Talent Management

MODELING AN HR SHARED SERVICES CENTER: EXPERIENCE OF AN MNC IN THE UNITED KINGDOM

FANG LEE COOKE
An increasing number of large and multinational organizations are moving to shared services models in delivering the human resource function. It is commonly believed that the adoption of an HR shared services model can transform the role of HR by enabling the HR function to be more strategic at the corporate level and more cost-effective at the operational level. However, few academic studies have been carried out to investigate challenges to implementing an HR services center successfully and the impact of adopting an HR shared services model on different groups of employees. Through a case study of a multinational corporation, this article reveals that there remains a significant gap between literature espousing the efficacy and utility of HR shared services and the extent to which the adoption of such a model is successful. The financial and emotional cost of moving to a shared services model can outweigh the tangible cost savings predicted by firms. The idea of separating the HR function into strategic, operational, and administrative components may prove to be too simplistic, although it underpins the initiative of HR shared services. © 2006 Wiley Periodicals, Inc.

Introduction

T

he delivery of the human resource function has undergone considerable changes in recent years, especially within large multinational corporations (MNCs). Traditionally, the typical HR structure in a large MNC starts with a small team at the corporate level that is responsible for strategic issues. Much of the operational HR function is carried out at the

national level. This function is often devolved to the branch-office level, supported by a small on-site HR department. However, an increasing trend in recent years has been the establishment of HR shared services centers that deliver these functions more centrally, and often more remotely, from the subsidiaries of the

References: Arkin, A. (2001, November 22). Central intelligence. People Management, p. 28. Brockbank, W. (1999). If HR were really strategically proactive: Present and future directions in HR’s contribution to competitive advantage. Human Resource Management, 38, 337–352. Currie, G., & Procter, S. (2001). Exploring the relationship between HR and middle managers. Human Resource Management Journal, 11, 53–69. Domberger, S. (1998). The contracting organization: A strategic guide to outsourcing, Oxford, UK: Oxford University Press. Fernie, S., & Metcalf, D. (1998). (Not) hanging on the telephone: Payment systems in the new sweatshops. Discussion Paper No. 390, Center for Economic Performance, London School of Economics. Hall, L., & Torrington, D. (1998). Letting go or holding on—The devolution of operational personnel activities. Human Resource Management Journal, 8, 41–55. Jermier, J., Knights, D., & Nord, W. (1994). Resistance and power in organizations. London: Routledge. Keep, J. (2001). Models of HR provision and the move towards shared services: Continuing the emergent review. The second report. London: Department of Health, SHRINE. Korczynski, M. (2002). Human resource management in service work. Basingstoke, UK: Palgrave. Kotter, J. P., & Schlesinger, L. A. (1979). Choosing strategies for change. Harvard Business Review, 57(2), 106–114. Kovach, K., Hughes, A., Fagan, P., & Maggitti, P. (2002). Administrative and strategic advantages of HRIS. Employment Relations Today, 29(2), 43–48. Lepak, D., & Snell, S. (1998). Virtual HR: Strategic human resource management in the 21st cen- tury. Human Resource Management Review, 8, 215–234. Lewin, K. (1951). Field theory in social science. London: Harper & Row. Liff, S. (1997). Constructing HR information systems. Human Resource Management Journal, 7, 18–31. McConville, T., & Holden, L. (1999). The filling in the sandwich: HRM and middle managers in the health sector. Personnel Review, 5, 406–424. Oates, D. (1998). Outsourcing and the virtual organization: the incredible shrinking company. London: Century Business. Pickard, J. (2000a, February 3). The truth is out there. People Management, pp. 48–50. Pickard, J. (2000b, July 6). Study casts doubt on ‘boom’ in outsourcing. People Management, p. 16. Pickard, J. (2002, July 11). A source for inspiration? People Management, p. 36. Procter, S., & Currie, G. (1999). The role of the personnel function: Roles, perceptions and processes in an NHS trust. International Journal of Human Resource Management, 10, 1077–1091. Reilly, P. (2000). HR shared service and the realignment of HR. IES Report, p. 368. The Shared Services and Business Process Outsourcing Association. (2003). Key findings of our shared services survey 2001. Retrieved October 27, 2005, from http://www.sharedxpertise.org Shrivastava, S., & Shaw, J. (2003). Liberating HR through technology. Human Resource Management, 42, 201–222. Sparrow, P., Brewster, C., & Harris, H. (2004). Globalizing human resource management. London: Routledge. Storey, J. (1992). Developments in the management of human resources. Oxford, UK: Blackwell Publishing. Ulrich, D. (1995). Shared services: From vogue to value. Human Resource Planning, 18, 12–23. Human Resource Management DOI: 10.1002/hrm Modeling an HR Shared Services Center: Experience of an MNC in the United Kingdom Ulrich, D. (1997). Human resource champions. Boston: Harvard Business School Press. Ulrich, D. (1998). A new mandate for human resources. Harvard Business Review, 76(1), 124–134. Zaccaro, S., & Banks, D. (2004). Leader visioning and adaptability: Bridging the gap between research and practice on developing the ability to manage change. Human Resource Management, 43, 367–380. 227 Human Resource Management DOI: 10.1002/hrm