June HCM Webinar: HR Shared Services Benchmarking Results, Trends, and Key Metrics. Karen Hilton, ScottMadden Scott Manning, ScottMadden

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1 June HCM Webinar: HR Shared Services Benchmarking Results, Trends, and Key Metrics Karen Hilton, ScottMadden Scott Manning, ScottMadden

2 Presenters Karen Hilton Partner Scott Manning Partner and Corporate & Shared Services Practice Lead 2013 APQC. ALL RIGHTS RESERVED. 1

3 ScottMadden s HR Shared Services Benchmarking Survey Second Annual Benchmarking Study Conducted in Partnership with APQC APQC HCM Community of Practice Call June 12, 2013

4 Agenda Introduction About the Survey Survey Highlights by Topic Summary How to Participate in Next Cycle 3

5 Introduction Our Focus A general management consulting firm recognized as a leader in shared services human resources, accounting and finance, engineering services, information technology, supply chain, and similar administrative functions. Experienced, Professional People Customized, Actionable Solutions An Exceptional Consulting Experience We provide seasoned, experienced consultants Our partners consult, devoting > 50 percent of their time to direct client consulting We have extensive knowledge of all aspects of shared services We have strong functional expertise across an array of support service disciplines While we leverage best practice information and our experiences, our solutions are tailored to the unique situations of our clients We are solidly grounded in theory, but our solutions are practical and implementable Our opinions are unbiased; we do not sell software or outsourcing services We manage our projects to build buyin and support throughout the process we focus on implementation We serve each client's best longterm interests We conduct ourselves with integrity throughout every aspect of our business We value our role as advisor we provide honest and candid counsel We actively involve our clients in the assignment and focus on transferring knowledge and skills to promote self-sufficiency 4

6 Introduction Our Work in Shared Services Decide Design Build Improve Strategy development and integration Benchmarking High-level business case Change management Service delivery model design and scope delineation Detailed current state, future state, and business case Sourcing model Organizational design Change management Project planning and management Service/transaction center build Process redesign Detailed organization design and staffing Technology design, selection, and support Training Facility design and set-up Change management Our Functional Expertise Process improvement/ cost reduction Operations/ technology assessment M&A integration Benchmarking Customer and employee surveys Change management Finance and Accounting Supply Chain Management Real Estate and Facilities Engineering Services Human Resources Information Technology Multi-Function Administrative Services 5

7 Introduction A Sample of ScottMadden Clients Consumer Products and Services Manufacturing Technology and Communications Public Sector and Government Energy and Utilities Healthcare and Pharmaceuticals Note: Representative sample; not all-inclusive of clients within an industry or industries served. Excludes numerous well-known Global 100 clients due to confidentiality agreements. 6

8 Introduction Shared Services Overview SHARED SERVICES DECENTRALIZED Service Culture CENTRALIZED Redundant Inefficient Non-Standardized Customer Focused Business Intelligent Efficient Delivery Model Best Practices Independent Entity Metric Driven Economies of Scale Standardized Processes Unresponsive Detached from Business Inflexible Infrastructure Combines the best of both worlds 7

9 Introduction Leading Practice HR Shared Services Delivery Model Customers Vendors Employees Line Managers Self-Service Tier 0 Assisted Support Tier 1 Tier 2 Service Interface/ Service Delivery Data Warehouse/ Knowledgebase Service Center Transactions Information and tools Routine services Administrative support Business Partners Interactive Voice Response Shared services Customer-facing Consulting services Liaison to Centers of Expertise, as appropriate 8 Strategies, Programs, and Policies Corporate Policies/governance Centers of Expertise Design programs Deliver services to business units Tier 3 support for service center Policies and governance Key Attributes: Service structured and delivered based on type of work performed Leverages centralized and decentralized components Heightens focus on the customer Increases service delivery at entry or lower service tiers Leverages technologies Focuses on proactive analysis and responses Defines services clearly and bases services on customer needs

10 About the Survey Survey Project and Timeline Identified gap in HRSS benchmarking data specific to service center and COE staffing and metrics Engaged APQC to conduct study; ScottMadden-designed questions Leveraged APQC s benchmarking methodology and member network Conducted first cycle in Fall 2011 Conducted second cycle in Fall 2012 Survey Target Audience U.S. or North American HR shared services organizations that include a service center and centers of expertise Survey Scope: 34 metrics 19 qualitative questions 9

11 Polling Question How mature is your shared services model? (choose one) We do not have a shared services model Planning to implement in planning stages Less than 2 years Between 2 and 5 years Greater than 5 years 10

12 About the Survey Survey scope covers four major areas: Delivery Model & Operations Staffing Performance SSO Management Infrastructure and Technology 11

13 Participant Overview Participation was fairly balanced across maturity levels and industries How many years has your HR SSO been in existence? Industries Represented 12

14 Participant Overview (Cont d) More than half of the participants came from companies with more than $5 billion in revenues 2% Participant Revenue 19% Less than $1 billion 38% Between $1 and $5 billion Between $5 and $10 billion 21% Greater than $10 billion No Response 21% 13

15 Survey Highlights Delivery Model & Operations (Global) A variety of global models exist; two-thirds indicate a global business services model What type of global geographic model is used? Site/countryspecific centers with global management and integration 12% Other 9% Regional centers, but run locally 3% Regional centers, with global management and integration 36% = Global Business Services Single global center 18% 14 Site/countryspecific centers run locally 21%

16 Share of Respondents Survey Highlights Delivery Model & Operations (Org Structure) A tiered approach continues to be most common for service center staffing Use of a tiered model does not appear related to SSO maturity 100% Is a tiered approach used as part of the service center staffing model? 80% 60% 65% 66% 40% 20% 35% 34% 0% Yes No 15

17 Survey Highlights Delivery Model & Operations Typical scope items reported were not surprising Top 5 Insourced Services Employee policy questions Separations and severance administration New hire processing Workforce administration Employee files/records management 0% 50% 100% % Providing Service In-House Top 5 Outsourced Services Defined benefit and defined contribution administration Employment verification Benefits administration Unemployment Relocation 0% 50% 100% % Outsourcing Service = Top 5 in

18 Survey Highlights Delivery Model & Operations (Centers of Expertise (COEs)) Talent Acquisition and Talent Management COEs generally show higher staffing levels Total Company Employees per COE Headcount 17

19 Survey Highlights Delivery Model & Operations (COEs Cont d) Location of staff across COEs Compensation and Benefits COEs are most often colocated with other COEs Co-Location of COEs with Other HR COEs 18

20 Survey Highlights Delivery Model & Operations (COEs Cont d) Degree of staff co-location within COEs Mixed models are in place Talent Acquisition and Employee and Labor Relations COEs are more likely to have virtual staff 19

21 Survey Highlights Delivery Model & Operations (Field HR) While not commonly considered part of SSOs, field HR is important to the overall delivery model Company employees per field HR headcount 20

22 Survey Highlights Delivery Model & Operations (Field HR Cont d) Most respondents have multiple position types in their field HR organization Do you have multiple position types within your field HR organization? If so, what types are included? 21

23 Survey Highlights Staffing (Service Centers) Median service center staffing reflects relatively high service center staff (not aligned with traditional 1:1000 ratio) Total Customers (Employees and Retirees) per Service Center Headcount Bottom Performer Median Top Performer 22

24 Survey Highlights Staffing (Service Centers) Tier 2 staffing levels are higher than Tier 1 Reflects shift to higher value services and increased use of self-service Total Company Employees per Service Center Headcount by Tier 3,000 2,500 2,679 2,462 2,000 1,500 1, ,641 1,125 Per tier 1 headcount Per tier 2 headcount Bottom Performer Median Top Performer 23

25 Survey Highlights Staffing (Span of Control) As seen last year, broader spans of control exist for Tier 1 staff than Tier 2 staff Tier 1 Span of Control Tier 2 Span of Control 24

26 Survey Highlights Staffing (Service Center Specialists) Median staffing ratios for service center specialists show more staff focused on employee relations or workforce administration activities Total Company Employees per Service Center Specialist Headcount 25

27 Survey Highlights Performance Performance by model differs on key service center metrics Tiered models have better Average Speed to Answer Non-tiered models achieve higher First Contact Resolution Average Speed to Answer Compared by Delivery Model First Contact Resolution Compared by Delivery Model 26

28 Survey Highlights Performance (Productivity) Top performing service centers are able to handle almost five times as many transactions and almost six times as many calls as bottom performers 27

29 Survey Highlights Performance (Cost) Top performing service centers cost per employee served is less than a quarter of that of bottom performing centers 28

30 Survey Highlights Performance (Talent Acquisition Activities) SSO productivity on recruiting and staffing activities shows wide variation Total requisitions per recruiting/staffing service center specialist headcount Total hires handled per recruiting/staffing service center specialist headcount 29

31 Survey Highlights SSO Management Infrastructure and Technology Despite 85% of respondents having shared services in place for multiple functions, over three quarters report into an HR executive 30

32 Survey Highlights SSO Management Infrastructure and Technology (Cont d) SLA use shows less formal approaches are becoming more common To what degree are service level agreements used? 31

33 Survey Highlights SSO Management Infrastructure and Technology (Cont d) Fewer are using charge-backs for services In what way are services delivered by the HR shared services organization charged back to customers 32

34 Survey Highlights SSO Management Infrastructure and Technology (Cont d) For portals, the majority of top performers in portal volume have portals with personalized content and fullsystem integration Nature of Portals Used by Respondents Personalized content with fullsystem integration Personalized content with limited system integration Some personalization of content without system integration Static, non-personalized content 26% 34% 6% 30% Do not leverage a portal 4% 33

35 Summary Overall Findings A tiered delivery model continues to be most common for HR service centers SSO staffing is higher for tier 2 specialists versus tier 1 generalists due to a shift to higher value services and increased use of portals and self-service Governance of the HR SSO by an HR executive is most common Some elements of traditional SSO management infrastructure are showing lower adoption Top performing SSOs continue to achieve significant efficiency gains and cost performance 34

36 Summary Top Performer Characteristics While not conclusive, top performers across key metrics had these characteristics: Use a tiered delivery model Are more mature (most with 3 or more years of maturity) Are governed by a lead HR executive Are part of a global SSO 35

37 How to Participate in Next Cycle 1. Contact us at 2. Receive an overview of the study and metrics included in last cycle 3. Expect follow-up regarding next cycle in late summer or early fall There is no cost to participate All participants receive a detailed report of all metrics and qualitative results Peer group comparisons are provided where relevant 36

38 Scott Manning Partner and Corporate & Shared Services Practice Lead Ten Piedmont Center, Suite 805 Atlanta, GA Karen Hilton Partner 2626 Glenwood Avenue Suite 480 Raleigh, NC

39 Assess the Need for HR Shared Services Moderate or High Performer? Which is your HR Department? 2012 APQC. ALL RIGHTS RESERVED. 38

40 Build the Business Case for HR Shared Services Making the Journey from Moderate to High- Performance HR HR still has an administrative burden Outcomes from alternative approaches to administration such as technology or outsourcing acceptable but not superb Strategic HR Partnerships HR functions that are not strategic business partners retain a large portion of their operational and transactional HR duties 2012 APQC. ALL RIGHTS RESERVED. 39

41 Build the Business Case for HR Shared Services Read our blog to learn about this case study based research project which is currently in the analysis and reporting phase: Developing Strategic HR Partnerships Watch for the findings in APQC s Knowledge Base and on our AllThingsHCM Web page: APQC. ALL RIGHTS RESERVED. 40

42 Implement or Improve HR Shared Services More resources from ScottMadden and APQC Implementing Shared Services (Collection) Improving Shared Services Centers (Collection) 2012 APQC. ALL RIGHTS RESERVED. 41

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