Improving HR service delivery is a critical step in transforming HR’s business impact. The first step in the HR transformation process is to design the desired service delivery model for HR services in order to achieve the goals of the organization. Towers Watson (2014) adds that the first step in transforming HR service delivery is to clearly understand what the function is doing and what organizational leaders want HR to do to achieve strategic goals. Understanding the gaps between the current state and the desired future state enables HR to then create a service delivery model and reset priorities for both HR and organizational leaders. In a similar vein, Deloitte (2010) states that HR leaders need to understand the kind of services required by business and make decisions on how those services will be rendered. Transforming HR requires an array of strategic changes to the HR function to support the effective execution of people strategies. Such changes may include redesigning the HR organization, changes in the operating model, HR policies and process, and implementation of new HR technology. Confirming these points, Taylor and Woodman (2012) state that one of the key variables in achieving the aims of HRM is the way services are delivered. Approaches adopted by HR departments in structuring their service delivery have however been a subject for debate and discussions for many years.
In the past, HR service delivery models focused mainly on administrative efficiency and effectiveness and cost reduction. The mandate was for HR to cut administration costs and improve the pace and quality of service delivery. PricewaterhouseCoopers (2014) asserts that HR is based on three elements: innovation in the operational model, analytic capability that brings real value to the business, and technology to support reliable data. Today, as Deloitte (2014) notes, while the imperatives of cost reduction and efficiency are part of the mandate, HR should drive a new range of business initiatives which focus on growth and sustainability, penetrating into new markets and the demands of the new generation of employees. Similarly, Taylor and Woodman (2012) argue that improving HR service delivery requires a new approach to business; one that focuses on optimising people, processes and technology. Dave Ulrich’s (1997) model of HR service delivery prompted many HR leaders to rethink and restructure their delivery of services to counter the challenges of the changing business conditions. A (2011) study by Bersin and Associates of high-impact HR organizations however
indicated that less than one in five HR organizations believed that their models delivered a desired efficiency, value and service levels expected by their businesses (Mercer, 2012).
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A survey report by Puetras and Tambe (2016) revealed that 92% of HR executives made significant adjustments to their operating model and 72% of them said that ensuring their operating model provides a competitive advantage was a major challenge. Considering the challenges faced by HR executives today in striving to be value adding-contributors and be more relevant to business, a more flexible and responsive HR model is necessary to help close the continuous gap between the requirements of business and how people fulfil those requirements (Puetras & Tambe, 2016). Deloitte (2015) notes that the delivery of services within organizations is far more complex than HR leaders can imagine, and that it is easy to overlook employee interactions that should be incorporated in HR service delivery.
According to Deloitte (2010), HR organizations focus on four major factors when designing and implementing a new service delivery model for HR services:
• Strategy: HR leaders target HR capabilities that fit the strategic needs of the business, including specialised programs and services to tackle issues such as talent management, emerging markets and total rewards. They position HR to influence business strategy through deep insights about workforce trends and other talent challenges.
• Customers: Achieving excellence requires improving HR services, its customers, including employees, managers and contractors.
• HR structure: HR staff need the right skills and training to fulfil HR’s role. Also, they must be organized to support the business as efficiently and effectively.
• Enablers: To deliver exceptional services, HR requires appropriate policies, processes, vendors and systems. This includes improved HR integration and standardization across the organization, as well as performance measures that reflect HR’s true business value. When it comes to transforming HR, creating a grand vision and giving out new jobs isn’t enough. HR leaders need to understand what services their business require and decide how those services should be delivered (Deloitte, 2010). Mercer (2012) identifies several obstacles that cause HR service delivery models to fail:
• Not strategically driven: Most often when organizations choose an HR model the focus is usually on cost reduction and service delivery issues as opposed to issues relating to what will be enabling the organization to meet its specific business needs.
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• Flawed implementation: Following the implementation process, HR organizations often fail to clearly articulate how employees will support the transformed function. HR assign new jobs/titles while roles remain poorly defined.
• Limited HR Capability: In a 2010 HR transformation survey by Mercer, most organizations believed that they did not possess the required level of HR capability in critical areas such as, talent management, organizational development and partnering. HR service delivery models in the current work environment require specialised capabilities that will ensure that HR delivers value to the organization.
• Failure to provide exceptional transactional services: When the HR department fails to deliver baseline transactional services due to lack of technology, inferior data quality, poor processes and policies, and lack of system integration, the credibility of the entire function is undermined. HR should ensure a flawless delivery of administrative services to gain credibility in the organization.
• Lack of satisfaction in self-service technology by users: Lack of adequate emphasis on change management and ease of use during the rollout of new self-service technology sometimes results in managers and employees not being comfortable or satisfied with online HR transactions. User satisfaction is a critical factor in the application of online technology as it determines people’s attitudes towards acceptance and using technology. • Lack of support for line managers: HR service delivery models often understate the role of
line managers in service delivery. Line managers are always at the forefront in HR program delivery and play critical role in the implementation of HR practices. Organizations who focus their investment on the selection, assessment and development of line manager’s reap greater returns on their investments.
• Insufficient geographic focus: Today’s global business operations require employees who possess specialist knowledge, and who are conversant with country-specific employment regulations and compliance, and service delivery model often fall short in accommodating such. Although some organizations have created centralised structures, some HR services are best provided by local or country-specific HR specialists.
Jim Scully, founder of HR Shared Services Institute, states that “A service delivery model is an essential part of HR service delivery performance and it is very important to get it right” (Sully, Lay, Schuler, Frisby, & Givan, 2018). The range of operational models are directionally similar, but vary according to business needs and what HR leaders know will work in their organizations. Organization savvy HR leaders who understand their organizations well, select
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and transform models to iterations that makes sense for business. Several factors influence these iterations such as size and stage of the business (growth, transformation or decline), location of the business (local, regional or global) and availability of enabling technologies, organizational readiness and cost of implementation.
KPMG in their publication “The future belongs to the Bold” offer guidelines for a successful transformation:
1. Begin with a concrete vision: Transforming HR requires firms to have a clear vision of where they intend to go. To add value, the vision should not be based on current circumstances.
2. Success is not guaranteed: HR technology alone cannot achieve/deliver transformation goals. The process requires careful planning and including resources and time.
3. Change management is critical: New cloud technological solutions have enabled fast and far-reaching changes. As a result there is a need for strategic change management.
4. Data insights require expertise: Although data is easily accessible, interpreting and making meaning of it requires new sets of skill, roles and processes.
5. Pay attention to HR skills: Transforming HR brings about new roles and responsibilities and also necessitates reskilling the HR team. Learning and development requirements should not be neglected.
6. Collaboration is key: Strategic change management is necessary in adoption and adapting to new roles by line managers. HR should ensure that they collaborate with line managers to enable them easily adopt enhanced roles in relation to people management using the HCM solution.
7. Challenge the status quo: Adjusting to standardized, simplified HR process model requires challenging the status quo.
8. Be bold: Effective transformation can be a long and challenging process to the HR function. It is imperative for HR to keep focus and deliver tangible results that will keep the change process moving toward success.
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