Creating an Effective Governance Structure for HR Shared Services

Before getting into the details of HR Shared Services governance ^[1], it’s helpful to understand the evolving framework for Shared Services, with a closer look at where companies are today.  While many lessons learned along the way can be applied across companies, your situation for HR Shared Services ^[2] will have elements that are unique and are dependent on how HR Shared Services fits in with the broader history of Shared Services at your company.

Shared Services has been a delivery model of choice for back-office ^[3] processes at leading global companies for decades.  Based on a survey of Peeriosity member companies, today, while 15% of members report that they are “new and emerging”, 39% report that they are “fully operational” with an additional 39% indicating their lifecycle stage is “mature”.  In other words, most Peeriosity member companies have many years of experience with implementations that are largely complete and stable.

When you consider the structure of Shared Services organizations, 55% report that they are “cross-functional” with an additional 39% reporting that they are organized by a “single function”, with only 2% organized by a “single process” (for example, an Accounts Payable Shared Services Center, or a Payroll Services Center).   If you were to track this result over time you would see a steady shift from “single process” to “single function” and from “single function” to “cross-functional”.

When you take a closer look at the organizational structure for HR-related processes a more complete picture begins to emerge.  Following are charts for Payroll, Benefits Administration, Employee Compensation, and Staffing.  Not surprisingly, the Payroll process, a unique HR Process that seems to report to Finance as often as it reports to HR, has the greatest likelihood of being in Shared Services.  Each of the other processes is more likely to be centralized, rather than being delivered using a Shared Services model.  Here are the details for each of these processes:

A recent Peercast^TM in the HR Shared Services research area featured the North America Employee Services Center of a $15B global building materials company sharing their experience with implementing HR Shared Services, with a specific emphasis on HR governance issues. 

In 2009, HR services were centralized by region across North America, with four regions and a separate group for Corporate HR.  The technology group supporting HR reported into Finance, with a dotted line to the Sr. VP of Human Resources, with no formal process in place for the approval of HR projects.  Recognizing the limitations of the design ^[4], the CEO appointed an HR Governance Team Leader who assembled a team of functional leads representing IT, Finance Shared Services, HR Information Systems, and HR Business Partners.  The team developed a charter and purpose statement, with the objective to address quality issues and define a structure and service delivery model for HR Services.

The outcome was to create the North American Employee Services Center, reporting to the Senior VP of HR, with a governance committee made up of key stakeholders who review and approve all business projects, with final approval required by the company’s Executive Committee.  Work activities were organized by process (not region), with teams providing support to all company locations and businesses using a common model and framework.

The governance committee developed a three-year action plan to move to the new structure and service delivery model, with major steps including integrating multiple groups to form Employee Services, and designing and implementing self-service using an employee portal.  Benefits cited with the new Employee Services model were extensive, including creating greater buy-in across the business for Shared Services as the appropriate business model for a wide range of administrative processes.

What is the status at your company with respect to implementing Shared Services for HR processes?  Do you have a separate organization responsible for Employee Services?

Who are your peers and how are you collaborating with them?

“Peercasts^TM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer Mail^TM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.