HR Shared Services

Organisations use shared services as a way of organising their HR activities, typically concentrating administrative activities into a centralised and commonly shared function.

The shared service model can help businesses reduce costs, avoid duplication of effort, and allow a greater focus on HR strategy.

HR Shared services is an increasingly common organisational response to creating more efficient service delivery. Costs can be reduced through the economies of scale from centralisation of services. Increased customer focus can lead to better quality outcomes. Technology can offer various routes to user friendly delivery (eg call centres, intranets, etc.). Choices, though, have to be made on the nature of the shared services operation and on the relationship between HR and line managers and employees.

This factsheet outlines how shared services work and the benefits of introducing them in an organisation. It takes a closer look at the typical tier structures and provides guidance on how to plan for and implement shared services across an organisation. Finally it highlights some considerations for HR when implementing shared services.

Why shared services?

Based on research on leading fifteen organisations, there seem to be three principal drivers to the introduction of HR shared service. These are:

  • Cost
  • Quality
  • Organisational change.

Organisations feel that shared services can reduce costs by three main means:

  • By cutting staff numbers, through achieving economies of scale
  • By reducing accommodation charges, through exiting some offices/using cheaper accommodation
  • By greater efficiency in what is done and how it is done, through streamlining and simplifying services, and doing them to a consistent, accurate standard. Combining purchasing decisions also offers savings through economies of scale.

Quality can, it is thought, be improved through shared services, both in itself and by HR being more customer focused. This is achieved by:

  • being more professional
  • achieving greater consistency and accuracy
  • being more aware of internal and external best practice
  • using better processes to complete work
  • delivering on time and to budget.
  • discovering what the customer wants rather than deciding what suits the service supplier
  • becoming more accessible by operating user-friendly services (longer opening hours or easier means of contact)
  • improving the supply of information to customers, both on process and content
  • giving better quality support in line with customer needs.