Report Touts Benefits from HR Shared Services

August 6, 2007 ( - A new research report from BusinessWeek says that in a recent benchmark survey by The Hackett Group, companies that had adopted an HR shared-services model reported reducing process costs by as much as 80%.

Sixty percent of the companies in the survey reported process savings of 21% to 80%, the report said. The savings most often came from a reduction in HR staff.

However, the report claimed that, though difficult to quantify, the bigger benefit comes from freeing HR professionals from their administrative tasks, such as troubleshooting payroll problems and entering and tracking paid time off, so they have more time for strategic issues like recruiting, talent management and organizational development. “When administrative processes are centralized, HR is freed to become a business partner, to add business value. The shared-services model has gotten us closer to that,” said Ricardo Rosa, corporate HR director for organizational performance at Johannesburg-based The Standard Bank of South Africa Ltd., in the report.

The research found HR shared services models varied based on company-specific circumstances, but certain common elements were usually present, including:

  • Companywide consistent policies and processes, from which standardized, automated transaction processing can be achieved,
  • A central knowledge base,
  • Some, and often extensive, use of employee and manager self-service applications from a Web portal,
  • Most often, but not always, a single human capital management (HCM) software platform,
  • A call center, internal or outsourced, for fielding queries and handling other tasks by phone, e-mail and chat, and
  • The use of outsourcing where it makes sense.

Most companies BusinessWeek interviewed for its research use a combination of outsourced and in-house shared services, depending on their industry, size and other characteristics.

BusinessWeek points out in its report that moving to a shared services model can take time and effort. Centralizing processes is the first step companies need to take to create self-service and the knowledge base for a call center, which, in highly decentralized companies, can take several months. Additionally, a company needs to budget time and money if the move to shared services will require implementation of new standard software, the report said.

The biggest challenge is change management – teaching employees how to use self-service and to utilize the call center. In some instances, some HR staff will have to be retrained to work in the call center, and HR specialists will have to be trained in their new strategic roles.

The benefit of reduced staffing and administrative costs will make getting through these challenges worth it. The strategic benefits are also worth it, but harder to measure. BusinessWeek warns that measurable return on investment can take three years or longer to be seen.

To request a copy of “New Era for HR Shared Services,” contact Chris Rogers, Director, Primary Research, at .