How a Multi-Tier HR Service Delivery Model Transforms HR

Barbara Levin
Posted: 04/03/2011

How to actually improve the delivery of HR services with fewer resources and lower costs

Over the years, HR transformation initiatives have had varying levels of success. Today, however, organizations are successfully transforming HR by deploying a multi-tier HR service delivery model. By placing heavy focus on a successful "Tier 0" – where employees, at a minimum of66 percent of the time, get their own answers to HR questions and complete their own transactions – employers are able to deploy cost-effective HR shared services models. Further, the multi-tier approach helps reduce escalations to HR experts by more than 70 percent – freeing talent to take on more value-added projects. By deploying Software as- a-Service-based technologies required for the multi-tier model, solutions can be implemented quickly with a low total cost of ownership. So, what is the bottom line? With this model, employers can actually increase employee satisfaction with the way in which HR delivers services –while, at the same time, reducing HR service delivery resource allocation and lowering costs.

HR Transformation – the Concept


Human Resources transformation is not a new concept. In fact, it has seen much iteration for the past 20-plus years. Simply put, HR transformation is a series of programs and initiatives designed to transform HR from a largely tactical and administrative function to a more strategic operation , providing value closer to the business unit level in areas such as human asset management, training and learning, compensation planning, succession planning, goal alignment, pay-for-performance, workforce analytics and more. An underlying assumption to these projects is that the strategic goals will be achieved by minimizing the people resources and costs dedicated to the administrative functions associated with the delivery of HR services.

And while many mid- to large-sized organizations have taken on HR transformation initiatives – the success of these programs varies widely.

Challenges to HR Transformation Success

Self-service and portal technologies are only part of the solution:To relieve the administrative burden on HR, many employers have implemented employee portals and/or self-service systems. The initial idea was that if employees could use a portal to get information, and then complete their own transactions via self-service, calls to HR would be minimized – leaving HR to perform the strategic work required for transformation.

And while these solutions have certainly reduced some administrative work, they fall short of minimizing most. Reasons vary, but can be summarized as:

Most HR portals are heavy on self-service transactions, but light on the communications and decision support tools required to complete transactions.

Most portals do not have a single interface to access HR information – nor do they have a single sign-on that makes them easy to use.

Communications in portals are typically not searchable or personalized – providing employees with a less friendly experience than they have on popular consumer sites – such as Amazon, Yahoo, Facebook, LinkedIn and other popular portals.

The bottom line? If portals and self-service are not easy to use – employees will give up and call HR.

Does this mean that portals and self-service investments were made in vain? No, but they require additional components – such as single sign-on and an integrated knowledge base – to maximize their effectiveness. I’ll elaborate later in this article.

Human Resources Talent Mix


Many organizations either do not have the right mix of HR talent to achieve transformation – meaning that the field HR person who formerly performed mostly administrative functions does not have the skills (or there’s a lack of resources to retrain) to perform the more strategic work, such as analyzing workforce metrics – or the right talent still spends too much time on administrative work to be truly effective. In fact, according to its 2008 paper, "Leverage a Multi-Tier HR Service Delivery Model to Improve Efficiencies," Gartner states that most HR talent spends 70 to 80 percent of their time on administrative work. More and more employers are, however, overcoming these challenges – and economy-driven mandates to "do more with less" – with the multi-tier approach to HR service delivery.

The Multi-Tier Approach to HR Service Delivery


There are many versions of the multi-tier model, the most common being a three-tier approach:

Tier 0:
Employees and managers answer their own HR questions and complete transactions via a portal and self-service systems. According to Gartner key performance indicators (KPIs) from the same 2008 paper mentioned above, 66 percent of HR inquiries/events should be able to be handled in Tier 0, although this author has seen most employers reach 80 to 90 percent Tier 0 usage when deploying the model "best-in-class" (more on that later).

Tier 1:
With widespread adoption of Tier 0, only 28 percent, according to the same Gartner KPIs, of employee inquiries rollover to Tier 1 – the HR shared services center or help desk – with a majority of those inquiries being resolved on the first call.

Tier 2:
In this model, then, the time that centers of excellence spend doing administrative work associated with employee inquiries is reduced from 70 to 80 percent, to as low as six percent according to the Gartner KPIs.

While help desks and/or call centers qualify for Tiers 1 and 2 – there can often be redundancies across business units, which is why, for maximum efficiencies, more and more organizations are moving to an HR shared services model.

As defined by Mercer in its 2008 paper, "Finding Your Place in the HR Shared Services Continuum," shared services refer simply to the consolidation and sharing of services by different units or locations within an organization. Shared services approaches typically are driven by the desire to achieve economies of scale, enhance consistency or standardization across the organization, improve quality, leverage technology investments, manage labor costs within certain functions, and provide greater value to the business.

According to the same Gartner paper mentioned above, organizations deploying the multi-tier approach can spend 20 percent less on the delivery of HR services; best-in class organizations can spend up to 50 percent less.

*Real life proof point: Nissan North America, within four months of deploying a multi-tier model, lowered its HR service delivery costs per employee by almost half.

Barbara Levin
Posted: 04/03/2011

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