Are You Using The Wrong KPIs for Your HR Shared Services?

Most of you will be familiar with the HR Shared Service Center model, (HR SSC), which operates alongside specialist HR Centers of Excellence and Strategic HR Business Partners. The idea is that the HR SSC acts like a first/second line customer service center for staff, freeing up time for HR specialists in the centers of excellence, and helps HR Business partners to deliver strategic, valued added HR interventions for the individual business units.

The HR Shared Service model has become increasingly popular, and current estimates suggest that 75% of the Fortune 500 [1] use some kind of shared services model.

Culture shift with KPIs for HR Shared Services (SSC)

View HR KPIs for SSC online

Customer Satisfaction Not on the Radar

Even though HR shared services are becoming the norm amongst multinationals and public sector organizations, we should not take them for granted as they can’t be considered an outright success. Admittedly, if you are looking at this from a purely commercial view point you can find countless studies of companies who have experienced massive success in terms of cost reduction and efficiency gain as a result of moving to shared services.

But, this white paper by the Hacket Group [2], citing recent SHRM research suggests that it may be too early for self-congratulatory back slapping, as while cost reduction is undeniable, customer service levels in HR SSCs leave a lot to be desired.

The study found that the metrics to evaluate customer/user satisfaction were not actually present on most business scorecards; which means that customer satisfaction was not on the radar of most companies.

Just 11% of respondents to their survey had employee satisfaction with their HR SSC as a positive outcome, and it was ranked 11th out of 14 possible outcomes when it did occur.

HR SSC Managers in Denial

What was particularly concerning about this study is that it also identified that some HR SSC managers may be in denial about the customer satisfaction levels in their center. Because the SHRM survey showed that while many HR SSC Managers claimed that their SSC met customer service expectations, most were unable to produce metrics to support their claims. In fact, just 8% of the respondents were able to show that they had been conducting employee/customer satisfaction surveys.

Poor customer satisfaction undermines the HR structure

Poor customer service has quite negative consequences for the business as employees will start bypassing the SSC and start using expensive HR business partners to resolve minor, transactional HR issues, reducing your cost savings and profit margins.

I have seen this phenomenon first hand in SSC organizations and if not handled it can lead to a chronic loss of confidence in the SSC and create frustration amongst strategic business partners, who find themselves dealing with transactional issues and unable to focus on value added big picture initiatives. A failed customer service infrastructure in your SSC will undermine the entire HR function, causing it to unravel and devolve.

Creating a more balanced, balanced scorecard

It’s clear that one of the most important tactics that HR SSC Managers need to deploy to make their SCC work is a more balanced, balanced scorecard, which means a more evenly spread set of KPIs. Despite companies stating, as confirmed by this PWC study [3], that’ increase in quality’, and ‘reduction in cost’ are the two main business reasons for an SSC, research tells us that in reality SSCs focus on cost reduction and neglect customer satisfaction, which means there is a need for a more balanced set of KPIs.

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Culture Shift with Quality KPIs for SSC

This means that the SSC Manager may need to encourage a culture shift in the organization, shifting the SSC towards quality monitoring and away from cost reduction in order to find the right balance.

But, where should this start?

  • It should start with a KPI review and this is where a KPI planning tool like BSC Designer can really help you. As it will enable you to create and implement and track the KPIs.

Use BSC Designer to show how your SSC balanced scorecard is misaligned with business strategy

Since you may need to encourage a culture shift in your SSC away from cost reduction towards quality, you’ll need to start by showing the status quo to the key stakeholders. One of the best ways to do this is to develop a balanced scorecard in BSC Designer that shows you the top level goals of cost and service, but which shows that your KPIS and objectives are focused on cost and severely lacking in the quality area. This can form the basis of your business case to move more toward quality based KPI management in your SSC. See my example below:

SSC balanced scorecard is misaligned with business strategy

View HR KPIs for SSC online

In this example, you can clearly see that the balanced scorecard is not that balanced at all and is skewed towards financial KPIs, (with there being 4 of them) and away from the quality customer perspective where there is just one KPI. You can use this analysis to demonstrate that the SSC focus need to shift towards more customer orientated KPIs in order to align with business strategy.

Use BSC Designer to build a business aligned balanced scorecard

You can now use a tool like BSC Designer to build a business aligned, balanced scorecard, which has a more balanced set of KPIs, taking into account both customer service and cost reduction. A more balanced set of HR SCC KPIs might look something like this:

HR Shared Services - KPIs Aligned with Strategy

View HR KPIs for SSC online

What’s great about using a tool like BSC Designer is that it is a dynamic tool, meaning that you can track performance or progress against each KPI giving you a powerful digital dashboard, which can let you see on a daily, weekly or monthly basis etc… (Depending on how often you update it), just how well your SSC is performing against both its service based and cost reduction goals/KPIs.

Use HR KPIs for SSC project discussed in this article as a starting template for your own scorecard! Access this example project online or download .BSC project file for BSC Designer PRO.

View HR KPIs for SSC online

References

  1. ^ Can shared services provide a quality HR service?, Katie Jacobs, 2014, HR Magazine
  2. ^ Saving Shared Services, Robert J. Grossman, HR Magazine, 2010
  3. ^ Shared Service Center – the 2nd Generation, PWC, Paul Horowitz, Charles Aird

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Kazim Ladimeji is the Director of thecareercafe.co.uk; thecareercafe.co.uk is a HR resource for start-ups and small businesses. Kazim is also an MCIPD qualified practicing HR professional with 17 years experience.

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