HR - Shared Service Center - An Introduction

Shared Services is a way of organizing administrative functions to optimize the delivery of cost‐effective, flexible, reliable services to all “customers”.

According to Wikipedia: Shared Services refers to provision of a service by one part of an organization or group where that service had previously been found in more than one part of the organization or group. 

Thus the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider. The key is the idea of 'sharing' within an organization or group.

When transitioning to a HR shared services model, organizations should structure the shared services center (SSC) to most effectively meet business objectives. Multinational organizations should determine whether shared services are most effectively delivered through a number of centers based on business groups and regions, or through one global center. Further, while implementing SSCs, organizations should identify internal structures for smooth service delivery, design career paths for employees, and manage transition challenges.

Outsourcing Models:

1.        On-site Recruitment Process Outsourcing Model
2.        Initiative-Based Recruitment Process Outsourcing
3.        Service Center (Off-Site) RPO Model
4.        Hybrid RPO Model
5.        Management Recruiting Solutions
6.        Talent Acquisition Consulting

Shared service centers are deployed for a variety of reasons:

1. To reduce costs of decentralization, to increase the quality and professionalism of support processes for the business
2. To increase cost flexibility for supporting services
3. To create a higher degree of strategic flexibility

Reported cost reductions of costs of services organized in shared service center are as high as 70% of the original costs, but average is about 50%.

Shared service centers are not to be confused with corporate staff departments. Different from staff departments, shared service centers have measurable outputs (by quantity and quality), with costs per unit of service provided. Tasks not organized in shared service centers include corporate control, corporate legal, management development policy, IT-governance and other support typical for the statutory duties of the executive board.

Broadly there are five key elements in implementation of a Service Center:

Shared Service Center Implementation Process

To strategize and design SSC, it is imperative to devise a 30-60-90 day plan with focus on goals and objectives. A tracking system must be built within to monitor the progress. Managing change and stakeholders holds the key in setting up a Service Center. Developing lead metrics and monitoring them will ensure SLA’s of the processes are continuously met.

Example of SSC Model

The Sourcing, Screening, Scheduling, and Post offer follow-up processes consolidated in a Service Center model.

Many people confuse shared services with centralization. However they are different. Below chart presents the diffrence between the both.

Reference:
University of Michigan's website