HR Shared Services Trends and Challenges

From the HRIQ Editorial Desk
Posted: 03/28/2011

Shared services increased in popularity over the last ten years as organizations realized the potential to streamline their enterprises and cut costs. This trend was accelerated towards the end of the decade when the economic downturn struck. Figures released by the Shared Services Institute (SSI) in 2010 show since 2007, HR shared services start ups in the United States have been increasing by 39 percent.

"HR shared services is experiencing a second surge in popularity that appears to be quite strong," the report said.


Shared Services Trends

These HR shared services were said to be as "unique and varied as the organizations they serve," however some clear trends were emerging.

"Virtually every HR service can be found to be delivered through a shared services model somewhere," the report, based on the views of 5,000 United States companies, noted.

Globalization was said to be one of the major trends impacting shared services in the future, as it is with many other business functions.

Just 11 percent of those who took part in the research said they had no intention of expanding their services globally, while 14 percent already had an integrated global model, and 24 percent planned to create one in the future.

Software-as-a-Service (SaaS) applications were also increasingly being seen as favorable by organizations. Gartner predicted last year SaaS would play an increasingly important role within HR functions, particularly in talent management. It is not surprising that its use is now spreading to other HR functions.

Some 80 percent of participants in the institutes' research were said to be open or favorable to SaaS.

Measuring Success of Your Shared Services Model

Despite this clear eagerness to adopt a shared services model and reap the benefits, many were unsure or unconvinced that their efforts were having the desired effect.

"Enabling the transformation of HR's role was listed among the most critical business drivers, yet it lagged behind all others in perceived level of achievement," it was explained.

Around 15 percent of the companies which participated in the survey said their shared services venture had achieved below average results in terms of transforming HR, while less than five percent said the model had not met their expectations in terms of cost savings.

A larger proportion, more than 40 percent said they didn't know or it was too early to tell if their shared services were meeting their expectations. However, this lack of understanding was prevalent across all performance indicators, which led the institute to claim a "valid benchmarking across such a diverse set of operating models remains elusive."

Cultural Challenges

Technical challenges are not the only ones facing HR shared services ventures. Unless staff members are fully on board, cultural differences could prevent the systems from presenting their full benefits.

The UK-based National Trust consolidated its 17 personnel departments into one center a number of years ago. These changes brought about a significant streamlining of operations and cost savings, but the biggest challenge had to do with human resources.

Paul Boniface, director of HR and governance at the Trust, told Personnel Today: "We did have examples of line managers not complying with new processes. Over time, that eroded as they saw the benefits of doing things the new way."

In response, Vanessa Robinson, head of HR practice development at the Chartered Institute of Personnel and Development, told the news provider the key is being open and communicating the changes with employees early on.

Workers must take a long-term view of shared services, however they can be resistance to change— especially if they view it as a way of cutting staff numbers. This can be particularly true within public sector organizations, many of which are seeing their budgets squeezed.

"It's making sure people know what the change is about, good communications, and making sure you set up project teams, which comprise more than the people changing jobs, but a number of key stakeholders too," Robinson said.

From the HRIQ Editorial Desk
Posted: 03/28/2011

Banner1

Join HR Exchange

EVENTS OF INTEREST

Southwest Airlines Training & Operations Support (TOPS) Building , Dallas, TX, United States
January 25, 2018
Hotel Palace Berlin, , Germany
January 29 - 31, 2018