Four Lean Strategies for HR Service Delivery

Jim Scully
Posted: 09/14/2010

If you think Lean is for the factory floor, and certainly not for HR service delivery, think again. Lean is about eliminating waste, and the typical service delivery function expends more than half of its resources on waste – that is, performing activities that do not directly deliver value to its customers.

The problem is, the standard Lean terms and tools were born on the shop floor. So they don’t necessarily translate into terms that resonate with people in HR service delivery. Even the most popular literature on the application of Lean and Lean Six Sigma to service environments tend to merely point out the existence of traditional manufacturing-type wastes to white- and gray-collar environments (i.e., movement of materials on the shop floor equates to movement of paper in the office). But that’s not good enough.

To make sense of Lean in HR service delivery, an entirely new set of analogous wastes is better. The table below translates the well-known 8 wastes of Lean (Taiichi Ohno’s 7 plus one) into terms that abound on the floor of HR shared services operations.

Manufacturing HR Delivery
Overproduction Overkill
Inventory Open Cases
Extra Processing Handoffs
Motion Data Handling
Defects Errors
Waiting Queuing
Transportation Dissemination

• Overproduction is overkill in the service environment. It involves providing services that: a) the customer does not need or value, b) is redundant or unnecessary, or c) customers could perform for themselves with the right tools and resources.

• Open cases are the service center’s version of work-in-process inventory. Just as in the factory, a lot of work-in-process inventory lying around is an indication of end-to-end process inefficiency.

• Extra processing in service most often takes the form of unnecessary handoffs. As transactions pass from party to party in a service center, waste activity multiplies. Handoffs are related to other types of waste, such as errors, queuing and data handling, so eliminating handoffs is a key Lean strategy.

• The service equivalent of motion is manual data handling, which is not only data entry but any type of manual management or manipulation of data. Even spreadsheet uploads have a certain amount of waste. Of course, data handling is a key cause of error as well.

• Defects are errors, plain and simple. Errors are the mother of all waste and are caused by other forms of waste mentioned here, such as handoffs and manual data handling. All work related to errors is waste – and there’s a lot of it. 90% of errors are caused by the system, not people (see Deming). Fix the system, prevent errors, eliminate waste.

• Waiting is, well, waiting. But in shared services we call it queuing. Automated case management systems and multi-tier escalation models are designed to – and can – improve efficiency and service. But they can also create lots of waste in queuing as well as handoffs.

• Transportation doesn’t really occur in service organizations, but the idea of moving product (i.e., information) physically certainly does. A paycheck, for example, is nothing more than information being provided to various parties to instruct or advise the flow of money. Distributing paychecks is disseminating information, and it’s waste. Think of all the reports that are pushed out to customers that might otherwise be replaced by providing access to such data online.

• Finally, an eighth waste which many companies have added to Taiichi Ohno’s (Toyota’s) original list is underutilization of talent. When jobs are dumbed down and over-specialized in the name of low cost, talent lies dormant in the form of people who are capable of doing more. Underutilizing talent costs more than whatever savings might supposedly be gained by designing simplistic jobs.

Four Strategies for Eliminating Service Waste

There are many strategies for eliminating these forms of waste in the design and management of HR service delivery. Here are four key ones:

First Call/First Time. When customers’ needs are not met on the first call or done right the first time, waste begins to accumulate and sometimes skyrockets. Designing your delivery model and preparing your people to do it right the first time is the best way to avoid most forms of waste.

Execute on Exceptions. The Pareto Principle, aka the 80/20 rule, tells us that 80% of issues are due to 20% of causes. In HR service delivery, this takes the form of 80% of work being performed for 20% of the transactions – namely, the exceptions. Getting the routine right isn’t even half the battle. You must design your model to handle exceptions efficiently and effectively. Otherwise, the exceptions can bring your whole model to its knees and destroy your value proposition.

Guard Your Gate. Garbage in – garbage out. Truer words were never spoken. Yet many of the inputs used in HR service delivery (forms, free-text email, paper, fax) are notorious for letting garbage into your delivery model. Eliminate these poor-quality input channels and quality will soar while costs plummet.

Transform to Transfer. Gone are the days of "your mess for less." If you must transition someone else’s problematic processes to your shared services scope, at least have a plan to clean it up…fast. That includes processes, policy, technology and data. Ideally, make simultaneous process transformation a prerequisite for the transition. Don’t make their mess your mess.

The concepts of Lean and Six Sigma are very applicable to HR shared services. After all, a shared services center is really more like a factory than any other office environment. In the shared services "plant," raw information is transformed into valued outcomes – a payment, enrollment, change in status, etc. When you think about it that way, the only real difference is that the floor of your shared services center is most likely carpeted.

Jim Scully
Posted: 09/14/2010


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