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HR Shared Services: A Definitive Guide [With Examples & Strategy]

25 th Jul 2023

9 mins read

Dr. Ramani Ganesh

As employee engagement and retention take centerstage post the pandemic, Human Resources (HR) leaders have had to build lean and agile HR operating models by leveraging HR Shared Services (HRSS).

The 2021 Deloitte Global Shared Services and Outsourcing Survey Report shows that 57% of the 600 organizations surveyed utilize HRSS centres. Around 80% of the respondents leverage HRSS for payroll processing, and most continue to grow upstream to include more specialized HR functions.

Read on to understand HRSS models, their challenges, best practices, and benefits.:

What is an hr shared services model, hr shared services strategy, challenges in hr shared services model, hr shared services examples, hr shared services best practices, benefits of hr shared services.

HR Shared services refers to an operating model in which selected HR activities are centralized and shared among all business units.

Administrative HR activities say payroll or document management, are generally prioritized for delivery through HRSS. HRSS can be insourced, outsourced, or hybrid. Generally, HRSS leverages HR automation for streamlining the delivery of HR functions.

An HRSS strategy begins by setting a clear vision and engaging stakeholders. It can disrupt the current HR function and employee workflows in the short run. Hence, a clear business case and top management buy-in are essential before you build and implement an HRSS model for your enterprise.

How to Build Your Strategy?

Document Current State: Calculate the AS-IS time and cost-to-serve for your HR function and set measurable improvement goals
Define Target Operating Model: Based on the expanse of your organization , determine if your HRSS can work through a global, local, or hub model for service delivery
Develop Service Catalogue: Determine which services are in scope for HRSS and if you can outsource, insource or adopt a hybrid model for these services
Create Service Level Agreements (SLAs): Set SLAs and escalation mechanisms in agreement with various serviceable business units
Deploy and Improve: Deploy the necessary teams and technology platforms to deliver the HRSS. Measure improvements against goals and improve incrementally

Major challenges that can impact the growth and development of an organisation even with HRSS Models are-

1. Resistance to Change

You may experience resistance from the management and employees while transitioning to an HRSS model. Top management executives may be wary of the dehumanization and distancing of HR services which could decrease collaboration and engagement.

Employees may resist HRSS, especially outsourced HRSS, as they think it may lead to job cuts, change in responsibilities, or relocation. Their resistance may impede the process documentation and knowledge transition processes indispensable for creating a robust HR shared services centre.

2. Lack of a Complementing Automation Strategy

An HRSS model can realize the expected cost-savings and performance gains only if supported by a robust HR technology and people analytics infrastructure.

Using isolated HR apps without a comprehensive digital strategy or trying to implement robotic process automation (RPA) tools without accounting for inconsistent data formats or varying HR workflows are common reasons for HRSS failures.

Besides, Artificial Intelligence (AI) and Big Data tools must process large volumes of data before they benefit HRSS workflows. The required data is rarely available in a readily accessible format. HRSS teams often spend substantial time and effort finding, cleaning, and restructuring this input data.

3. Different Requirements across Business Units

A centralized HRSS centre may not deliver value to all business units as intended.

For example, a shared payroll process for a global business may struggle to efficiently deliver compliance with local tax and labor laws across all regions. In such cases, some business units may choose to develop alternate workaround solutions that could undermine the adoption of the HRSS model and give rise to a fragmented HR IT infrastructure.

Example 1: Employee Query Support

Handling employees’ queries and resolving them within specified SLAs is one of the most common use cases for HRSS.

As per a case study by Boston Consulting Group , a global company with more than 60,000 employees used automated HRSS Helpdesk support to reduce costs by 65%. The company discovered that 80% of employee queries related to four categories. Accordingly, they digitized the HR handbook enabling an online knowledge base for their HRSS team.

Centralizing HR help desk support can help scale up the use of telephony and chat solutions and consolidate support team training efforts. Automated escalation mechanisms and stringent SLAs result in increased employee satisfaction.

Example 2: Employee Data and Document Administration

As per the 2020 Gartner HR Shared Services Head of Function Survey , Shared Service Centers (SSCs) handle 54% of operational HR activities like employee data and document administration. 14% of HR administration is managed by outsourcing partners, while HR teams still govern 32% of these activities.

HR leaders are looking to shift these responsibilities to shared services as they are most suited for the same. It helps HR professionals to focus on more strategic tasks like HR policy design and workforce planning.

HRSS Models can increase productivity and employee engagement . However, flawed HRSS strategy and lackadaisical execution can disrupt or adversely affect your business. To ensure you can utilise the maximum from the HRSS model, you can trust the following best practices:

1. Continuously Expand the Scope

HRSS can go much beyond owning standardized day-to-day HR activities. You can also streamline and shift other essential HR functions like recruitment , learning, and development to HRSS.

For large organizations, it is also critical to design and develop HRSS to serve all business units across the globe without exception. Progressive companies take a long-term view and look beyond immediate savings in cost as a criterion for implementing HRSS across HR processes and business units.

2. Choose Automation over Outsourcing

Outsourcing HRSS can be efficient and cost-effective. However, robotic process automation (RPA) can help enterprises automate mechanical rule-based activities and achieve higher productivity without shifting the process controls to a third party.

As per Gartner’s research , more than 80% of shared services organizations have implemented robotic process automation technology.

HR Automation also enables your organization to generate centralized clean data suitable for HR analytics . Evolved organizations are also using HRSS for HR analytics requirements.

3. Set Clear Ownership with Service Tiers

There must be clear boundaries between the responsibilities of HR teams, HRSS centres, and outsourcing partners.

World-class organizations use a tiered service structure:

Information-based: Employees use self-service portals and online knowledge bases for services in the first tier.
Transaction-based: HRSS teams assist employees and process queries or transactions using available HR tech platforms in the second tier.
Expertise-based: In the third service tier, HRSS centers forward the service issues that require expertise to HR teams for resolution.
Strategic: As the service tiers transition to strategic services, they are handled entirely by dedicated HR teams and leaders.

As per the 2022 HR Shared Services Trends Report by Lace Partners, UK , the top objectives of HR leaders over the next 12 months are the delivery of operational efficiencies (87%) and improving employee experience (84%) through HRSS. A low 18% said that cost-saving was one of their top expected benefits.

Other major benefits are:

1. Improved Employee Experience

Self-service portals and chatbots empower employees to be productive on their terms without wasting time on ad-hoc follow-ups for HR requests. HRSS models work with predefined SLAs that ensure greater transparency and help manage employee expectations about HR services.

Regional shared service centres are well-positioned to align their services with local needs, regulations, and language, resulting in a seamless experience for employees.

2. Increased focus on HR strategy

With a clear division of responsibilities, internal HR team members, gain the bandwidth to shift their focus to strategic business objectives like talent management , employee value proposition (EVP) design, and employer branding. HR business partners (HRBPs) can work with business unit leaders to understand their talent requirements better.

HR departments can dedicate time to innovate and rethink HR processes and policies by working on employee feedback. They can also leverage the business intelligence reports and analytical insights generated by HRSS teams to drive strategic decisions.

3. Enhanced HR Operational Efficiency

HRSS models ensure that HR processes are simplified and standardized, resulting in greater service efficiency. Clearly defined process ownership results in accountability and better governance.

Well-documented processes, shared knowledge, and up-to-date platforms ensure that HR processes comply with workforce regulations across different regions and reduce compliance risk.

4. Cost Savings

HRSS centres save on costs with outsourcing, automation, and process redesign. Outsourcing provides access to large pools of skilled resources across geographies, resulting in large-scale labour arbitrage.

As per a Shared Services report by PwC , 49% of organizations fully realize their cost-saving objectives by implementing shared service models, and 40% achieve them partially.

Automation reduces manual data entry and human process intervention saving on employee costs. HRSS centres can better negotiate with technology and outsourcing vendors by pooling the HR workload and consolidating the requirements.

5. HR IT Excellence

HRSS centres enable the acceleration of the HR IT agenda by consolidating and scaling the HR software applications for enterprise-wide adoption.

Some commonly used service technologies leveraged by HRSS teams include computer telephony integration (CTI), Interactive voice response (IVR) systems, self-service portals, and helpdesk ticketing solutions .

As HRSS cover more HR functions over time, they can leverage unified HR Management systems ( HRMS ) that set the tone for improved HR IT adoption, even for non-shared services.

6. A Potential Profit Center

If your shared service centre develops skillsets, capabilities, and infrastructure, it can cater to other businesses. It can turn into an independently-managed profit centre for your business.

Final Words

While the HRSS strategy rose to prominence as a cost-saving measure, it has become one of the cornerstones of an agile HR function. The growing scope of HR shared services, increased employee expectations, and the tumultuous HR landscape makes a compelling case for a holistic restructuring of the HR function.

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Shaping the Future of Shared Services Centers: Insights from a Delphi Study About SSC Transformation Towards 2030

Open access
Published: 10 October 2022
Volume 14 , pages 4828–4847, ( 2023 )

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Cicero Ferreira ORCID: orcid.org/0000-0003-3334-2595 1 &
Marijn Janssen ORCID: orcid.org/0000-0001-6211-8790 2

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In recent years, shared services centers (SSCs) have been central to organizational transformation strategies of many large firms and governments to reduce costs, improve service quality, and innovate services. SSCs are undergoing significant transformations due to the advancement of technologies. To better understand the technologies’ impact on SSCs in 2030, a Delphi panel with over 30 experts, executives, and researchers was conducted in the first half of 2020. Panelists pointed out six recent technologies potentially impacting SSCs by 2030: AI/ML, internet/package-based automation, BPMS/RPA, business analytics, blockchain, and cloud computing. The experts expect that these technologies will cause a transformation in the SSC business model and disruptive changes in SSC employees’ and managers’ profiles. Managers cannot merely continue their regular efforts and should refocus from automating repetitive functions towards intensifying the use of technology in value-adding services. The outcomes should help public and private sector managers to be ahead of change and prepare their organizations for the future of SSCs.

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Introduction

Over the years, countless large public and private organizations have embraced shared service centers (SSCs) to reduce cost and increase service levels and innovation capabilities at the same time (Lakshmi et al., 2020 ). SSCs are organizational arrangements in which activities are unbundled and concentrated in a separate semi-autonomous unit (Bergeron, 2002 ; Janssen et al., 2007 ). SSC’s basic premise is that services provided by one local department can be delivered to other departments with relatively few efforts (Bergeron, 2002 ). The introduction of SSCs requires a transformation in the way organizations are organized (Boglind et al., 2011 ; Weerakkody et al., 2011 ). Since the 1990s, SSCs have invested in technology, mainly focusing on automating transactional activities and services to increase productivity and reduce operational costs (Bergeron, 2002 ). However, the advance of technology in the twenty-first century has accelerated that even the most specialized and strategic activities might be impacted by recent advances, such as artificial intelligence (AI).

SSCs are undergoing significant transformations due to the advancement of technologies (Lakshmi et al., 2019 ; Suri et al., 2017 ; Willcocks et al., 2017 ). The research presented in this article aims to understand the impact that new technologies will have on SSCs in the next 10 years. The motivation of the study is to help managers, in both the public and private sectors, to be ahead of change and prepare their organizations for the future of SSCs. To select critical themes, identify emergent issues during data collection and analysis, and guide the research process (Saunders et al., 2016 ), the study considered the key technologies used by SSCs in 2020 with the potential to impact their future. SSCs’ future is difficult or even impossible to predict, as SSCs are complex and multifaceted arrangements (Schulman et al., 1999 ). Beyond short-term forecasts, the future can sometimes be contradictory or paradoxical (Bouwman & van der Duin, 2003 ; Handy, 2011 ). Therefore, we opted for a Delphi method with a variety of persons having different opinions and visions. Panelists pointed out six recent technologies potentially impacting SSCs by 2030, as shown in Table 1 .

The panelists expect that these technologies will cause radical transformations in the business model and SSC employees’ and managers’ profiles. A business model defines the logic of how value is created, marketed, delivered, and captured by an organization (Bašić, 2022 ; Díaz-Díaz et al., 2017 ; Osterwalder et al., 2005 ; Wilson, 1992 ). We define the SSC business model in the “ SSC Business Models Transformation ” section.

The nature of the study is exploratory, and the paper is structured as follows. In the next section, the “ Theoretical Foundation ”, we discuss the theoretical basis of the study. The following section, the “ Research Approach ,” clarifies the paradigm that guided the study and the methodology used for sample definition, data collection, and analysis. Next, in the “ Findings ” and “ Discussion of the Impact on SSCs ” sections, we present the research’s main findings and discuss how new technologies should impact SSCs and their professionals in the next 10 years. In the last section, the “ Conclusions ,” the main findings and their significance are highlighted. Recommendations are also made for future research. Appendices 1 and 2 present the questionnaires used in the first and second Delphi rounds.

Theoretical Foundation

The study aims to identify the impact of emerging technologies on SSCs over the next 10 years—what changes should occur in the SSCs due to the adoption and use of new technologies? Foresight studies have broad theoretical and methodological support (Giaoutzi & Sapio, 2013 ). The study’s theoretical basis is formed by elements of the systems theory, contingency theory, and dynamic capabilities. The reasons for choosing these theories are explained in the following paragraphs. This theoretical background underpins the problem’s conception, the research questions, the research design, and its conceptual lenses to examine the data collected.

Often, SSCs operate within a broad scope. Systems theory views the organization as an integrated whole, with interacting parts, inserted in an environment with which it continuously interacts (Chiavenato, 2014 ; Haile & Altmann, 2016 ; Johnson et al., 1964 ). From systems theory, we used three concepts in this study. The first, the concept of open systems, explores organizations’ interaction with their external environment, the exchange of information, and its adaptation to continuing in balance (Johnson et al., 1964 ). In the case of SSCs in this study, this concept helps us, for example, to understand that, as open systems, SSCs compete with other systems—other potential service suppliers—and need to remain competitive, transforming themselves to continue adding value to their clients over time. It also emphasizes the need to adapt to changes in the environment. The second concept, models of organization — e.g., Schein model and Katz and Kahn Model (Chiavenato, 2014 )—gives us the vision that an organization is a set of mutually dependent subsystems, and changing one affects the behavior of other subsystems. This perspective enlightens that the impact of new technologies on SSCs transcends their boundaries and should be evaluated considering the whole company. As the last of the three concepts, the processes — a set of interdependent and interacting elements (with time-ordered sequences of tasks) to achieve a goal or purpose—help us reflect on the execution of the organization’s tasks. In this study, this vision allows, for example, to reflect on the consequences of task automation in the provision of services by SSCs.

SSCs are contingent (dependent) upon their external and internal context (Chiavenato, 2014 ). Furthermore, contingency theory suggests that any organization, by extension, the SSC, is dependent on the context and emphasizes that the environment’s conditions cause transformations in organizations (Donaldson, 2001 ). This emphasizes technology as an element of the environment that is changing. As organizations live in a changing world, their organizational model must be characterized by flexibility and adaptability to the environment and technology. To survive and remain competitive, each SSC and any organization need to incorporate technology that comes from the environment, which determines their organizational design and task environment. Although this theory has its roots in relativism, and this research has its bases in constructionism, we benefit from a dialogue between these viewpoints that help us to study the role of technology in the context of SSCs.

In the future of SSC, new organizational capabilities will likely be needed. Dynamic capabilities reflect the firm’s ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments (Ferreira et al., 2021 ; Teece, 2009 ). And dynamic capabilities theory (Eisenhardt & Martin, 2000 ; Teece, 2007 ; Teece & Pisano, 1994 ) provides a conceptualization and model for organizations to do that. In this study, the theory helps identify the dimensions that should be impacted by new technologies (e.g., competencies, processes, learning, adaptability, decision-making, and organizational skills (Tondolo & Bitencourt, 2014 )) and how SSCs might evolve the need for those capabilities. Dynamic capabilities are particularly relevant in technological change because the SSCs will need to identify and respond to new opportunities (Janssen & Joha, 2006a ), mainly in the context of technological changes, which requires a reconfiguring of their capabilities. Table 2 summarizes how systems theory, contingency theory, and dynamic capabilities help conceptualize SSCs and address the surrounding issues.

The scientific administration emphasized the homo economicus, while the school of human relations emphasized the social man (Chiavenato, 2014 ; Longo, 2007 ). Structuralism brought out the organizational man, while behavioral theory highlighted the administrative man. In recent times, the academy has turned its attention to the homo digitalis, whose transactions with their environment are predominantly carried out through the computer and the internet (Chiavenato, 2014 ; Kotler et al., 2020 ). The intensive use of technology by the homo digitalis in their daily lives and organizations reaches levels never imagined, even in shared service centers.

Research Approach

To understand which new technologies should gain traction and be relevant to SSCs in the future and estimate their impact, our research method aims to capture highly specialized IT and SSC knowledge. This high level of expertise is captured using opinions from experts, who are up to date with the latest knowledge and trends. The research should also give managers insights to anticipate changes and adjust SSCs gradually to the changes to come. The study’s aim calls for qualitative research, as it makes it possible to understand the perspective of study participants and interact with them. These needs and the context of the research led us to adopt as research strategy the Delphi method, whose primary use is in forecasting and discussions about the future (Linstone & Turoff, 1975 ).

Therefore, the study follows the social constructionist paradigm (Easterby-Smith et al., 2008 ), which asserts that reality depends on the observer, and knowledge is socially constructed (Zhao, 2022 ); thus, it should be given special attention to the language and conversations. As the research strategy, we used the Delphi method (Linstone & Turoff, 1975 ; Okoli & Pawlowski, 2004 ; Wright et al., 2000 ). Such an approach facilitates the asynchronous interaction of experts in a panel to anticipate opportunities and threats in discussions about the future and define the appropriate actions to be taken today (Giaoutzi & Sapio, 2013 ). Compared to other methods, such as traditional survey and scenario planning, the Delphi method enables individual and collective reflection on the issues addressed, without the disadvantages of in-person meetings, and provides a synergy of ideas and perceptions among experts. The Delphi approach also increases the process knowledge through the improvement and evolution of the questions asked. It similarly enhances the use of the expertise and experience of specialists.

Delphi Method

The Delphi method structures communication within a group to deal with a complex problem (Linstone & Turoff, 1975 ; Wright et al., 2000 ). Complex problems have the following characteristics (Funke, 2010 ): (a) the elements involved in the solution are numerous. For instance, organizational elements (e.g., people, culture, technology, clients, competitiveness), impacted dimensions (e.g., efficiency, services, innovation), and the level of impact (e.g., low, medium, high); (b) many elements are interconnected; (c) they change over time (dynamics). These three characteristics are present in the analysis of the impact of new technologies on the future of SSCs.

The Delphi method is based on three assumptions: (i) anonymity of the respondents, (ii) statistical representation of the responses, and (iii) the return of group responses for reassessment in subsequent rounds. The Delphi method dynamics advance the discussion into a consensus, representing a consolidation of the expert’s intuitive judgment on future events and trends (Linstone & Turoff, 1975 ; Wright et al., 2000 ). Such a judgment is made possible by the structured use of knowledge, experience, and creativity of the expert panel and considers the principle that collective judgment, adequately organized, is better than individual opinion. The Delphi method is especially recommended when quantitative data are not available or cannot be safely projected for the future, given the expected structural changes in the determining factors of future trends (Linstone & Turoff, 1975 ; Wright et al., 2000 ). The size of the expert panel may vary depending on the purposes of the study. The authors suggested not having less than 7 to 12 people for a Delphi panel (Baldwin & Trinkle, 2011 ).

Conducting the Delphi method is relatively simple; questionnaires are submitted in several rounds to a group of experts, preserving the answers’ anonymity. In the first round, the experts receive the questionnaire—or a link for online access—prepared by the coordination team and answer the closed-ended or open-ended questions individually. The answers to open-ended questions receive content analysis treatment to enable their coding and structured analysis. The answers to the closed-ended questions are tabulated, given a simple statistical treatment, and the results are returned to the participants in the next round. In each round, the previous round’s responses consolidated are submitted to the panel, and the panelists reevaluate their reactions considering the justifications of the other respondents. The process can be repeated in successive rounds until the divergence of views is reduced to a satisfactory level. The response from the last round is considered the panel’s forecast.

Regarding the time horizon of the forecasts, although it varies from sector to sector, a prospective study may focus on the short term (from 1 to 3 years), medium term (from 4 to 10 years), or long term (usually above 10 years) (Brier, 2005 ). In this study, we adopted a 10-year perspective so that SSC managers in the field can reference their SSC adequacy actions and the appropriate time to do so. The time horizon might be influenced by exogenous developments, such as the acceleration of technology development due to the COVID-19 pandemic, as explored in the “ Conclusions ” section.

Sample Selection

The sample was aimed at gaining a diversity of perspectives and views. To form the Delphi panel with IT and SSCs specialists, we counted on executives and experts from SSCs, academia, and consultancy firms such as IBM and Deloitte, from many parts of the world, like North and South America and Europe. Initially, we used a “sample for convenience” of our professional contacts. We then used the networking sampling approach (Dillman et al., 2014 ), interacting with three potential sources: (a) SSC LinkedIn groups—Finance Shared Services Best Practice Network, with 817 members, and Shared Services Best Practice Network, with 5706 members; (b) international SSC conference contacts in the USA and the UK (103 people); and (c) ABSC—Associação Brasileira de Serviços Compartilhados, with 325 members. In Delphi studies like this, the panelists’ quality determines the quality of the research results, so we restricted the invitations to experts and executive-level professionals to the research sampling frame. In the first half of 2020, we sent about 500 invites to potential Delphi panelists, resulting in 60 confirmations. Due to our study’s nature, we opted for having a mix of technical and managerial functions of the panel members. Moreover, we invited only experienced professionals (at least 10 years of experience), resulting in the profile shown in Table 3 .

Data Collection and Analysis

The data collection took place in the first half of 2020 in two rounds of questionnaires whose online links were e-mailed to Delphi panel experts. In the first Delphi round, there were 33 participants, and in the second Delphi round, 32 participants, keeping the proportion of about 30% of IT background panelists. Twenty-nine of the respondents (90%) participated in both rounds. The abstention of 47% concerning the 60 initially confirmed participants is within the expected range, 30 to 50%, according to Wright et al. ( 2000 ).

A questionnaire was submitted in the first round to understand the impact of new technologies on SSCs over the next 10 years. The questionnaire contained seven open-ended questions: (1) Which five technologies will have the most significant impact on SSCs in the next 10 years? (2) How will each of these five technologies impact the future of SSCs? (3) Do you expect that the need for SSCs (company-internal and outsourced) by customers will decline or increase due to those technologies? (4) How will the SSC internal business model be transformed? (5) Will the nature of services and activities provided by SSCs change over the next 10 years? Will new technologies make SSCs more strategic for organizations? (6) How will new technologies affect workers’ and SSC leaders’ profiles? (7) What is the primary value added today by the SSCs, and how will this change 10 years from now? A structured content analysis was performed to analyze and interpret the answers.

With the support of QDA Miner Lite software (Adu, 2019 ), we conducted content analysis to evaluate the answers to the open-ended questions, which is a systematic way to arrange, explain, and analyze the content of texts and surveys. The content analysis was performed in three steps using a technique adapted from the work of Bardin ( 1977 ) and Creswell ( 2007 ). The first step, called “pre-analysis,” consisted of reading the answers, providing the information needed for the next stage of the categorization. The second step, “exploration’ of the material, comprised a more thorough analysis with text excerpts and categorizations attempting to isolate, group, and describe the concepts (codes) present in the texts analyzed. Finally, the third step, “interpretation,” clarified the stated or latent original content of the analyzed data. Creating categories at this point takes into account Bardin’s five principles (Bardin, 1977 ): mutual exclusion, between categories; homogeneity, within categories; relevance, or no distortion, of the transmitted message; fertility for inferences; and objectivity or comprehension and clarity.

After coding and interpreting the first questionnaire’s answers, the second questionnaire was designed with closed-ended questions using a Likert scale, multiple choice, and selection boxes (Appendix 2 ). The second questionnaire’s purpose was to verify the impact of the technologies most cited by respondents in the first round on SSCs. To identify what skills will be needed by SSC professionals of the future, we used the skills model proposed by Van Laar et al. ( 2017 ) for employee skills and the skills model proposed by Sousa and Rocha ( 2019 ) for management skills.

As recommended for social research, participants were informed in writing of the voluntary and anonymous nature of their participation in the study and that they would be able to interrupt their activities at any time if they so wished (Easterby-Smith et al., 2008 ). They were also informed that their data in the questionnaires would be encrypted and kept anonymous under secure access.

In the next section, we organize the presentation of the findings into three blocks. In the first block, we address the technologies highlighted by the panelists as those that will most impact the SSCs. In the second, we underline the profile required of SSC professionals in the future to succeed in a very different working context from today’s, both in service execution and in SSC leadership. In the final block, we present the panelists’ vision of what should be transformed in the SSC business model and discuss the value added by SSCs to business and in which direction it probably will evolve.

In the following subsections, we present the research findings and analyze their significance from a theoretical and practical perspective.

Impact of New Technologies in SSCs over the Next 10 Years

In the first Delphi round, panelists were asked what technologies would significantly impact SSCs over the next decade. Six technologies were the most cited:

AI/ML is expected to have the most significant impact on SSCs by 2030 for 78% of the respondents. At present, with a few exceptions, SSCs are just only exploring this technology or using AI/ML quite timidly (SSON, 2020 ) in simple tasks, such as chatbots. Shortly, this technology is expected to revolutionize the SSCs, with decision support and forward-looking data analysis.

Internet/package-based automation will also have a significant impact, according to 62% of the respondents. Today, the automation is limited to software packages (e.g., ERPs, PSA), while by 2030, SSCs will expand the use of other technologies, such as BPMS/RPA, to integrate their solutions.

BPMS/RPA was also mentioned by 62% of the respondents as high-impact technologies for SSCs. The evolution of these technologies is enabling viable intelligent process automation (Lakshmi et al., 2020 ; SSON, 2020 ), which combines redesign, automation, end-to-end process management, and continuous improvement using AI/ML and RPA.

Business analytics was mentioned by 37% of the responses. Nowadays, the most common use of BA is still restricted to traditional BI tools for analyses. By 2030, SSCs should use algorithms to get models to support predictive analytics, neural networks, and complex event processing. This will allow them to have a more consultative role to support the business units.

Blockchain was also mentioned by 37% of the respondents. Blockchain would enable automatic transactions between parties and the safe and secure storage of data. SSC could facilitate and maintain the blockchain to enable users to transact.

Cloud computing got 34% of the responses. SSCs could help users migrate to the cloud and make agreements, while public sector SSCs could operate their own cloud within the national boundaries. In this way, ensuring that data is only stored with the jurisdiction of the country.

In the second Delphi round, the panelists qualified the level and type of impact these technologies will have on SSCs. The convergence of views among participants was faster than expected (only two rounds), although the experts were selected for their diversity in opinions. This can be explained by the relatively well-defined boundaries and concept of SSCs. The scatter plot of Fig. 1 below summarizes the technologies’ impact, including whether these technologies will improve efficiency, services, or innovation. BPMS and RPA are expected to improve efficiency. Cloud and the internet are focused on improving services, and AI and blockchain are expected to innovate and transform SSC. However, blockchain is expected to be less impactful than AI.

Impact of disruptive technologies on SSCs

AI/ML emerged as the technology that should mostly impact the transformation of SSCs, providing a high level of innovation. AI/ML is followed by business analytics/data analytics, whose impact is expected to be high but directed towards improving services.

About AI, panelist P24, an SSC expert, said:

“Artificial Intelligence systems to i) provide detailed analytics to enable further process optimization - e.g., what's always 100% approved and therefore no longer requires an approval step, but more importantly; ii) prediction tools to spot trends and therefore proactively source solutions for internal or external clients; iii) 'holistic patterning' moving away from traditional silo workflows to spot subtle interrelationships and then built up process workflows that are more complex but provide greater client value and cost reduction.”

About analytics, P55, an SSC director, commented:

“Analytics will emerge as a significant game-changer. Shared Services are privy to a plethora of data. The ways this data can be converted to valuable information and then to insights are many. That is where the industry is headed.”

Skills Required from SSC Professionals in 2030

Regarding the primary employee skills demanded by SSCs within 10 years, the top two were critical thinking (72%) and collaboration (59%). The technical knowledge of expertise area and problem-solving skills were ranked in third place, both having 50%. On critical thinking, P55, an SSC director, expressed:

“Humans will remain relevant because of critical thinking. That is something which you cannot impart on the hyper-automation solutions. To achieve that, the base has to be in the domain knowledge and technical expertise as well as a focus on the big picture. Collaboration with different moving parts and adaptation to change will become critical in determining success.”

As for the primary skills of leaders, they were found to be relevant: innovation and creativity (91%), new business opportunities (78%), high-performance team management (78%), new models of work organization (66%), and strategic management (59%). Panelist P59, an SSC director, said the following about creativity:

“The new leaders will need a strong knowledge in innovation, technology, and creativity to find new business opportunities to improve efficiency, efficacy, and users experience in the business processes.”

SSC Business Models Transformation

The essence of the SSC concept resides in its business model, which “tries to capture the benefits of both centralization and decentralization” (Janssen & Joha, 2006b ). Therefore, it is essential to understand how new technologies may transform the business model. Based on Díaz, Muñoz, and González (Díaz-Díaz et al., 2017 ), for our study, we defined business model as how the SSC creates and delivers value to customers and how the revenue is generated.

In the opinion of 66% of the panelists, the service scope will expand to a more analytical/high-end portfolio of services. Panelist P50, a shared services advisor, describes it this way:

“The SSC business model will change from FTE-centric to value delivered. People at SSCs will be engaged in doing high-end work and hence will be billed at a higher rate.”

In the words of panelist P32 (an SSC director):

“The SSC has to be more strategic in nature, providing not only timely, accurate, controlled information, but also entering into a business partnership relationship with customers, being responsible for managing the end-to-end process activities. The additional analytics provision by the SSC has the power to provide a competitive advantage to the business, in the marketplace.”

In the opinion of most panelists in the first Delphi round (62%), the current SSCs add value, mainly by offering cost reduction to the organization. Considering the 10-year horizon, they consider that the primary added value will become a more strategic action of the SSCs (44%). As panelist P29, an SSC researcher, said:

“It might go from either a cost center or specific center of excellence based on human labor (and its limitations) towards a value center whereby the underlying integrated and automated technology combines the best of both worlds by reducing costs and improving the service quality and user experience using AI. As such, it could become the engine of strategic innovation, and have a fundamental role in achieving and gaining competitive advantage for an organization.”

Most panelists (65%) understand that the need for SSCs will increase and that they will play a much more strategic role.

Discussion of the Impact on SSCs

The study made it clear that while AI is expected to be the most influential technology, all six highlighted technologies can lead to the SSC reinvention, in all organizational dimensions. In the following, we discuss the overall impact of technology on SSCs, as well as in the profile of SSC employees and their business model.

Impact of New Technologies by 2030

The Delphi panelists anticipate a better and more intense use of technology by SSCs. In 2020, SSCs use technology primarily to automate repetitive work, adopting solutions such as basic RPA, ERPs, and industry-specific packages (e.g., core banking, insurance, or HR). In this way, technology supports the role of SSCs in reducing operating costs and cycles and improving data accuracy and service quality. However, by 2030, the technology will be used in a much bolder way. Going far beyond the automation of repetitive operational work, the technology will increase employee productivity in expert work, as Fig. 2 shows us. This trend was also found in Deloitte consultancy’s survey, with 379 respondents, from several countries, across nine industries (Deloitte, 2019 ). Contingency theory explains that for an organization to remain competitive, it is necessary to stay updated and incorporate the technology available in its context (Donaldson, 2001 ). It also explains that SSCs will adopt different strategies to meet their needs as organizations are all different. The technological transformation foreseen by the panelists will result in SSCs transformation to make them more competitive. Consequently, technology will no longer only contribute to cost reduction. Still, it will enable the reinvention of SSCs, which will provide higher added value services for organizations as a whole—repetitive work, administrative work, expert work, and high-end work (which will contribute to the SBUs’ core activities).

The emerging technologies disrupting the SSC work

Currently, the services provided by SSCs are predominantly transactional, mostly record-keeping, administrative, and information provision tasks, with short turnaround (e.g., payroll, accounting, accounts payable, account receivable). These transactional tasks usually occur in a business process and can be easily automated with standard technology (e.g., ERP, workflow, basic RPA). The study identified that by 2030, these activities are likely to have been completely standardized and automated and that a digital worker/robot workforce will perform them. With the support of technologies such as AI and predictive modeling, they will be able to provide more strategic services by aggregating the support to revenue generation to the traditional cost reduction. The strategic work could include support for innovative product development, business decision-making, collaboration, and negotiation. SSCs are expected to play an active role in achieving and gaining a competitive advantage for an organization.

In the next two subsections, we discuss what changes will likely occur in the profile of professionals working in SSCs by 2030 and how the business model will be impacted.

Employees’ and Managers’ Profile

As represented in Fig. 3 below, technology will free human beings from repetitive work and support them in more expert work; SSCs will likely need proportionally fewer and more skilled professionals. The skills of SSCs employees will change significantly. Employees’ critical thinking and collaboration will be essential skills in the future. Still, technical knowledge of the expertise area and problem-solving skills will also be relevant. Innovation and creativity, new business opportunities, and high-performance team management will be the most vital skills desired for managers. However, mastering new models of work organization—including digital workforce management—and strategic management will also be vital for them.

New employees’ and managers’ profile

Dynamic capabilities theory helps clarify the dimensions that technology will impact, such as the organizational design and the execution environment of tasks, leading to the change of SSC capabilities—e.g., competencies, processes, learning, adaptability, decision-making, and organizational skills. The working environment of SSCs will undergo major organizational and work process transformations, resulting from the need for robotic and human workforce management and BPMS/RPA automated processes, and perhaps more importantly, from AI/ML applied to commercially relevant discoveries. Another aspect to consider is that these new professional profiles are more easily found in more developed countries, where labor costs are higher. Other research has already verified a growing migration of SSCs to countries with high labor costs (Deloitte, 2019 ; PwC, 2019 ).

Business Model

On the business model of the SSCs, as defined in Sect. 1, the “ Introduction ,” and Subsection 4.3, the “ SSC Business Models Transformation ,” there will be a significant impact of the technology emerging today. Current operational challenges, such as manual and repetitive tasks, are expected to be resolved at that time because BPMS/RPA will have addressed them. The focus of the services provided by them should migrate from operational efficiency to higher value-added services. The latter is supported by cloud computing and internet and innovation support services, with AI/ML, blockchain, and business analytics. SSC’s scope of services will expand to a more analytical/high-end portfolio of services. As we saw in the research results, it is expected that the need for SSCs will increase (93% of the respondents), but its services will be much more strategic (87%). Open systems theory explains this transformation of the business model because the survival of SSCs depends on their ability to respond to the external environment, e.g., responding to the technological evolution and the risk of substitution by other equivalent service providers. Also, from the ST, we understand that the change of SSCs will provoke other organizational changes, for example, in the business units, which may delegate activities of greater added value to SSCs. Recent PwC research, with about 160 SSCs worldwide, corroborates the trend of changing the service portfolio of SSCs that increasingly move from transactional to knowledge-based processes (PwC, 2019 ). This trend was also confirmed by a recent Deloitte survey (Deloitte, 2019 ).

Conclusions

The goal of this paper is to better understand technologies’ impact on SSCs in 2030 by conducting an empirical study. In this way, this research explored the dynamics of the knowledge economy and balances theory and practice. Existing technology plays a role in helping SSCs in their mission to reduce operating costs. In contrast, experts expect a disruption to happen. Six technologies are expected to significantly impact SSCs by 2030: AI/ML, packaged-based automation, BPMS/RPA, business analytics, blockchain, and cloud computing. These technologies will contribute to improved efficiency, new and better services, and innovations. AI technology is expected to have the highest impact and is most associated with innovation by the surveyed experts. Blockchain will also be associated with innovation services, but with less relevance than AI. BPMS/RPA will contribute to improving process efficiency. Business analytics/data analytics and internet and cloud computing will have a high impact on services.

The results suggest that the experts think significant transformations will happen at an intense pace. The new technologies will consolidate the digital transformation of SSCs and are expected to cause disruptions and accelerate the change of SSCs, impacting the way they operate and do business. The theoretical implication is that more research in SSC transformation is required, which functions are necessary, and how readiness for transformation can be measured and developed.

The study suggests that significant transformations are needed in two organizational dimensions: professional skills and the SSC business model. The profile of SSC employees is increasingly moving from being the executors of transactional activities to knowledge workers, who are involved in more complex activities operating at the more strategic level and being highly specialized. For skills, as the work’s nature will change to more complex and strategic work, it will be required from employees’ critical thinking and collaboration and from managers to drive innovation and creativity, new business opportunities, and high-performance team management. Hence, researchers should give more attention to the role of human resources in SSC and investigate which competencies and capabilities are needed to be future-proof. Perhaps, this study’s main contribution is the need for transformation in the business model. According to the experts, the transformation will happen to let the SSCs in becoming a strategic partner of the business units by adding value directly to their core business. This implies the need to theorize the business model dimensions of SSC better.

This study brings the following theoretical, policy, technical, and managerial implications. In theoretical terms, by exploring the future of SSCs, the study broadens the understanding of the relevance of SSCs for organizations and offers likely scenarios for their evolution, paving the way for further research in this field. The study suggests that there will be a reinvention of the SSC concept, as SSCs will no longer be focused on cost reduction and transactional activities, but will instead contribute directly to the core business, and the new technologies will support this trend. In policy terms, perhaps the main implication is that now policymakers will be able to anticipate the changes identified by this paper, preparing organizations and SSCs to have a combined transformation strategy and get the most out of the new SSC. In technical terms, the more intense use of the technologies addressed by the study will cause an increase in the complexity of the technological environment, which needs to be developed and managed. Specifically, security and maintenance costs should be given attention. Another implication is the transformation of the technical profile of SSCs’ employees, as they will contribute in a much more strategic way, going beyond the organization’s boundaries and considering closely their clients, products, competitors, among others. In managerial terms, the implications are remarkable, as SSC managers will need to be visionary leaders, able to see both the forest and the trees, and lead from digital workforces to high-skilled knowledge workers and self-managed SSC teams, among others. In addition, they should lead the transition from today’s SSCs to the SSCs of the future, with all the inherent challenges. Perhaps, one of the major challenges is preparing for this future from this day forward and beginning the change now.

Although the study’s learning has limited generalizability, managers responsible for SSCs can benefit and plan the adaptation of their SSCs to the foreseen changes presented in this article. SSCs will likely change, but there might be many influences and endogenous developments that might influence how this will occur.

Recommendations for new research could include verifying how the Covid-19 pandemic anticipated or accelerated the digital transformation of SSCs and, consequently, using the technologies covered in this study. Another research problem could involve studying professionals’ transition today dedicated to transactional work to more complex, strategic works. Could it be the same people, trained for the new functions, or mandatorily new professionals with profiles so different that they make it impossible to leverage the current professionals? Finally, systems theory shows us that we need to understand the entire organization, not just one of its parts. Thus, our suggestion for future studies is to confirm the results of this research from the perspective of the internal clients of the SSCs. Our study focused on SSC executives and specialists, and the new studies could be based on the view of SSC clients. What do they expect and anticipate?

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• A Delphi study on the future of SSCs was conducted.

• The need for SSCs will increase and move to a much more strategic role.

• AI is expected to be the most influential technology.

• The skills of SSCs employees and managers will change significantly.

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Ferreira, C., Janssen, M. Shaping the Future of Shared Services Centers: Insights from a Delphi Study About SSC Transformation Towards 2030. J Knowl Econ 14 , 4828–4847 (2023). https://doi.org/10.1007/s13132-022-01072-0

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HR’s new operating model

The way in which organizations manage people used to be relatively straightforward. For more than two decades, multinational companies generally adopted a combination of HR business partners, centers of excellence, and shared service centers, adjusting these three elements to fit each organization’s unique nature and needs.

Today, this approach—introduced by Dave Ulrich in 1996 1 David Ulrich, Human Resources Champions: The Next Agenda for Adding Value and Delivering Results , first edition, Boston, MA: Harvard Business Review Press, 1996. —is rapidly evolving. In interviews with more than 100 chief human resources officers (CHROs) and senior people leaders from global multinational businesses, we identified five HR operating-model archetypes that are emerging in response to dramatic changes in business and in the world—including heightened geopolitical risks, hybrid working models, and the rise of majority-millennial workforces.

These emerging operating models have been facilitated by eight innovation shifts, with each archetype typically based on one major innovation shift and supported by a few minor ones. The key for leaders is to consciously select the most relevant of these innovation shifts to help them transition gradually toward their desired operating model.

Eight innovation shifts driving HR’s new operating models

Today’s increasingly volatile, uncertain, complex, and often ambiguous business environment is forcing companies to transform at an unprecedented pace. The global COVID-19 pandemic and rapid evolution of workplace technology have accelerated the adoption of various alternative, hybrid working models—as well as new challenges in monitoring employee conduct and performance. The emergence of majority-millennial workforces has led to a profound shift in employee preferences. And the “Great Attrition” of workers , 2 Aaron De Smet, Bonnie Dowling, Marino Mugayar-Baldocchi, and Bill Schaninger, “‘ Great Attrition’ or ‘Great Attraction’? The choice is yours ,” McKinsey Quarterly , September 8, 2021. exacerbated by demographic developments in many parts of the world, has intensified existing talent shortages.

HR plays a central role in navigating this upheaval, creating a need for the function to rise to a new level of adaptability and responsibility . 3 Laura Blumenfeld, Neel Gandhi, Asmus Komm, and Florian Pollner, “ Reimagining HR: Insights from people leaders ,” McKinsey, March 1, 2022. While every organization has its own trajectory and HR operating model, our interviews with senior leaders revealed that organizations are innovating in ways that are collectively changing the HR function from the “classic Ulrich model”:

Adopt agile principles to ensure both strict prioritization of HR’s existing capacity and swift reallocation of resources when needed, enabling a fundamentally faster rate of change in the business and with people and how they work.
Excel along the employee experience (EX) journey to win the race for talent in the time of the Great Attrition , 4 Aaron De Smet, Bonnie Dowling, Marino Mugayar-Baldocchi, and Bill Schaninger, “‘ Great Attrition’ or ‘Great Attraction’? The choice is yours ,” McKinsey Quarterly , September 8, 2021. enabling both employee health and resilience.
Re-empower frontline leaders in the business to create human-centric interactions, reduce complexity, and put decision rights (back) where they belong.
Offer individualized HR services to address increasingly varied expectations of personalization.
‘Productize’ HR services to build fit-for-purpose offerings with the needs of the business in mind, and to enable end-to-end responsibility for those services through cross-functional product owner teams in HR.
Integrate design and delivery with end-to-end accountability to effectively address strategic HR priorities, reduce back-and-forth, and clarify ownership.
Move from process excellence to data excellence to tap into novel sources of decision making using artificial intelligence and machine learning.
Automate HR solutions to drive efficiency and capitalize on the power of digitalization in HR.

These innovation shifts are driving the emergence of new HR operating models, albeit with different degrees of influence depending on the nature of individual organizations (Exhibit 1). In analyzing the drivers, we identified five HR operating archetypes.

Five emerging HR operating models

These eight innovation shifts have enabled companies to rethink how they manage their people and the best way to do so. Exhibit 2 shows the five emerging HR operating models we identified, which are all enabled by two core elements: a strong, consistent data backbone and a user-friendly, highly reliable service backbone. When asked which two archetypes best fit their HR operating model, 48 percent of people leaders attending a recent webinar selected Ulrich+, 47 percent EX-driven, 36 percent leader-led, 31 percent agile, and 6 percent machine-powered. 5 Reimagining HR Webinar Survey, McKinsey, November 2022, n = 140 senior people leaders. Figures do not sum to 100%, because of the possible selection of multiple answers.

This model is an adaptation of the classic Ulrich model, with HR business partners developing functional spikes and taking over execution responsibilities from centers of excellence (CoEs). In turn, CoEs are scaled down to become teams of experts and selected HR business partners. They are supported by global business services and have a digital operations backbone. Many CHROs believe the classic Ulrich model is not up to solving today’s HR challenges, with HR business partners lacking the skills and time to keep up with the latest HR developments. Inflexible CoEs limit agile reactions, while other organizational boundaries have steadily become more permeable. Multinational businesses with mature and stable business models are often the ones that experience these pain points.

An agile transformation

A global financial institution underwent an agile transformation with a focus on IT delivery, supported by an agile HR operating model with 2,000 staff members. It first structured its HR function along the employee life cycle, aligning resources to the employee experience (EX) journey: when they join, work, develop, perform, and exit. The evolution to an agile model was supported by three HR innovation shifts:

reducing the number of handovers by integrating run (servicing and operations) and change (product delivery) activities into “workstreams”
setting up workstreams with end-to-end service responsibility (for example, design and delivery of recruiting), common goals, and steering
allocating resources to agile pods with product crews for each workstream and agile ways of working

Projects that cut across multiple product crews were supported with a center-of-excellence initiative manager at the divisional level, and the stream-by-stream transition plan was phased over two years.

This model calls for a smaller number of HR business partners, with an emphasis on counseling top management, while CoE professionals focus on topics such as data and analytics, strategic workforce planning, and diversity and inclusion. The freed-up resources are pooled to implement cross-functional projects. CHROs who favor this operating model believe that HR needs to accelerate to keep up with the increased focus on execution exhibited on the business side and to prevent HR from hindering rapid transformation. Companies are applying this and other agile methodologies when experiencing rapid growth or discontinuity. (For an example of this model, see sidebar “An agile transformation.”)

Optimizing the employee experience

A global software company adopted a new business strategy to maximize the customer and employee experience, committing to a two-year transformation journey. Its first step was to mirror the customer experience for employees by identifying and revamping “moments that matter” along the employee life cycle. Three HR innovation shifts facilitated this: persona-driven HR services began following a customized approach; product owners took on end-to-end responsibility over HR concept, design, and delivery to deliver moments that matter; and HR, IT, and business operations combined into a comprehensive data function.

This model is meant to help CHROs gain a competitive advantage by creating a world-class EX journey. Putting EX first means allocating disproportionate resources toward “moments that matter.” For example, HR, IT, and operations experts could be granted full responsibility to jointly plan, develop, and roll out a critical onboarding process. By creating a world-class EX, HR becomes the driving force in bridging cross-functional silos and in overcoming the patchwork of fragmented data and processes that many organizations suffer from today. The companies employing this model are highly dependent on their top talent, with a small set of clearly defined competencies. (For more on this model, see sidebar “Optimizing the employee experience.”)

In this model, CHROs transition HR accountability to the business side, including for hiring, onboarding, and development budgets, thereby enabling line managers with HR tools and back-office support. This archetype also requires difficult choices about rigorously discontinuing HR policies that are not legally required. Too much oversight, slow response times, and a lack of business acumen in HR have led some companies to give line managers more autonomy in people decisions. Companies exploring this choice typically have a high share of white-collar workers, with a strong focus on research and development.

Machine-powered

With this model, algorithms are used to select talent, assess individual development needs, and analyze the root causes of absenteeism and attrition—leaving HR professionals free to provide employees with counsel and advice. As digitalization redefines every facet of business, including HR, CHROs are looking for ways to harness the power of deep analytics, AI, and machine learning for better decision outcomes. Organizations that are experimenting with this are primarily those employing a large population of digital natives, but HR functions at all companies are challenged to build analytics expertise and reskill their workforce.

Innovation shifts shaping HR model archetypes

While innovation shifts have shaped the traditional HR operating model and led to the emergence of new archetypes, not all innovation shifts are equal. Each archetype is typically based on one major innovation shift and supported by a few minor ones (Exhibit 3).

For example, a leader-led archetype is mainly shaped by the shift of empowering the leaders and the front line. At the same time, it gives more flexibility to the needs of the individual (the “cafeteria approach”) because leaders have more freedom; it also builds on digital support so leaders are optimally equipped to play their HR role. Alternatively, an agile archetype is strongly focused on adapting agile principles in HR, but it typically also aims to move toward a productized HR service offering and strives for end-to-end accountability.

The critical decision for senior people leaders is to consciously select the most relevant of these innovation shifts to transition gradually toward their desired operating-model archetype. For example, the leader-led model puts business leaders, rather than HR, in the driver’s seat, allowing line managers to choose the right HR offerings for their individual teams. And for companies that decide to deploy machine-powered HR, the key is building and relying on deep analytics skills. This model uses integrated people data to make targeted, automated HR decisions.

In large, diversified organizations, CHROs may find that different archetypes fit the differentiated needs of specific businesses better and may adopt a combination of HR operating models.

Transitioning to a target operating model

Transitioning to a future-oriented archetype is typically a three-step journey. First, CHROs and their leadership teams align on the right operating-model archetype for their organization based on the most pressing business needs, expectations of the workforce, the wider organizational context, and the company’s dominant core operating model. In large, diversified organizations, CHROs may find that different archetypes fit the differentiated needs of specific businesses better and may adopt a combination of HR operating models.

Second, HR leadership teams prioritize the three or four most relevant innovation shifts that will move their function toward their chosen operating-model archetype. When doing this, people leaders need to reflect on strategic HR priorities and, even more important, the shifts required to establish the operating model given its feasibility, the potential limits to the speed of implementation, and the magnitude of change. (Today, we find that the capacity to change the HR information system is often the most limiting factor.) For example, if a company is operating in a traditional hierarchical “command and control” way, the sole shift of HR into an agile archetype requires profound and demanding changes to ways of working, likely beyond only HR. Similarly, a business accustomed to a “high touch, concierge service” HR approach will find that a shift to a leader-led archetype is challenging and requires significant effort to implement.

Finally, teams think comprehensively about the transition journey, working toward core milestones for each of the prioritized innovation shifts individually and ensuring a systemic, integrated transformation perspective at the same time. This requires mobilizing for selected shifts, building new capabilities, and acting on an integrated change agenda in concert across business and HR.

Sandra Durth is a senior expert and associate partner in McKinsey’s Cologne office, Neel Gandhi is a partner in the New York office, Asmus Komm is a partner in the Hamburg office, and Florian Pollner is a partner in the Zurich office.

The authors wish to thank Fabian Schmid-Grosse and Christian Winnewisser for their contributions to this article.

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The Challenge :

Manage increases in employee request volume and type

Air France is a renowned international passenger airline with over 102,000 employees worldwide. In 2004, Air France agreed to merge with KLM, the Dutch airline. This merger added a workforce of over 30,000 people to Air France’s already well-established employee base, resulting in an increased volume of inquiries from employees. Additionally, Air France was interested in creating a global SSC to manage its domestic employee requests, particularly from Roissy and Orly airports in France. Air France required a scalable solution that could handle a request load of more than 34,000 employees at these two Parisian sites. In addition to the large volume of inquiries, the solution would also have to accommodate a wide variety of requests as well as help to standardize resolution processes across the board. The Solution Requirements:

Scalability, handling of complex cases, and rapid deployment

Air France needed a solution that would address the following critical requirements for this project:

Absorb the increased volume and complexity of cases resulting from the Air France-KLM merger
Establish standard processes for case resolution, including team management and workflows to improve quality of service
Deliver high quality service to employees; special focus on fulfillment of time-to-respond limits
Rapid deployment and ease of use for 130 HR Shared Services Center agents

(article continued below)

The Solution:

HR Shared Services Centers and Neocase HR

Two identical Shared Services Centers (SSC) were installed to manage the Human Resources operations of both airport locations: Roissy and Orly. Each HRSSC is comprised of seven basic teams with one team servicing both centers. The seven teams consist of the following:

Initial Point of Contact—Service Desk
Employee SLA 1
Employee SLA 2
Retirement Plan
Management Queue
Hiring and Professional Development
Oversight and Reporting
Vacation and Travel Miles Redemption

With the exception of the Service Desk, each team handles a specific type of inquiry, or manages an inquiry based on that employee’s service level agreement (SLA) or position within the company (management queue). The Vacation and Travel Miles Redemption is sufficiently managed for both operation centers by one unit in the Roissy HR SSC. The Initial Point of Contact—Service Desk receives all inbound requests from employees. These cases are logged and either resolved through first call resolution, or transferred to the appropriate queue based on required expertise and corporate commitment for resolution timeline. Air France selected Neocase HR in a highly-secure SaaS (Software as a Service) model to manage all employee inquiries. Neocase HR empowered Air France to set up multiple service level agreements (SLA) to enforce the proper time-to-respond limits for different categories of employees. In addition, Neocase enabled the company to set up several topic-specific queues for their HR experts where inquiries were intelligently routed based on the question. The Neocase collaborative case management solution allows multiple HR employees at Air France to work on the same case simultaneously, leading to resolution in a much more expedient manner. A key factor in Air France’s decision to work with Neocase was a rapid deployment cycle. Neocase HR was deployed within a few weeks, including the time needed to customize the software for Air France’s workflows, queues and service level agreements. Neocase’s ease of use guaranteed a fast adoption of the solution by Air France’s HR managers. HR Managers and agents required only three-day and one-day training sessions, respectively.

The Results: 30% reduction in number of inbound employee requests

The Neocase HR implementation has been a very successful project at Air France: HR agents are better able to support employees with advanced technology and effective workflow processes and employees have greater confidence that their HR requests are being administered in a standardized, professional way. The airline has achieved the following results in a short period of time after having deployed Neocase HR:

Significant increase in first call resolution rates
Decreased the number of employee requests by nearly 30%
Increased efficiency and productivity of HR staff of up 20%
Employee workplace satisfaction increased by 40%

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Annie Hayes

Case Study: Barclays scoop top rewards with HR shared service centre

By Annie Hayes

The challenge: Barclays Bank is one of the UK’s largest retail financial services groups, with assets exceeding £45 billion and 75,000 employees worldwide. In 2000 Barclays’ new CEO, Matt Barrett, announced a strategic review of support functions. Barrett believed the existing decentralised model of HR support was inefficient and provided a fragmented service with excessive costs. He was right – by 2000 Barclays had 28 business units in the UK, each of which had separate, dedicated HR provision and technical systems. Some 120 systems across the business held HR data, which meant that it was difficult to get consistent HR advice across Barclays or a consolidated view at the corporate level. The bank concluded that it should centralise and re-engineer many of its HR processes in order to remove duplication and provide a unified and efficient service. However, it recognised that the transition represented a formidable challenge. Barclays asked PA Consulting Group to help it overhaul the decentralised HR model. The objective was to reduce costs (by almost 50%) yet at the same time substantially improve the delivery of HR services, across the bank’s six operating divisions and 75,000 employees. The assignment presented challenges on many fronts. There was no precedent for an HR shared service centre of this size or complexity. PA and Barclays worked closely together to gain executive support for the project and to satisfy the complex groups of stakeholders across Barclays that all their individual HR needs would be more than accommodated by the new SSC. The action: Barclays invited PA to support it through this period of major change. The objective was to help Barclays design and implement a best-in-class operational model for its HR function, and in the process deliver substantial cost and headcount savings and operational improvements. Targets were cost and headcount reductions of 38% and 44% respectively. The project also aimed to deliver operational improvements to the efficiency and effectiveness of the HR function and to the quality and consistency of management information and HR advice. The solution was a groundbreaking in-house HR shared service centre (SSC). A single source of HR advice and service, unique in its customer focus, size, processing power and commercial outlook. Planning and implementing shared services: Although designed to generate cost savings by automating and aggregating present processes, its raison d’être was more than simple economies of scale. The vision for the Barclays SSC was to add real value to the business by creating better HR processes designed around a central proposition of customer service. In addition, the SSC was designed to have the commercial ethos of a small business within Barclays. The key benefit is that through providing visibility of volumes as well as costs, rather than a single aggregate overhead charge, business units can influence demand in line with affordability targets. Though the technical questions raised by the creation of the SSC were complex, the principal issues involved a focus on the customer, and on achieving process improvement through close attention to customer needs. There were many different customer types to consider: a customer could be an employee with a query about pay, a line manager requiring advice on disciplinary procedures, or a business group negotiating the price of HR advice, among other possibilities. At the outset, Barclays and PA developed a blueprint that described the overall process and key benefits. This document was fundamental in securing senior management buy-in to the new operational HR model. With this buy-in secured, a combined team of PA and Barclays people implemented the recommendations. The project was structured around five workstreams:

developing an operational design to meet service
flexibility
control targets
preparing the business readiness (to ensure a positive attitude to the SSC prior to launch, both inside the SSC and throughout the bank)
formulating a new office environment
realising a fully integrated customer
work and management control system
managing programme implementation and communications

Challenges and how they were overcome:

Balancing needs, issues and stakeholders was one of the biggest challenges. The issues generated by complex IT, infrastructure and communication projects had to be balanced against the needs of Barclays’ complex group of stakeholders. These comprised Barclays’ executive, the bank’s various subsidiaries – Barclaycard, Retail Bank, Corporate Banking, Barclays Capital, to name only four – together with all employees, line managers, and senior executives, both within those businesses and in the SSC. Developing the new world, ‘tomorrow’s dream’ of the SSC, had to be balanced against the reality of maintaining business as usual. The old-world HR systems had, for example, to keep on paying people until the new system was in place.
The SSC represents a continuing challenge to the HR generalist role already, the SSC is handling more complex decision-making, such as advice about disciplinary matters and complex benefits issues. The question is now how far up the HR ‘judgement chain’ it is possible for the SSC to function. Longer term, the value that will emerge from the SSC will be largely dictated by its ability to take on areas requiring more judgement. Already the SSC is taking on more of the high level HR issues than SSCs in peer organisations.
IT requirements of the SSC were complex and demanding but IT was always recognised as an enabler and not a driver. PA helped specify the IT systems and helped select Siebel, a powerful customer relationship management tool, which was used extensively to enhance customers’ experience of the SSC. For example, the system captures information on the status of a query centrally so that a caller’s details are available to whoever takes the call. Hence any adviser who answers will be able to deal with the enquiry seamlessly.
How would the SSC speak to its customers? the SSC was designed to mirror the customer service experience of well-run external call centres. Barclays chose telephony over e-mail as the delivery system, because it wanted to give staff ‘HR with a human face’ – or more accurately a human voice.
The impact of the SSC on the role of Barclays’ line managers was central to its development. Every new HR process and every new item of management information was designed to support line managers and enable them to manage their people better.
Managing expectations and relationships new senior HR personnel from the business group arrived during the design and implementation of the SSC. This meant that at critical points relationships had to be managed and business cases revisited several times to establish comfort levels.
Designing a new working environment in order to support the new HR operating model, PA helped design a new working environment for the SSC that would look and feel very different. Critically the project not only looked at changing the layout of the space, but also focused on changing shift-working patterns. This had three major benefits: first, the business can access the SSC over a longer daily period of operation; second, it allows for greater rotation of people among the desks; and lastly, by optimising the use of floor space, Barclays saved £1 million.
Cost reductions the SSC has already met its target of a 44% reduction in headcount and is on track to achieve 56% by the end of 2002, with corresponding cost savings. This saving not only exceeds the target but is being achieved a whole year ahead of schedule.

The result: Not only has the SSC met its financial targets a year ahead of schedule; it has also given Barclays’ line managers access to more consistent, high quality advice, and answers to both simple and complex HR queries. On completion of the project, all HR administration, contact with employees, and HR advice was centralised to the SSC. Barclays has re-engineered its core HR processes, such as employee relations advice and resignation, and automated all the high volume processes, such as payroll, pensions and benefits. Staff feedback is positive about dealing directly with HR rather than through a set of paper forms, with many commenting on the quality of the customer service experience they have received via the telephone-based service. Every employee is just one call away from advice and the aim is to resolve 90% of all queries in the first call – an impressive aim given that the SSC currently receives 3,000 calls a day. The shift to a paperless environment is a major culture change. Observers are surprised that most of the work of the SSC is done by telephone, especially as it delivers so much value in terms of efficiency and effectiveness. These are two of the value creation criteria set by CEO Matt Barrett to measure the SSC’s success. Professional outsourcers regard Barclays groundbreaking HR SSC as being at the leading edge in terms of its processes, customer orientation, and commercial success. Peers from many sectors and from banks overseas have asked to visit and learn from Barclays experiences.

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HR Shared Service Video Case Study: Pepco's Success
Hr Shared Service Center Model
What is HR Shared Services? Benefits of HR Shared Services.
HR shared services centre
What is Shared Services?
HR Shared Services For Your Business

VIDEO

The Workplace Leader Podcast
Betterclean Services Case Study: Hayley's Story
Case Study How Google Creates a Cohesive Culture for their Workforce
Ace466-Global Business Services_Case Study ams OSRAM (Group 15)
Human Resources Information System (HRIS) Recovery Case Study
CA Final Audit Chapter 9 Standards On Related Services

COMMENTS

HR Shared Services: A Definitive Guide [With Examples & Strategy]
HR Shared services refers to an operating model in which selected HR activities are centralized and shared among all business units. ... As per a case study by Boston Consulting Group, a global company with more than 60,000 employees used automated HRSS Helpdesk support to reduce costs by 65%. The company discovered that 80% of employee queries ...
PDF A paradigm shift in HR shared services model: Digital delivery
HR Digital Shared Services enables superior delivery capabilities with more eficient processes. Service centers improve the quality-of-service delivery with the adoption of new technologies such as cloud-enabled "as-a-service" models and process automation. In a 2021 benchmarking analysis of the top.
HR Shared Services: Everything You Need to Know
HR Shared Services is a centralized hub of HR administrative and operational duties that are characterized by employee self-service and automation through leveraging technology, and multi-tiered levels of service and service responses. This allows organizations to provide standard HR services in the most efficient way.
Shaping the Future of Shared Services Centers: Insights from ...
In the case of SSCs in this study, this concept helps us, for example, to understand that, as open systems, SSCs compete with other systems—other potential service suppliers—and need to remain competitive, transforming themselves to continue adding value to their clients over time. ... HR transformation and shared services: Adoption and ...
PDF THE POWER OF HR SHARED SERVICES
role. Today, he leads a Shared Services model that is the pride of the City, having saved millions of dollars. This article introduces the "burning platform" that drove the HR transformation from a decentralized model to shared services model and takes us through the three phases of the transformation. Chazey Partners Case Study Serties | 2
PDF Research Shared Services: A Case Study in Implementation
Research Shared Services: A Case Study in Implementation Brian Squilla Thomas Jefferson University Jenna Lee Huron Consulting Group Andrew Steil ... IT, or HR shared services), with research, an organization should think about it as an investment. The higher education climate mandates that institutions consider mission over
PDF Exploring the central characteristics of HR shared services: evidence
The paper proceeds as follows. First, we review the existing literature on HR shared services and discuss HR competencies, intellectual capital and agency theory concepts as these aid understanding of how the needs of end-users may be satisﬁed by an HR SSC. After the literature review, we present the methodology used in our empirical study as
PDF Delivering a Modern HR Shared Service Centre
The Rise of HR Shared Services Over the past decade, HR shared service centres have become immensely popular mechanisms for streamlining and standardising the delivery of HR administrative functions. Aberdeen Group found in 2012 that 73 per cent of the organisations it surveyed had a full or partial HR shared service centre in place, and very ...
PDF Shared Services Handbook Hit the road
86. This handbook provides a practical overview of the key aspects involved in considering, designing, building and implementing a shared services centre. It is based on the cumulative experience of our team gained over the last ten years helping more than 500 companies with their shared services programmes.
(PDF) Exploring the central characteristics of HR shared services
characteristics of HR shared services: evidence from a critical case study in the Netherlands, The International Journal of Human R esource Management, 24:3, 487-513 T o link to this article: http ...
HR Shared Services
The shared service model can help businesses reduce costs, avoid duplication of effort, and allow a greater focus on HR strategy. Often shared services are seen as supporting strategic business partners and centres of expertise in HR. This factsheet outlines how shared services work and the benefits of introducing them in an organisation.
Exploring the central characteristics of HR shared services: evidence
Human resource shared service centers (HR SSCs) are foreseen as improving HR service delivery for their end-users: employees, line managers and decentralized HR professionals. Although the concept expects the benefits of HR SSCs to come from centralizing knowledge and decentralizing the control exercised over an HR SSC, research into these two ...
A new approach to human resources
The choice is yours ," McKinsey Quarterly, September 8, 2021. enabling both employee health and resilience. Re-empower frontline leaders in the business to create human-centric interactions, reduce complexity, and put decision rights (back) where they belong. Offer individualized HR services to address increasingly varied expectations of ...
Modeling an HR shared services center ...
An increasing number of large and multinational organizations are moving to shared services models in delivering the human resource function. It is commonly believed that the adoption of an HR shared services model can transform the role of HR by enabling the HR function to be more strategic at the corporate level and more cost-effective at the operational level.
Shared service implementation in multidivisional organizations: A meta
Harritz D (2016) Role of management devices in enacting strategy—case study of shared service centre. Journal of Accounting & Organizational Change 12(4): 504-521. ... (2011) Structures in public human resource management shared services in state governments. Review of Public Personnel Administration 31(4): 349-368. Crossref. ISI. Google ...
What's Next for HR Shared Services?
Shared Services. Performance Benchmarking and Surveys. For more than 10 years, ScottMadden and APQC have gathered benchmarks and trends specific to HR Shared Services through a custom benchmarking study focused exclusively on the shared services delivery model. Courtney Jackson and Karen Hilton, partners in ScottMadden's Corporate & Shared ...
PDF University Shared Services Case Studies
provides finance and HR services to the colleges and programs on the Ann Arbor campus. Overview About the University The University of Michigan began exploring shared services in 2009. After considering various models and potential services, decision was made to move forward with offering support in finance and human resource from a single
PDF The Evolution of HR Service Delivery in the New Digital Experience Era
the blended portal/case management space. Almost two-thirds of organizations now use the same application for both HR case management and knowledge management (portal). This represents a positive shift from Aon's 2018 HR Shared Services Study1, Driving a Digital Employee Experience Through HR Shared Services findings, where
Neocase case study: Air France Success Story
Case Study - HR Case Management for Air France: Using Neocase HR to manage high-volume, complex employee requests Neocase discusses the comprehensive, SaaS solution implemented for this 34,000-employee passenger airliner to achieve significant efficiencies in its HR Shared Services Contact Center. Download a PDF version of this case study
Case Study: Barclays scoop top rewards with HR shared service ...
Case Study: Barclays scoop top rewards with HR shared service centre. Pre-millennium Barclays was formed by clusters of business units each with its own head office; when new CEO Matt Barrett announced tough financial targets in line with his value-based management philosophy, the decentralised and fragmented HR function was an obvious ...
PDF The new case for shared services
The new case for shared services. The oil and gas industry is enjoying an unprecedented growth cycle that is likely to continue for many years. But that growth brings capital, cost and capacity challenges that can be overcome by changing the way services are delivered internally. The dramatic rise in unconventional production is certainly one ...
HR Outsourcing Case Study: Service Desk Achieves 99.6% Customer ...
Read our HR Outsourcing Case Study and discover how Auxis helped a Top Consumer Goods Corporation achieve a 99.6% customer satisfaction score. ... Our client's division provides a range of shared services functions from Costa Rica for the corporation's business units in the Americas, including North, South, and Central America and the ...