Should Human Capital Management Activity Move Away from Shared Service Centers?
By Mike Vilimek on Feb 09, 2014
By Laura Schaulat - Originally posted on Profit
Over the last 15 years, many organizations have standardized processes and consolidated costs through the shared service model. This transition was enabled in part by a common global technology platform, surfaced in local languages. That platform also laid the foundation for the next development cycle of human resources (HR) process maturity: a slight swing of the pendulum back toward localization, as HR leaders realize that one size does not fit all for HR shared services.
There are several situations in which some relocalization of specific human capital management (HCM) activities makes sense and adds value. In the hybrid model of combining shared service centers with select local support, as described by global consulting firm Mercer, local HR managers provide “employee support for complex, sensitive issues best handled in person”—for example, union relations.
A Focus on Talent Management
Taking a closer look at Mercer’s top activities for local HR managers, many are focused on talent management, including “onsite talent acquisition activities, onboarding, and ongoing training delivery.” It is no surprise to see talent at the top of the action items. Moving to shared services and cleaning up the transactional side of HCM has enabled the heads of HR organizations to focus on strategic business priorities. One top priority and concern is talent—in particular, younger talent in emerging markets. CEOs say attracting and keeping younger workers is one of their biggest talent challenges. At the same time, emerging markets have left a talent war in their wake. To win that talent war, fuel growth, and increase retention, executives need to relate to both new talent and existing employees.
The next generation of talent is increasingly based in emerging markets. As reported by PwC, workers in these markets want continuous learning and development, and they expect to have many careers during their working lives. Thanks to the global economic recession, baby boomers are forced to maintain employment longer than expected, and global corporations prefer to ride out these troubled times with seasoned personnel rather than taking a chance on the younger generation. So our budding talent has been forced to take a back seat in recent years. It’s no wonder they are described as “loyalty lite” and express decreasing employer loyalty every year. They haven’t had the best start to their careers, and they are primed to vote with their feet. Organizations will have to work harder on a local level to keep them interested.
No matter what the driver for making select HCM relocalizations, there are some key considerations and principles that HR leaders should think through and follow. First of all, ensure that shared service centers continue to provide transactional support, or risk a pendulum swing all the way back to the suboptimal local HR model. Second, utilize data to understand which geographies to target for relocalization by leveraging talent management systems and business intelligence. For example, companies can analyze their global talent footprint, focusing on key roles affecting the business. Where is that footprint today, and where will they be in three years? Finally, review the relocalization strategy on an annual basis to ensure that it evolves along with the business.
Understanding specific relocalization needs and making strategic changes will ensure that the pendulum swing toward relocalization adds value in the right places and does not undermine all the benefits achieved through shared service centers.
Laura Schaulat is a director in Oracle’s Insight and Customer Strategy team based in Singapore and serves as Insight’s human capital management strategy lead in Asia Pacific.