The Future of HR Shared Services | Whitepaper summary

December 18, 2020
June 26, 2023
Learning And Development

Is HR Shared Services simply a behind the scenes function? Supporting the administrative side of things and focusing on the ‘hygiene factors’ of HR? Well, that’s the perception LACE Partners set out to challenge when they interviewed 25 global HR Shared Service directors from leading Private Sector and Financial Services businesses in early 2020.

They’ve compiled their findings into this detailed whitepaper: The Future of HR Shared Services: Becoming People Experience and Solutions Experts. As we’ve done with previous reports, we’ve read it and picked out some of the key points we think you’ll find interesting.

The Future of HR Shared Services

From cost effectiveness to effective engagement and use of technology

Setting the scene before we dig into the findings, the shared services model has been a staple for 25 years or so and for much of that, cost was the driving factor and the reason a one-size model ruled. However, times are changing and engagement has overtaken the budget because it affects productivity and performance. The role of today’s HR Shared Services leader is to bridge the two, creating more personalised experiences in a standardised way!

A huge part of that involves tapping into the rapid growth of artificial intelligence (AI) and technology overall. It’s given those leaders both the tools and opportunities to rip up the old rules, disrupt and deliver a new way of doing things. It was this idea that inspired LACE and shaped the four focus questions for this research.

  • What activities is HR Shared Services focused on? How do we keep these services relevant and continuously improve?
  • How are HR Shared Services teams structured? What roles, capabilities and behaviours will be critical to success?
  • What tools and enablers are HR Shared Services using to optimise service delivery?
  • What can HR Shared Services learn from other ‘shared’ functions, in their organisations, such as Customer Services, Finance, Marketing?

The disconnect between how Shared Services are perceived internally and externally

How people refer to the HR department in their business is a giveaway of how they perceive it. LACE’s research highlighted that ‘HR Operations’ (52%) or ‘HR / People Services’ (32%) were among the most common names, giving the impression that they ‘keep the lights on’ and run the day-to-day functions that support business needs.

Which roles does HR need to play in an organisation
Source: LACE Partners: The Future of HR Shared Services: Becoming People Experience and Solutions Experts.

To sum up the above in a few words, maybe the HR Shared Services department needs a rebrand and renaming to truly reflect the role it has in your business. To reaffirm the purpose and reflect the areas people might not realise they have a key role in, such as people management, employee experience and strategy. The clue’s in the name and if it isn’t no wonder people misconceive what you do in HR Shared Services…

The link between the customer and employee experience

The respondents in LACE’s research were in agreement, “employee experience drives employee engagement, which in turn impacts employee productivity and, ultimately, customer experience.”

And yet very few had successfully transferred their perceived values of a great experience into a formal vision or service promise for design principles. The way they’d described this experience included transparent, empowering, frictionless and simple, but these were lacking from their experience’s design principles.

How they’ve been measuring performance could do with a shake-up too, a way to move from formal KPIs to metrics that reflect how their people feel. While 76% had operational measures in place, only 48% were collecting data on the employee experience. And while 68% had a formal performance scorecard in place, the study quotes one interesting exception to the rule:

“Only one organisation had made a conscious choice not to embed a formal performance scorecard. For them, the absolute priority was to give employees the right answer and support, no matter how long it took”.

HR needs to focus more on the key moments that impact employees, not just the key metrics. LACE list four ways HR departments and teams can score more points with employees and mark fewer scorecards.

How can HR departments create better people experiences
Source: LACE Partners: The Future of HR Shared Services: Becoming People Experience and Solutions Experts.

Interacting with HR departments on your terms

Some people know the cost of everything and the value of nothing, and it’s a problem for some businesses too! They’ve made cost one of the primary drivers of their HR strategy and that often creates the one-sized service designs that inhibit flexibility and adoption through the business.

We hinted at it already, but businesses are waking up to the idea that a better employee experience could drive performance and productivity, yet they still want these personal experiences within the purse strings.

That’s where the idea of ‘contact your way’ enters the picture. And it’s something that has driven a self-service, digital revolution in employee resolution, how they access HR shared services and information searching. The image below reflects this idea, but also the generational divide between how employees like to engage with HR. For example, 40% of Millennials/Gen Z typically resolved issues using messaging, compared with only 20% of Baby Boomers.

Which channels can employees use to access HR?
Source: Source: LACE Partners: The Future of HR Shared Services: Becoming People Experience and Solutions Experts.

Managing these channels efficiently requires you to get the right balance between the employee preference (push) and a level of ease that drives adoption (pull). LACE’s tips for pulling this off include making experiences personal when it’s not viable to personalise, a consistent feel across channels and clearly signposting response times or methods in order to manage expectations.

Keep improving the digital experience

What’s interesting is how many respondents had implemented a knowledge management tool (88%) and document/file management system (also 88%). However, as this whitepaper highlights, these are areas that require ongoing management and improvement – otherwise it’s tricky to truly build communities, drive collaboration and tap into AI.

A lot of companies are clinging onto the raft of reporting but far fewer have dipped their toes into the pool of analytics. 40% use the visualisation capabilities of their tools, but just 17% were using more advanced analytics software – providing a huge opportunity for HR, especially in understanding people and behaviour better.

Lastly, AI presents a bit of a dilemma – a head-scratcher for the heads of HR! A recent Shared Services & Outsourcing Network report revealed that 42% were not yet using AI but were planning to, and only 3% had implemented it. In LACE’s study, 28% were using AI but it was the bottom priority, likely because many lack the capabilities to use it effectively: “63% of  organisations do not have ready access to the data required to leverage new intelligent such as AI and chatbots.”

Although AI can make HR life easier, it takes time to create the processes, build it out and train the people. It’s an activity worth investing the time in and a huge untapped resource for most HR departments.

Hello Business Advisor, goodbye Business Partner

If there are two sections of the report I’d recommend you check out for yourself after this, it would be this one and the next! They’re the most data and chart heavy sections, so they go into the most detail. However, here’s a high-level summary.

Operational excellence (37%) and service excellence (35%) were the two areas viewed as of most critical importance. The former because it’s viewed as a foundation of the HR function and the latter as it highlights that delivering an exceptional employee experience requires going beyond the basics. This means thinking about what your people value, framing HR interactions as part of a journey and not a process, and moving the mindset away from siloed working. It also means reviewing the perception that data analysis is a specialist skill set, and tapping into its power to identify areas for improvement.

HR teams need to relax a little when it comes to process and focus more on the creative mindset. Anyone can learn a process, but a creative mindset is something much harder to develop over time, and much needed to find new ways of continuous improvement. Over two-thirds of global shared services organisations leverage a Centre of Expertise (i.e. specialist skillsets internally within shared services), with 32% of these supporting continuous improvement and process design.

They also need to focus on creating career paths for their best internal talent and ensuring they’re hiring people with the right business experience. Remembering that certain things can be taught easily and others come naturally, each role will have a balance between the two when it comes to skills.

Becoming People Experience and Solutions Experts

Essentially, this section argues that with digital technology and AI freeing up time and capacity for HR teams, they can invest that into other areas outside of the traditional support model. These new roles might include becoming a coach/confidante to people managers, more specialised in key areas like wellbeing and recruitment, more adept at people analytics, and better at project/change management.

So, how might HR Shared Services structure their new model or approach to offer great people experiences and solutions? LACE suggest the following structure, and just below that some more practical tips on how to deliver it.

  • Organisation effectiveness
  • Wellbeing and Engagement
  • Pay, Recognition and Benefits
  • Development and Progression
  • Attraction and Onboarding
  • People Advisory
Practical tips for HR departments to deliver a better experience to employees.
Source: LACE Partners: The Future of HR Shared Services: Becoming People Experience and Solutions Experts.

If you want to read it for yourself, you can download the full PDF whitepaper: The Future of HR Shared Services: Becoming People Experience and Solutions Experts..