HRO handbook V 2.0

38
Enabling HR Transformation Volume 2, 2012 HRO Handbook

description

 

Transcript of HRO handbook V 2.0

Page 1: HRO handbook V 2.0

Enabling HR Transformation

Volume 2, 2012

HRO Handbook

Page 2: HRO handbook V 2.0

Foreword 3

Section 1: HR Outsourcing 3.0 — Technology Enabling HR Transformation 4

Section 2: Demystifying Big Data 6

Section 3: Case Study 9

Section 4: HR Shared Services 11

Section 5: Industry Views from AIMA’s First National HR Shared Services Summit 13

List of Figures and Tables 33

Contents

Page 3: HRO handbook V 2.0

Date of Publication: November 2012

DISCLAIMER

Although the authors have made every effort to ensure that the information in this book was correct at the time of publishing, the authors do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

Page 4: HRO handbook V 2.0

3

We are delighted to present to you the Enabling HR Transformation, HRO Handbook – Vol 2. The Handbook is PeopleStrong’s attempt to throw light on and provide you with the latest trends and updates, from Technology and Analytics to Service Platforms. We have also included a case study on HR outsourcing highlighting key factors of implementation and success.

2012 will probably be remembered as the year of change – whether it be in the USA, China or even in Burma. Change has not been in the political arena alone. Technology continues to evolve everyday and while SOCOMO (Social-Cloud-Mobile) is still being talked about, Big Data and Analytics is changing the way we operate. This has many implications for HR and especially HR Outsourcing. Analytics is giving power in the hands of the leadership and HR practitioners for real-time decision making. Employees are being empowered truly ‘at their time and their convenience’ through tools that are compatible with smart phones and tablets. HR Service delivery is being empowered through Ease of Access (through multiple channels and devices), Self-service, Collaboration and Analytics. Product interfaces are losing their boring MIS style interfaces and are becoming cleaner, sharper and cooler. However, it is important to remember that technology is an enabler and it is the outcome which is important.

I am happy to inform you that the first ever National Summit on HR Shared Services held by AIMA in August 2012 was a great success. Pankaj Bansal (Co-founder & CEO, PeopleStrong) was the Summit Director and helped design the event. The Summit threw up much learning and proved to be an eye opener for delegates and speakers alike. The one clear message that came out was that HR Shared Services is the foundation stone for enabling HR Transformation and addressing higher order issues. For this to come about, innovation needs to be contextual and not replicable. We have dedicated a section on relevant highlights from the Summit in this report.

This Handbook is second in our series on HR Transformation. We hope that it will be a useful read with its combination of theoretical and practical ideas from the HR industry, and will aid your company’s HR Transformation process. We look forward to your feedback and to engage with you further.

Shelly Singh Co-founder & EVP

PeopleStrong

Foreword

Page 5: HRO handbook V 2.0

4

Enabling HR Transformation | HRO Handbook Volume 2

Section 1

HR Outsourcing 3.0 - Technology Enabling HR Transformation

The last decade has seen economic volatility the world over. Parallel to this crisis has been the rise and rise of business process outsourcing (BPO), including human resource outsourcing (HRO). Whether fuelled by recession alone or enabled by technology, outsourcing is here to stay as companies continue to find ways to do more with less.

In the last decade that HRO has been in existence, it has evolved rapidly. Starting from just payroll outsourcing, it has evolved to more complex, multi-process functions that touch numerous areas within a company. Whether the driver for HRO was cost savings, talent management, to provide strategic inputs towards the overall business, or achieve transformation in the HR function, it has resulted in a sea-change in how companies operate and view the HR function. Looking back today, it is clear that HRO has resulted in transforming the function by enabling HR leaders to delegate routine transactional and operational activities to HRO vendors, and focus on aligning to business goals and providing value in the boardroom.

The two factors underpinning HRO are process re-engineering and technology, both of which have matured alongside the evolution of the HR Outsourcing industry. It is the latter space of technology though that will shape and define HRO in the coming years. With increasing consumerization of IT, access to

technology is possible for everyone from the entry-level employee and manager upwards. With employee self service, help desks and faster turn around times, the employee experience underwent a complete change and facilitated HR leaders and managers to spend more time on talent management and development, and HR leaders on strategy.

That was the past. The future will open up a whole new dimension for HR citizens!

HR Outsourcing 3.0

The HR blogosphere and the twitterati around the world are buzzing with excitement about the newest technologies and their implications for HR. SOCOMO+ is what seems to be defining the HR technology space and what that means is that the future of HR is Social, Mobile, in the Cloud, Employee-Centric, Gamified and a Data Rich environment! Will all of this be possible? Is it just a fad? How many HR managers use their smart phones and / or tablets for social networking, recruiting, human capital management and games? These are the questions will need to be debated now.

With the boom in SOCOMO technologies, it is now possible to get access on the go, anywhere, anytime. These developments have given impetus to the niche field of HR technology, so much so that there are now

Page 6: HRO handbook V 2.0

5

dimension. With increasingly sophisticated tools to capture and analyse relevant HR data, it is possible for all HR stakeholders (employees, managers, leaders and vendors) to get access to a centralised pool, have their own individual access and make decisions accordingly. All this from the convenience of one’s own phone or tablet!

dedicated conferences the world over focussing on the subject. Why an HR technology conference, you ask? That is so niche! But such conferences have become one of the ‘must attend’ events in the world of HR because it offers us a window into the future and looks at how they will impact bottom line of companies.

Add to this environment a component of Big Data and you have another layer to this above mentioned

Page 7: HRO handbook V 2.0

6

Enabling HR Transformation | HRO Handbook Volume 2

As the year 2012 comes to an end, there is already a huge movement towards Cloud with other future-shaping trends being Social Media and Big Data. Opportunities in Big Data are immense and there is much that remains to be explored in the areas. Companies in marketing, retail and healthcare are already using Big Data to predict customer behavior for business effectiveness. The buzz has made companies, across industry types, realize that it will not be possible to maintain a competitive edge in the market just based on individual gut feel and that insights from a diverse dataset will be a valuable asset in decision making in the long run.

Big Data is going to impact HR as never before and is changing the way the function is working from purely system based to a more output and employee driven platform. As a result, a large amount of HR data resides in multiple layers and systems with low or no integration. Some distinct data pools that exist in the HR domain today with little overlap and low integration are given in Figure 1.

This data is huge and is constantly increasing. Making sense out of this data is a challenge and an opportunity as well. For HR to truly play a significant role in Business, it is important to move from measuring Efficiency (with a focus on cost) to Effectiveness (of HR

Figure 1: Data Pools - Opportunity in HR Big Data

Section 2Demystifying Big Data

Page 8: HRO handbook V 2.0

7

on competence, motivation and attitude of workforce) to Impact (on Business Performance). This is where Big Data processing and analytics comes to our rescue.

What is Big Data?

It is already being said that Web 3.0 is all about Big Data. Wikipedia defines Big Data as:

“... a term applied to data sets whose size is beyond the ability of commonly used software tools to capture, manage, and process the data within a tolerable elapsed time. Big data sizes are a constantly moving target currently ranging from a few dozen terabytes to many petabytes of data in a single data set.”

Big Data processing and analytics have a very important role to play wherever a huge amount of data is being captured, e.g. Internet search, social networks, web logs, call logs, mobile access logs, ecommerce, etc. See Figure 2.

There are many techniques that draw on disciplines

such as statistics and computer science algorithms that can be used to analyze datasets. Some of the techniques are Predictive Modelling, Time Series Analysis, Simulation, Statistics, Regression, Pattern Recognition, Cluster analysis, Crowd- sourcing, and Data mining.

How Big Data can be useful in HR and Recruitment?

HR is still at a basic level of understanding as to what Big Data can do for business. A large chunk of Big Data is human capital data and this can be leveraged in a number of ways for Talent Acquisition and Management. For example:

» Demand (Jobs) and Supply (Candidates) information drilling down to pin-code level categorized by Industry, Functional Area, Years of Experience and other demographics.

» A consolidated profile of Candidate with data aggregated from his/her resume and multiple social media platforms

Figure 2: Estimated rate of data generation the world over. Source:CRISIL Global Research & Analytics (GR&A)

Page 9: HRO handbook V 2.0

8

Enabling HR Transformation | HRO Handbook Volume 2

Step 1 Measuring transactions such as Recruitment, On-boarding, Payroll, Exit, etc.

Step 2 Identification of Metrics that are important for your Business

Step 3

Benchmarking with others in the Industry

Step 4

Understanding past behaviour and outcomes

Step 5 Predicting future likelihoods

» Manning/Staffing ratios in relation to business forecast numbers.

» Identifying the right fit for your organization by creating a positive profiling of a candidate. Clearly establishing the link between the positive profile (quality of hire) with the overall productivity

» Variable pay analysis for establishing productivity and attrition

» Utilization with respect to Employee Demographics, Leave and Time processes.

Where do we begin?

While Big Data may look overwhelming, it can be utilized and mined in a planned and systematic manner as mentioned in Figure 3. To really create Business Impact, these must be included in your Big Data Roadmap.

The infrastructure required to do the data churning is huge. So, it is recommended to move from an on-premise setup to a scalable, Cloud-based platform that can securely access your company’s data and is able to aggregate the same with other data sources such as social media platforms.

Figure 3: Implementing Big Data in an Organization

Page 10: HRO handbook V 2.0

9

About the Client

The client is a financial services company, part

of a group of seven businesses, and one of

India’s first multinational corporations. Today,

the Group’s footprint extends to 36 countries

and the multi-billion Dollar company has a

geographical span across 1200 locations

in India.

Section 3 Case StudyLeading Financial Services Company Realizes Business Value in Total HR Outsourcing

Problem Statement/Business Needs

The client’s expectations from the outsourced partner were an integrated strategic service delivery framework and re-engineered processes leading to enhancement of productivity. In terms of the outcome, the client expected cost benefits, reduction / elimination of non value-added activities, optimum resource utilization, continuous value creation and improvement.

Key Solution Elements

The implementation was structured around creating a process framework, governance mechanism, quality audits and facilitating change management. The HR Shared Services model once implemented had a dedicated employee service and transaction centre and provided an integrated cock-pit view of all HR transactions. The project aim was to maintain or improve current levels of performance, while leveraging future growth within the company (with associated performance improvements and cost savings) was an important driver behind the engagement.

The underlying aim was to improve performance by designing solutions that improved performance levels. A key component in this was technology integration through HRIS (a SAAS based application), a Case Management Tool and a Contact Center (aspect bases).

Enhanced cost effectiveness was brought about through the creation of an offshore HR Shared Services center at Gurgaon, re-sizing of HR-operational model (re-designing the ‘to-be’ processes), rationalization of HR business process, reduction in complexity, focus on lean processes saving cost and time. Focus on design and implementation activities like Process, Technology, and People, led to smooth change management, thereby making it a success. The framework of the relationship is detailed in Figure 4.

Page 11: HRO handbook V 2.0

10

Enabling HR Transformation | HRO Handbook Volume 2

Performance: » Overall average query resolution time is 185 mins

(3 hours), improved from the old average of 15 hours

» Level 2 queries currently resolved in 11.5 hrs, improved from an average of 29 hrs before the relationship

Long Term Impact

The client is now able to integrate existing processes and activities under one service umbrella. Standardization of processes has freed up time for HR Generalists and Centers of Excellence (CoEs) as they are relieved of administrative work. They now focus on helping the business shift from the staff room to the board room. Employees now experience faster responses from HR and are able to get all queries resolved through a single point of contact thereby creating a delightful experience.

Figure 4: Solution Framework for Client

Key Results

The results of the model exceeded client expectations with significant cost savings. Servicing 15,000 employees (over 700 branches across India for 7 business units) with the same quality and consistency became the norm. 93% of queries related to policy, benefits, payroll and statutory compliance were resolved by the end of every month.

Cost: » Release of 72 man months of HR productivity from

transactional work

Query Volume: » Over 200,000 unique queries handled for employees

from September 2009 with an average of approx. 500 unique queries per day

» Over 180,000 calls received with an average 400 employees calling everyday at the contact center

» Servicing 15,000 employees in over 700 branches across India for six Business Units under the Group

Effectiveness: » Adoption: 72% across the group with over 80% for

one Business Unit

» Average handling time of queries is 7 minutes

Page 12: HRO handbook V 2.0

11

Section 4 HR Shared Services

HR Shared Services is an enabler in HR Transformation.  It has evolved with an idea to transition the more administrative role of HR into the administrative specialist function, also known as Shared Services, so as to create capacity for other roles within HR to deliver more strategic benefit.  The aim of an HRSS model is to reduce cost, increase quality, and drive efficiency and effectiveness. Organizations that opt for Shared Services often keep a small HR team at the corporate level to focus on high-level strategy, governance, and policy. It is believed that by doing so, companies will be able to maintain best practices, monitor delivery, be more sensitive to customer needs, and generally reposition HR as more strategic and be less encumbered by administrative tasks.

HR Shared Services is a relatively new form of HR delivery that has experienced considerable popularity among large firms with multiple sites across the country and multinational corporations. The four strategic reasons for the evolution and setting up of HR Shared Services could be described as:

» To be part of a wider business change introducing the concept of professional or functional services

» To achieve a greater degree of structural flexibility to respond to business change

» To improve organizational learning across organizational boundaries

» To allow HR to reposition itself as more strategic; to reduce involvement in administrative trivia.

The expectation outcome from outsourcing of transactional HR activities to a HRSS centre can be bucketed in three parts and is illustrated in Figure 5.

Process standardization and centralization By centralizing the delivery of the administrative aspects of the HR function, senior HR professionals can concentrate on providing strategic input to the organization. Centralized accountability does not necessarily mean physical centralization.  Shared Services can be totally decentralized in physical terms as long as the accountability or reporting is centralized.  A Shared Services organization must be clear about what it is responsible to deliver.  The scope of delivery must be expressed, or at least be able to be expressed, as delivered outcomes.  There is an involvement of multiple parties in delivering outcomes, but there is a clear understanding of who does what in the process.

Firstly, it helps the organization increase its creditability and image by associating with a superior vendor. It also helps the organization obtain expertise on HR transactions, skills and technology that would not otherwise be available. Besides this, the overall governance model helps improve risk management, improve operating performance and have superior

Page 13: HRO handbook V 2.0

12

Enabling HR Transformation | HRO Handbook Volume 2

control on processes with on time delivery commitment every time. Outsourcing to a superior vendor helps accelerate expansion by tapping into the provider’s developed capacity, processes and system and also gain market access and new business opportunities through the provider’s network.

Financial benefitThe biggest advantage is to free up theft investments in assets – People, Infrastructure and Technology – and use these resources for other purposes. Secondly, generate cash by transferring assets to the provider. Moreover, through superior provider performance and lower cost structure, the opportunity to turn fixed cost into variable cost definitely increases.

Figure 5: The value proposition of an HR Shared Service model over time.

Increased employee satisfactionThe benefit from an employee perspective can be visualized and assessed in two ways: » Increased satisfaction through the service provider’s

SLA driven query resolution process, on time delivery of requests made and structured way of dealing with day-to-day transactions/queries in the employee’s life cycle. User friendly tools/applications help employees reach out to HR anytime, anywhere – which increases flexibility in all cadres.

» For internal HR team: Frees up the bandwidth and provides the opportunity of a stronger career path, and also increases the commitment and energy in non-core areas.

Page 14: HRO handbook V 2.0

13

Section 5Industry Views from AIMA’s First National HR Shared Services Summit

Summary of the Sessions

Session I: The Looking Glass: Deep Dive into foundation for HR TransformationThis session highlighted the need and the emergence of the HR Shared Services model. The session revolved around the impact of HR on business agenda, and trends in the HR space across countries and industries, problem definition in a corporate context, and HRSS models as solutions. Session Chair Mr N.S. Rajan, Partner & Global Leader People & Organization, Ernst & Young

Speakers » Mr Rohail A Khan, Global Group President HR

Outsourcing Solutions & IT, Xerox HR Solutions » Mr Pankaj Bansal, Summit Director & Co-Founder

& CEO, People Strong HR Services

Session II: Trends & Key Drivers This session highlighted trends in the HRSS space and the key drivers that led to its emergence and success in both developing and developed countries. The pros and cons of adopting an HRSS model were discussed along with measures to mitigate risk. Further the session focused on typical activities in an HRSS center and the basic requirements needed to successfully implement a Shared Services model.

Session Chair Mr S Varadarajan, EVP-HR, Tata Teleservices

Speakers » Mr Rajesh Ranjan, Vice President, Everest Group » Mr Harish Devarajan, Leadership Coach &

Organisation Consultant, People Unlimited » Mr AVK Mohan, Global Head- HR, Exl Services

Session III: Partnership & Change Management The discussion focused on the importance of choosing the right partner in bringing about HR Transformation through HRSS. Apart from focusing on the key criteria for identifying and maintaining partnerships in the space, the session addressed change management at both the individual and organizational level.

Session Chair Mr Faisal Sayed, HR, Religare

Speakers » Ms Shelly Singh, Co-founder & EVP, People Strong

HR Services » Ms Deepa Chadha, Vice President HR Shared

Services, Bharti Airtel Limited

Session IV: Strategic Solutions: Technology and Innovation This session focussed on the role of technology and analytics as a key enabler for a HR Shared Services

Page 15: HRO handbook V 2.0

14

Enabling HR Transformation | HRO Handbook Volume 2

model. The scale at which organizations are operating requires extensive usage of technology. Analytics helps to measure the metrics defined and the impact on business. The session spotlight was on innovations in the technology and analytics space and future directions.

Session Chair Dr Jitendra K Das, Director, FORE School of Management

Speakers » Mr Manish Choudhary, Managing Director, Pitney

Bowes Software » Mr Rajendra Ghag, Executive Vice President – HR,

HDFC Standard Life Insurance » Mr Ranjan Sinha, CEO, Global Talent Metrics » Dr A K Chawla, Head- HR North, Tata

Consultancy Services

Summit highlights

» Buying propensities in HRSS are shifting from galactic deals to niche partnerships around payroll, helpdesk, etc.

» There is an increasing focus on outcome based value proposition and the future lies in attaining business agility, enabled by technology, service delivery, innovation and outcome orientation.

» Technology is playing a greater role than ever before in enabling HR organizations to move from personnel management to business execution. There is more focus on relevant information, better outcomes, smarter decisions and actionable insights anytime, anywhere, at any event, on any device and in any country.

» Employee engagement has seen a paradigm shift with greater emphasis on creating a dialogue using predictive analytics, motivating actions through persuasive technologies and in general a dynamic approach using gamification and rich media

Session V: Impact of HRSSC This session focussed on the impact that the implementation of an HRSS model can have on businesses and subsequent benefits of a centralized HR platform. The session also highlighted the importance of continuous learning in the Shared Services model.

Session Chair Mr Pankaj Bansal, CEO and Co-founder, PeopleStrong HR Services

Speakers » Mr Gautam Chainani, Chief People Officer, Aditya

Birla Financial Services » Mr Sameer Khanna, Head HR, Jones Lang LaSalle,

India

Page 16: HRO handbook V 2.0

15

Session Chair

The role of HR in any organization can be divided into 3 categories - Strategic, Tactical and Transactional. This demarcation is the base for evolution of an HR Shared Services Center. HR professionals are typically reluctant to let go of control while the HRSS model endeavours to enable this. Organizations must look at creating wealth by enriching employees in their own roles, which will in turn strengthen the performance of the function itself.

N.S. Rajan Partner & Global Leader - People & Organization,

Ernst & Young

SpeakersHRSS is the way forward for structured change in organizations. Earlier, HR was viewed as simply a transactional and not a strategic function. All this has changed with technology impacting HR service delivery, and thus outcomes and the bottom-line of a business to create a win-win solution for all stakeholders.

Rohail A Khan Global Group President HR Outsourcing Solutions & IT,

Xerox HR Solutions

HRSS is very industry agnostic, though the scale of operations is still a criterion. Expectations on learning and career growth are more elaborate in India than the rest of the world. The ability to make better decisions around retirement and healthcare will have direct impact on the bottom-line. Shared services model unlocks time for such activities along with world class delivery. Process consistency, quality and effectiveness are ensured.

Pankaj Bansal Summit Director and Co-Founder & CEO,

PeopleStrong HR Services

Session IThe Looking Glass: Deep Dive into Foundation for HR

Page 17: HRO handbook V 2.0

16

Enabling HR Transformation | HRO Handbook Volume 2

The HR Shared Service Model

The global economy is becoming increasingly volatile and given this, companies are pushing for greater efficiency and ROI from every function, including the Human Resources division. The role of Human Resources in any organization can be divided into three categories - Strategic, Tactical and Transactional (for details see Figure 6). The challenge facing HR is to re-invent itself at all three levels and this is the entry point for HR Shared Services.

HRSS is the way forward for structured change in organizations. Earlier, HR was viewed simply as a transactional and not a strategic function. All this has changed with technology impacting HR service delivery and outcomes, thus impacting the bottomline of a business and creating a win-win solution for all stakeholders.

Trends in HR Shared ServicesWith the growing size and scale of organizations, there are a lot of pressures on the HR division of an organization like effective and efficient delivery of HR outcomes through centralization and consolidation. Most HR executives now realize that their current service delivery model is not sustainable into the near future, and that deployment of a new model is necessary. This gave rise to the evolution of a Shared Services

model. The services and processes that were earlier performed by multiple entities are provided by a single organization and, as such, that HRSS provider becomes an internal service provider. The entity leverages economies of scale, scope and place; has established service levels and prices its services in alignment with those service levels; is highly focused on customers (one access point for all delivered services); has robust metrics; and is focused on process standardization and best practice deployment. In short, it is run like a business and takes the concept of consolidation to the next level with a more sophisticated and robust service delivery model. In the last few years, the HRSS model has become more mature and some increasingly common trends in the space are as seen below.

Trend 1: The Shift in HRSS Deals

Buying propensities in HRSS are shifting from galactic deals to niche partnerships around payroll, helpdesk, etc. Initially, in the first phase of outsourcing, large conglomerates went ahead with total HR Outsourcing but failed to effectively implement the model due to the huge size and scale of the deals. In the recent years though, the size of each deal is decreasing but the overall value of the deals is increasing as seen in Figure 7. The average value per deal per annum is decreasing over the years, but the Shared Services industry has grown tremendously.

Figure 6: The HR Shared Services Model

Page 18: HRO handbook V 2.0

17

Figure 7: Trend of the Average Annual Contact Value of new Shared Services deals over the years

Figure 8: The shift in the value proposition of the Shared Services model over time

Trend 2: The Future of HRSS – Transforming HR and Achieving Business Agility

There is an increasing focus on outcome based value proposition. Organizations have traditionally focused on the movement from operational efficiency to process

efficiency. But the future lies in attaining business agility, which will be enabled by technology, service delivery, innovation and outcome orientation as seen in Figure 8. This will enable HR to facilitate achieving business goals.

Page 19: HRO handbook V 2.0

18

Enabling HR Transformation | HRO Handbook Volume 2

The above qualities could be a result from a successful adoption of an HRSS model. HRSS is a means to the end and not the end in itself. Organizations need to figure out their desired outcomes first and then decide if HRSS is the correct means to achieve it.

Trend 3: Technology and InnovationTechnology has and continues to play a pivotal role in enabling HR organizations to move from personnel management to business execution. The widespread adoption of personal computers made it possible for HR organizations to utilize more sophisticated talent management techniques to support key talent decisions, for example, using computer-based tools and forms for evaluating employee performance and assessing job candidates. Greater access to data enabled HR to shift from focusing on specific employee decisions to aligning talent management processes. No longer was HR limited to being a series of isolated silos focusing on staffing, training, compensation and succession. Now HR could function as a set of integrated talent management processes designed to ensure a steady supply of high performing talent in critical job roles. Emphasis on usability and pace of innovation is increasing. There is great focus on relevant information, better outcome, smarter decisions and actionable insights anytime, anywhere, at any event, on any device and in any country (see Figure 9).

Figure 9: Future trends in technology

Trend 4: Models of Employee EngagementIn relation to employees and employee engagement, there has been a significant paradigm shift. Table 1 illustrates the key changes with respect to employees and engagement activities as a result of the HRSS model implementation.Employee engagement has become key to the success of any organization, whether it is done through persuasive computing (behavioural economics, contextual targeting), predictive analysis (interests, topics, patterns), ethnography (behaviours and attitudes) or social media/ gamification (relationship influencers, fun factor). The HR Shared Services model is extremely adaptable across industry type, though a certain scale of operations is a key requirement. In essence, there are mainly three types of HR costs – labour cost, labour health care cost and pension cost. The ability to make better decisions around retirement and healthcare will directly impact the bottom-line. What a Shared Services model does is unlock time for such activities along with world class HR service delivery and process consistency, wherein quality and effectiveness are also ensured. However, HR has a core human element that must not be forgotten and professionals need to use their judgement to consider what requires a personal touch and what does not. Outcome orientation will enable better adoption of the HRSS model and move HR professionals from the role of an HR Business Partner to an HR Enabler.

Page 20: HRO handbook V 2.0

19

Table 1: Changing trends in how employees are viewed and engaged in the HRSS paradigm

Old Model » Accommodate them

» Focus on the transaction

» Hit them periodically through the year

» Wait for them to do something

» The portal will cover what they need

» Static online experience

» One size fits all

New Model » Engage them

» Focus on the outcome

» Create a dialogue using predictive analytics

» Motivate actions through persuasive technologies

» Right media at right time with contextual targeting

» Dynamic approach using gamification

» Customized and targeted based on preferences

Rationale » Engagement = Behavior

Change

» Outcomes drive savings

» Continuously influence behaviors

» If we don’t encourage, they won’t act

» People engage through different channels

» Experience needs to be sticky and engaging

» People have unique motivators

Page 21: HRO handbook V 2.0

20

Enabling HR Transformation | HRO Handbook Volume 2

Session ChairHR professionals are often faced with a difficult scenario - on the one hand, the organization and management require HR to increase productivity and output and on the other, employees want HR to enhance the working environment and incentives. It is up to the HR division to be able to find a balance and yet address these different but important demands.

S. Varadarajan EVP-HR,

Tata Teleservices

Speakers Some of the drivers to the adoption of the HRSSC model are cost reduction, process excellence, standardization, access to technology, access to expertise, ability to focus on core business, resulting in competitive advantage. A hybrid model, i.e. a combination of in-house operations and outsourcing is the best-fit for most companies. HRSS helps an organization achieve both economies of scale and skill.

Rajesh Ranjan Vice President, Everest Group

The need for HRSS emerged due to inefficient HR departments, transaction overload, time and space constraints for employees, need for focus on employee engagement and development, need to empower line managers and other business imperatives. The benefits of an HRSS model are quality, cost and time savings, state-of-the-art technology (such as Employee Self-Service), credible HR data and focus on career development opportunities.

Harish Devarajan Leadership Coach & Organisation

Consultant, People Unlimited

There is a lot of imbalance between various stakeholders. Shareholders want more and more, customers want more for less, employees ask what more, and the government wants more for nothing. In such a scenario, the drivers for change are increased globalization, enhanced individualization, imperatives of inclusion, relentless technological advancement, and global mobility of talent. All of these are, to a large extent, taken care of by the HRSS Model.

AVK Mohan Global Head- HR,

EXL Services

Session II Trends and Key Drivers

Page 22: HRO handbook V 2.0

21

enabled models are leading to more standardised platforms which allow for a personalised employee experience.

Why Outsource

The benefits of an HRSS model are quality, cost savings, time saving, state-of-the-art technology and Employee Self-Service, credible HR data and focus on career development opportunities. However, despite this HR Managers are called upon to build a business case for outsourcing. Some pros and cons of outsourcing vs. in-house operations are:

What to keep in mind when setting up an HRSS center: » Do not exaggerate the business case

Trends and Drivers of HR Shared Services

HR professionals are often faced with a difficult scenario. On the one hand, the company and management require HR to increase productivity and output and on the other hand, employees want HR to enhance working environment and incentives.

Apart from the push and pull factors at play in the workplace, the other drivers in the adoption of the HRSS model are cost reduction, process excellence, standardization, access to technology, access to expertise, ability to focus on core business resulting in competitive advantage. Adoption of HRSS helps in shifting costs from capital expenses to operational expenses. Further, the cost of service delivery is reduced, thereby reducing total cost along with increasing effectiveness. A hybrid model, i.e. a combination of in-house operations and outsourcing is the best-fit for most companies. HRSS helps an organization to achieve both economies of scale and skill.

The traditional sourcing model debate of whether all in-house vs. all outsourced, is increasingly being expanded to include hybrid and/or multiple best of breed provider options. HRSS models are becoming broader, deeper and sophisticated as seen in Figure 10. Technology

Outsourcing » Economies of scale » Institutionalization and

standardization » Efficiency of technology » Professional Service » High initial investment

In-house » Flexibility » Low investment options » Addresses constraints » Adopt technology as

appropriate » Burden of career

development continues

Figure 10: Key Trends in HR Shared Services

Page 23: HRO handbook V 2.0

22

Enabling HR Transformation | HRO Handbook Volume 2

» Set realistic expectations

» Define/insist on the requirement upfront

» Process mapping/ modification is critical

» Data integrity must be fundamental

How to make an HRSS project successful

» Adoption of the State-of-the-Art approach to ensure effectiveness and efficiency

» Responsibility vs. Accountability mapping

» Clear and defined Review

» Analysis

» Troubleshooting process

» Live the change: The entire organization needs to believe in the change and integrate themselves with the new model and new ways of working.

Following are the key trends highlighted in the Session. Trend 1: HRSS Evolution in Developed vs. Developing Markets.The way HRSS has grown in developed markets is quite different than that of developing economies. The HRSS trend comparison between the developed markets and India can be seen in Figure 11.

Trend 2: Talent Management and related core functions are now outsourcedEarlier only transactional activities were outsourced but now even talent management activities such as Learning, Recruitment and Performance Management Systems are considered within the scope of HRSS. Transaction-intensive processes are core but talent management components are increasingly considered as well. This is illustrated in Figure 12.

Trend 3: Drivers for HR Shared Services are changing Organizations are increasingly looking for a cost + value strategy where cost reduction is important but not the only driver. As seen in the Figure 13, value or process excellence is clearly almost as critical for most current or prospective users of HRSS.

Figure 11: HRSS Evolution in Developed vs. Developing Markets

Page 24: HRO handbook V 2.0

23

Figure 12: Trend showing the increasing focus on Talent Management activities to be a part of HRSS model

Figure 13: Percentage importance of each of the key drivers for HR Shared Services

Page 25: HRO handbook V 2.0

24

Enabling HR Transformation | HRO Handbook Volume 2

Trend 4: Technology as a game changerTechnology advancements over the years are creating newer options to reduce total cost yet increase effectiveness as seen in Figure 14. Technology reduces human effort and time invested on mechanical and repetitive jobs, thereby saving time and increasing productivity. This in turn reduces the overall cost for the organization.

Figure 14: Changing Technology platforms for HR Management Systems over the years. Source: Everest Group (2011)

Advancements in technology also lead to: » Greater integration of HRMS, case management,

knowledge management, and portals » Interactive and intuitive interfaces/tools enable

greater level of self-service » Analytics tools help in better decision making » Mobile apps provide greater flexibility

Page 26: HRO handbook V 2.0

25

Session Chair Significant operating and financial performance improvements are critical to success and long term survival of an organization. With a trusted partner as a provider, scaling within the same resource pool, reduced costs and greater margins is a big possibility, which otherwise would be too steep a task.

Faisal Saiyed EVP-HR,

Religare Enterprises Ltd.

Speakers To maintain a healthy relationship between partners, organizations must follow a governance charter. The reasons behind a robust governance mechanism are to (a) define the governance relationship between the partners, (b) influence how long term common objectives are met, (c) ensure performance is optimized and success is measured (d) set responsibility and accountability framework, and (e) to specify best practice governance framework that identifies outcome, addresses timely renewal and continuous improvement of governance practices.

Shelly Singh Co-founder & EVP,

PeopleStrong HR Services

In the adoption of an HRSS model, it is extremely critical to have the right partnership. Some of the key areas to look out for are common values and interests, shared responsibilities and accountabilities, equal decision making rights and a healthy learning culture.

Deepa Chadha Vice President HR Shared Services,

Bharti Airtel Limited

Session III Partnership and Change Management

Page 27: HRO handbook V 2.0

26

Enabling HR Transformation | HRO Handbook Volume 2

Identifying a Strong Partner: The Airtel Outsourcing Experience

Bharti Airtel Limited is a leading integrated telecommunications company with operations in 20 countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks amongst the top five mobile service providers globally in terms of subscribers. When Airtel decided to adopt the HRSS model, it realised the critical importance in identifying the right partner. The checklist to identify a good partner:

» Share same values and interests

» Share risk, responsibility & accountability

» Equal decision making rights

» Learning culture is fostered

On the basis of this trusted partnership, Airtel has outsourced a number of its HR activities to a Shared Service centre. The scope of activities are seen in Figure 15.

Governance Model

In implementing an HR Shared Services model, it is important to understand the core elements of HR and how these have evolved. HR has had an emotional connect with people and employees always had a hard coded touch-point. With the rise of HRSS and outsourcing, it was natural for internal HR to pose questions such as, “What happens to my role?”, and “Where is the time to do all this?”

In order for the outsourced partnership to be a success, there are some requirements at the individual employee level as well as at the organizational level. A change at the individual level requires: » Dedicated Program Manager at tactical level » Performance based linkage to success of the project

at both ends » Program Management team is cross functional

A change at the organizational level requires a governance charter that can be seen in Figure 16.

Figure 15: Airtel’s scope of activities in HRSS

Page 28: HRO handbook V 2.0

27

The Governance Model de-constructed

A formal Governance Model helps to:

» Establish a three-level relationship model

» Provides a forum for continuous dialog on strategic planning and execution

» Management commits a minimum percentage of their time to this initiative

» Co-accountability for success and failures

The reason behind such a robust governance mechanism is to:

» Define the governance relationship between PeopleStrong and Client

» Influence how long term common objectives are met, performance is optimized and success is measured.

» Set responsibility and accountability framework

» Specify best practice governance framework that identifies the outcome, timely renewal and continuous improvement of governance practices.

Figure 16: HRSS Governance Model

The roles and responsibilities of each stakeholder can also be defined as:

» Sponsor / Steering Committee: To ensure (a) value creation for mutual benefit, and (b) Transforming the overall HR delivery experience

» Strategic Review: Strategic interventions viz. people, technology, process workflows and communication to translate expectations into superior and consistent delivery

» Tactical Review: Trend analysis, escalations review – identify course correction opportunities. Closely monitor change

» Operational Review: SLA performance, process deviations, issue log tracking, addressing routine operational issues.

Page 29: HRO handbook V 2.0

28

Enabling HR Transformation | HRO Handbook Volume 2

Session Chair HRSS’ popularity as a model can be attributed to stiff competition in the marketplace to a certain extent. The HRSS model is very powerful because cost cutting is a primary driver in bringing in efficiency. Research shows that HRSS costs can come down by almost 10-20%. This can happen in two domains – by hiring fewer employees per output and hiring less HR employees for internal service delivery.

Dr Jitendra K Das Director,

FORE School of Management

Speakers Analytics help to measure the impact of HR initiatives and operations. In fact, analytics can help predict outcomes to enable future planning. Looking to the future, we need to devise methods to be able to measure intangible relationships such as - How diversity and inclusion impacts shareholder value. We need to device analytics to a level where even qualitative metrics can be measured.

Manish Choudhary Managing Director,

Pitney Bowes Software

In the light of today’s scenario, there is no other option apart from outsourcing or creating an HR Shared Services Centre. Though HRSS is not a ‘one size fits all’ option, technology and analytics have a huge impact on businesses. However, before taking a call on the HRSS model, the context and the business need must be kept in mind.

Rajendra Ghag Executive Vice President – HR, HDFC Standard Life Insurance

Technology is a driver to run business operations efficiently. The focus should be initially on innovation and then process innovation which will lead to operational efficiency through technology. Social hiring is one such innovation. While adopting a technology, companies must ensure that strategy needs to drive technology and not the other way round.

Ranjan Sinha CEO,

Global Talent Metrics

Technology plays a great role when it comes to hiring. With technology, the hiring cost has reduced hence positively affecting both the lines. Analytics helps to link the actions that the management takes to the impact that has on the business, for e.g., how higher incentive disbursement leads to lower attrition can be answered using analytics.

Dr. A K Chawla Head- HR North,

Tata Consultancy Services

Session IV Strategic Solutions - Technology & Analytics

Page 30: HRO handbook V 2.0

29

Technology is a driver to run business operations efficiently. Social hiring is one such innovation. While adopting a technology, companies must ensure that strategy needs to drive technology and not the other way round. The rush to start using tools should not outweigh the need to formulate a social media strategy.

The aim of HR is to reduce the cost and enhance the quality of employees. Technology and analytics play an important role measuring both the means as well as the outcomes. In fact, analytics can help predict outcomes to enable future planning.

Case Study Tata Consultancy ServicesHiring at levels of 40,000-60,000 employees per year is extremely difficult without technology as an enabler. But today Tata Consultancy Services has around 2,50,000 employees and hiring at this scale is impossible without technology. At TCS, everything except interviews is automated on the internal technology portal in the recruitment and on-boarding domain. Hiring of each and every person adds to both the top line and the bottom-line and with technology, the hiring cost has reduced thus positively affecting both the lines.

Apart from recruitment, competency development is another equally important activity. Therefore, training modules and Performance Management Systems are also available on the TCS technology portal. Analytics helps to link actions the management takes with impact on business, for e.g., analytics can be used to gauge the extent to which a higher incentive disbursement leads to lower attrition.

Looking to the future, we need to devise methods to be able to measure intangible relationships such as ‘how diversity and inclusion impacts shareholder value’. We need to device analytics to a level where even qualitative metrics can be measured.

A clear understanding of how the service provider’s technology and analytics will help is extremely important. Partnership with the provider is essential.

Page 31: HRO handbook V 2.0

30

Enabling HR Transformation | HRO Handbook Volume 2

Session Chair Fundamentally, the expectations from HR outsourcing can be bucketed in three parts - Process Excellence, Financial Benefit and Increased Employee Satisfaction. The HRSS framework provides them to an organization along with cutting edge technology and a centralized knowledge pool. It is the convergence of technology, knowledge pool, process expertise, and operational predictability, which provides the organization with a superlative HR Shared Services experience.

Pankaj Bansal CEO and Co-founder

PeopleStrong HR Services

Speakers The cumulative impact of HR Transformation will be to fundamentally redefine the time, cost and value-add of HR organizations. A Shared Services model is used to reposition HR Business Partners and their aim to become more strategic and less administrative. This only happens when HR Administration becomes more efficient, cost effective and processes and delivery methods to the business are standardized. This is greatly enabled by an HRSS model.

Gautam Chainani Chief People Officer

Aditya Birla Financial Services

The real value of an HRSS model is seen through improved accuracy, sustainable systems and processes, more efficient integrated systems landscape reducing manual re-work and lower risk of data protection breach, with a single, secure solution for all staff information. In order to gauge the impact of a Shared Services Centre (SSC), an organization must not forget the motive of an HRSSC and the means of measuring it.

Sameer Khanna Head HR,

Jones Lang LaSalle India

Session V Impact

Page 32: HRO handbook V 2.0

31

The true value of HRSS

HRSS provides companies benefits such as creating a central knowledge base, policies and processes, from which standardized, automated transaction processing can be achieved, and a single Human Capital Management software platform. Typical services that are included as part of HR Shared Services are Recruitment Administration, Benefits Administration, Employee Welfare Support, Payroll changes, Training and Support Administration, and Information Management. The real value from an HRSS centre is detailed in Figure 17.

Achieving HR Transformation

In order to gauge the impact of a Shared Services Centre (SSC), an organization must ask questions like:

Figure 18: The change in percentage time spent on various facets of HR activities after HR transformation in the form of an HRSS model

» Is the SSC doing what it set out to do?

» How has moving to an SSC measured up against the earlier way of doing HR?

» Is the new model reducing costs and time to process functions?

» Are customers satisfied?

» In general terms, how is the service doing? How does it stack up against other companies in the industry?

The cumulative impact of HR Transformation will be to fundamentally redefine the time, cost and value-add of HR organizations. A Shared Services model is used to reposition HR Business Partners and their aim to become more strategic and less administrative. This only happens when HR Administration becomes

Figure 17: Co-creating value through HRSS

Page 33: HRO handbook V 2.0

32

Enabling HR Transformation | HRO Handbook Volume 2

Figure 19: Way Forward for HRSS

more efficient, cost effective and processes and delivery methods to the business are standardized. This is greatly enabled by a HRSS model as displayed in Figure 18.

Key Takeaways & Future Directions » Understand wider applications of Shared Services

and the necessary steps to success » Enable partnerships beyond organizational

boundaries » Identify and create flexible service models through

collaboration » Learn how Shared Services can enable strategic

business transformation and not merely serve as a vehicle to control costs

» Recognize operational challenges in establishing partnerships

» Learn to monitor and measure performance through a properly executed governance platform

Way Forward for HRSSCIn line with the way ahead for HRSSC, PeopleStrong is turning the spotlight on two key focus areas:

Strategic implementation to align with business goals » Drive value-added initiatives and evaluating cost

reduction methods to stretch ROI

» Draw the end-to-end roadmap to implement the concept of ‘HR functions aligned to business goals’ successfully

» Cut administrative tasks to deliver HR’s value proposition to the rest of the business

» Standardize processes globally to reduce errors and deliver uniform services

» Enhance Employee Self Service to reduce workload and channel efforts to value-add activities

Advancing and improving HR processes, functions and delivery by focusing on opportunities to be a profit generating centre

» Understand what the business sees as high value

» Leverage technology to improve functionality & service delivery

» Enhance employee engagement to optimize retention of high performers

» Evaluate the most effective charge-back structure

» Do more with less

Page 34: HRO handbook V 2.0

33

FIGURES

Figure 1: Data Pools - Opportunity in HR Big Data

Figure 2: Estimated rate of data generation the world over

Figure 3: Implementing Big Data in your organization

Figure 4: Solution framework for client

Figure 5: The value proposition of an HR Shared Service Model over time

Figure 6: The HR Shared Services Model *

Figure 7: Trend: Average Annual Contact Value of new Shared Services deals over the years *

Figure 8: Shift in the value proposition of the Shared Services Model over time *

Figure 9: Future trends in technology *

Figure 10: Key Trends in HR Shared Services *

Figure 11: HRSS evolution in developed vs. developing markets *

Figure 12: Trend showing increasing focus on Talent Management activities to be a part of HRSS model *

Figure 13: Percentage importance of each of the key drivers for HR Shared Services *

Figure 14: Changing technology platforms for HR Management Systems over the years *

Figure 15: Airtel’s scope of activities in HRSS *

Figure 16: HRSS governance model *

Figure 17: Co-creating value through HRSS *

Figure 18: The change in percentage time spent on various facets of HR activities after HR transformation in the form of an HRSS model *

Figure 19: Way forward for HRSS *

TABLES

Table 1: Changing trends in how employees are viewed and engaged in the HRSS paradigm *

* These Figures and Tables are from Presentations made by Speakers at AIMA’s HR Shared Services: A Key Differentiator for Transformation, August 2012

List of Figures & Tables

Page 35: HRO handbook V 2.0

34

Enabling HR Transformation | HRO Handbook Volume 2

Notes

Page 36: HRO handbook V 2.0

35

Notes

Page 37: HRO handbook V 2.0

36

Enabling HR Transformation | HRO Handbook Volume 2

Notes

Page 38: HRO handbook V 2.0

Platform based HRO

HCM Technology

Payroll & Compliance

Recruitment Process Outsourcing

HR Shared Services

Reach us at:

Tel: + 91-124-4782400/401

[email protected]

BENGALURU | DELHI | GURGAON | MUMBAI | HYDERABAD

www.peoplestrong.com