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Hope Zhang, Director, HR Services & Payroll, Hudson’s BayThe shared services model, in which different functions such as finance and accounting, purchasing, IT, and human resources (HR) are centralized and shared across an organization, has been gaining attention since the mid-1980s. By the year 2000, the idea had become widely accepted and organizations across the globe had gradually started their journey to transform. From an HR journey perspective, the progression of the HR shared services (HRSS) model can be divided into three phases:
Phase One: The initial adoption of the HRSS model in operation and the transition to an integrated cloud-based human capital management (HCM) system hosting the core HR functions including core HR, payroll, absence, and benefits or pension. Over the past 10-15 years, we see a spike in HR departments moving to a shared services operating model. As of 2020, 75 percent of the Fortune 500 companies have established their own HRSS centers, compared to fifteen years prior.
Phase Two: The optimization and expansion of the initial HRSS model, which includes standardizing and simplifying processes, digitizing and automating tasks, as well as incorporating additional HR modules for compensation, recruitment, performance management, learning and development, communication, and DE&I.
Phase Three: The achievement of artificial intelligence (AI) and machine learning (ML) empowered, robotic process automation (RPA) based, fully integrated digital HRSS operating model, where RPA is the main delivery source of the repetitive operational transactions and the AI algorithms generate predictions, insights and making operational decisions through processing, evaluating and learning from the everyday data pipeline.
Currently, we see many companies either completed or almost completed their transformation to ‘phase one’ or in the beginning or middle of their journey exploring ‘phase two.’ With the future in mind, how do we go from here? The focus in the next few years will be—technology, employee experience, and HRSS team building.
Focus on a multi-year HR Technology Strategy
Technology has been a key enabler, which has helped HR technology to progress significantly over the past 20 years, moving from data hosting and on-premises software to cloud-based employee experience platforms. Creating a multi-year HR technology strategy is crucial now more than ever to gradually and sustainably identify, implement and optimize HR technologies that support the company’s journey to the final phase, step by step and module by module.
“It is equally important to have a comprehensive internal team-building strategy that will not only get us through each day but also develop the necessary resources and skills to achieve the desired outcome over time”
On Cloud yet? Cloud technology allows for the storage and operation of real-time data in applications using the internet and eliminates the need for companies to concern themselves with storage capacity, backups, or upgrades.
Functional HR Modules: Which HR modules or technologies are desired in your company? Identify and create a roadmap to implement based on the budget, needs, and implementation requirements.
Process Review: Implementing a new system with additional functionalities often means a redesign of internal process flows, roles and responsibilities, handoffs, and measurement of key performance indicators (KPI). On the other hand, certain existing processes can be automated using technology such as chatbots and RPA.
Employee Self-Service: Employee Self Service has a lot of potentials and can be successfully expanded over the course of time from both the angle of scope expansion (giving employees more to manage themselves) and function elevation (introducing chatbots and AI to handle first level or straightforward HR inquiries and requests)
Data analytics: The HRSS team serves as the central hub for HR data. With high levels of data accuracy, this information can be utilized for various analytical purposes, such as supporting decision-making, understanding employee needs, and identifying trends and patterns in overall workforce operations.
Focus on Employee Experience
As the gen Z population begins to enter the workforce and millennials become the dominant generation in the labor force, it is becoming increasingly common to see them playing key roles as contributors and leaders in organizations. More than ever, employee experience is front and center.
Personalized employee experience: The COVID-19 pandemic and the growing diversity of the workforce have highlighted the importance of personalized employee experience. At the same time, advancements in technology have made it possible to collect information on individual employee needs and preferences and use that data to deliver personalized support, such as personalized benefits packages and career development plans.
Increased flexible work arrangement: 74 percent of US companies are using or planning to implement a permanent hybrid work model, and giants like Meta, Apple, Google, and Microsoft are investing in the metaverse workplace.
Companies need to address the challenge of creating a more flexible work environment that is suited to the needs of their industry and organization.
Increased use of mobile applications: Workforce communication is lagging behind the advancements of social media platforms. Employees who are accustomed to having access to information at all times and from any location in their personal lives now expect the same level of convenience in their work environments. They not only want the ability to access and manage their HR information but also to do so anytime, anywhere.
Use of gamification: Gamification is in the picture to motivate and engage employees, such as by using rewards and challenges to encourage desired behaviors and outcomes.
Focus on HRSS Team Building
One thing that HR leaders tend to forget is, whether the whole journey is going to eventually lead us to where we want to be, which depends not only on the plan itself but also on the team responsible for executing it. It is equally important to have a comprehensive internal team-building strategy that will not only get us through each day but also develop the necessary resources and skills to achieve the desired outcome over time.
Design the transition structure: With the desired future state in mind, how can we progress from the current structure? What would be the transition team structure and for how long?
Assess the required skills: With technology heavy in a plan, what type of skill set would be required to achieve future goals? For example, being tech-savvy would be one of the key elements.
Plan to recruit, train, and upskill: This will be an ongoing effort that involves hiring skilled professionals, providing ongoing training and development opportunities, and fostering a positive and collaborative work environment.
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