Transactional Value | What has HR Done to Add Value?

Cost reduction and efficiency improvements are generally the main drivers for HR systems changes and the adoption of a shared services delivery model. Jerry Arnott (Department for Work and Pensions — DWP) emphasises the importance of efficiency improvements within the DWP's HR transformation programme and states that it is critical that HR adds value on essential administrative and support services. This scale of saving is mirrored in other organisations we have worked with.

HR's ability to deliver transactional value is the main litmus test for managers. As Maggie Hurt (Renolds) points out: 'Our clients judge us on getting the basics right, like pay and offer letters — what we might regard as mundane. We then get the attention of our clients and earn the right to contribute at a more strategic level'. HR services delivered at the transactional level are most immediately relevant to day-to-day management and therefore play strongly into tests of competence and relevance. It is essential therefore that HR works with the rest of the business to agree on expectations in the following areas:

• Target cost base (measured through various ratios)
• Service levels
• Quality
• Reporting

Underpinning these tangible measures will be less tangible (but arguably the real determinants of value) measures of responsiveness and experience (the personal touch).

All this is great, and if HR can get all the above right it will be adding transactional value. But we believe HR can deliver more in this area:

1. Data modelling — HR needs to turn information into insight. What is more likely to get the attention of the CEO/CFO, a turnover figure (say 15%) set alongside an industry turnover average (say 13%) or data showing the true costs of turnover: where we are experiencing it; the kind of people leaving, an impact analysis that shows what it costs to lose then replace someone? We believe the latter will, especially if the financial impact can be estimated.
2. Reporting what is useful — we need to report what managers will find useful. This means thinking more deeply about the kind of data we collect and how we present it. Ian Elms recalls that in his time at Kingfisher an annual 'census' was produced showing a breakdown in company demographics, compensation data, etc. This gave the executive team insights about the workforce.
3. Assessing impact on performance — getting under the skin of data so that we can better assess the impact on performance. Other functions do this really well (e.g., marketing, finance) and we have much to learn from these in order to build a compelling story using both narrative and data.