Shared Service Centres

Shared service centres provide services needed by several, if not all, other parts of an organisation. Two distinctive features of HR shared service centres are:

• they offer a common service provision of routine HR administration and, sometimes, additional HR services;
• they are service-focused, enabling the customers of the shared service to specify the level and nature of the service.

An increasing number of organisations are exploring the option of HR shared service centres, including the use of 'off-shoring' whereby the service centre is located in a geographically remote location. As shown earlier in Table 1, the introduction of a shared service centre is just one element of a wider change to the way that the HR department operates and is structured. For example, a shared service centre is often introduced at the same time as there is a move to introduce business partners and centres of excellence as there is a corresponding increase in the number of people management activities that are devolved from the HR department to the individual employee.

The content of shared services will vary from one organisation to another. A shared service centre can provide the full service from routine administration in, for example, recruitment, payroll and training, right through to supplying specialist HR information and advice on HR policy and practice.

HR shared service centres can be resourced by in-house personnel or they can be outsourced to specialist third party outsourcing providers. In practice, it is becoming more common to see hybrid models. One example of a hybrid model might be whereby the majority of the HR services are provided through an in-house shared service centre, with a few specialist areas being outsourced (e.g., employee 'wellness' or 'well-being'). A different example could be where the administrative activities are outsourced to one provider and other specialist areas are outsourced to separate specialist providers. A model of shared services which illustrates the benefits and challenges posed by different organisational models is shown in Figure 1.

 Figure 1: The benefits and disbenefits of different organisational models