More than two decades ago, organizational theorist Dave Ulrich recognized a problem: Most businesses were underusing human resources (HR) by treating it like an administrative function rather than a strategic powerhouse. UIrich introduced the concept of HR shared services, a model that aims to boost the strategic impact of HR teams by streamlining and consolidating HR technology and resources.
An uncertain labor market, inflation, and a global push for more equitable hiring have raised the stakes for HR. As a result, executives are showing renewed interest in Ulrich’s model. Here’s how HR shared service centers (HRSSCs) work and how to start transforming your own HR function.
HR shared services 101
At most traditional organizations, each business function has its own HR manager or team. HR handles the routine administrative tasks that pop up day by day, escalating issues as necessary. HR is mainly reactive, rarely strategic.
Under a shared services model, the HR function becomes an umbrella unit that delivers services to individual departments. In other words, HR acts as a consultant, proactively advising the business rather than just reacting to problems as they arise.
Shared services models typically divide HR into three branches that share technology and resources: Centers of Excellence, service centers, and business partners.
Technology is a crucial part of the story. Smart technologies such as artificial intelligence (AI) and machine learning (ML) enable HRSSCs to anticipate problems before they crop up. Employees use self-service platforms where possible. Smart technologies automate repeatable processes. Multitiered services and service responses make the organization more agile by enabling HR teams to go where they’re needed.
The pandemic challenged conventional paradigms regarding how HR should operate. HR teams are now responsible for a host of critical decisions about employee wellness and safety. At the same time, they’re navigating a turbulent labor market marked by talent shortages across the globe.
According to Deloitte’s 2021 Global Shared Services Survey, the majority of businesses are turning to HRSSCs with efficiency in mind. More than 80% of respondents said they’re looking to cut costs and get work done faster by changing their HR service model.
Fortunately, technology is on their side. In Ulrich’s original vision for HR shared services, the three branches could share resources and best practices, but technology wasn’t a major part of the mix. HR teams can now automate many repetitive tasks, creating a smarter and more connected experience for the whole organization.
For example, Deloitte’s survey revealed 80% of shared services leaders plan to introduce or improve their use of robotics to deliver better experiences at work.
Modern digital platforms can perform microlevel tasks such as automatically handling a new hire’s onboarding experience, serving up a quick how-to guide to a manager after a stressful meeting, or using ML models to create customized tips for sales reps after a customer meeting.
They can also perform macrolevel, strategic tasks. Smart dashboards allow HR decision-makers to measure employee satisfaction, keep abreast of hiring needs, and identify top-performing teams, as well as teams that might need extra help.
How teams benefit
When businesses switch to a shared services model, the whole organization benefits in six ways:
HR becomes an enabler, not a blocker. HRSSCs create a division of labor that allows skilled HR decision-makers to work strategically with other business leaders rather than in silos.
Operations are streamlined. HRSSCs turn cumbersome processes into repeatable workflows. This keeps the business running smoothly and makes it easier to keep up with regulatory compliance.
Employee experience improves. According to McKinsey research, workers who report a positive employee experience are 16 times more engaged than those who don’t—and eight times more likely to stay at a company. HRSSCs enable HR to serve employees faster, and technologies such as AI and ML help tailor the experience to individual needs.
Customer experience elevates. Happy employees create happy customers. The Deloitte survey shows that shared services organizations overwhelmingly report greater customer satisfaction than their legacy counterparts.
The business becomes more resilient. Under a shared services model, HR uses its resources more efficiently, allowing teams to respond faster to crises such as health emergencies and talent shortages. Automated tools and specialized teams free HR decision-makers for high-level planning, meaning no conversation happens without HR’s input.
Costs decrease. Streamlining processes reduces costs. The division of labor is more efficient, since experienced HR professionals can handle strategic decisions while other teams take care of lower-hanging fruit.
Transforming support with AI
When three Coca-Cola bottlers merged to form Coca-Cola European Partners (CCEP), the world’s largest Coca-Cola bottler, the restructuring introduced major technical challenges. CCEP inherited a host of outdated processes and technology.
For example, about 90% of the 200,000 annual service desk requests came in by email, making them difficult to track and triage. To keep the business running smoothly, the company needed to digitally transform and consolidate its services.
CCEP turned to ServiceNow Customer Service Management to streamline services across the organization. The company started with the source-to-pay department, building a dashboard to enable agents to automate case allocation. Using AI and ML, teams can now automatically scan emails and populate request forms, turning unwieldy processes into workflows.
Automation frees agents to perform more difficult tasks that require their creativity and expertise. The organization plans to build upon its success with source-to-pay by rolling out shared services across the board.
Find out more about building an HR shared services strategy in our on-demand webinar.
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