

•    Design the whole thing for service as well as efficiency and then build a service-oriented culture in the delivery team.

•    Pay more attention to customer feedback and less to the ratio of HR practitioners to other staff in measuring success.

•    Recognise that HR has a number of different customers to be convinced and, in particular, that senior management has to support the concept in theory and practice so adapt processes, policies and service specifications in consultation with line managers.

•    If you require the line to act differently (i.e. through the introduction of on-line self-service), they must be given the appropriate support and training.

•    Don’t underestimate the scale of resources required: budget, HR time, Central IT time/commitment, etc.

•    Pilot it rather than roll it out in one go. This keeps up the momentum for change, minimises disruption to the business, identifies early problems and is an opportunity to validate existing data before transferring to the new system.  Accept that the roll out will not go as expected.

•    Be wary of IT delivery times, and be cautious whether the system will be fully operational on time and to specification.

•    Avoid the temptation to design and implement a unique HR data portal and service, or to significantly customize one. Many effective products are on the market, and adapting one of them is much simpler, less expensive and more likely to succeed.

•    Remember that IT is a channel for providing and disseminating information but it is the content and analysis of the information that drives business performance so plan to analyse the data.  Data does not improve decision making unless it is used. If it’s just warehoused it might as well not exist.

•    HR Business Partners must feel shared accountability for success so ensure that all HR are kept well informed of what is happening on the ground.

•    Ensure staff have the appropriate knowledge, information and skills. Customer service and call handling are often seen as the minimum requirement. Where the centre provides more specialist services, HR knowledge is also essential.  Indeed if this knowledge is dependent on understanding the organisational context then question whether outsourcing advice is the right way to go.

•    Avoid the risk of de-skilling some administrative jobs to the point where they become extremely tedious to perform.

•    Avoid the risk that shared service centre staff are ill-attuned to business needs, giving generic rather than specific advice and not seeing the work through to a real conclusion.

•    Rotate people carefully and frequently within each area to avoid the 'silo mentality’.

•    Finally communicate, communicate and then communicate some more.