The Ultimate HR Challenge: How to Evaluate In- vs Outsourcing and Implement a New Model – in Just 3 Months
The day I joined this company, I was given two deadlines. One was to present the metrics on cost benefit analysis of insourcing versus outsourcing HR Shared Services; and second was to launch the Shared Services department based on the above analysis, and with the following six goals:
- Develop a strong and secure foundation for the delivery and transmission of sensitive HR information.
- Consolidate standard transactional activities in a low-cost hub.
- Ensure consistency, reduce administrative effort, and increase organizational efficiency.
- Maintain the quality and integrity of data.
- Provide utmost customer satisfaction to users.
- Apply PDSA methodology for continuous process improvement.
I chalked out the steps in going about collecting the data, and developed a strategy to achieve these goals. First and foremost, I tried speaking with the HR folks across North and South America but they were hesitant about talking with me since mine was a change management role. However, I had the support from my superiors.
The three bottlenecks in SAP HR data administration and maintenance were: incomplete, inconsistent and inaccurate information reaching HR from line and staff managers. Within the HR workforce, nine employees handled the SAP-OM data and eleven individuals marshaled the SAP PA database. There were a lot of redundancies in data management with smaller sites not getting enough on-the-job experience/training to help other locations. Since SAP is not a user-friendly platform, nor is it easy to implement, keeping employees trained and up-to-speed was a constant challenge. Additionally, the quality of data in SAP HR varied from site to site, and corporate staff spent an inordinate amount of time reviewing, advising, and/or cleaning up after some locations. As a result, we did not have any HR metrics associated with PA/OM data maintenance until I presented the cost benefit analysis within a month of initiating our study.
At this point, my manager told me to implement static ‘html’ templates created by our consultants for different HR actions, and to be used by the European HR Shared Services. The company wanted both Americas and European HR Shared Services to be on the same platform and be synchronized. Based upon the ‘needs analysis’ done in the initial part of the project development, I suggested that these templates wouldn’t work in the US. I had experienced tremendous resistance from our HR partners across the pond [Europe] and they were just not willing to even consider my proposal. Fortunately, some of the decision makers happened to be at the corporate office for a conference and we met frequently, which facilitated the exchange of views/data back and forth. I had the golden opportunity to explain my ideas on a white board and to explain why our payroll and benefits were different to those in Europe. Specifically, the span of control was different and HR Managers in the US were not willing to enter any data in the change request form. My proposal was to implement SAP workflows for any employee- or position-related changes in SAP. I was fortunate to have partnered with a driven and knowledgeable internal IT team that helped me build workflows in a quick and efficient manner. The corporate team was convinced and gave their nod for the project. We did the configuration in six weeks, training and testing a week and a half, each; and finally launched the HR Shared Services within four months of project initiation.
The final solution was a 4-Tier model, wherein: Tier I was designated at the level of the primary user at any location entering requests to the workflow, thus initiating the process; Tier II was the HR Manager of the respective territory who approves or rejects the change request, acting as a gatekeeper; Tier III was HR Shared Services, the core expertise in processing, validating and verifying information; Following the validation of the input, the information was channeled to Tier IV, with distribution to five users, namely: benefits, payroll, security, IS security and intranet, depending on the requirement of information.
Since the entire workflow occurred within SAP box, we believe that we had established a secure pathway for transmission of data from primary users to the end users.
Our implementation schedule was as follows:
- Scope project, understand requirements (first and second month)
- Selection of HRSSC staff; plan for redistribution of tasks (second and third month)
- Design of SAP Workflow electronic forms for the Americas (second and third month)
- HRSSC staff training (third and fourth month)
- Train local HR how to use SAP workflow screens (fourth month)
- Implement HRSSC in the Americas (fourth month)
I tracked and measured the metrics throughout the project. Within four months of launch, the time taken to make changes to a single transaction was reduced by 93% and the overall cost was slashed by 70%. This was the result of automation brought by SAP workflow implementation. As a result, we saved $200,000 per annum.
The Chief HR Officer gave us ‘AAA’ rating and lauded the work of the entire team.
Our specific accomplishments were:
- Gaining economies of scale.
- Previously untapped, unrealized efficiencies.
- Freeing up local HR for more value-added work.
- Cost savings.
We adopted SLAs with our HRSSC partners and had quarterly process improvement meetings with the Directors, and annual board meetings with the HRSSC Steering Committee. A continuous process improvement was embraced with a balanced scorecard and 12 KPIs. Along with it we measured customer satisfaction to build our future strategy.
This formed a foundation of a platform that is now functioning well and paying rich dividends.
Note: Anupam Diwan has since left this company and has taken on a new role as Senior Manager - Human Resources, for Projects, Planning & Execution at Express Scripts, Inc.