Managing the Boundaries between the Different HR Service Delivery Channels

This is an area of difficulty often faced by HR functions. The underlying issue is primarily about which role is the tail and which is the head. Does it matter? Ultimately, the function needs to develop an HR agenda which will support and help the business succeed. So what matters is that the function works through issues around the client interface and how work is commissioned and then delivered.

In the Reilly et al. (2007) report, 56% of organisations identified 'boundary disputes' within HR shared services as the most prevalent problem affecting their operations. These can often relate to a lack of clarity about roles, responsibilities and accountabilities of the different parts of shared services and fragmented processes. Transferring HR activities to a shared service centre can have knock-on effects on existing career paths, creating tensions and conflicts between an apparent 'esteem' attached to business partners and specialists, compared with the 'institutionalised devaluation' often attached to HR staff involved in administrative and transactional support roles. This thinking can drive wedges among HR professionals and weaken the overall effectiveness of the HR function.

Indeed, Nick Worrall, HR Director at National Grid, identified similar issues associated with the development of its UK shared service centre. As he reflected:

When it became apparent that various people, including myself, were to be part of comprehensive shared service solution, we didn't exactly go home skipping that night. However, those initial thoughts were progressively dispelled as it became evident that the adopted structural approach allowed for end-to-end responsibility for many big ticket HR services, such as recruitment and learning and development, in addition to general transactional support.

Elaborating these insights, it is becoming recognised that one of the ways to mitigate these effects is to involve staff in the design of the centre and being explicit about career development and opportunities. Some organisations have opted to keep their HR service centre separate from the wider HR function. Others have encouraged those wishing to develop a career in HR to acquire wide-ranging HR knowledge in the centre through, for example, rotating around different business streams, and then moving to line or specialist roles in HR or elsewhere in the organisation.

There is also the potential for boundary issues between business partners and specialists. In our experience, if HR specialists are business-focused, boundary issues are less of a concern, as their work will be inexorably linked in with business priorities. Problems arise when HR specialists are semi-detached from the business, pursuing their own agendas and priorities rather than those of the business. For example, in one organisation some learning and development specialists had invested significant time in developing a whole range of training workshops which were not a priority. There are many other examples outside L&D, such as the development of inappropriate policy, investing in unnecessary external research, participating in external bodies of dubious value to the organisation and so on.

One of the ways HR functions are resolving these organisational boundary issues is through adopting aspects of the consultancy model. In particular, there are three aspects that help business partners and specialists to work together more effectively:

• The acceptance that HR professionals need to be addressing those issues that are most critical to their clients. This is an important way in which value is expressed and is based on the principle that there will be a commissioning of work by the client.
• This work will be packaged as a project, with clear terms of reference — including deliverables, timescales, resources, costs, etc.
• HR participates fully in these business-critical projects because they have valuable skills that will help their client to make progress.
  Whatever the structural solution, it is likely that boundary issues will arise and require resolution. 

Case Example Illustrating Aspects of the Model

This Oil and Energy Services company had grown both organically and through acquisition into a global organisation employing 64,000 staffs in 80 countries. To create high levels of customer service it depended on high levels of international team working and knowledge sharing. This reliance on knowledge and technology caused them to describe themselves not only as a leading oilfield services provider but also as information systems specialists, who could support their customers by translating data into useful information, and then transform this information into knowledge for improved decision making around the globe. Given their strategy of creativity, collaboration, and high levels of customer intimacy, the levels of understanding of customers' needs, managing international diversity and knowledge sharing required a great deal of international teamwork.

HR Strategy

The HR function was seen as pivotal to the development of international team-working and knowledge sharing. The HR function had a crucial role in developing culturally sensitive management and in so doing was required to shed its administrative workload to concentrate on culture management and change issues. The HR function was being gradually transformed into a more strategically oriented function, in which HR staff worked more closely with managers in the new operating structure.

To achieve this, the HR function was first divided into the now common shared services and business partner model. Shared services provided administrative and policy support with HR business partners providing direct support to business-facing managers in the field. Second, shared services adopted a global HRIS to allow it to become more efficient and effective in providing globally available data for all service lines and all business groups from the same database. This allowed consistency and integration of performance management and other HR practices and policies throughout the company. Third, Web-based HR was introduced to improve service delivery by opening up the access to the HRIS using manager and employee self-service applications.

HR Service Goals

Thus, the HR service goals were primarily concerned with improving service quality and freeing up time for HR staff to address more strategic issues.

So when we looked at it we realised that in order to do that we had to take off a lot of the administrative load from the HR function in each of the groups and let them focus much more on people and then…work with one another around people issues because that's the cultural driver and let all the support stuff be taken care of somewhere else. 
(UK HR Director)

HR Service Architectures

First, these goals were to be achieved through the development of a common HR portal, through which all online services could be accessed. The intention of this portal was also to help HR to create a greater sense of corporate identity among employees in the extended enterprise using an internal employer branding strategy. Second, the company implemented a global HRIS, comprising a set of basic information systems and the first set of Web-based HR tools. These technologies were a combination of out-of-the-box applications, derived from the global HRIS, combined with bespoke tools, many of which were developed in-house'.

The parent company's internal analyses had shown that

There is a cost saving …but that cost saving does not offset the cost of implementation and investment cost. It might do in the long term but if you're looking at sort of two/three year returns it doesn't work. (UK HR Director)

The real benefit being sought was an improvement in HR service quality, providing more accurate and reliable data and enabling more informed management decisions. The company, however, had a longer term transformational goal of introducing ICT to improve human capital management through the development and introduction of a bespoke global 'career centre'.

Service centres were established to handle transactional enquiries from line managers and employees. The emphasis was on the internal sourcing of HR technologies, unless a compelling case could be made for outsourcing of services. As the HR Director explained:

I think outsourcing overall is quite dangerous because outsourcing is … in many cases it's cost driven and if it's cost driven why should another organisation be able to take some cost out which you can't?

HR Service Outcomes

A mix of intended and unintended outcomes emerged. On the positive side, managers were satisfied overall with the level of transactional support provided by the shared service centre and the quality of data available via employee and manager self-service tools. There were issues, however, with some Web-based HR applications, in particular the 'career centre' which was supposed to enhance opportunities for international mobility but failed to live up to its promise. Managers also reported problems with 'service ambiguity', in the sense that they were not always sure what services to reasonably expect from different parts of HR, citing potential conflicts and overlaps between specialists and business partners.

This example, supported by the framework described earlier, points to a number of important points for practitioners to be aware of when considering different HR service delivery approaches:

• Consider carefully the specific HR services goals that define the purpose of the investment in the project(s)
• Design an architecture which is appropriate for the defined goals
• Implement the solution with a determination to achieve positive, intended outcomes which reflect the defined project goals
• Check carefully that a 'line of sight' has been established between HR strategy, goals, architectures and intended outcomes

Some of these architectural design decisions are now examined in some detail, as these are often a source of anxiety and confusion for HR professionals.