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Ask the Pro: HR Shared Services

Who does what?

Question:

We’re setting up an HR shared services organization (SSO) and are trying to determine which capabilities to put into the SSO and which should stay in the retained organization. Can you help us figure out how to achieve a retained organization that enhances the value of the overall SSO effort?

Answer:

In HR as in other functions, the retained organization – the services, processes, and activities not placed in an SSO –- delivers three types of services to the business: “site support,” “business partner,” and “Center of Expertise.” Ideally, all three aspects of the retained organization work hand in hand with the SSO to seamlessly provide the operating units with the entire range of HR services.

An SSO typically consolidates readily standardized, rules-based transactional and customer service activities into one or several shared services centers. Examples of such processes in HR might include HR data administration, payroll, benefits, candidate sourcing and screening, new hire integration, separation, and training administration. Additionally, an SSO will typically also handle most employee and manager inquiries through an internal call center team.

A “Center of Expertise” (CoE) can be thought of as a shared services organization for strategic, knowledge-based activities, just as a transactional SSO consolidates standardizable administrative activities. In the HR function, CoEs may exist for capabilities such as total rewards, organization effectiveness, talent management, learning, labor and employee relations, and workforce analytics, as well as for other knowledge-based services that apply across the entire enterprise.

Site support services include routine administrative services that, for one reason or another, cannot be consolidated and must therefore continue to be delivered locally at each operating unit. Examples of such local or site-specific HR processes and programs may include new hire on-boarding, operational recruiting, temporary labor administration, and time and attendance.

HR business partner capabilities are typically needed to source and deliver strategic human capital solutions and support that is tailored to the businesses’ specific needs. HR business partnership capabilities often include HR strategy development, workforce planning, succession management, organization design, and support for mergers, acquisitions, and divestitures.

It’s important to understand that the move to shared services is about more than simply implementing the SSO proper – it’s about adopting an entirely new service delivery approach that allocates work to the appropriate group within each function based on the nature of the work and the type of value it generates. In our experience, companies that make the investments needed to prepare the retained functional organization for its new role in the service delivery model are far more likely to gain the expected return on investment than those that do not.

Marc Solow, director, Deloitte Consulting LLP

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