Intro to HR Shared Services: Benefits, Challenges (2023)


In the fast-paced world of human resources, organizations are constantly seeking ways to optimize their HR functions and improve service delivery. HR shared services is a strategic approach that offers streamlined and efficient HR processes to support the needs of employees and the organization as a whole. This article explores the concept of HR shared services, its benefits, challenges, and key considerations for implementation.

What Are HR Shared Services?

HR shared services refer to the use of technology to centralize HR-related functions, making them easily accessible to everyone in the organization. It includes implementing self-service portals for employees, automating HR transactions, creating a centralized point of contact for HR-related questions, and other activities that help to consolidate HR operations into a single unit.

Benefits Of HR Shared Services

Implementing HR shared services drives quite a few tangible benefits for your organization.

1. Process consistency

Consistency is critical for fairness. Establishing transparent and consistent HR processes is the only way to ensure all employees are treated with respect and dignity. And this is exactly what HR shared services help to achieve.

By consolidating HR functions into a centralized unit, HR shared services enhance the uniformity of HR processes and facilitate compliance with policies and regulations.

2. More time to develop strategic initiatives

One of the objectives behind implementing HR shared services is offloading transactional and administrative tasks to automation. This way, you free up a lot of time for your HR reps to focus on strategic initiatives such as employee development, succession planning, and organizational design.

3. Improved policy compliance

HR shared services offer various communication channels, such as intranets, employee portals, email communications, and training sessions, to make company policies accessible to everyone in the organization. This centralized approach to policy management makes it easier to communicate internal policies, interpret them, and reinforce policy compliance. 

4. Increased employee involvement in HR-related processes

Centralization of HR functions breaks the silos between HR and other departments. It empowers employees to actively manage their HR-related processes, like accessing and updating their personal information, submitting requests for leave or benefits, viewing pay statements, and participating in performance management activities.

By making these processes more accessible to people outside the HR department, organizations reduce HR workload and foster transparency and trust in the workplace.

5. Cost reductions

There are many ways HR shared services contribute to cost reductions. But reduced administrative workload is probably the most significant outcome of centralizing HR activities that directly leads to cost savings.

Implementing a centralized HR hub allows you to hand over repetitive HR tasks to technology and increase operational efficiency without increasing your team’s headcount.

6. Higher overall efficiency

HR shared services eliminate workplace bureaucracy and give every team in the organization a higher level of autonomy. It enables employees to complete HR activities faster, e.g., request paid time off (PTO) in a few clicks or complete on-demand training without leaving their system, saving time and increasing productivity.

Challenges Of HR Shared Services

When you decide to switch to HR shared services, you should be ready to face the following challenges.

1. Implementing new technology

From defining your requirements and selecting the right tool(s) to building new HR workflows and migrating data, implementing HR shared services is a time-consuming process that may become your major roadblock to a successful transformation.

That’s why you’ll need to clearly communicate the goals of the initiative and get buy-in from stakeholders before you start tech implementation. It will help you establish clear expectations and win some time to address issues you face.

2. Lack of the necessary knowledge in the organization

As you start transforming your HR model, you’ll face resistance from people affected by it (in this case, from everyone). And one of the reasons employees are usually resistant to any change is the lack of the necessary skills to navigate it. 

To adopt a new model, you’ll need to offer relevant training on technology and procedures involved in it. It means you must include the costs of upskilling your employees in your HR transformation budget, which brings us to another challenge — justifying the costs of implementing HR shared services.

3. Justifying the costs

Transforming your HR model requires significant investments in technology, infrastructure, training, and change management initiatives. Justifying these costs to key stakeholders may become a serious challenge.

To address it, you’ll need to run an ROI analysis, comparing the expected financial benefits against the costs required. It’ll also help to apply phased implementation to demonstrate evidence of the benefits of the shared services model and ensure minimal disruption to HR processes during the transition.

4. Customization of HR solutions for specific cases

Indeed, HR shared services help to standardize HR operations. But what if you need to deviate from a standard process occasionally? Here comes the next challenge. 

Luckily, you can navigate it easily by developing a flexible process framework that allows for limited customization when required.

5. The need for IT support

Implementing technology inevitably leads to unfortunate technical issues and security concerns. This is where the need for dedicated IT support arises. This can be achieved by establishing a strong partnership between the HR and IT departments, ensuring clear communication channels, and providing ongoing training to HR staff to handle common IT-related issues.

6. Updating technology and refining processes

Technology and HR processes are constantly evolving. Once you’ve implemented automation, you’ll need to look for opportunities to improve your HR operations to align with your organizational needs. It requires a proactive approach to regularly evaluate the effectiveness of existing technology and processes, identify areas for improvement, and implement necessary updates.

How DAPs Empower HR Teams & Drive HR Transformation

Ways To Implement HR Shared Services In Your Organization

This is how you establish an HR shared services model in your organization.

1. Identify organizational needs

First things first, look at the HR activities in your organization as they are. Assess the current HR structure, processes, and pain points and try to answer these questions:

  • How are your HR activities structured at the moment?
  • What challenges are you facing? 
  • Which HR tasks have the strongest potential for standardization?
  • Where will you benefit most from making improvements?

Identifying these needs will guide you in designing an effective HR shared services model.

2. Define objectives

What do you want to achieve by implementing HR shared services? Perhaps you expect to streamline processes, enhance employee experience, or reduce costs. 

Whatever your objective is, make sure it’s measurable and achievable. For example, instead of a broad objective like “improve HR services,” a SMART goal could be “reduce HR service response time by 30% within six months.”

Align the HR shared services initiative with your organization’s overall objectives. Think of how HR can contribute to achieving strategic goals, such as cost reduction, increased operational efficiency, improved employee experience, or better compliance with regulations.

3. Create a digital roadmap

Before you take action, create a digital transformation roadmap. A digital transformation roadmap is a set of steps your organization needs to follow to achieve specific objectives using digital tools.

Begin by assessing your organization’s existing technology infrastructure to choose a system that can fill the gaps and support your HR processes efficiently.

Next, research the HR technology market to identify suitable solutions that align with your objectives. Look for the technology that helps to bring all the core HR activities under one roof. Ideally, your new HR system should handle the following tasks:

  • Employee record management
  • Knowledge management
  • Time and attendance management
  • Benefits administration
  • Policy management
  • Performance evaluation

Finally, create a detailed implementation plan. Define key milestones, assign responsibilities, and establish a timeline for deployment. Consider potential dependencies, data migration requirements, integration with existing systems, and user training needs. 

4. Develop a training program to adopt a new model

Speaking of training, this is one of the most important steps to successfully adopting HR shared services.

Start by assessing your employees’ current skills. Consider the existing skill levels, familiarity with technology, and the knowledge gap related to the new HR shared services model. Remember, you’ll need to offer separate programs for your HR team and the rest of the company.

It’s very likely that your employees have no experience with the HR system. In that case, you need to start from scratch. And it’s fine. This is how digital transformation is performed. 

Select the appropriate training methods based on the nature of the content and the learning preferences of your employees. The easiest way to provide personalized technology training is by using a digital adoption platform (DAP) such as Whatfix. With Whatfix, you can easily embed custom in-app guidance workflows for different teams or individuals right into your HR software in just a few clicks. With tooltips, product walkthroughs, and self-help widgets, employees can quickly adopt the new HR technology and start using it to its full potential.

Unlock the full potential of your workforce with better training and support embedded directly in your enterprise applications.

5. Adopt new HR processes

Once you’ve defined the scope of work and developed an action plan, follow a phased approach to adopt a new HR model.

Begin with a pilot phase to test the new HR processes in a controlled environment. Select a specific department, team, or location to serve as the pilot group. Implement the new processes and closely monitor their effectiveness. Gather feedback from pilot participants to identify areas for improvement and make necessary adjustments.

Once the pilot phase proves successful and the new processes have been refined, expand the implementation to additional use cases or departments. Gradually roll out the new processes in subsequent phases, ensuring proper training, communication, and support are provided at each stage.

6. Maximize the use of reporting and analytics

You’ll need to continuously evaluate the effectiveness of the new HR processes to bring the new model to great performance. Measure key performance indicators, gather user feedback, and monitor the impact on operational efficiency, employee experience, and HR service delivery. Use this feedback to refine the HR processes and align them with evolving business needs.

Enable Your HR Shared Services Efforts With Whatfix

Supercharge your HR shared services efforts with a simple interface bridging users and technology. Implement digital adoption platforms to solve complex people-related transformation issues, elevate employee experience, increase HCM adoption, and improve employee productivity.

DAP offers all the necessary tools to guide your employees through new HR technology and address the fear of change. By providing users with step-by-step interactive walkthroughs, contextual help, and tooltips on top of your HR tool’s interface, Whatfix offers an easy (and even fun) way to learn at their own pace and adopt HR-shared services smoothly.

Schedule a free demo with us to learn more about how Whatfix can support your HR transformation initiatives.

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