3 steps to a global and strategic HR shared services center

The transition into an HR Shared Services model can be a delicate one. But, it behooves organizations to address these challenges as soon as possible as HR executives are expected to do more than just cut operational costs. Considering U.S. businesses lose approximately $11 billion annually due to employee turnover – and with recruiting costs averaging 1.5 times annual salary – decisions relating to human capital have taken on new importance.

Considering the challenges involved in the implementation of HR Shared Services, it is quite evident that the success can be achieved by meticulously defining the entire end-to-end process. The successful implementation of HR shared services will transform the HR function’s role in the business setting and can help improve the predictability and consistency of HR services to the benefits of the organization.

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Challenge: Globalization

The biggest challenge of an HR Shared Services model is the very notion of moving HR away from the local teams. A fear arises amongst leaders as well as employees that the personal connection between the HR department and their teams will be lost. It is here that organizations needs to reach an equilibrium whereby HR is treated as a business while also maintaining the connection to employees.

For organizations with a presence in different geographical regions, HR shared services needs to accommodate the disparate labor laws, financial taxes, and more.

Solution: Make it Local

With the help of centralized HR policies and procedures, the local requirements can be met while also maintaining the harmony between all operating units. The centralized policies and procedures at all business units serve as the basis to deliver consistent HR services to the units while also helping to keep interaction and transaction costs at a minimum.

Challenge: Operations

Roles and responsibilities are not clearly defined throughout HR Shared Services implementation. This makes the complete process vague and unmanageable.

Solution: Clearly Defines Roles

To fully address the scope of the HR process while implementing HR Shared Services, it is important to clearly define the roles of all involved. Generally this includes:

• Business Partners: Serve as the catalyst that translates the operating units’ need into HR requirements and evaluates the HR service delivered
• Centers of Expertise: These are the subject matter experts that build the HR programs to meet the requirements of the operating unit
• Shared Services Centers: The centers deliver complete HR services to the customers
• Local HR Delivery: Involves those providing on-site support

Only focusing on shared services delivery might produce efficiency gains, but without other roles clearly defined, it would become rather impossible to gain maximum results. The interaction of all these roles is critical to the success of HR shared services implementation.

Challenge: Service Delivery

HR Shared Services users are a diverse group, ranging from the highest level of professionals and HR executives who require information for building HR programs to the other employees of the organization. Therefore, it is important that the service delivery is catered according to the needs of each group of individuals and is delivered through the right communication channels.

Solution: Integrated HR Information System

The HR shared service provides the organization with a "one stop" HR data shop that can be used for making business decisions such as workforce planning. Also, the integration of HR information helps to improve business controls and facilitates employee self-service.

It is quite natural for HR Shared Services to change over time— sometimes rapidly and sometimes more slowly, mainly due to changing governmental regulations or organizational policies. To keep up with all these changes, the HR shared services model adopted should be flexible enough to correspond with all the required changes.