Human resource shared services

Some organisations argue that a better alternative to outsourcing is to use an HR service centre or shared service centre (see, for example, Pickard 2002). Shared service centres are sometimes referred to as partnership service centres or insourcing, depending on the circumstances. For example the Window on practice shows how Rotherham Borough Council has entered into a strategic partnership with BT.

IDS (2003) suggests that developing an HR service centre is often the linchpin in a company’s drive to achieve a more efficient form of HR delivery, and suggests that this is primarily achieved by streamlining and centralising routine HR processes and transactions. In addition such a service centre is usually the primary point of reference for line managers with HR queries. The benefits IDS identifies are savings from lower transaction costs, the removal of unneeded duplication, a more consistent HR approach across the whole of a company and an HR service which is more customer focused and more responsive to business needs.

Service centres may be HR centres or may be a shared centre with other functions, such as IT or finance. Other terms used are ‘HR call centre’ or ‘client centre’. In terms of operation many centres have staff based in the ‘back office’ dealing with administration and transactions, and different staffing for the ‘front office’ where enquiries from line managers are handled. Alternatively staff may be organised in teams by specialist function or client group (IDS 2003). Staff at the service centre would have electronic access to personal employee details and HR policies and so on.

One of the advantages of such centres is the metrics that can be derived to assess their performance. Examples are call waiting time, call count, call length, time taken to resolve queries, accuracy and satisfaction measures from users. There is usually a system of escalation where queries can be fed up to the next level if the original call centre operator cannot resolve them, so for example there would be access to a functional specialist for non-routine or complex queries.

One form of shared services is to have an online or e-HR self-service system, as in the RBS example in the Window on practice above. Such systems may offer cost saving advantages, but can pose special problems of their own inducing feelings of remoteness, dehumanisation and lack of customer friendliness. People Management (2006a) reports on a study by Roffey Park Institute which investigated line manager perceptions of e-HR. The two negative aspects reported most frequently were that line managers felt they had insufficient training on the system, and that employees were penalised when they did not keep their records up to date. Managers also felt that they spent too much time on HR administration and that on-line help available was of poor quality. We explore different aspects of e-HR in more detail in Chapter 33.

The problems with the service centre structure are that local knowledge and business solutions may be lost in the changeover, many low-level administrative roles are created with little potential for career development and there may be an obsession with measurement at the expense of service delivery.

Source: Torrington Derek, Hall Laura, Taylor Stephen (2008), Human Resource Management, Ft Pr; 7th edition.