Why today’s HR service delivery model is failing?

Human Resource has undergone a numerous process of transformation over the past decades. By recognizing the critical linkage between talent management and business success, business executives are now asking for their HR functions to play a vital role in strategic planning in order to achieve the company’s objectives. Aside from playing a strategic role in the organization, executives are also looking to wring costs from HR service delivery in order to allocate the funds to other business objectives.

And in response to these assigned tasks, Human Resource department in many organizations around the world have implemented a service delivery model in which transaction services, program design and strategic business support are carried out by three groups within the HR function such as HR Business partners (consult with business leaders on people issue), Center of Expertise (focus on the design of HR programs and policies) and Shared Services Centers (deals with day-to-day HR service delivery).

While this model has somehow improved the HR performance, it has not enabled Human Resource to provide the continuous changing demands of business leaders in order to fully support the business needs. According to a study conducted by Bersin & Associates, it indicates that fewer than one in five HR organization feel that their model delivers the combination of efficiency, value and high level of service that business leaders are seeking for their businesses.

So why today’s Human Resource service delivery model is failing to deliver and meet the business needs and expectations? According to MERCER, a New York based human resource consulting firm, these are the 7 key obstacles to business success.


1.Not Strategically Driven

When firms are considering the appropriate HR model, they tend to lean on service delivery problems or cost reduction issues, rather than enabling the organization to meet its specific business needs. Cost cutting or minimizing costs may somehow have a bit of impact when creating an ideal HR model. Due to factors such as amount to be spent on the development of the model, the needed workforce to do needed tasks and the amount of time to be spend on the model development. Business leaders tend to forget the primary objective which is to have a strategically driven model that will provide their business needs. They focus on how to maximize their profits by minimizing the costs rather than spending a bit more on a strategically driven HR model that will benefit their organization in the long run.



 2.Flawed Implementation

A lot of us can relate into these situations, following the completion of transformation efforts, numerous HR organizations were struggling to fully implement on how their subordinates will support the newly transformed function – one good example as stated by MERCER, is when staff titles are often changed while their roles are poorly undefined. And according to them the position of HR Business Partners is an excellent example. Its role was originally intended to play a strategic role in order for the business to thrive. But many HR Business Partners are still asked to spend significant time providing administrative or generalist services. On the other hand, a lot of HR functional departments have been rebranded as COEs, even though appropriate consideration has not been given to the specialist expertise required of COE staff to achieve specific business priorities. In addition, organizations who established Shared Services Centers often fail to consider how Service Centers differ from the accustomed HR function; as to what MERCER defined, the skills sets and focus of service center staff are different, as to the career paths, day-to-day management, key performance indicators and resourcing approach.


3.Limited HR capability

In today’s HR service delivery model, it requires capabilities that the typical HR does not possess. As to MERCERs survey in 2010, majority of organization believe that they do not possess the required level of HR capabilities in the critical areas such as partnering, organizational development, and talent management. According to them, these skills have a dramatic demand in order to influence the workforce and to have an effective change in the future.

The transition from an administrative to a strategic business partner role without enough exposure to the business, strategy expertise and other competencies is impossible for the existing staff. On the other hand, COEs need operational management skills in data analysis, project management, supplier management and cost management that the current HR staffs may not possess. It is important for the existing staffs to get an enough knowledge on the current or existing business model of their organization. Without proper knowledge it is impossible for the existing staff to effectively adjust in their new roles. They must be trained or exposed to business transactions, they also need to have an extensive amount of exposure on strategy expertise via training and seminars from industry experts.


4.Failure to provide top-notch transaction services

The credibility of the entire function is hampered when transaction services are not delivered flawlessly due to the following factors; inferior data quality, lack of technology, poorly defined processes and policies, and lack of system integration. These are the key factors that pulled staff from strategic priorities and dragged them back into administrative services. In pursuance to deliver top notch transaction services, it is vital for the organization to have an accurate data combined with up to date technology in order to have a precise output. We all know that technologies could really help the businesses to grow, algorithms and AI technology (Artificial Intelligence) are now being utilized by businesses to help them improve their decision making skills by studying the patterns and behavior of the consumers using gathered data. Aside from having an updated technology to improve the business, it is also important for the organization to have a well-defined processes and policies; these policies can help employees avoid confusion and have a better understanding of their roles in the organization.


5.Limited satisfaction in self-service technology by employees and managers

As per MERCER, line managers and employees often still prefer to receive high touch services from Human Resource, especially when sensitive issues are concerned. In addition, change management and ease of use may not be properly emphasized during the cascading of new self-service technologies which results to lower satisfaction of online HR transactions. Some of the drawbacks in investing to employee self-service technology is having a required amount of time to spend in order for each employee to better understand how the system works. The roll out may cost a huge chunk of time and money. If employees do not completely understand how this technology works, it may create wastage of resources. In addition, the most common problem in this transition is when some employees attempt to use the new system while on the other hand, old employees tend to utilize the older systems and manual processes which may lead to confusion. If the firm or the business decides to use the self-service technology, it is vital to make sure that all personnel is on the same page and is ready to shift into the new process.


6.Lack of support for line managers

The recent Bersin and Associates research suggests that organizations that are focusing on their resources development, assessment and selection of line managers reap a greater return. We all know that managers are the front liners of HR program delivery – from compensation, career development, planning etc. A good and effective line manager is actively involved in his/her team operations, provides support and encouragement in order to have a positive feedback on a day-to-day basis. Line managers are crucial for the organization, they are vital cogs insuring that proposed and approved programs must be implemented. The lack of support for line managers from the senior management may cause a huge impact. A line manager’s job is way bigger than we thought, and sometimes they feel overwhelmed. Most of us tend to have a conjecture that line managers will organically grow into the job. Managing people is a challenging job that needs support from the top management especially when new ideas are being proposed to help the organization achieve its greater goal.


7.The insufficient geographic focus

 The current service delivery model does not account the realistic need of today’s global business operations for staff with deep expertise in country-specific employment legislation. As per MERCER, many global organizations have attempted to create a centralized HR structure – some HR services such as ensuring compliance with local labor laws, managing union and advising managers on people issues and conflicts are best provided by local, regional or country specific HR Specialists. Perhaps the most fundamental step in building a global HR program is to abolish favoritism on managers who are nationals of the country in which the company is based. Company tend to consider nationals of their headquarters as expatriates and to regard everyone as local nationals. In today’s global market, the norm is “us vs them” as per strategy business, and this distinction can put companies at a clear disadvantage. They put the most confidence in the nationals of their headquarters country, and due to that, they get the vital assignments, climb the ranks faster and wind up sitting on the board. This could lead into a skewed perception by the company to the world. Now, a lot of organizations recognized these dangers and they are now considering to move more executives from emerging countries such as Europe and Asia.


To know more about the 7 key obstacles to business success and how to overcome these problems, you may attend the Business Savvy HR Development Program on May 7-8, 2019 at Marco Polo Hotel. For more details, you may visit www.huris.com.ph or email cipdprograms@huris.com.ph.


Source: Mercer and Bersin & Associates

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