The Unique Shared Services Challenges of H.R.

Originally Published in by Paul Mandell | July 18, 2012

Global businesses continue to centralize their human resources functions into shared services centers. Human resource management is a great candidate for a corporate shared services operation, or an outsourcing partnership, given the presence of a variety of repeatable processes and the scale of the function, among other factors. However, centralizing this function on a global scale poses some unique challenges that shared services and outsourcing professionals ought to keep in mind as they explore such an effort.

Unlike some other functions in global business, the human resources arena involves a great deal of interaction with employees. There are benefits questions to address, interpersonal conflicts to resolve, and adverse employment actions to take. As highlighted in the movie “Up in the Air,” some of these sensitive matters seem best suited for in-person communication with an H.R. representative. Given that quite a bit of what occupies the attention of H.R. professionals fits into the sensitive category, or otherwise frequently leads to discussion with employees, it can be difficult to determine what elements of H.R. fit comfortably within the shared services or outsourcing model.

Compounding the challenge for an H.R. shared services function is the fact that, because of the many sensitivities that surround H.R., it can much harder for senior leadership to develop an appetite for placing H.R. in the shared services operation. And without buy-in at the top, significant operational changes can be virtually impossible to achieve.

If you are considering the shift of your H.R. function to a shared services center or outsourcing partner, here are some recommendations to build support and maximize your odds of a successful transition.

1. To develop an appetite for centralizing H.R. at the top, start by focusing on the P&L. As with other functions, shifting H.R. to a centralized location will inevitably deliver cost savings in the form of improved H.R. staff-to-employee ratios. Indeed, this may be the most obvious and compelling point in your argument.

2. Make the case for the legal benefits. Many H.R. nightmares arise from disparate treatment of employees, the dissemination of inaccurate benefits information, and neglect of steps required for full compliance with various employment-related regulations. By centralizing and automating portions of the H.R. function, you can deliver fewer mistakes, which means happier and more productive employees, fewer lawsuits, and less risk of compliance failures. These gains may be most appreciated by the legal department, so consider including them in your efforts to build support.

3. Highlight the improved customer experience. An additional benefit to any company that leverages technology to centralize its H.R. function is the wider and more efficient dissemination of H.R. information to employees. An effective online H.R. portal can deliver a greater volume of the information that employees demand. Moreover, new employees, particularly Millennials, have come to expect information delivered online, rather than via the H.R. professional down the hall.

Many companies are naturally hesitant to fold H.R. into their shared-services centers and suite of outsourced functions. And this hesitancy is certainly not misplaced; H.R. is a uniquely sensitive function, with significant impacts on a company’s workforce. But there are valuable benefits to be achieved that, more often than not, will easily justify the transition.