Monday, September 20, 2010

Measuring Impact: HR Shared Services

As I think about the last few weeks I have had the pleasure of interacting with many HR professionals regarding HR Metrics.  Last week,  I discussed the Evolution of HR Metrics and this week I would like to chat about Shared Services and HR Metrics.

In my workshop at the HR Metrics Summit hosted by IQPC, I asked where people were in their HR journey and about 30% were in infancy or just starting, about 30% had metrics but weren't sure if they were they right ones and about 30% were looking for metrics for a Shared Services model for HR.  This made me stop and think.

For shared services to be effective, most people think about cost savings to operate HR, headcount reduction, and customer service effectiveness.  So you may have metrics that look something like this:

1) HR cost per employee
2) HR staff/FTE ratios
3) Customer satisfaction scores
4) Problem resolution metrics
5) Time to solve problem
6) Average time on call
7) Calls per CSR
8) Calls resolved on first call
9) ROI
10) Service Level Agreement measures (SLA's)

So, by definition we are measuring a transactional function that handles functions like payroll, benefits, and record keeping, policies and procedures, etc.

My question is this...what metrics can we use that points to the strategic impact an HR Shared Services model can provide?  

After all, if HR moves to this model, doesn't that free up some time for top HR professionals to be strategic.  (that is the theory).  A recent article in SHRM's HR Magazine discusses the shared services model and lessons learned to date.  (have to be a national  SHRM member to view).

According to the HR Magazine's Article,  Saving Share Services, the size of companies that are moving to shared services are smaller.  In other words, shared services aren't just for the larger companies.  So, with this model looking better and better as companies are trying every way to save pennies, we need to figure out how to show impact especially in the strategic area.

Do we need to make sure that HR Shared Services and the HR Department collaborate on these metrics as you can't be effective in one area without the other? (Transactional and Strategic)

I have some ideas about metrics for HR shared services that point to impact, but I would love to hear from you to see what has worked for you and how you have handled these metrics.


Michael D. Haberman, SPHR said...

Could you explain what you mean by "shared services'? How does this operate in a small company vs. a midsize or bigger company?

Unknown said...

Hi Mike:

Great question and I shoud have defined that in the blog. Here goes a stab at it:

"Shared services" is a term defining an operational philosophy that involves centralizing those administrative functions of a company that were once performed in separate divisions or locations.

So IT, HR Finance and accounting can all have a shared services model if the company chooses.

In HR things to consider for shares services are payroll, benefits admin, cobra, FMLA paperwork, etc.

Shared services can be outsourced to a third party or handled in house.

Does that make sense?


Debbie King said...


Like Mike, I'm not totally clear on what is being "shared" - is it that all the HR functions are in one centralized area and then "shared" to their customers, internal and external? Anyway, your blog sparked the following ideas - which I present in raw form, since I'm not as clear on what the concept looks like, but I think these could be components linking transaction and strategy:

1. Recruitment - identifying the 'right' competencies and 'right' talent/values match. I think we, HR, need to evolve our screening and interviewing methods to better match the competencies required for the future.

2. Engagement - meaningful work design in order to better measure contributions to company goals and objectives.

3. Innovation - risk taking and 'out of the box' solutions to address customer needs for cost savings, efficiencies and competition.

Am I on the right road --- or did I take a U-turn?


Unknown said...


I think you are on the exact right path. And you interpretation of the model is correct. So, think of a company with multiple field locations an each one were performing various HR admin tasks by centralizing those in a shared services model then mangers/supervisors and employees have one place to go/call for transactional/admin type of services. As I go to more and more Metrics conferences, it has become clear that these shared services group have their own set of metrics and I am just wondering how to look at it strategically. You brought up competencies in recruitment, so I have heard some companies centralize sourcing through shared services, so you can analyze recruitment data to see how efficient and effective the function is but then like you said take it one step further to see if those new hires have the competencies that are needed to move the organization forward.

Thanks Debbie for your thoughtful input.


HR News said...

Are there any HR centric magazines or portals in India? Please help ..?

Unknown said...

Hi HR News:

I am sorry I don't know of any HR Portals in India. I do know that SHRM is very active in India, maybe check there.


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