HR Shared Services

The value of a business is a function of how well the financial capital and intellectual capital are managed by human capital. You’d better get the human capital part right.” – Dave Bookbinder

Dave is a corporate finance executive with a focus on business and intellectual property valuation. He is the author of a #1 best-selling book about the impact of human capital (PEOPLE!) on the valuation of a business enterprise called The NEW ROI: Return On Individuals.

HR as a function  evolved significantly in last 10-15 years in India. The expectations from the businesses started changing in recent years and thus HR started gaining the position of “Strategic Partner” in such demanding Organisations. 

Traditionally, HR was considered as enabling function and the deliverables from HR, were by and large targeted towards efficiencies in its own domain. However, owing to the globalization, existence of multi-national companies –( foreign as well as Indian),  and importantly to keep the pace with emerging competitive business environment, role of HR witnessed a major change.

It has become the key enabler to enhance the HR service delivery effectiveness and positioned as business enabler. The journey of HR  from a service function to contribute to the Organization’s growth has acquired significant focus on the Organization Development in line with the Organization’s Vision and Goals. Therefore, it was inevitable to have an entity which will allow HR to concentrate on the enhanced expectations from the stakeholders and not to be bound by the routine operational work. This very need from business and within from the function led to the emergence of HR Shared Services.

This very approach of HR Shared Services is nothing but centralizing  HR services which are prevailing in different parts of the business and by doing the same it aims for  Reducing Costs, Optimising resources, Bringing  efficiencies and improving internal customer’s satisfaction.

Implementation of HR Shared Services is always a very sensitive issue to any organisation as sometimes it leads to redundancies within HR , sometimes it may require investments in Information and Technology, changing the way of working for the HR function as a whole.

The critical factor for the successful implementation of HR Shared services is firstly, how effectively the change management is handled within HR as a function and secondly how well the organisation culture alignment is done during and after implementation of HR Shared Services.

In my professional journey, I have seen the failure of a HR Shared Service Centre. The Organisation which has got more than 40,000 employees and presence in more than 100 countries across the globe, has decided to outsource the HR Operations to a professionally managed company.  With an intent to roll over the same based on the experiences, the initial outsourcing was done only for one country . However, the entire efforts went in vein as the Company which took over the operations could not align to the culture of the organisation. There was a great amount of dissatisfaction and disengagement among the employees of the organisation. Finally, the organisation did not have any choice but to reverse its decision of HR Operations outsourcing.

However, the story does not end here. In subsequent years , having convinced about the pros of a well established HR Shared Service Centre, and accepting the cons of implementing such model,  the organisation has implemented HR Service Center internally and achieved success too !

With the past experience of the external HR Shared Service Centre and the learning from the same have been carefully embedded in the customised model and importantly, being an in-house HR Shared Service Centre, the thrust was given on the organisation culture alignment.  Once the success was achieved, efficiencies were proven, this model was replicated to all major countries and the hub-spoke structure facilitated the entire organisation . It has not only brought the economies of the scale to a business , a country  but to the entire organisation on a global level .  

However, it will be unjust to say that the implementation of HR Shared Services through external partners does not succeed. It really depends on the preparedness of the organisation  to internalise it in its way of working. 

At the outset,  Organisation’s  leadership and  its Human Resource function have a great  responsibility to their stakeholders especially while implementing HR Shared Services in the organisation . It is equally a strategic decision as any other business decisions and involves long term vision aligned to its fundamental business and work culture. Considering the same,   shared services strategy  requires careful consideration for  the realities that exist for each and every business under the organisation’s gamut.