2/5/22, 2:41 AM HR Shared Services: Everything You Need to Know - AIHR

HR Shared Services:
Everything You Need to Know
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Posted by Rhonda Gardner

An HR shared services model can help HR departments deliver their services

to employees in a faster, more effective way. It presents an opportunity to
separate the operational from the strategic so each part of the department
can be most effective in providing a positive employee experience. Let’s have
a closer look at HR shared services, its benefits and challenges, as well as HR
shared services best practices.

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Contents
What are HR shared services?
Benefits of HR shared services
Challenges of HR shared services
HR shared services maturity model
HR shared services best practices

What are HR shared services?

HR Shared Services is a centralized hub of HR administrative and operational
duties that are characterized by employee self-service and automation through
leveraging technology, and multi-tiered levels of service and service
responses. This allows organizations to provide standard HR services in the
most efficient way. The different tiers in an HR Shared Services provide common
services such as:

1. Payroll

2. Employee data management

3. Benefit and leave administration

4. Relocation services (international and domestic)

5. HRIS

6. Recruiting operations

7. Learning services

8. Reporting and analytics

9. and the HR service center.

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HR shared services is a part of a multi-tiered HR service delivery model. It

enables the other parts of the HR department to focus on strategic initiatives.

Benefits of HR shared services

Implementing HR shared services has multiple benefits for your organization,
including:

1. HR becomes more strategic. The division of responsibilities frees up the

more experienced HR professionals to focus on strategy. This provides
more opportunities to measure HR’s performance through Human Capital
metrics that align its success to the organization achieving its strategic
objectives. This is critical for HR to be a true business partner by
contributing to the development of the business strategy.  It ensures
organizational business strategy has a strong focus on people
management and a positive employee experience.

2. Consistency and compliance. HR matters are always handled in the

same, consistent way, which helps ensure that you’re compliant with rules
and regulations. This leads to a better employee experience and to
mitigation of risks within the organization.

3. Operational excellence. By assigning clear responsibilities for

administrative processes, organizations can reach operational excellence.
This happens through streamlined processes and optimized workflows.
On top of providing a better HR service, operational excellence also results
in an improved employee experience and efficiency.

4. Improved employee experience. Employees get their issues resolved

and find relevant information quickly and conveniently. This has a positive
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impact on their digital, as well as their overall employee experience.

Employees have grown to expect all systems to be engaging, to be easy to
navigate, and to satisfy their needs and expectations. This includes
systems they interact with at their jobs. If there is a gap between
expectation and experience, this leads to employee frustration.

5. Cost reduction. HR shared services can help organizations cut costs in

several ways. For example, you need less experienced HR professionals to
handle transactional HR services, which results in lower labor costs. What’s
more, the efficiency achieved through streamlining and simplifying
services also helps reduce costs.

Challenges of HR shared services

While HR shared services can help human resources achieve operational
excellence and enable the department to become more strategic, putting it into
action is not always straightforward. There are several challenges organizations
face.

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1. A lack of a digital roadmap for the majority of organizations. An

increase in automation requires a clear digital agenda and roadmap for
Human Resources to implement technology that will create efficiencies
and drive a better employee experience. Example technologies include
simple tools such as live chat, virtual agents such as ServiceNow, and live
chat, but also more advanced applications such as Robotic Process
Automation (RPA) and HR analytics and reporting tools. However, many
organizations implement digital tools on an ad hoc basis, rather than with
a coherent HR digital transformation plan in place.

2. Creating urgency for investments in shared services and/ or HR

technology. It is difficult to clarify the business impact of HR shared
services. That’s why organizational leaders might not immediately
understand its benefits and why they should prioritize it. With this in mind,
you need to work on clearly defining the value shared services add to the
business.

3. One size doesn’t fit all. HR shared services unfortunately may not be the
right solution for every business unit. There are instances where HR
shared services will benefit and complement a business unit, yet for
another unit, it may be a hindrance. It is, therefore, critical to conduct a
cost-benefit analysis to determine the value it brings to which business
units, the overall organization, and the cost. An example would be working
together with a designated global upskilling partner that is very effective in
building skills for the common areas of business but may lack upskilling
capabilities in highly specialized areas of the business.

4. Knowledge transition. When transitioning to an HR shared services

model, it is necessary to ensure proper documentation of processes and

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activities from SMEs to new employees working in the HR shared services
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center. This is a project. There is the need to manage the time it would
take to document and transfer the knowledge as well as apply the
knowledge so the HR shared service achieves a satisfactory level of
efficiency.

5. Collaborating within the HR team and across the organization can

suffer. There might be a disconnect between the different parts of the HR
team, namely between the shared services and other, more strategic, or
specialized parts of the team. That’s why managers have to put conscious
effort into strengthening the team mentality. Likewise, having an HR
shared service center does not negate the need to continually interact and
engage with employees. Therefore, it is important to continually build
relationships and engage with key stakeholders in the business unit. Good
systems support successful businesses, but it is through strong
relationships, systems become efficient to meet the needs of internal
customers.

HR shared services maturity model

Adapted from Scott Madden’s Shared Services Maturity Curve, this model shows
how HR shared services matures with time and how it advances from
establishing the foundation through improved automation and analytics
capabilities to continuous expansion and improvement.

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HR shared services best practices

Based on the HR shared services maturity model, how can your HR department
maintain and lead an innovative and value-adding HR shared service center?

Transform
Transform is the first part of HR shared services maturity. This is where most of
the current organizations are at. Activities include:

Determine which activities will fall under HR shared services. If it

involves a high volume of transactional or administrative work, the activity
may be HR shared service center eligible. In addition, you would also
consider HR tasks that have a strong potential for standardization because
they are repeatable and straightforward. As we’ve mentioned above,
typical HR services activities include payroll, benefits administration,
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recruiting operations, as well as organizational and employee data

management, and some activities in learning & development.

Define roles and responsibilities. You need to determine who will be

responsible for what within your HR shared services team. For example,
which employees will be responsible for which employee services? This is
especially important if you’re setting up HR shared services within an
international company, which will centralize employee services across
multiple locations.

Choose the right technology to support you and your workforce. HR

shared service tools should enable your organization to provide services
effectively and efficiently. Some functionalities that you should look out for
when choosing an HR technology vendor include:
ticketing

policy and knowledge management

incident routing

SLA monitoring

employee self-service.

Furthermore, take into consideration that these tools usually manage sensitive
employee data, for example, medical or contact information. That’s why you
need to look for HR solutions that offer high levels of data security. Ideally,
you’d implement a cloud-based, mobile-friendly solution right from the start. It
should also integrate with your core HRIS.

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Maximize its capabilities

At the next stage of maturity, HR Shared Services should be able to:

Offer new or expanded services. The scope of services offered within the
HR shared services organization is growing. This may include expanding
services to other geographic locations. According to ScottMadden, “global
business services (GBS) is a popular option for mature shared services
organizations to gain additional benefits through global management and
integration. GBS organizations typically include higher-value activities and,
by nature, are delivered to a global customer base.” In this case, your
customers are your employees, of course.

Expand on automation capabilities. Since processes handled by HR

shared services are repeatable and standardized, they have a high

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human involvement and implement automation. Examples of HR

automation are:
Pre-employment assessments

Automated email flows

Automatically generating official PDF documents when onboarding

new hires

Removing access to applications when offboarding an employee

Expense claims

Maximize the use of reporting and analytics. HR has been gaining a

reputation for using metrics to measure, report and monitor HR programs
and initiatives.  This is useful and will continue to be. However, in recent
years, there has been a stronger emphasis on analytics which goes beyond
measuring, monitoring, and reporting to predicting, prescribing, and
diagnosing. That’s why utilizing different types of HR analytics is becoming
increasingly important:
Predictive analytics uses existing and historical HR data to predict
future outcomes.

Prescriptive analytics offers possible actions organizations can take

in light of the data and trends that emerge from predictive analytics.

Diagnostic analytics indicates the source of the problem, so it can

be targeted directly and addressed accordingly.

Integrate social media. The most progressive organizations know their

social media presence is key to engaging with their customers and
employees. The most strategic HR departments are not only using
LinkedIn to promote their organization and attract talent, but they are also
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survey, 87% of recruiters use LinkedIn, but only slightly more than half use
Facebook. Conversely, candidates are very likely to use Facebook to check
job openings. In fact, 67% of job seekers who used social media to find
their most recent position used Facebook.

Enhance
Mature HR shared service centers are making extensive use of automation and
analytics, and they’re tirelessly working on refining their workflows.

Process automation. Popularized as Robotic Process Automation,

process automation allows one to tie together different HR services in a
fully automated way. Examples include scheduling automatic reminders in
case someone hasn’t activated their account. This prevents spam and
leads to more targeted communication. Other examples include creating
flows between HR processes. If a candidate is found to lack a critical skill
but is still hired, this can prompt the learning system to recommend this
skill to the candidate for training. These integrations between systems are
the results of powerful and value-adding automation.

Continuous improvement. Collect feedback from your employees about

your HR shared service center and look for ways how you can enhance
your workflows. You can do this through regular surveys. Also, consider
the changing needs of the organization, for example, when an
organization is growing fast or is changing its policies. Be responsive, and
in so doing, you will develop a culture of continuous improvement.

Create a digital roadmap. A key challenge in modern-day shared service

departments is a lack of a coherent digital strategy. By implementing a
technology roadmap and an ambitious and clear goal (e.g., “Any process

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center transforms from an administrative steward into a lean and cutting-

edge technology center.

Invest in the continuous development of employees working in HR

shared services. A common difficulty is a lack of development prospects
for employees working in shared services. In other words, having a clear
digital roadmap and vision enables an organization to provide a clearer
image of the roles needed in the future. This includes automation and
other technology roles, but also agile project management, data entry
roles. Providing ongoing training to your HR shared service employees will
help your organization ensure continuous efficiency as complexity
increases.

Over to you
Organizations and HR departments should always strive to provide employee
services in an efficient, as well as cost-effective way. HR transformation into HR
shared services can be an excellent way to not only elevate your employee
experience but also allow for a bigger focus on the HR strategy aligned with
business needs and goals.

However, before investing in HR shared services, leaders must consider the

challenges and preemptively take actions to overcome them. Investments in HR
shared services are long-term investments. Therefore, to continuously benefit
from an efficient HR shared services model, organizations require visionary
leadership, must be willing to continue investing in leveraging technology, and
developing the competencies of the HR shared services employees.

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Rhonda Gardner
Rhonda Gardner has been a HR Professional for the past 19
years in diverse industries such as Banking & Insurance,
Professional Consulting Services, and INGOs. She lives in
Atlanta, Georgia in the United States of America.

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