HR Models: Pros & Cons - Business Partner, Solution Center, Shared Services - Company Case, Exams of Business

Download HR Models: Pros & Cons - Business Partner, Solution Center, Shared Services - Company Case and more Exams Business in PDF only on Docsity! Human Resource Models 2 Image provided by www.ceridian.co.uk Human Resource Models Human Resource Models What is a Human Resources (HR) Model and what role does it play in the development of a successful business? A HR Model is an organization’s strategic framework that helps manage and organize all business functions concerning human capital. It allows a company to manage its labor force as effectively and efficiently as possible. The key role of a HR Model is to facilitate day-to- day operations and plan for future opportunities related to the human capital of the business. These theoretical models are meant to better manage employees and determine accountability. According to David Ulrich, a leading expert in Human Resource theory and application, most managers are not fully utilizing their employees. David Ulrich states, “The greatest concern here is that, in the New Economy, human capital is the foundation of value creation. (Various studies show that up to 85 percent of a corporation’s value is based on intangible assets.) This presents an interesting dilemma: The asset that is most important is the least understood, least prone to measurement, and hence, lease susceptible to management” (4) is human capital. There are, however, a variety of ways to organize and operate the human resource function in organization. Moreover, HR organizations are often in flux. Research shows one in three businesses will restructure their HR structure in 2013-2014 to better meet the employee’s needs (Towers Watson, 2). With the changing nature of HR in today’s world we wanted to know what type of HR models were being used and how HR professionals felt about each model: their pros and cons. Then we created an 18- question survey and sent it to 566 HR employees in 6 different industries. The team identified these individuals using LinkedIn, Lead411, and the University’s Alumni Office. 122 participants fully completed the survey and 68 individuals partially completed the survey responses. All surveys that were included in this study were over 60% complete. According to the survey data, the following are the most popular HR models that businesses are adopting into their business strategy: v Business Partner Model v Solution Center Model v Shared Services Model Human Resource Models 3 The remainder of the article will cover the following about each HR model: • Each model’s basic logic and framework • Each model’s advantages & disadvantages from the standpoint of those HR professionals we surveyed • Summary data comparing the 3 models For the purpose of this report, we averaged the data we collected on each survey question so we could more easily compare the results across all three models. The average “HR ratio” we calculated is defined as the number of HR employees over the number of non-HR employees. This ratio can be useful but needs to be used with caution because the HR ratio is heavily influenced by company size. To find current technology trends within HR, we also asked survey respondents to indicate their company’s planned change in spending for HR technology in the coming calendar year. Human Resource Models 6 Figure 2.0 This figure visualizes what the Shared Services model does for a business strategy organizational setting. Image provided by www2.illinois.gov Shared Services Model   The Shared Services Model is rapidly becoming the most common HR Model in the workplace. Based on Tower Watson Corporation’s research, almost half of the companies that are currently changing their HR models are implementing a shared services model, sometimes including business partners and “centers of excellence” (HR Service Delivery and Technology Survey Executive Summary Report 2013, 4). Figure 2.0 below gives a quick overview of the Shared Service Model accomplishes and its benefits. This model strives to centralize HR functions as much as possible while continuing to be responsive to customer needs. This model utilizes groups of specialized HR employees which are referred to as Centers of Excellence. This model also allows utilization of a Business Partner role to address the needs of line managers. Then, the shared model introduces a middle group that is made up of HR employees with varied skill sets that can be easily transferred between projects. The end result is expanded flexibility and integration of HR resources for better service delivery. The HR shared services model generally handles HR administration/transactions and deliver HR services to HR’s customers (managers and employees). These services are payroll, benefits administration, salary administration, training administration, and employee relations. HR shared service centers often are the first line of communication with employees regarding these various services and issues, as well as more advanced advice and support. Human Resource Models 7 Table 2.0 Shared Service Model - Results   Background About This Model’s Survey Participants: See Table 2 below.   Shared Service Model – Advantages and Disadvantages   Advantages: This model promotes standardized processes and policies, allows resources to be shared across the business, and aligns work priorities of all the employees so everyone is informed and not wasting resources on unnecessary tasks. Overall, the Shared Services Model often increases efficiency and effectiveness of HR services (State of Illinois Shared Services Program 2013). The shared services model allows each HR partner to meet with many levels of the organization and understand the business more closely. It gives HR professionals a variety of available experiences and provides good value to the business. It also has increased efficiency and reduced costs dramatically while maintaining a high level of customer satisfaction. Disadvantages: If employees are not fully capable of handling different job functions, there can be confusion and impaired business performance. Plus, the model may have unclear lines of accountability if key roles and responsibilities are not specified up front. In addition, this model can often lack sufficient automation if not implemented correctly and can lead to HR employees being overwhelmed with functions that can easily be handled through automation. Another disadvantage in this model is that there is often little personal touch between the employees and the HR professionals. Most of the issues are dealt over the phone or via email, which does not allow the employees to feel as connected and supported as they otherwise would. Human Resource Models 8 Pros: “Shared Services has increased efficiency and reduced costs dramatically while maintaining a high level of customer satisfaction. Additionally, we still utilize somewhat of a business partner model in the areas of employee relations and recruitment so the customers still have solid face-to-face HR interaction and support.” -State of Utah Cons: “Role definition (RACI) can sometimes get blurry.” –Microsoft Human Resource Models 11     Pros: “Strong strategic business partner roles and global centers of expertise, Strong understanding of the business and seat at the table. Strong impact on talent management and leadership development.” -Eli Lilly Cons: “I'd like to see us communicate and collaborate even more effectively. We're currently interviewing key stake-holders to determine the extent to which we need to go through an HR transformation to make our model even more effective.” –Oracle Human Resource Models 12 Conclusion/Where Models Thrive Qualitative data Now what does this mean for you and your company? As you can see from the information above each model has pros and cons. The best model for a company depends on the desired focus of the company and its strategy. In Table 4.0, you will find the aggregate analysis of the comments made by the surveyed HR professionals organized by model. This analysis shows clearly that each HR model has a unique focus. For example, having a strategic focus and better connection with internal customers is the most important factors for companies that use the Business Partner Model, whereas having a flexible and efficient HR department is most important to those who have a Shared Services Model. Like the Business Partner Model, strategic focus is also important for those who utilize a Solution Centers Model, but they also emphasize being cost effective and efficient. The model that best fits a company is the one that aligns with what is important to them. Quantitative Data In the table below, we have placed all the data from the five major categories: 1) Time Available for Strategic Tasks, 2) Outsourcing HR Activities, 3) Automated HR Functions, 4) HR Employee to Regular Employee Ratio, and 5) Change in Technology Spending in 2014. The values are averages we calculated from all the responses we collected. Some key findings are as follows: • Solution Centers Model: automates HR functions more than the other models. • Business Partner Model: outsources more of its HR activities, on average, than other models. • Shared Services Model: more time spent on Table 4.0 Table 5.0 Human Resource Models 13 strategic tasks and less desire to increase technology spending, implying greater satisfaction with their HR technology solutions than companies using other models. In general, businesses are currently using one of these models or are transitioning to one of these models because of the increased efficiency, reduced costs, and improved HR delivery often seen with these models. However, it should be remembered that these models are theoretical and every business will adapt one or a mixture of these models to their unique circumstances. The most important thing to consider when designing the organization of HR in your company is leveraging your human capital as efficiently and effectively as possible. Keeping the strategic utilization of human capital in the forefront of any HR Organizational restructure will significantly improve HR’s value to the company. The true mark of an effective HR model is based on how well the organization manages their people, who make up the backbone of the organization (Bhatia 2008, 4).     Planning for the Future   To use the preceding data effectively, HR professionals’ first need to determine their company’s strategy and vision for HR. There are several tradeoffs that need to be made when designing an HR organization and it’s important to think about the company strategy when considering questions such as the following: • Do we want the employee/internal customer experience to be of utmost importance or are cost savings worth slightly worse service delivery? • Is focusing completely on high-level strategic projects the best way to utilize our HR professionals, or is it better to be as flexible as possible? For nearly all companies, the best solution lies somewhere between the extremes of the tradeoffs. Although finding the right balance can take some effort and experimentation, the right HR organization can greatly increase HR’s impact and value for the company.