This article was first published in HR Director
Welcome to the digital age where organisations continue to grapple with the constantly changing effect of technology on customer demands and on the way we work and communicate with each other. Katharine Henley, Victor Torres and Vineet Khanna are shared services experts at PA Consulting Group.
Shared services organisations are often at the centre of that change, with support functions playing a critical role in enabling companies’ agility and responsiveness, two key requirements for competitiveness. To explore the future trends and pressures in shared services, PA Consulting Group interviewed 40 leaders from cross-sector and global companies.
That research uncovered a number of key themes. The first of these is that shared services are failing to deliver wider business requirements and unlock strategic value that goes beyond cost reduction. Despite this, the scope of shared services keeps growing. While HR, finance and IT services are still the main adopters of shared services models, there has been a steady expansion into analytics and customer services. We are also seeing a rise in insourcing, with 58 percent of respondents saying they now use or intend to use in-house shared services. This reflects a growing view that internal provision can provide increased organisational flexibility, better service control and responsiveness to react to business needs.
The companies we researched reported that new technology such as business process automation can bring cost reductions and organisational transformation and it can reduce the need for outsourcing altogether, if transaction based activities are automated. However, too many organisations are focused on getting cost reductions first, leaving the strategic changes that drive real value until later which, all too often, means they never happen.
The environment has never been better for HR to raise its profile as a value adding function by using people data to measure its impact. One of the key advantages new technology brings is the way it provides access to big data and this is a strategic change that HR teams should be embracing. HR should be taking action to secure the additional capabilities that technology provide, to use data more effectively and drive value through its shared services.
The rise of strategic shared services
HR shared services should also be leading the way in thinking about how to develop and manage future careers for their people, as technology changes our workplaces. This includes exploring new roles that can emerge from automation and AI and how to give our people the skills to move into them. This is not the first time automation has had an impact on jobs, and created new opportunities. This quote from an article in Time Magazine in 1961 underlines how worries about the impact of technology on jobs are nothing new: “The rise in unemployment has raised some new alarms around an old scare word: automation – automation is reaching into so many fields so fast that it has become “the nation’s second most important problem.” (First: peace.).
The lessons from history are that while automation has an initial impact on jobs, new jobs then emerge, and we need to start planning for that transition now. HR and HR shared services should be developing workforce plans for each department. These should outline how they will work with the flexibility of the gig economy to create a responsive organisation as well as how they will use data to manage talent and predict future skills requirements. As organisations gain greater insight about how their future customers will behave, this skill matching will become both a science and an art. Insight and support for departmental planning is likely to become ever more critical for business success, in a world where rapid response to changing customer demands is essential.
As HR processes themselves become automated, the core services they deliver will become leaner, with more self-service solutions. However, HR will also have more data about its own performance, enabling it to predict future needs and to scale or align services accordingly. This scalability will support core business performance in a way that was not previously possible. By managing the supply of services from the gig economy, HR will have the ability to respond and grow services whenever the business needs it.
HR shared service teams could become the central point for business performance data, with data scientists extracting and manipulating information in a way that informs strategic decision making. This creates a huge opportunity for new types of HR careers, blending IT and deep analytical skills, which collaborate seamlessly with other functions like IT.
Another critical effect of automation on HR will be the need to design and drive a new culture and ways of working. As the use of machine intelligence to carry out business tasks increases, HR will need to ensure that both humans and robots operate to the same values and culture. Equally, the growing use of services from the gig economy, will create challenges for HR. If a gig economy worker is only going to join the organisation for six months, their recruitment must focus on ensuring their values are aligned with those of the organisation right from the start.
This means that, in this digital future, HR’s shared services need to focus on four areas: building and managing capability, brokering relationships, gaining insight from data and steering culture. Developing these capabilities could move HR shared services from a supporting role to front of house, where they lead business strategy and performance through driving effective resourcing decisions. The digital world gives HR professionals a real opportunity to carve out a vital future role, they should seize it now.