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    Everything you Need to Know about HR Shared Services

    March 24, 2022

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    hr shared services
    Unmesh Lamture
    Written By
    Unmesh Lamture

    HR shared services help HR teams provide their services to employees more expediently. The focus here is on ensuring that the operational aspect of HR is at optimum levels, meaning each function works at maximum efficiency. It aims to ensure the entire HR department is effective and that employees get the best service possible.

    This blog explains what HR shared services are and explores the various benefits and drawbacks of the model.


    What Are HR Shared Services?

    HR shared services is a centralized service catering to the operational and administrative functions of HR. Using the latest technology, AI and ML, automation enables employee self-service for all HR functions. This means that the organization can provide all HR functions efficiently to all its employees.

    These are some services you can expect to get from HR shared services:

    • Payroll
    • Employee information management
    • Time and schedule information
    • Relocation services
    • HR Information system
    • Recruitment functions
    • Learning and development
    • Reporting and analytics
    • HR service center

    HR shared services is a part of a multi-tiered HR service delivery model. It enables the other parts of the HR department to focus on strategic initiatives.

    Advantages and Disadvantages of HR Shared Services:


    There are numerous benefits of implementing HR shared services for your organization:

    • With an improved strategy and more focus on people, your HR team can focus on creating and implementing strategies to further your organizational goals. Earlier, top HR professionals would be mulling over tedious and repetitive paperwork and number crunching. Now, they will have the time to focus on tasks where their skills and talents can be fully utilized.


    • Your HR professionals have more time to meet with your talent and focus on the human aspect of HR. Performance management can be a taxing duty. With technology taking care of the monitoring and measuring, HR professionals are freed up to conduct one-on-ones and spend time with their talent creating improvement plans. The focus can then shift entirely to employee experience.


    • Once you have entered the initial data and programmed the parameters, AI and ML take over. This means that accuracy and consistency govern their actions, ensuring they are always compliant. This means that employees will not miss their compensation adjustments, your taxes will always be filed on time, and your employee bonus calculations are always taken care of. This leads to mitigated risks in terms of rules and regulations compliance and ultimately happier employees.


    • The organization can achieve operational excellence with a clear delegation of administrative processes. With technology by your side, the processes become more streamlined, and workflow becomes optimized. HR shared services result in improved HR service and operational excellence.


    • HR shared services allow a renewed focus on employees. Employee experience scores will go up. Employees no longer have to go through complicated processes to address their issues or find the desired information. They have access to everything, whether they are working from home or halfway across the world. This means that employees have a better experience getting their HR concerns resolved quickly and conveniently. If anything, employees today expect systems to be efficient, intuitive, engaging, and most of all, useful.


    • With HR shared services, your organization can experience a significant reduction in costs incurred. You don’t need to have an experienced team of HR professionals to be compensated heavily. You simply need a smaller, more efficient team, saving you time and cost.


    • Reducing redundancy during expansion is a major advantage of using HR shared services. By using the latest tech, you don’t have to worry about resources being taken up due to work getting duplicated. All your tasks are consolidated in one place, which means they are easier to manage.


    The goal of HR shared services is to increase the HR department’s efficiency. It must ultimately ensure the department achieves operation excellence and contributes more to the overall business strategy. However, there are some challenges: 

    • While companies intend to implement digital solutions, they may not have a clearly defined roadmap of how to implement these solutions. This leads to a poorly implemented system. In many cases, companies don’t plan for scaling, leading to needing costly, new systems whenever the company expands. This can be combated by working closely with the HR shared services provider to create a digital roadmap to ensure the system's success.

    • With cost being a major concern, many companies implement temporary solutions to fix specific concerns. This results in a costly array of solutions that are difficult to integrate. The solution is to use an HR shared service provider that can easily upgrade their services. This means that organizations can select one or a few required services and add more services as and when required. They may even reduce the number of services they use when no longer needed.

    • If there isn’t a clear definition of the value that HR shared services brings to the organization, the management or leadership may hesitate to incur the costs. When presenting a proposal, figure out the short-, medium-, and long-term impacts of using HR shared services. This way, you can justify the short-term costs to achieve lower costs in the medium to long term.

    • HR shared services are a great tool for most organizations. However, this may not be the case for all organizations. It is imperative that as an HR function, you run a thorough cost-analysis of implementing HR shared services.
      Your business may not be at the stage where it requires HR shared services. This could be because you have a limited workforce or simply because your business model doesn’t require it. Contact a reliable HR service provider, and they will let you know exactly how you will benefit and if you actually need their services right now.

    • Improper knowledge transfer can be a major concern when implementing HR shared services. Processes must be documented thoroughly so that HR professionals are fully aware of how to use the systems. Employees must also know how the systems work. Top-notch service providers ensure that knowledge transfer is initiated well before the systems go live. They will often check in after implementation to ensure everyone is on the same page.


    • A major function of HR shared services is to create efficiency by ensuring each function is focused on optimum efficiency. While this ensures that that particular function is working well, it does not consider that all the HR functions have to work together.
      Experienced HR shared service providers know that HR functions have to work efficiently by themselves and come together to work towards organizational goals. The best providers have integrated dashboards and linked systems to ensure that everyone is always aware of what is happening. This means that they can also reach out to different HR department functions to help each other.

    Best Practices for HR Shared Services

    Here are a few things you should be ready with when preparing to implement HR shared services at your organization:

    • First, you need to determine what HR functions will be included by HR shared services. Typically, high-volume work, like filtering and shortlisting resumes or payroll functions in a large organization, are functions that you would rather have the HR shared services system take care of. You also want to ensure that the system takes care of repetitive tasks. This will free up HR professionals to focus on other tasks.

    • Clearly define those responsible for each function. Ensure that you have delegated each HR function to the right people and provided access to the required personnel to access the systems when they need to.

    • Make sure that you choose the right technology. The goal is to provide services to enhance your employee experience and streamline the selected HR functions. The HR shared services you choose should have some basic capabilities:
      • Ticketing
      • HR Policy Management
      • Incident Management
      • Service Level Agreement Monitoring
      • Employee-self Service
      • Automation

    • Data security is an important aspect. When choosing your HR shared services provider, ensure that they use the latest and most effective security protocols. This ensures that your employee and organization data are always secure.

    • Continuing along the vein of selecting the right technology, ensure that the chosen HR shared services tool can easily be integrated into your existing infrastructure without having to undergo expensive and intensive upgrades and changes.


    • Ensure that you plan for scaling. At some point, you will need to increase the services you are using or must provide those services to more employees.


    • Automation is a significant feature of HR shared services. This means that you have to be prepared to automate as many of your HR functions as possible. Otherwise, you simply aren’t getting the most out of the system.
      • Automate emails
      • Candidate assessments
      • On-boarding documents
      • Expense claims
      • Leave tracking


    • HR shared services use AI and ML to manage all your HR functions. They also do a great job collecting accurate data, analyzing it, and turning it into reports. Ensure that these reports are reviewed, and the information and insights gained from these reports are actioned upon. Ensure that your HR team is aware of using predictive analytics, prescriptive analytics, and diagnostic analytics.
      • Predictive analytics predict trends and can give HR professionals a chance to make changes or adopt policies to meet upcoming trends.
      • Prescriptive analytics give you potential actions that could be taken to mitigate certain situations or make the most of them.
      • Diagnostic analytics allow you to find the root cause of an issue and resolve it quickly.

    The best HR shared services come with integrated analytics and reporting tools that are easy to use.

    • Work on improving the system. Make sure that you always have a feedback loop going. Use the feedback you get from your employees to make systems more effective. Find ways to enhance your workflows. Ensure your system changes with the organization’s needs. When you initially implement the system, it is likely that your needs will not be as complex as they could be in the future.


    As was mentioned earlier, HR shared services isn’t something that every company needs at the moment. However, it is best to gauge that requirement for yourself. Request a demo and ask various service providers how they think your organization will benefit from using HR shared services.

    Another thing to keep in mind is the type of provider you go with. Yes, cost is a concern for every business. However, don’t let short-term savings trap you into having to make huge investments as your business expands.

    Top-quality HR shared services providers prioritize your business growth and your current needs. They want you to grow: the more you grow, the more of their services you are likely to require. This means that the right provider will be able to offer you the limited services you potentially need now and be right by your side when you are ready to scale up.

    Be sure to conduct thorough research, and take your time choosing your HR shared services provider.

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