The Human Resources function supports organizations in a variety of ways; however the way these services are delivered across the business varies on the size and scale of the organization, with companies deciding on different HR service delivery models.
One way HR objectives can be delivered is via the Ulrich model, which is seen as a widely accepted service delivery model. Ulrich put forward a model that assisted organizations in understanding how they could make HR more strategic, especially in large complex businesses. He identified four key roles in HR, the strategic partner, change agent, administration expert and employee champion with shared service activities operating out of call centers. This model encouraged technology to be utilized providing support to the rest of the business. The Ulrich model provided a clear separation of activities and responsibilities across the four roles, ensuring that efficiencies were improved, costs reduced and there was a more strategic value to HR.
Another way HR objectives can be delivered is through outsourcing. Some organizations choose to outsource all of their HR Services, according to the CIPD Executive Briefing (2005) this is the practice of transferring all or some of the HR service provision form an in house team to one or more external providers. The benefits are thought to include, access to specialist knowledge, cost saving, improving levels of standards and driving efficiencies. According to a CIPD survey (2009) there was an increase in this model within larger companies (over 10,000 employees) where 71% of at least some of their HR activity was outsourced.
HR activity differs across sectors and size of organizations. Large, private sector companies look for a HR service that can efficiently operate at scale, either outsourcing or many adopting the Ulrich model. These businesses are often driven by revenue targets and will look for a model that is cost effective, process orientated, allowing for both specialist knowledge and strategic partnerships, where HR can demonstrates value to the business. Sodexo, with 35,000 employees in the UK & Ireland went through a HR transformation in 2013, where they adopted the Ulrich model and have a shared service center with administration experts, change agents and employee champions. Whereas reward, talent management and resourcing act as centers of excellence and a small team of HR Business Partners align HR to the overall business strategy. The benefits of the transformation have allowed the business to reduce duplication of process, saving costs and more recently Sodexo has added self-service to some HR functions. Through self-service, employees can book holidays, access pay slips and make changes to their rewards package, through the new Reward Hub.
In the public sector, companies need to operate in a transparent and compliant manner, where there is a need to maximize efficiency and focus on service rather than profit. The economy and austerity measures effect how public sector organizations operate. The BBC decided to outsource some of their HR services to Capita, including recruitment, pay and training. This impacted HR efficiency and demonstrated a cost saving to shareholders of £50 million, over a ten year period.
HR budgets across the public and private sector can be very different, according to a report by Personnel Today (2104) in the private sector 30% of people mentioned an increase in budget however 46% in the public sector reported a reduction. Therefore HR services need to be innovative and find ways to operate in a cost effective manner. Some councils are finding ways to share HR Services, in 2016 Buckingham County Council and Harrow Council signed a shared service deal that demonstrated large financial savings, meaning less pressure on frontline services that are important to the public.
Within small to medium businesses, especially ones that aren’t established, HR can often be seen as a blocker, stopping the entrepreneurial aspect to the business, introducing process and compliance whereas they are focused on growth and profit. Typically SME’s have limited financial resources and this can lead to managers not receiving the same amount of training as larger companies, therefore as the business grows they don’t have adequate knowledge which could lead to disengaged employees or compliance challenges. Additionally this could result in senior leaders undertaking the role of HR themselves, despite not having the correct qualifications, affecting the quality of HR programs and decision making. As companies grow, companies may look to introduce a HR function, in a study by the CIPD (2015) the main reason for introducing a HR professional was “The workforce reached a size when a more structured people approach was needed, including formal policies and processes”
The role of HR in this size organization can be very reactive, dealing with operational HR problems rather than being seen as a strategic partner to facilitate growth and the people agenda. According to the CIPD, the HR role may also have shared responsibilities and other aspects to their role such as finance. Certainly HR teams will be smaller, flexible and will need to adapt to the needs of the business, the roles being extremely varied.
Therefore although the output of HR across sectors and companies ultimately could be the same, to ensure compliance, implement policy, manage talent, recruitment and drive engagement how it is delivered varies drastically. Although key underlining challenges remain the same, to demonstrate how HR can add value and ultimately impact growth, cost savings and profit.
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