HR, BPO, Siemens, approach
A One Size Fits All Approach Doesn't Always Work
-
|
- Print |
- Email Page
HR Business Process Outsourcing (BPO) is this the latest fad?
I think we all know that Shared Services are now a proven approach to improving service levels and reducing costs. However, in my 25 years in the HR market, working predominantly for Siemens, I can count on one hand the number of times that I have seen so many leading indicators pointing in the same direction. These indicators are all showing signs that there will be explosive growth for the outsourcing of HR Services over the next few years.
For global organisations, the outsourcing of non-core functions has become not just a smart business move, but also a critical strategy for maintaining a competitive edge and increasing market share and shareholder value. But how many organisations actually realise the value that can be created by outsourcing what has been typically viewed as less mission critical functions?
I am staggered when I look at people costs and the fact that this is an area where investment is not made to deliver a competitive edge in the same way that organisations invest in enterprise wide systems and related technology. Recent research shows that people account for in excess of 40% of most organisations overall operating costs1. When we talk about people costs we don?t just mean PAYE but also all the costs associated with employment such as benefits, recruitment, and administration. For example, the cost of administrating HR on average is $1,500 per employee per annum. When you equate this to a global company the size of Siemens with 417,000 employees worldwide this represents a significant opportunity for cost savings if the organisation were to align its HR systems and processes. 
So as you can see, HR Shared Services and BPO can definitely deliver real bottom line benefits to organisations. But I am wary of talking about cost savings in isolation as ?true? HR transformation is not just about saving money. The value of the investment is also about increasing the value of the top line performance of individuals within the organisation. Implementing an HR Shared Services strategy needs to be undertaken as part of the reshaping of the entire business. And it goes without saying HR transformation requires significant commitment. As I stated earlier HR is very rarely treated as the primary ROI for technology investment and outsourcing. Manufacturing, IT infrastructure or other areas of the business normally drive this.
Improving HR service quality while reducing the costs associated with service delivery
Traditionally, the majority of HR time and expense was devoted to routine, day-to-day administrative processes ? for example, payroll, sickness and holiday. This is the transactional side of HR management - absolutely necessary but adding little in the way of value to the business. What usually happens is that organisations end up with very expensive specialists performing very tactical low value work. Add to this the fact that most HR processes are highly fragmented across local business units within an organisation, and then multiply this across numerous countries and territories and you end up with very inefficient systems and processes undertaken by quite expensive resources.
In today's highly competitive world, most HR departments are now being faced with a range of challenges ? from tougher competition to increasingly complex legislation, from mergers and acquisitions to technology integration ? and the HR department is finding that it must balance the traditional role described above with the emerging role of strategic advisor and contributor to both individual and business objectives. There is also pressure to increase shareholder value which is forcing HR to plan and manage its costs better, and a growing demand for more meaningful management information ? often enterprise-wide; by group or business unit; to meet compliance requirements. This in itself is driving the need for common processes and approaches across functions or national/cultural boundaries.
The key to start balancing all of the pressures and challenges in today's commercial business world is the transformation of their often fragmented and labour-intensive HR processes. By transforming the infrastructure, applications and standard processes which currently absorbs about 70% of their energy, HR departments will be able to demonstrate business value as well as concentrate on what really counts more time for people.
HR transformation benefits not just those within the HR department but employees throughout the organisation as well as customers and shareholders. The costs of reducing those cumbersome administration processes by outsourcing the repetition and routine, enables organisations to reinvest in other parts of the business. The value proposition for this type of change management program needs to be demonstrated to all the key stakeholders in the business to ensure their buy-in. From the Chief Executive Officer to the Chief Financial Officer and other departmental managers and employees all should become partners in the common pursuit of excellence.
HR transformation can substantially improve your business performance and can take you from the historical practice of global HR delivery:
This content is for all members only
To be able to read this content and have full site access you need to be a full member
If you are already a full member, please log in here
By becoming a full member you will save time and money by helping you avoid reinventing the wheel in addressing problems and sharing them with HROA Europe experts, peers across industries and around the world with one common interest in business transformation. Our full membership package is unique as it is designed to take into consideration where you are in your business transformation journey and your own personal experience. Full HROA Europe membership includes:
- Full HROA Europe site Access
- HROA Europe Club meetings
- HROA Europe Connects
- HROA Europe Counsel
- HROA Europe University
- Benchmarking
- HROA Europe Newsletter
- Rapid Research
- Substantial discounts
- And much more
-
|
- Print |
- Email Page
