Commonwealth of Pennsylvania create HR SSC


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SSON: Can you give us an overview of the ‘HR demographics’ of the Commonwealth as they relate to your HR Shared Services project? For example, how many employees, departments, agencies and unions do you have?

James Honchar: To give you some clarification; this particular HR office and HR services fall under the executive branch of the Commonwealth of Pennsylvania. We have three branches, the executive, legislative and the judicial. We have roughly 76,000 salaried employees in the executive branch – all of whom receive benefits. We also have 20,000 to 30,000 wage employees.  These are seasonal employees who work part-time; like winter maintenance crews, park rangers, tax season employees and lifeguards. They do not work on an annual recurring basis. 

SSON: What is the structure of HR Management at the Commonwealth?

JH:  We have about 23 cabinet-level agencies under the executive branch. These are agencies where the Executive is actually nominated by the governor and confirmed by the Senate of Pennsylvania — like the Departments of Transportation, Public Welfare, Labor and Industry and Revenue. In each of those offices, we have HR directors who serve the agency and provide a full range of HR services —  except for what we’ve consolidated under the service center.

In addition to that, we have another 23-30 boards and commissions, which are generally appointed by the Governor.
Those individuals and those agencies report to my office, which is part of the Governor’s Office of Administration. We lead all the collective bargaining and union negotiations and provide general oversight and guidance to all of the agencies. 

SSON: In terms of HR service delivery, in what way do the States operate differently? Are they more complex than private employers?

JH: The public sector is particularly challenging because it doesn’t have the normal labor and employment laws that would apply to employees in the private sector. We have a couple of other competing interests that we also are subject to.

First of all, we have a merit system, which covers 67-70 percent of our employees. They come into the Commonwealth as an employee and are then provided with some level of protection after they have completed a probationary period. This system guarantees that those positions will continue to provide the essential services of government during times of political transition.

The remaining 30 percent of our employees are not covered by the merit system and there is often a lot of competing interests on how individuals are selected and how they get placed. Thus, you’ll often have inquiries and requests from the legislative branch and judicial branch on these positions.

We also have a collective bargaining process. Our public sector employees in Pennsylvania have been able to organize and join unions and collectively bargain since 1972.  There are 19 different unions.

We have two different types of collective bargaining. Under the traditional contract negotiation system, if we don’t reach an agreement and there is an impasse, unions can strike.

The other type of collective bargaining is called binding arbitration. This covers our health, safety and law enforcement positions. Here we attempt to negotiate agreements and if we can’t, an arbitrator decides the terms and conditions. Employees in positions considered critical to public safety are not permitted to strike, according to the law. 

SSON: What were your business drivers for creating your HR Shared Services Center and how long has it been in effect?

JH: The primary driver was one of budget and cost. In our budget year, 2008/2009, we had a deficit of approximately three billion dollars. Like every other entity in the Commonwealth, we were trying to provide better levels of service on the same budget. The driver for us to create the center was to do more with less.  We were able to eliminate about 70 positions throughout the Commonwealth – while providing a higher level of service – through consolidation. 

SSON: And how long has the actual center been in existence?

JH: We went live with half of our agencies in February and transitioned the remaining agencies across in March – except for the Department of Corrections, which has 18,000 employees at 27 different correctional facilities throughout the state. We moved that agency in June.  

SSON: What were the main transitional challenges of moving services?

JH: There were a couple; one was coming up with a structure that could serve a diverse population. We have 3,000 different job classifications, ranging from clerical employees to doctors, scientists and nuclear engineers. The main challenge was to find one solution that in effect will fit all of those cultures and agencies. We also had to do it in a very short timeframe – we had ten months from the time we were given the approval to move forward. 

The other huge challenge was change management. We went from having agencies providing these services to relying on a single center. That was a large change management challenge.

SSON: So tell us about the functions in your Shared Services HR center; how many calls are they handling monthly? 

JH: We have two main functional areas. One is that we perform all the agencies’ transactions. Any HR transaction that an agency would normally handle, we now handle at the center. This can be anything from hiring a new employee, to transferring an employee, to giving a promotion.

The second category relates to the employee side – for example, changing their benefits, payroll deductions or signing up for savings bonds. Thus, from the moment the employee is offered a position until they separate either voluntarily or involuntarily, our center now deals with all those transactions.

The second biggest change is that we have a full range of customer service activities, including a phone center and an electronic self-service mechanism linked to our HR payroll system.  The third option we hope to implement is the ability for employees to email us and get answers to questions they have.

On the employee services side we get about 1,500 calls a week.  Our latest statistics indicate that we are answering about 90 percent of calls in less than 30 seconds. Our goal is to answer all of our calls within the first 30 seconds.

SSON: So what approach did you take in your three key areas – employee services, agency services and business information support?

JH: At first, our initial approach was to hire staff for one single center that would be able to do everything.  Thus we would have an employee who could not only do agency transactions but could also work in the call center and answer the employees’ questions as well. We found out very quickly that approach wasn’t going to work.

SSON: Was Tier 0 where employees help themselves? Did that come first, prior to contacting the center as part of your approach? 

JH: Since 2003, when we implemented an integrated HR payroll system, we’ve had an employee self-service component. Thus, most employees had the ability to go and make changes to their address, tax deductions, savings and bank details.

Some of our employees didn’t have that opportunity, however, because they worked in positions where they didn’t have Internet access. In those cases, their Tier 0, in effect, became their agency HR office. A perfect example would be our correctional institutions. None of our corrections officers are permitted to have electronic devices or computers at their work sites. Thus, they have to rely on their HR office, either by telephone or by walking down the hall to get the information or make the changes that they need.

SSON: What were the various technologies that you put in place to support the HR shared services effort? Can you tell us a bit more about your technology requirements and the various technology vendors selected and why? 

JH: One of the things that actually made it workable was having an enterprise resource planning system already in place.  The system handles all of our HR and payroll transactions, which enable us to use it for all the transactions performed at the service center. Had we not implemented that system back in 2003, it would have been a huge challenge to try to perform all of those agency services.

After that implementation, we set out to create technology to make sure that we are providing the level of service to agencies and employees that they need and expect. Starting with the agency services side, we developed a Web-based action request system that would allow the agencies to communicate their requests to us electronically. We would receive the necessary information to complete their transaction in the form of an electronic request and then add the information to our enterprise system.

On the employee side, there wasn’t a call center in place. Thus, we wanted to implement a call center with a few features; one was to have an automated call distribution system. This state of the art system would allow us to be able to deflect calls when we were overloaded and provide a standard message to employees giving them the option to leave a message if they wanted to.

In addition to that, we wanted to give employees another option. If they didn’t want to call the center, they could try and find the information themselves. We utilized the Enwisen AnswerSource HR Shared Services technology, which is a combination of a portal/knowledgebase and a case management solution. This knowledge base allows employees to search for the answers to their questions.

SSON: I’m sure during that time and the implementation stage you may have had some challenges — what lessons did you learn? 

JH: Probably the biggest thing we learned was that if we did not have the information tagged appropriately, employees would not be able to search for the information they needed. For example, if an employee wanted to find out how to change their name, they were directed to the most random and inapplicable pages, everything except to the page where they could change their name. We learned to carefully think about what questions employees were going to ask and tagged these phrases correctly to help them get exactly what they were looking for.

SSON: You say your center went live in February; can you share some early results with us? 

JH: We have in fact abolished about 70 positions in the Commonwealth. That in itself is resulting in about 3.5 million dollars in annual savings. Even though we’ve abolished these positions, there is still a charge-back from the agencies for the services we provide. Right now, we are averaging 80 dollars per employee per year, which is significantly less than they could ever hire an employee to provide those services.  Basically, it’s costing an agency 80 dollars per employee per year for us to provide these services for them.

SSON: What projections do you have for the next two to three years?

JH: We think the savings are going to remain relatively consistent. We don’t see the average savings increasing that much. We hope there is another agency out there that will consider joining our center. That will drive down costs - the more employees and the more agencies we are able to serve, the less the overall cost per agency.

Early on, we brought in an independent consultant from Deloitte to look at how our processes were working and to give us feedback. Deloitte found that our error rate in processing transactions on average was less than three percent, which in the first six months of any start up organization was an excellent achievement.

SSON: I’m sure you will take bigger strides in the coming years. Has the center and Tier 0 been fully embraced by employees?

JH: Yes, I’m very pleased to say it has. We have 25,000 employees who don’t regularly have access to computers. One of the things that this has allowed us to do is to really make an effort to give those employees access. Thus, they can now log onto the Internet at home or from any remote location and access information electronically - whereas beforehand they didn’t have that option.

SSON: How has transforming the way you deliver HR services helped with the overall HR transformation? 

JH: One of our biggest challenges was to keep or increase the level of service and communications the employees were used to. 

SSON: So what is next on the agenda as you continue to define HR service delivery in the Commonwealth? 

JH: Our next step is to move forward and actually implement the Ask HR component of Enwisen. This will allow employees to email us, as opposed to only calling us. In addition to that, we are looking at the potential of creating an electronic personnel file to replace the hard copy format that we currently have. 

SSON: Is that for all employees?

JH: Yes, for all.

SSON: James – thanks so much for taking the time to speak with us today.

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