From Guest Writer, Jim Scully, President of HR Shared Services Institute…
In all honesty…
As a 20-year practitioner, consultant and researcher in the shared services field, I’ve observed that most shared services implementations fail to realize much of their envisioned ROI. To be brutally honest, many fail to save a dime.
The classic excuse is ineffective or inadequate change management, and that’s certainly on the list.
But to comprehend the full breadth of causes, I will place shared services models in three categories:
- Waste-for-Less models focus on performing current activities cheaper, usually through a combination of labor consolidation and geographical relocation of activities (offshoring, nearshoring, “ruralshoring,” etc.). Little attention is paid to identifying process waste, much less eliminating it. As a result, waste activities continue to be performed albeit by less expensive resources.
- Less-Waste models are a step in the right direction. To varying levels of success, these models have redesigned processes to eliminate waste, either in conjunction with or subsequent to go-live. Again, the degree to which waste is removed varies widely. Obviously, the extent to which waste is removed determines how much financial benefit is gained.
- Less models achieve the greatest financial benefit, because they tackle the most important process question: Why? Why are we doing it at all?
One Reason Organizations Fail…
One reason organizations fail to drive out waste is that they simply don’t know waste when they see it. The lists of wastes commonly used in manufacturing don’t hit the spot for information factories (that’s what shared services operations are), so a translation is required. Below is the list of information process wastes developed by HRSSI with the comparable manufacturing waste provided in parentheses.
- Dissemination (Transportation) – providing information and reports that could be obtained by the recipient on demand
- Open, Unresolved Cases (Inventory) – cases (service requests) that are incomplete
- Overkill (Overproduction) – performing activities or services that are not valued or doing for others what they could do for themselves
- Manual Data Handling (Motion) – entry, manipulation or extraction of data using manual methods
- Delays (Waiting) – hold-ups in process completion awaiting completion of upstream steps or input/approval from other parties
- Errors (Defects) – all activities associated with errors, including not only immediate rework but also downstream corrections, communications, unnecessary audits/approvals, etc..
- Handoffs (Overprocessing) – involvement of more parties than absolutely necessary incompletion of end-to-end process (hint: self-service is the ultimate handoff-free process)
While change management is critical, investing in change management isn’t going to yield any better results than the model itself can deliver. The real multiplier is the process itself.
This raises the second major culprit in suboptimal shared services deployments; inadequate technology investment. Driving waste from processes generally requires new technological capabilities. Put another way, waste often stems from inadequate technology. Process excellence and technology go hand in hand. Unfortunately, benefits from process excellence, no matter how large, are hard to quantify in advance. This can make the business case for process-enabling technology hard to get approved.
One approach is to start by taking stock of the waste in your current delivery model. Then make a reasonable assumption of the amount of waste you can eliminate by leveraging robust technology. Based on the amount of process waste I see in my work with organizations, your business case should be a slam dunk.
Jim Scully and Rayanne Thorn, our own HR Editor, will share findings from the latest HRSSI Survey and what they mean in an upcoming webinar on March 23 at 1:30pm EST, “The Truth Behind Performance Data: Measuring HR Shared Services” – registration is free!
Jim Scully is Founder and President of the HR Shared Services Institute. He has been entrenched in shared services for more than 20 years, both as a corporate executive with Georgia-Pacific Corporation and consultant.
Over the years Jim has consulted with many large and mid-size organizations to help and/or optimize their HR shared services models and brings a passion for enhancing the shared services value proposition by moving beyond waste-for-less to less waste.
As a researcher Jim has amassed the most comprehensive collection of comparative practice and performance data available. To support this research Jim also founded the HR Shared Services Network on Linkedin, which with over 10,000 members is the largest social network for the HR shared services community.
Jim holds a Bachelors degree in Philosophy and a Masters in Management. He lives and works in Atlanta, Georgia.
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