Even though one of its objectives is to optimize costs, the SSC enables you to manage HR in a way that will bring together the various entities, while encouraging a sense of company identity and belonging as well as developing services for employees.
Companies’ expectations are changing and the focus is currently on harmonizing HR processes and minimizing costs. There is therefore a trend to group together entities in all sectors such as Banking, Retail, Health and Transportation.
HR sees the SSC as an advantage in terms of efficiency and benefit with the use of high-performance tools for customer relations and for management of HR activities. The SSC will allow companies to not only share and standardize processes, but also to increase the sense of belonging to the company by rallying all participants around a single HR system.
One of the challenges facing the SSC is to create a sense of community between the SSC, the customers it serves and the partners. SSCs essentially cover administrative management and payroll. In certain cases, this is extended to training. HR’s challenge is to continue to offer quality service while developing new services that are partly financed through the optimization of costs by centralizing and rationalizing.
There is not just one SSC model because several areas are involved
Setting up a SSC is a complex process requiring great care during the various implementation phases. There are several points that must be taken into consideration. First, the company needs to decide on the legal status it wishes to use for the SSC. It can create a separate company or a new division within its HR structure to manage this shared service center. You need to first define the economic model based on the services you want to provide and the type of financing to cover the costs. The SSC should be based on a 5-year business model. HR is now beginning to use a services-based model and must therefore meet 2 requirements: the quality of services provided and controlling the costs of these services. The preparatory phase is essential for the SSC to operate properly and to ensure successful completion of the project.
The second key issue is the scope. First, the functional scope will allow us to determine the HR areas covered by the SSC, such as payroll, administrative management or training. The services must then be defined, such as production of payroll or the possibility of offering on-demand services such as the management of work-study contracts.
The SSC is designed to “serve” and thus has its own customers. It must therefore define the scope of customers for which these services are meant: which branch, subsidiary or business unit. We must study the HR processes that will be shared or standardized. The various entities will keep their specificities in terms of agreements made internally; the managing of RTT reduced work time, for example. Analyzing the standardized or specific processes this way allows us to focus on shared processes and eliminate those processes that are based on diverse practices.
The SSC uses technological tools and we should focus on using a single tool for each function delivered, while ensuring the interoperability of these tools to increase efficiency. Interoperability is crucial to avoid unnecessary operations and having to re-enter data (which can lead to errors). The automation of procedures and processes is only efficient if it is useful internally and provides benefit. When focusing on the efficiency of processes, the key is to find a balance between the expertise of the teams and automation.
The SSC’s performance, in terms of services and financially, must be assessed based on measurement indicators shared and recognized by the customers. Setting up indicators for the level of service expected and the level of service rendered allows us to make objective measurements. These indicators are defined and approved when creating the SSC to enable each party to measure how the SSC has met its commitments. This level of service is important for customers because it touches upon sensitive issues such as deadlines for signing contracts, deadlines for items required for final settlements and deadlines for certificates sent to the national employment agency (Pôle Emploi). Economic indicators can be used to assess costs, financing and the expected economic balance.
Professionalization and change in culture for HR
Creating a SSC requires that a company analyze its internal skills and expertise. Localization, professionalization will be sensitive subjects to handle mobility, expertise to be maintained or transferred, assisting all those involved towards a new service culture.
Setting up a SSC also focuses on the question of governance because it is a separate business unit. It plays a strategic role in managing HR services for internal customers and is thus often directly or indirectly assigned to executive management.
This is why the director of the SSC should have a business profile, since he will be handling the relationships between all the departments within a company, develop its services and ensure an economic balance of the SSC, as any company CEO would do with their own customers. Companies should try to professionalize SSC directors and develop their managerial and IT skills. The director should create a sense of community from the start and think of his ‘partner’ network as an ecosystem. The SSC produces the services but must continue to upgrade them through contact with the customers, who are a part of this process. To deliver these services, the SSC relies on the various teams as well as on its Information System, which can be managed by an IT department or directly within the SSC. In any case, the SSC requires the resources to manage its information system since this is a key challenge with respect to its commitments to its customers, its projects and costs.
HR’s objective in setting up a SSC is to define its own model, one that suits its organization, its culture and especially its challenges. Analyzing the situation according to these criteria ensures that these objectives will be reached.
Dominique Rouquette, Organization & HR Process Consultant