HR, Services, Delivery, Xchanging

Radical transformation of HR services delivery needed, a report from Xchanging

02 Oct 2003 | (Survey)

HR departments need to radically transform the quality of their service delivery if they want to add serious value to business and keep up with organisational changes, according to Who Dares Wins: HR Service Delivery in 2003, a research report released today by Xchanging, a leading provider of human resources services.

The report - commissioned by Xchanging HR Services and conducted by the independent research organisation, NelsonHall – was the result of a survey of 60 HR Directors from some of the UK’s top organisations. It identifies three areas where the pace of change needs to be significantly increased:

- 70 per cent of HR Directors want to improve their department’s ability to add value to the organisation

- 68 per cent of HR Directors think their department must improve its transactional efficiency and productivity

- More than half of HR Directors are dissatisfied with the cost of HR per employee.

But the survey also found that more than half of HR Directors are prevented from fulfilling these requirements due to time constraints and other business initiatives taking priority. To address these needs, organisations are looking increasingly to outsource their administrative HR functions, with 56 per cent seriously considering extending or purchasing outsourcing services in the next year. Handing over the HR back office to an external provider will free up time to focus on strategic, value-added activities, according to 90 per cent of those surveyed.

Management of the recruitment and training processes tops the list of service needs (80 per cent), with many citing inability to cope with the workload and hire costs as the main problem areas. Pensions, payroll and employee benefits administration services also featuring highly on the list. Major benefits sought from outsourcing include access to improved technology, access to specialist knowledge and expert processes, reduction in administration costs and increased value for money.

But despite growing confidence in HR outsourcing, some fears remain. HR Directors are concerned about giving control to a third party and sceptical about the complexity of the outsourcing process. Rather strangely, therefore, 57 per cent favour purchasing services from multiple suppliers. 35 per cent prefer outsourcing a selection of services to one supplier. Only 8 per cent are currently comfortable with full service outsourcing.

Chris Dickson, HR Director for Shared Services at BAE SYSTEMS, commented,
“Understandably, HR Directors are worried about how they can make outsourcing work without damaging the day-to-day running of the business. It takes time and commitment from both sides of the partnership. Communication is vital to ensure that philosophies are aligned; the company has to be clear about what they want to achieve and the outsourcing supplier has to be frank about how they are going to make it work. Setting clear measures for success at the start and regularly reviewing service means that both sides are working towards continuous improvement. BAE SYSTEMS could not have achieved the level of HR transition it has over the last two years if it had not outsourced.”

Richard Houghton, Chief Executive of Xchanging UK, commented:
“Companies are taking a long hard look at their back offices and are beginning to see that it makes sense to shed costly and inefficient administrative processes so they can focus on strategy. They should look for a partner who brings top-class process re-engineering skills and excellent HR information systems. Crucially, though, they must find an outsourcing supplier that addresses their specific requirements and understands the cultural changes that will occur. Outsourcing is never a ‘one size fits all’ situation.”

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