Unlocking the Benefits of Shared Services

For Schneider Electric and many other companies, the main driver behind establishing a shared-services center stems from the organization’s desire to have immediate access to all of its workforce management data.

    But what good is that data if the company’s managers don’t know what it all means?

    That’s the question Brian McLaren, director of HR shared services at RBS Group, recently asked himself.

    The Edinburgh-based bank once known as Royal Bank of Scotland has realized huge cost savings since it established its shared-services center in 2000. After investing ?12 million in the project, the company has seen savings of ?70 million during the past six years.

    Despite this success, McLaren saw room for improvement. Specifically, he has noticed that while the company has a lot of good information about its employees, RBS isn’t doing enough to use this data to improve its workforce management strategy, he says.

    “Our HR directors do not quite understand the data,” McLaren says. “We have these individual streams of information, but nothing to bring it all together that makes the connection to our business.”

    To address the issue, RBS is spending the next few months creating a “people metrics group” whose job will be to provide monthly reports to line managers and HR directors on various human capital metrics.

    The reports might provide an analysis of why turnover is particularly high in one business unit compared with another, McLaren says.

    By the end of this year, McLaren hopes to establish a group of 14 HR managers to make up the group. They will be supported by a few credit analysts and underwriters.

    “Since we are a financial services company, we have a lot of expert analysts who can support this group,” McLaren says.

    RBS is on the forefront of an emerging trend, analysts say. “Consultants have been pushing the idea of taking this human capital approach for some time, but it’s been slow to get off the ground,” says Neil McEwen, an analyst at PA Consulting Group who has worked with RBS in the past.

    This is becoming a greater focus now because line managers are turning to the shared-services centers for this kind of workforce analytics, analysts say.

    “Companies are starting to realize that the value of having the data isn’t just the ability to report the data, but to interpret it and understand how it can be used to improve the business strategy,” says David Parry, an analyst in the London office of Deloitte. “Being able to slice and dice the data is the key benefit to doing shared services.”

Workforce Management, February 12, 2007, p. 21 — Subscribe Now!