HR Shared Services The Foundation for Integrated Talent Management and High Performance

The multi-polar world brings together competition from both established players and aggressive up-and-comers into an arena with a truly global footprint. To survive, organizations everywhere feel challenged to be more strategic and leverage their internal processes and talent more efficiently and effectively. Indeed, high performing organizations know that the negative impact of decentralized and inconsistent service delivery is high.

Introduction

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When faced with these challenges, many organizations focus quickly on driving transactional efficiency and turn to the structural benefits of shared services such as centralization of resources and labor arbitrage. Shared services is not, however, simply about reducing the cost of the Human Resources (HR) function. It is also about creating the enduring foundation needed to achieve consistently high and compliant HR service delivery. It is about supporting a relentless focus on talent management through a singular commitment to continuous improvement of the employee experience. It is about providing HR professionals with the engine they need to drive their talent management agenda.

Accenture believes an effective shared services capability streamlines and standardizes data and processes, building a foundation for HR to provide the integrated talent management capabilities that set an organization apart from its peers. HR shared services is not just for organizations starting out new, but also for those organizations that have already implemented shared services for other back-office functions. Organizations that have consolidated like functions or imple-mented shared services highlight that transitioning to this model can be difficult. Accenture experience has shown that successful HR shared services outcomes occur when leader-ship takes a holistic approach, one that focuses not only on cost, but also on developing a comprehensive HR strategy which seeks to transform

the people, end-to-end processes, and technology to create a service-oriented model valued by the broader business.

When the HR function is viewed as a peerand given an equal voice at the leadership tableit can directly impact the bottom-line performance of an organization.

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Building a Foundation for Talent Management As organizations have begun expanding globally, functions such as supply chain, finance and customer relationship management have moved toward globally organized automation and efficiency. HR functions, on the other hand, have lagged, playing catch-up in terms of adopting tested principles of standardization and industri-alization. In consequence, although significant enterprise and HR data exist within most organizations, HR managers struggle to obtain and leverage information to drive insightful

and strategic management across the talent management lifecycle (see Figure 1). Additionally, HR professionals oftentimes are mired in less value-add transactional activities.

Because data resides across disparate departments and internal groups in most organizations, simply finding, consolidating and standardizing people-related information poses such a challenge that HR managers often never get to a point where they can analyze the data. Without this analysis, they have difficulty making informed decisions about where the best talent lies, how internal talent may fill needs elsewhere in the enterprise and a host of other people-related decisions. In the end, HR managers focus on what they can seethe cost of HRinstead of focusing on the human capital investment. As a result, leadership views HR as administrators rather than strategic business partners.

HR shared services helps break this cycle. If the primary impediment to HR's ability to become a valued business partner is its transactional load, the first answer must be to process transactions as efficiently as possible. The common infrastructure HR shared services provides, whether insourced or outsourced, can consolidate and deliver transactional and information services to internal and external HR customers in an operationally-efficient and cost-effective way. When this infrastructure is coupled with strong governance, enabling technologies and reliable data, HR shared services provides a strong foundation for talent management (see Figure 2).

Figure 1. The talent management lifecycle.

Metrics and Analytics

Discover Your sources

of talent

Define Your talent

needs

Develop Your talent potential

Deploy Your talent at the right place at the right time

Talent Mindset

Talent Culture

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By providing cohesion and confidence in employee data, HR shared services gives HR managers the tools to complete the strategic analysis and support business decisions. For example, HR managers can analyze and monitor workforce metrics to track business performance in specific areas such as:

Geographic Expansion: Utilizing integrated and consistent HR data to power the management and movement (if necessary) of talent and skills across geographic lines to support talent requirements.

Workforce planning. Bringing together personnel, organization, cost and performance data across all facets of the business (e.g., geographies, operating units) to identify workforce supply and demand.

Succession planning. Providing better, more integrated data to support succession planning and retention, which encourages proactive develop-ment and support of the organizations employees.

Performance management. Identifying and retaining high performers and key workforces helps organizations avoid the high cost of recruitment and training.

Figure 2. The foundations of talent management.

Metrics and Analytics

Define Your talent

needs

Develop Your talent potential

Deploy Your talent at the right place at the right time

Talent Mindset

Talent Culture

Foundation of efficient and integrated HR operations and support

HR Information Systems

Organization (Governance &

Roles)

Service Delivery

Discover Your sources

of talent

Metrics and

Analytics

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The Challenges of HR Shared Services As with all major initiatives, navigating the transition to shared services comes with challenges. Implementing this model for the HR function brings its own set of unique considerations.

HR viewed as high-touch. To begin, the very notion of moving HR away from local teams has made the transi-tion to a shared services model harder to implement. Local (in-country/region or local operating unit) leaders appreciate the feeling of control they get from having HR physically nearby. There is also considerable sensitivity surrounding HR information and its handling. Fears of organization and individual exposure mean that the HR function, by its very nature, requires a level of delicacy not seen in other areas,

such as IT and Finance. To implement HR shared services, organizations must find equilibrium between operating HR as a business and employees need for personal connection. Fundamentally, however, organizations need to treat HR as a business to achieve sustainable success.

Scope, roles, and responsibilities. The full scope of HR processes (from hire to retire) and the corresponding split of strategic and transactional HR activities among business partners, centers of expertise, shared services and local HR delivery must be designed to capitalize on available skills and specialist knowledge, economies of scale and labor arbitrage. Fully realized HR operating models rely on a network of roles and responsibilities. Specifically:

Businesspartnerswhotranslateoperating unit needs into HR requirements and evaluate HR services delivered to their units.

CentersofExpertisewhodesignandbuild the HR programs that meet the operating units HR requirements.

Sharedservicecentersthatdelivertransactional and high volume HR services to customers.

LocalHRdeliveryresourceswhosupport on-site, high touch processes such as recruiting or employee relations.

Focusing solely on the shared services component will drive efficiency gains, but without the other roles, success can only go so far. Determining how to split duties and how the players should interact with each other is critical to achieving the desired benefits.

Shared services back-office. Like most shared services back-office functions, the HR back-office function includes case management and

Levi Strauss & Co.s senior management launched a company-wide effort to reduce costs and refocus the business on profitable growth. This effort required a transformation of HR to reduce costs and better enable talent management across the organization. The company set up a major change program for HR, including consolidation of HR systems; process and transactional activities moved into shared service centers; a tightly defined performance metrics and service management framework; and outsourcing of administrative operations. As a result, the HR organization is better positioned to support company leaders in their quest for profitable growth. For example, HR is now able to help executives select the right talent, emphasize the right capabilities, and develop creative solutions to motivate and reward people.

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operations teams that manage day-to-day transactional activities and processes. What is unique to HR is that these teams generally require a higher degree of functional expertise than other back-office functions. While HR shared services certainly has its share of repetitive transactional work, the HR area also requires centralizing and consolidating disparate HR practices while still considering the following: the complexities of local country and regional legislation; the adoption and practice of existing policies and guide-lines; the specific language of HR; and, the prerequisite skills, sensitivities and knowledge of teams working within an HR landscape.

Differentiated service users. The end users of HR services and information comprise a diverse group, including business-focused individuals (such as high-level executives and HR

professionals seeking information to drive HR programs) and true end-user individuals (including hourly and salaried workers, new applicants and hires, seasonal workers, and retirees). Service to each group must reflect their particular needs and available communication channels.

HR service growth and adjustment. HR service requirements typically change over timesometimes rapidlyto reflect changing governmental regulations and organizational policies. The HR shared services solution must be designed within a flexible frame-work that can accommodate the shifting HR landscape that it serves.

Complexity of multi-nation deploy-ments. In cases involving organizations spanning multiple geographies, deploying HR shared services requires accommodating disparate financial, tax, data privacy and labor laws. CentralizedHRpoliciesandprocedures

must reflect local requirements and customs, while still attaining benefits from harmonization.

Ultimately, shared services success comes from meticulously defining the work from end-to-end so that it can be completed by the most appropriate team and supported by a strong governance structure. Whether within HR or any other functional area, this process requires providing a clear definition of the service, establishing clear roles and responsibilities, determining the necessary inputs and outputs required to provide the service, and creating the service level agree-ments, internal performance measures, and governance processes for the proper follow-through.

SAPs vision for its HR department was for it to become a strategic business partner, and notjustbeseenasapurelyadministrativefunction.Combiningroutinefunctionsacrossgroup offices and moving them to a shared services organization was seen as an ideal way to achieve this objective. This would free local HR staff to concentrate on more complex and higher value work, while at the same time saving moneyanother important objective. The fact that shared services could achieve this through streamlining duplicated functions, increasing efficiency and moving to a lower cost location played a major part in building the business case for shared services.

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Figure 3. The potential benefits of the HR shared services journey.

Range of Benefits

Centralization Shared Services

Transition from Centralization to Full Value of Shared Services Many organizations stop here leaving value behind and decreasing the likelihood of sustainability and scalability

Benefits of centralization recede due to lack of shared accountability for performance and increase in shadow costs over time

Lack of Clarity Services,Costs

Corporate Culture Tenure, wages, back-office mentality

Exceptions Increase

Shadow Cost Increase

Re-engineering Simplified, standardized system/process

Continuous Improvement

New Location Wage and real estate arbitrage

Consolidation Re-organization and de-layering

SLAs Cleartwo-wayservices agreed by clients

Performance Management Metrics, Targets, Scorecards

Service / Cost Transparency

Global End-to-End Process Visibility, Governance

Addressing the Challenges The key to addressing the challenges outlined in the previous section is to use HR shared services as a catalyst to transform the whole HR function. The shared services model itself, while an enabler to high performance, can not be held fully responsible for HR success. In fact, organizations may actually put themselves on the path to languishing benefits if they do not push beyond the physical location and process reengineering components of a shared services implementation (see Figure 3). Indeed, many organiza-tions that started shared services are

revisiting their operations to complete the implementation in the context of a holistic HR service delivery model.

Accenture believes that an organizations ability to successfully execute its HR strategy depends on implementing not only shared services as part of the HR service delivery model, but also the remaining three cornerstones of HR transformation (see Figure 4):

1. Enhanced HR roles and competencies. Within a transformed HR environment, the accountabilities and responsibilities of HR roles are clearly defined so the right work gets done by the right resources at the right cost.

2. Common policies and processes. Standardized processes form the basis for delivery of consistent and predictable HR services to operations at a lower unit cost per transaction/interaction.

3. Integrated HR information systems. An organizations technology landscape ideally incorporates both service management and functional applications within a common HR technology system across the organization, potentially supported by integrated specialist applications. This system facilitates the streamlining of HR processes and provides an accurate source of management information to underpin business decision making, such as workforce planning analytics.

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Figure 4. The four cornerstones of HR transformation.

Enhanced HR roles and competencies

Therightpeopledoingtherightworkin the right place AlignHRandHRinvestmentswiththebusiness

New service delivery model

SinglepointofcontactforallHRservices End-to-endservicemanagementand

measurement

Common policies and processes

Consistenttreatmentofpeople Reduceduplicatework

Integrated HR information systems Consistent"one-truth"HRdata Improvebusinesscontrols Facilitateemployeeselfservice

HR transformation

From a practical point of view, to address the challenges of implementing HR shared services, organizations must focus on:

Vision and sponsorship. Senior leader-ship must understand and promote the concept that HR plays a very strategic role in the organizations success. They must be aware that progressive HR groups operate in an integrated fashion, both within HR and with the broader organization. Without senior leaderships direction that HR must be incorporated into the fabric of the organization as a strategic partner, HR managers will not have an opportunity to exercise their newly unleashed analytic skills.

Business decision-making. For the shared services operating model to work, HR must think and act as a business within the business. At times, this might mean finding less customer facing, but equally effective means of delivering service. Taking action that seemingly reduces service levels and high-touch support for their end customers (employees, retirees and applicants) will run counter to many HR professionals outlook. It is important to challenge the local delivery paradigm to deliver measurable benefits.

Governance. Shifting to a fully realized and transformed HR service delivery model entails significant change and requires strong oversight to ensure that the changes are understood, adopted, maintained and improved over time. Governance must define and enforce the use of the right role for the right activity and rigorously pursue standardization.

Additionally, a well defined governance function can mitigate challenges associated with location specific legalities and regulations by under-standing the various rules and working to implement policies and procedures that meet the requirements with the least divergence from the standard.

Skill level. In tandem with the reorganization of roles and responsi-bilities under the shared services model and broader service delivery model, employees must have, or be given the opportunity to develop, the right skills to perform these new activities. For example, the changing nature of the HR business partner role requires a mindset shift from the transactional to the analytical and strategic. The skills required are very different and not all resources make the transition seamlessly.

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Establishingacustomer-centricHRservice delivery model will fundamentally change the way HR interacts with the business. If implemented successfully, the model can help improve the consistency and predictability of HR service provided to the business.

Technology.CommonHRtechnologyplatforms and enablers challenge traditional thinking about HR delivery. They allow for remote processing, provide capture of people-related data (which in turn allows more powerful analysis) and force a level of standard-ization that is generally not seen on a unit-by-unit basis. Organizations need a clear strategy around implementing and utilizing these tools in conjunction with other enterprise-wide systems (such as financials) to fully enable the overall operating model.

Progress tracking. The saying what gets measured, gets done holds particularly true when talking about transforming the HR function. Organi-zations must establish measures and goals and track results to ensure progress. Performance results will show where the model needs additional work and pinpoint where integration is not yet complete. When implementing these tracking measures, organizations need to focus not only on the financial imperatives, but also on areas such as progress towards organizational and cultural change as defined by the vision.

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SAP worked with Accenture to implement an HR shared services solution. Within six monthsafterthe"golive"date,theSAPshared service center had already proc-essed more than 13,000 requests. Many requests are now settled through intensive use of portal applications and self-service functions and 80 percent of the remaining requests are now being settled at the first levelbyusingtheEmployeeInteractionCenter.

Implementing HR shared services demands more than simply centralizing the HR function within the shared services model. It requires designing and implementing key organizational, process and technology componentsall of which play a critical role in delivering and managing the end-to-end HR service.

To that end, organizations must have a clear vision of the strategic HR capabilities they need to run the business. When implemented correctly, HR shared services provides a consistent, scalable foundation to increase the focus on integrated talent management. It also enables a strong, predictive and flexible HR organizationone that is dynamic and able to adapt with the business to absorb and drive organization and strategic changes.

The unique aspects of transforming the HR landscape require strategic thinking, institutional fortitude and a rigorous focus on execution excellence. Those that can navigate the challenges and take a broad perspective, looking beyond human resources as a set of transactional processes to how HR can enable the overall business strategy, will drive sustainable value and equip themselves to compete in a rapidly changing global marketplace.

Conclusion

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About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with more than 181,000 people serving clients in more than120countries.Combiningunpar-alleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.58 billion for the fiscal year ended Aug. 31, 2009. Its home page is www.accenture.com.

About Talent & Organization Performance

The Accenture Talent & Organization Performance service line provides solutions that enable clients to improve the performance of their people, their organization and their business. This group of skilled professionals has extensive experience across a range of talent, organization, human resources, change management, analytics, learning and collaboration capabilities. Backed by a comprehensive research program, global resources, and unparalleled tools and assets, Accenture collaborates with clients to multiply their workforce talent and organizational capabilities into a strategic force that can drive high performance. For more information, visit www.accenture.com.

About Shared Services

For over 20 years, Accenture has continuously pushed the boundaries of what the shared services operating model has to offer. We help deliver shared services programs that yield outstanding results, teaming with our clients to realize shared services solutions that enable high performance across their entire organization. Our shared services and business process outsourcing professionals help transform finance, human resources, procurement, customer relationship management, logistics and IT management operations for clients operating around the world. Moreover, we augment our experience with world-class assets, standardized methods based on industry practices, and a broad program of ongoing research into the latest trends and opportunities in shared services that informs our engagements. For more information, visit www.accenture.com.