Shrm poll shared_servicesfinal

July 23, 2010

SHRM Poll: Shared Services and Centers of

Excellence

Shared Services & Centers of Excellence | ©SHRM 2010

SHRM Poll: Shared Services and Centers of Excellence

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Contents:

Introduction

Shared Services Centers

Centers of Excellence

Results by Organizations That Do Not Use a Shared Services/Centers of Excellence HR Transaction Model

Methodology


Introduction

This study examined the shared services centers (consolidated administrative HR functions) and centers of excellence (localized areas of in-depth HR expertise) models used for administering HR transactions and services. The shared services model, as envisioned by Dave Ulrich, is a way to promote HR expertise and deliver improved services companywide through the division of tasks and expertise.

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Shared Services Centers

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Does your company administer and deliver HR transactions through an internal and central shared services department?

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Yes, 75%

No, 25%

Note: n = 484.


Does your company administer and deliver HR transactions through an internal and central shared services department? (Differences by organization demographics)

• Publicly owned for-profit organizations (74%) were more likely than nonprofit

organizations (53%) to administer and deliver HR transactions through an internal and

central shared services department.

• Large-staff-sized organizations (500 or more employees) (78%) were more likely than

small-staff-sized organizations (1 to 99 employees) (62%) or medium-staff-sized

organizations (100 to 499 employees) (63%) to administer and deliver HR transactions

through an internal and central shared services department.

• Organizations with multinational operations (75%) were more likely than organizations

with single country operations (64%) to administer and deliver HR transactions through

an internal and central shared services department.

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What business model does your company use to administer and deliver HR transactions?

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37%

2%

61%

Completely in-house shared services

Completely outsourced shared services

A combination of in-house and outsourced shared services

Note: n = 352. Only respondents who indicated that they administer and deliver HR transactions through an internal and external shared services

department were asked this question.


What business model does your company use to administer and deliver HR transactions? (Differences by organization demographics)

• Government agencies (58%) were more likely than publicly owned for-profit

organizations (24%) or nonprofit organizations (21%) to use completely in-house

shared services.

• Publicly owned for-profit organizations (72%), privately owned for-profit organizations

(68%) and nonprofit organizations (79%) were more likely than government agencies to

use a combination of in-house and outsourced shared services.

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To what degree has your company's shared services organization…

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

increased employee satisfaction with HR service delivery? (n = 277)

gained endorsements and support from the business unit(s) and local leaders it serves? (n = 276)

decreased employee satisfaction with HR service delivery? (n = 267)

lost endorsements and support from the business unit(s) and local leaders it serves? (n = 267)

26%

32%

4%

3%

50%

48%

18%

18%

17%

11%

36%

27%

7%

9%

43%

52%

To a large degree To some degree To a slight degree Not at all

Note: Percentages may not total 100% due to rounding.


To what degree has your company's shared services organization… (Differences by organization demographics)

• Increased employee satisfaction with HR service delivery

> Privately owned for-profit organizations reported greater average degrees of

increased employee satisfaction with HR service delivery than publicly owned for-

profit organizations.

> Organizations with single country operations reported greater average degrees of

increased employee satisfaction with HR service delivery than organizations with

multinational operations.

• Decreased employee satisfaction with HR service delivery

> Publicly owned for-profit organizations reported greater average degrees of

decreased employee satisfaction with HR service delivery than privately owned

for-profit organizations or government agencies.

> Large-staff-sized organizations reported greater average degrees of decreased

employee satisfaction with HR service delivery than small-staff-sized

organizations.

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What are the top three positive outcomes your company has experienced as a result of its shared services center?

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1%

3%

9%

11%

14%

14%

18%

19%

25%

31%

33%

36%

37%

0% 10% 20% 30% 40%

Other

Improved ability to calculate metrics around HR functions

Maintained (i.e., did not see an increase in) administrative costs

Improved employee satisfaction with basic HR transactions

Reduced transaction errors

Reduced routine HR-related calls/emails from employees

Reduced/eliminated paper-based record keeping

Greater strategic functioning of HR

Improved efficiency of operations

Better tracking of employee data

Consolidated redundant HR functions

Reduced administrative costs

Reduced HR staff time spent on administrative tasks

Note: n = 247. Percentages do not total 100% as multiple response options were allowed.


What are the top three positive outcomes your company has experienced as a result of its shared services center? (Differences by organization demographics)

• Improved employee satisfaction with basic HR transactions

> Privately owned for-profit organizations (19%) were more likely than publicly owned

for-profit organizations (6%) to report improved employee satisfaction with basic HR

transactions.

• Reduced transaction errors

> Medium-staff-sized organizations (22%) were more likely than small-staff-sized

organizations (5%) to report reduced transaction errors.

• Reduced HR staff time spent on administrative tasks

> Large-staff-sized organizations (48%) were more likely than medium-staff-sized

organizations (28%) to report reduced HR staff time spent on administrative tasks.

• Reduced administrative costs

> Organizations with multinational operations (44%) were more likely than

organizations with single country operations (27%) to report reduced administrative

costs.

> Organizations with unionized workforces (49%) were more likely than organizations

with non-unionized workforces (30%) to report reduced administrative costs.

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What are the top three positive outcomes your company has experienced as a result of its shared services center? (Differences by organization demographics, continued)

• Consolidated redundant HR functions


organizations with single country operations (27%) to report consolidated

redundant HR functions.

> Organizations with unionized workforces (45%) were more likely than

organizations with non-unionized (30%) workforces to report consolidated

redundant HR functions.

• Greater strategic functioning of HR

> Organizations with single country operations(26%) were more likely than

organizations with multinational operations (13%) to report greater strategic

functioning of HR.

• Reduced/eliminated paper-based record keeping

> Organizations with single country operations (24%) were more likely than

organizations with multinational operations (13%) to report reduced/eliminated

paper-based record keeping.

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What are the top three challenges your company has experienced with its shared services model?

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Note: n = 235. Percentages do not total 100% as multiple response options were allowed.“Not sure” and “none” responses were excluded from this

analysis.

4%

10%

18%

22%

23%

24%

27%

30%

37%

40%

43%

0% 10% 20% 30% 40% 50%

Other

Expected cost reductions not achieved

Negative impact on relationship between HR staff and other company employees

Difficulty with outsourced portions of HR services

Expected HR staff time savings not achieved

Time to implement the shared services model was lengthier than expected

Performance metrics for this model have not been effectively tracked

Difficulty with the IT infrastructure to support automated, web-based HR functions

Shifting HR staff roles and responsibilities

Transitioning from traditional HR delivery to the shared services model

Employee resistance toward the shared services model


What are the top three challenges your company has experienced with its shared services model? (Differences by organization demographics)

• Negative impact to the relationship between HR staff and other company

employees


organizations with single country operations (11%) to report negative impact to the

relationship between HR staff and other company employees.

> Organizations in the midwest (27%) were more likely than organizations in the

northeast (3%) to report negative impact to the relationship between HR staff and

other company employees.

• Performance metrics for this model have not been effectively tracked


organizations with multinational operations (19%) to report that performance

metrics for this model have not been effectively tracked.

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What are the top three challenges your company has experienced with its shared services model? (Differences by organization demographics, continued)

• Employee resistance toward the shared service model


organizations with non-unionized workforces (38%) to report employee resistance

toward the shared service model.

• Transitioning from traditional HR delivery to the shared service model

> Large-staff-sized organizations (48%) were more likely than medium-staff-sized

organizations (27%) to report transitioning from traditional HR delivery to the

shared service model.

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Is the shared services center just for your location or the entire company?

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Note: n = 219. HR professionals who were employed by a single location/business unit company did not answer this question.

3%

16%

80%

Just this location

Multiple locations but not the entire company

Entire company


How many separate locations are served by shared services?

18

Note: n = 207. HR professionals who were employed by a single location/business unit company and responded that their organization’s shared

service center was just for their location did not answer this question.

0%

10%

20%

30%

40%

50%

60%

70%

80%

One location Two to five locations Six to 10 locations 11 or more locations

1%

15%13%

71%


How many separate business units are served by shared services?

19

Note: n = 215. HR professionals who were employed by a single location/business unit company and responded that their organization’s shared

service center was just for their location did not answer this question.

0%

10%

20%

30%

40%

50%

One business unit Two to five business units

Six to 10 business units

11 or more business units

8%

23%22%

46%


Which services are offered through an HR shared services department?

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3%

12%

18%

24%

26%

27%

28%

32%

33%

36%

37%

38%

39%

39%

43%

47%

48%

60%

65%

66%

68%

88%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Other

Expatriate administration

Stock/share administration

Expense reimbursement

Information services

Relocation services

Other benefits (i.e., not health care, retirement, leave or work/life) …

Compensation planning

Onboarding support

Training and development

Performance management

Work/life benefits administration

Pension administration

Time keeping

Recruiting support

Employee assistance/counseling

Employee data collection and maintenance

Leave administration

Payroll

Retirement benefits administration

Flexible spending account administration

Health care benefits administration


Which services are offered through an HR shared services department? (Differences by organization demographics)

• Relocation services

> Publicly owned for-profit organizations (40%) were more likely than government

agencies (12%) to report offering relocation services through an HR shared

services department.


organizations with single country operations (16%) to report offering relocation

services through an HR shared services department

• Stock/share administration

> Publicly owned for-profit organizations (30%) were more likely than nonprofit

organizations (7%) to report offering stock/share administration through an HR

shared services department.


organizations with single country operations (14%) to report offering stock/share

administration through an HR shared services department

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• Pension administration


organizations with non-unionized workforces (32%) to report offering pension

administration through an HR shared services department.

> Medium- and large-staff-sized organizations were more likely than small-staff-sized

organizations to report offering pension administration through an HR shared

services department.

• Other benefits administration

> Large-staff-sized organizations were more likely than medium-staff-sized

organizations to report offering other benefits (i.e., not health care, retirement,

leave or work/life) administration through an HR shared services department.

• Payroll


organizations with single country operations (58%) to report offering payroll

through an HR shared services department.

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• Retirement benefits administration

> Organizations in the southeast (80%) were more likely than organizations in the

northeast (52%) to report offering retirement benefits administration through an HR

shared services department.

• Flexible spending account administration

> Publicly owned for-profit organizations (75%) were more likely than government

agencies (44%) to report offering flexible spending account administration through

an HR shared services department.

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Centers of Excellence

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Do you have centers of excellence that offer HR services/functions?

25

Note: n = 222.

Yes, 49%

No, 51%


Which services do the centers of excellence provide?

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5%

45%

46%

50%

51%

53%

57%

58%

63%

73%

75%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

Succession planning

Legal

Diversity programs

Organizational design and change processes

Total rewards planning

HR policy development

Performance management

Employee relations

Recruiting, recruiting and staffing administration or recruiting and hiring policies

Training and education program planning and administration, mentoring, coaching


Which services do the centers of excellence provide? (Differences by organization demographics)

• Employee relations


organizations with multinational operations (50%) to report providing employee

relations through centers of excellence.

> Organizations with non-unionized workforces (74%) were more likely than

organizations with unionized workforces (40%) to report providing employee

relations through centers of excellence.

• HR policy development

> Privately owned for-profit organizations (74%) were more likely than publicly

owned for-profit organizations (44%) to report providing HR policy development

through centers of excellence.

• Other services


organizations with non-unionized workforces (1%) to report providing other

services through centers of excellence.

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Over time, to what degree have the services of your central centers of excellence…

28

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

gained endorsements and support from the business unit and local leaders it serves? (n = 100)

lost endorsements and support from the business unit and local leaders it serves? (n = 94)

increased employee satisfaction with HR service delivery? (n = 99)

decreased employee satisfaction with HR service delivery? (n = 95)

42%

1%

23%

1%

35%

15%

48%

14%

13%

34%

15%

36%

10%

50%

13%

49%

To a large degree To some degree To a slight degree Not at all

Note: Percentages may not total 100% due to rounding.


Over time, to what degree have the services of your central centers of excellence… (Differences by organization demographics)

• Increased employee satisfaction with HR service delivery

> Privately owned for-profit organizations reported greater average degrees of

increased employee satisfaction with HR service delivery than publicly owned for-

profit organizations.

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Does your company have decentralized HR generalists in separate business units and/or individual locations?

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Note: n = 232.

Yes, 58%

No, 42%


Does your company have decentralized HR generalists in separate business units and/or individual locations? (Differences by organization demographics)

• Publicly owned for-profit organizations (71%) were more likely than government

agencies (35%) to report having decentralized HR generalists in separate business

units and/or individual locations.

• Organizations with multinational operations (72%) were more likely than organizations

with single country operations (44%) to report having decentralized HR generalists in

separate business units and/or individual locations.

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Organizations That Do Not Use a Shared

Services/Centers of Excellence HR

Transaction Model

32


What is the primary reason for your company not adopting a shared services business model?

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10%

1%

3%

9%

10%

10%

12%

46%

0% 10% 20% 30% 40% 50% 60%

Other

Current outsourcing arrangement of HR functions works well

Concerns about loss of support from the business units regarding HR service delivery

Model development/implementation in progress

Lack of upper management support for this HR service delivery model

Concerns about cost escalation

Concerns about lowered employee satisfaction with HR service delivery

No perceived need for this HR service delivery model for our organization

Note: n = 102.


Does your company plan to change to a shared services/centers of excellence HR transactions model?

34

Note: n = 104. Only respondents who indicated that their organizations did not administer and deliver HR transactions through an internal and

external shared services department were asked this question.

0%

10%

20%

30%

40%

50%

Yes, within 12 months

Yes, within 13 to 24 months

Yes, within the next 2 to

5 years

No Not sure

10%7%

5%

37%

42%


Does your company plan to change to a shared services/centers of excellence HR transactions model? (Differences by organization demographics)

• Among organizations that do not currently administer and deliver HR

transactions through shared services/centers of excellence:

> Nonprofit organizations (81%) were more likely than publicly owned for-profit

organizations (35%) to indicate that they do not plan to change to a shared

services model.

> Organizations with multinational organizations were more likely than organizations

with single country operations to indicate that they plan to change to a shared

services model within 13 to 24 months (23% compared with 5%) or within the next

2 to 5 years (18% compared with 3%).


organizations with multinational operations (36%) to indicate that they do not plan

to change to a shared services model.

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Demographics: Organization Sector

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Note: n= 330

0%

10%

20%

30%

40%

Publicly owned for-profit

Privately owned for-profit

Nonprofit Government Other

37%

33%

16%

11%

3%


Demographics: Location Staff Size

37

Note: n = 316.

0%

10%

20%

30%

40%

Small (1 to 99 employees) Medium (100 to 499 employees)

Large (500 or more employees)

22%

39% 39%


Demographics: Organization Operations

38

Note: n = 324

Single country, 55%

Multinational, 45%


Demographics: Union Status

39

Note: n = 328

Union, 27%

Non-union, 73%


Demographics: Region

40

Note: n = 316

0%

10%

20%

30%

40%

Northeast Southeast Midwest West

16%

28%

37%

19%


SHRM Poll: Shared Services & Centers of Excellence

• Response rate = 18%

• Sample comprised 484 HR professionals from SHRM’s membership who were employed by organizations with 250 or more employees.

• Margin of error is +/- 4%

• Survey fielded May 6 – May 12, 2010

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Methodology

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Education

Shrm poll shared_servicesfinal