Sharing HR Shared Services Center Best Practices

Tobias Kuehr

One of the main goals of and strategies behind shared services centers (SSCs) is establishment of an optimized cost structure. Driving efficiency and cutting costs is mainly achieved by implementing best-in-class processes, as well as increasing use of innovative techniques for leveraging currently available technology and automation. And while charging internal business units for services delivery can contribute to an organization’s financial coffer, SSCs are consistently pressured to offer prices that are within the market standard.

SSC organizations seeking to achieve these general targets, regardless of their unique situations, all share a common requirement – access to external, comparative market data and views. Process optimization, choosing the right innovation and defining the ‘standard market price’ of HR services can only be successfully achieved by screening the external market. There are various ways to examine other companies and markets, industries and countries – and the first method that comes to everyone’s mind is benchmarking. But current benchmarking tools and capabilities are essentially limited to pure data comparisons and narrow analyses of gaps or similarities. While benchmarking works fine to arrive at data-driven results, in the end it can only be used as a support and explanation tool. We therefore need to elevate benchmarking to the next level – best practice sharing among organizations.

Best practice sharing takes the next step beyond pure data comparison, asking the necessary questions why, how, when and, especially, ‘so what’? A somewhat surprising fact about best practice sharing is that most companies are extremely open to engaging with others in a ‘sharing relationship’. This is because it is not about competitive data. Rather, it is learning from and sharing with other SSC organizations. While benchmarking focuses on data comparisons, best practice sharing elaborates on why different organizations structure and manage their SSC operations differently, why special systems have been implemented, and especially how and with what outcomes processes have been optimized.

Does best practice sharing among different companies sound too good to be true? The reality is, it is happening today. For example, in Germany, Deutsche Telekom runs an HR Roundtable, participated in by companies including Siemens and Deutsche Bahn. Every several months we get together and discuss trends and our own best practices on operational topics such as benchmarking or payroll. I have quickly come to realize through this HR roundtable that even if size and structure of peer HR SSCs are different, we always identify interesting ideas and concepts that are worthwhile to discuss, compare and in many cases, implement in our own organizations. Although it sometimes takes several workshops to arrive at comparable data sets (e.g. through adjusting process steps considering scope and depth of services), the face-to-face exchanges deliver valuable insights which consistently result in adapting various thoughts within our own development process.

This article first appeared in SSON's May 2008 HR Service Delivery eAlert. For information on how to register for this targeted e-Alert click here.