8 Secrets towards a Profitable HR Shared Services Implementation

8 Secrets towards a Profitable HR Shared Services Implementation

Growth is the singular goal of a business to be termed successful. And the major drivers of this growth happen to be strategic cost cutting, increasing efficiency, refining customer experience and enriching its services. Constantly nourishing the system such that these pillars continue to breed success is essential to achieve the business objectives of profitability and sustainability. HR Shared services are assisting mid-sized to large corporations as a central practice to achieve these indispensable goals.

Shared services as a concept has been around for the better part of 3 decades now, still it is sometimes confused with Business Process Outsourcing (BPO)-a means to source services to a third party vendor. Unlike a BPO though, shared services attempt to achieve ideal operational effectiveness by utilizing internal services to another location within the same organization, at various geographic locations. Outsourced HR shared services can appear as an extension of a BPO process, but the fact that they require consistent participation from the internal HR department makes it a diametrically opposed entity than any other outsourcing service.

As shared in our previous blogs, the benefits of an outsourced HR shared service model may go beyond just saving costs. When done right, outcomes may also include increased efficiency, better data visibility, and building employee satisfaction that result in lower attrition rates. (https://www.linkedin.com/pulse/whats-brewing-shared-hr-services-naveen-gulati)

Common HR tasks managed in the shared service center may include payroll changes, recruitment supervision, employee onboarding, employee benefits management, relocation services, attendance monitoring, employees training management etc.

Experience and experts suggest corporations to avoid arbitrary picking of tasks from a list of functions, and reflect unhurriedly with your outsourcing HR shared services vendor for a careful analysis of what can work best for your organization.

Here is a far-reaching list of 8 best practices that can make the transition to a shared services model painless and successful:

1. ASK Questions: What objectives you want to reach? How much are you willing to invest for transition to outsourcing HR shared services? What concerns can your existing HR team have? How will you handle layoffs and transfers? Will you need new recruitment as replacements? How will you ensure your objectives are being addressed and met?

2. Define Standards: A few hasty decisions can surge the costs and anticipated savings can take a beating. Be clear on which HR tasks should go to the shared bouquet and which ones to remain local. HR department acts as the touch point between the workforce and managers, as such choosing shared services carefully such that it engages employees become paramount. I suggest creating a list of all HR tasks and evaluating their significance before assigning them to either outsourced HR shared services or the internal team. An upright vendor should be open to recommend the clearest way forward- one that saves you cost in addition to upholding employee contentment.

3. Implement in a sequence: Get your vendor to design the process sequentially so you are not frustrated at any phase of the change process. Communicate with all the stakeholders so they are in the loop about this HR transformation and are not caught by surprise when the process starts implementing changes.

4. Streamline complex tasks at the drawing table: One of the major challenges in transitioning to the outsourced HR shared services model is the complexity of active HR tasks. Believe me you can get stressed out by simply hearing the jargon being used! Make every effort to simplify issues like databases and processes before discussing them with the vendor. Come to think of it, more complex matters demand more price, so your cost cutting can kick off even before the outsourcing partner enters the picture.

5. Go all-out for Standardization: Make sure that processes are standardized from the beginning itself. Deviations and exceptions drain efficacy of a process and integrity of the process suffers, leading to creeping snags.

6. Ask for a transparent Costs structure and SLA: It is crucial you maintain a transparent relationship with your outsourced HR shared services vendor so that you are always cognizant of costs and calculations.

7. Brace for challenges from unexpected quarters: Change has challenges and change is challenged. Undervaluing the change management basics like clear communications, executive realignment and training can lead to insecurity among managers about the dreaded risk of losing the job. This fear can exhibit lower morale, discontent and an overall unhappy ecosystem. Assuring your workforce about the future can mitigate threats and retain top performers.

8. Meticulously follow up for effective transition and implementation: Don’t let the outsourced HR shared services provider exit after implementation! The real deal begins after you have made the transition, when your people put the new systems into use and organizational effectiveness is measured over time- and a comparative analysis is made between efficiency before and after implementation. You can analyze performance on following parameters:

  • Revenue per Internal Equivalent
  • Viable cost savings
  • Improvements in end-to-end processes
  • Employee Satisfaction
  • Customer Satisfaction
  • Return on Investment (ROI)

Most of the Fortune 500 companies are now using outsourced HR shared services, but India is still struggling to adapt. Nevertheless a few pioneering Indian organizations are reaping the benefits of increased efficiency while reducing core costs.

My advice: Don’t just jump because someone yelps ‘savings’. Ask a reliable and experienced vendor to review and analyze potential benefits to your organization’s objectives and mission over a long period of time.

Naveen Gulati

Open Mind Services Limited

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You can also read another post for an introduction to HR Shared Services.

What’s brewing in HR Shared Services