The use of ‘shared service centres’ has been a growing global trend across business as a whole since the early 1990s. Increasingly, HR are now using the shared services concept to drive down costs, provide increased levels of service and improve data accuracy and integrity.
The use of ‘shared service centres’ has been a growing global trend across business as a whole since the early 1990s. Increasingly, HR are now using the shared services concept to drive down costs, provide increased levels of service and improve data accuracy and integrity.
Whilst the concept initially took off in the manufacturing sector, it has now become popular in all sectors as the call centre concept has been successfully combined with the use of employee intranets to enable larger organisations (those with more than 2,000 employees) to gain benefits from economies of scale and process standardisation.
Shared services in theory
Simply defined, ‘shared services’ is the standardisation of common administrative functions and transactional processes within an organisation.
For HR this means having a user-friendly employee intranet site (incorporating employee self-service) and one or more dedicated staff in a focused call-centre and transaction-processing unit to provide one-stop access to employee service, transactions and information.
When employees have a query, their first port of call is a user-friendly employee-centric intranet. Types of queries that could be answered this way include employees checking their leave balances online, making changes to their address details and finding out what to do if they are taking parental leave. When set up properly, between 60 to 70 percent of initial queries can be dealt with this way, without HR staff becoming involved.
If the employee is unable to answer their query through the intranet, or feels uncomfortable using the intranet (such as employees with English as a second language), they would then call the shared services centre. Customer service representatives at the shared services centre deal with 80 to 85 percent of the remaining queries, using an online-knowledge base and direct access to employee data.
The remaining 15 to 20 percent of these calls are typically more complex and are directed to ‘case managers’. In these situations, a ‘case’ is opened and routed to a more senior employee who has the knowledge and/or ability to resolve the issue. A case management system is used to manage and track these queries.
Experience in North America shows that cost savings can be realised in as little as three months when the right tools and techniques are used. For example:
· A global financial services institution reduced transaction costs by 50 per cent, providing a direct cost saving to the business of US$8 ($12.1) million
· A telecommunications company reduced overall HR costs by more than 40 per cent in one year
· A retail operator was able to dramatically reduce the number of critical data errors in their core HR systems
A SSC case study
A growing medical company in the US found that they were struggling to provide the levels of service demanded by their 5500 employees. The time taken by HR staff in answering questions from business unit members about HR programs, policies and guidelines left them with little time to focus on strategy. Further, HR processes were not implemented consistently across the business, and HR staff were drowning in paperwork.
HR reviewed the whole way they were providing information to their customers. They then developed a vision with stretch (but achievable) goals for where they wanted to go, and documented the business case supporting that vision.
Once their vision and business case had been ratified by management, the first step was to update their employee intranet site by restructuring and personalising the information on the site so that employees had more of the information they needed, and spent substantially less time wading through information they didn’t need.
At the same time, they re-engineered a number of key HR processes to centralise, standardise and automate them. They then set up an HR service centre which was supported by case-management software and integrated with their HR system.
HR managers have been able to change the focus of their activities, and no longer need to focus on transactional activities. They are yet to fully measure the impact on cost, but short-term measurements indicate a substantial drop in transaction costs and an ROI period of less than 12 months on their investment.
by Kathy McRae, head of practice, Technology Solutions Australia, Watson Wyatt. Tel: 02 9253 3116.
