July 23, 2010 SHRM Poll: Shared Services and Centers of Excellence

Shared Services & Centers of Excellence | ©SHRM 2010 SHRM Poll: Shared Services and Centers of Excellence 2 Contents:  Introduction  Shared Services Centers  Centers of Excellence  Results by Organizations That Do Not Use a Shared Services/Centers of Excellence HR Transaction Model  Methodology

Shared Services & Centers of Excellence | ©SHRM 2010 Introduction This study examined the shared services centers (consolidated administrative HR functions) and centers of excellence (localized areas of in-depth HR expertise) models used for administering HR transactions and services. The shared services model, as envisioned by Dave Ulrich, is a way to promote HR expertise and deliver improved services companywide through the division of tasks and expertise. 3

Shared Services & Centers of Excellence | ©SHRM 2010 Shared Services Centers 4

Shared Services & Centers of Excellence | ©SHRM 2010 Does your company administer and deliver HR transactions through an internal and central shared services department? 5 Note: n = 484.

Shared Services & Centers of Excellence | ©SHRM 2010 Does your company administer and deliver HR transactions through an internal and central shared services department? (Differences by organization demographics) Publicly owned for-profit organizations (74%) were more likely than nonprofit organizations (53%) to administer and deliver HR transactions through an internal and central shared services department. Large-staff-sized organizations (500 or more employees) (78%) were more likely than small-staff-sized organizations (1 to 99 employees) (62%) or medium-staff-sized organizations (100 to 499 employees) (63%) to administer and deliver HR transactions through an internal and central shared services department. Organizations with multinational operations (75%) were more likely than organizations with single country operations (64%) to administer and deliver HR transactions through an internal and central shared services department. 6

Shared Services & Centers of Excellence | ©SHRM 2010 What business model does your company use to administer and deliver HR transactions? 7 Note: n = 352. Only respondents who indicated that they administer and deliver HR transactions through an internal and external shared services department were asked this question.

Shared Services & Centers of Excellence | ©SHRM 2010 What business model does your company use to administer and deliver HR transactions? (Differences by organization demographics) Government agencies (58%) were more likely than publicly owned for-profit organizations (24%) or nonprofit organizations (21%) to use completely in-house shared services. Publicly owned for-profit organizations (72%), privately owned for-profit organizations (68%) and nonprofit organizations (79%) were more likely than government agencies to use a combination of in-house and outsourced shared services. 8

Shared Services & Centers of Excellence | ©SHRM 2010 To what degree has your company's shared services organization… 9 Note: Percentages may not total 100% due to rounding.

Shared Services & Centers of Excellence | ©SHRM 2010 To what degree has your company's shared services organization… (Differences by organization demographics) Increased employee satisfaction with HR service delivery > Privately owned for-profit organizations reported greater average degrees of increased employee satisfaction with HR service delivery than publicly owned for- profit organizations. > Organizations with single country operations reported greater average degrees of increased employee satisfaction with HR service delivery than organizations with multinational operations. Decreased employee satisfaction with HR service delivery > Publicly owned for-profit organizations reported greater average degrees of decreased employee satisfaction with HR service delivery than privately owned for-profit organizations or government agencies. > Large-staff-sized organizations reported greater average degrees of decreased employee satisfaction with HR service delivery than small-staff-sized organizations. 10

Shared Services & Centers of Excellence | ©SHRM 2010 What are the top three positive outcomes your company has experienced as a result of its shared services center? 11 Note: n = 247. Percentages do not total 100% as multiple response options were allowed.

Shared Services & Centers of Excellence | ©SHRM 2010 What are the top three positive outcomes your company has experienced as a result of its shared services center? (Differences by organization demographics) Improved employee satisfaction with basic HR transactions > Privately owned for-profit organizations (19%) were more likely than publicly owned for-profit organizations (6%) to report improved employee satisfaction with basic HR transactions. Reduced transaction errors > Medium-staff-sized organizations (22%) were more likely than small-staff-sized organizations (5%) to report reduced transaction errors. Reduced HR staff time spent on administrative tasks > Large-staff-sized organizations (48%) were more likely than medium-staff-sized organizations (28%) to report reduced HR staff time spent on administrative tasks. Reduced administrative costs > Organizations with multinational operations (44%) were more likely than organizations with single country operations (27%) to report reduced administrative costs. > Organizations with unionized workforces (49%) were more likely than organizations with non-unionized workforces (30%) to report reduced administrative costs. 12

Shared Services & Centers of Excellence | ©SHRM 2010 What are the top three positive outcomes your company has experienced as a result of its shared services center? (Differences by organization demographics, continued) Consolidated redundant HR functions > Organizations with multinational operations (40%) were more likely than organizations with single country operations (27%) to report consolidated redundant HR functions. > Organizations with unionized workforces (45%) were more likely than organizations with non-unionized (30%) workforces to report consolidated redundant HR functions. Greater strategic functioning of HR > Organizations with single country operations(26%) were more likely than organizations with multinational operations (13%) to report greater strategic functioning of HR. Reduced/eliminated paper-based record keeping > Organizations with single country operations (24%) were more likely than organizations with multinational operations (13%) to report reduced/eliminated paper-based record keeping. 13

Shared Services & Centers of Excellence | ©SHRM 2010 What are the top three challenges your company has experienced with its shared services model? 14 Note: n = 235. Percentages do not total 100% as multiple response options were allowed.“Not sure” and “none” responses were excluded from this analysis.

Shared Services & Centers of Excellence | ©SHRM 2010 What are the top three challenges your company has experienced with its shared services model? (Differences by organization demographics) Negative impact to the relationship between HR staff and other company employees > Organizations with multinational operations (26%) were more likely than organizations with single country operations (11%) to report negative impact to the relationship between HR staff and other company employees. > Organizations in the midwest (27%) were more likely than organizations in the northeast (3%) to report negative impact to the relationship between HR staff and other company employees. Performance metrics for this model have not been effectively tracked > Organizations with single country operations (37%) were more likely than organizations with multinational operations (19%) to report that performance metrics for this model have not been effectively tracked. 15

Shared Services & Centers of Excellence | ©SHRM 2010 What are the top three challenges your company has experienced with its shared services model? (Differences by organization demographics, continued) Employee resistance toward the shared service model > Organizations with unionized workforces (62%) were more likely than organizations with non-unionized workforces (38%) to report employee resistance toward the shared service model. Transitioning from traditional HR delivery to the shared service model > Large-staff-sized organizations (48%) were more likely than medium-staff-sized organizations (27%) to report transitioning from traditional HR delivery to the shared service model. 16

Shared Services & Centers of Excellence | ©SHRM 2010 Is the shared services center just for your location or the entire company? 17 Note: n = 219. HR professionals who were employed by a single location/business unit company did not answer this question.

Shared Services & Centers of Excellence | ©SHRM 2010 How many separate locations are served by shared services? 18 Note: n = 207. HR professionals who were employed by a single location/business unit company and responded that their organization’s shared service center was just for their location did not answer this question.

Shared Services & Centers of Excellence | ©SHRM 2010 How many separate business units are served by shared services? 19 Note: n = 215. HR professionals who were employed by a single location/business unit company and responded that their organization’s shared service center was just for their location did not answer this question.

Shared Services & Centers of Excellence | ©SHRM 2010 Which services are offered through an HR shared services department? 20 Note: n = 234. Percentages do not total 100% as multiple response options were allowed.

Shared Services & Centers of Excellence | ©SHRM 2010 Which services are offered through an HR shared services department? (Differences by organization demographics) Relocation services > Publicly owned for-profit organizations (40%) were more likely than government agencies (12%) to report offering relocation services through an HR shared services department. > Organizations with multinational operations (38%) were more likely than organizations with single country operations (16%) to report offering relocation services through an HR shared services department Stock/share administration > Publicly owned for-profit organizations (30%) were more likely than nonprofit organizations (7%) to report offering stock/share administration through an HR shared services department. > Organizations with multinational operations (24%) were more likely than organizations with single country operations (14%) to report offering stock/share administration through an HR shared services department 21

Shared Services & Centers of Excellence | ©SHRM 2010 Which services are offered through an HR shared services department? (Differences by organization demographics) Pension administration > Organizations with unionized workforces (58%) were more likely than organizations with non-unionized workforces (32%) to report offering pension administration through an HR shared services department. > Medium- and large-staff-sized organizations were more likely than small-staff-sized organizations to report offering pension administration through an HR shared services department. Other benefits administration > Large-staff-sized organizations were more likely than medium-staff-sized organizations to report offering other benefits (i.e., not health care, retirement, leave or work/life) administration through an HR shared services department. Payroll > Organizations with multinational operations (73%) were more likely than organizations with single country operations (58%) to report offering payroll through an HR shared services department. 22

Shared Services & Centers of Excellence | ©SHRM 2010 Which services are offered through an HR shared services department? (Differences by organization demographics) Retirement benefits administration > Organizations in the southeast (80%) were more likely than organizations in the northeast (52%) to report offering retirement benefits administration through an HR shared services department. Flexible spending account administration > Publicly owned for-profit organizations (75%) were more likely than government agencies (44%) to report offering flexible spending account administration through an HR shared services department. 23

Shared Services & Centers of Excellence | ©SHRM 2010 Centers of Excellence 24

Shared Services & Centers of Excellence | ©SHRM 2010 Do you have centers of excellence that offer HR services/functions? 25 Note: n = 222.

Shared Services & Centers of Excellence | ©SHRM 2010 Which services do the centers of excellence provide? 26 Note: n = 102. Percentages do not total 100% as multiple response options were allowed.

Shared Services & Centers of Excellence | ©SHRM 2010 Which services do the centers of excellence provide? (Differences by organization demographics) Employee relations > Organizations with single country operations (76%) were more likely than organizations with multinational operations (50%) to report providing employee relations through centers of excellence. > Organizations with non-unionized workforces (74%) were more likely than organizations with unionized workforces (40%) to report providing employee relations through centers of excellence. HR policy development > Privately owned for-profit organizations (74%) were more likely than publicly owned for-profit organizations (44%) to report providing HR policy development through centers of excellence. Other services > Organizations with unionized workforces (13%) were more likely than organizations with non-unionized workforces (1%) to report providing other services through centers of excellence. 27

Shared Services & Centers of Excellence | ©SHRM 2010 Over time, to what degree have the services of your central centers of excellence… 28 Note: Percentages may not total 100% due to rounding.

Shared Services & Centers of Excellence | ©SHRM 2010 Over time, to what degree have the services of your central centers of excellence… (Differences by organization demographics) Increased employee satisfaction with HR service delivery > Privately owned for-profit organizations reported greater average degrees of increased employee satisfaction with HR service delivery than publicly owned for- profit organizations. 29

Shared Services & Centers of Excellence | ©SHRM 2010 Does your company have decentralized HR generalists in separate business units and/or individual locations? 30 Note: n = 232.

Shared Services & Centers of Excellence | ©SHRM 2010 Does your company have decentralized HR generalists in separate business units and/or individual locations? (Differences by organization demographics) Publicly owned for-profit organizations (71%) were more likely than government agencies (35%) to report having decentralized HR generalists in separate business units and/or individual locations. Organizations with multinational operations (72%) were more likely than organizations with single country operations (44%) to report having decentralized HR generalists in separate business units and/or individual locations. 31

Shared Services & Centers of Excellence | ©SHRM 2010 Organizations That Do Not Use a Shared Services/Centers of Excellence HR Transaction Model 32

Shared Services & Centers of Excellence | ©SHRM 2010 What is the primary reason for your company not adopting a shared services business model? 33 Note: n = 102.

Shared Services & Centers of Excellence | ©SHRM 2010 Does your company plan to change to a shared services/centers of excellence HR transactions model? 34 Note: n = 104. Only respondents who indicated that their organizations did not administer and deliver HR transactions through an internal and external shared services department were asked this question.

Shared Services & Centers of Excellence | ©SHRM 2010 Does your company plan to change to a shared services/centers of excellence HR transactions model? (Differences by organization demographics) Among organizations that do not currently administer and deliver HR transactions through shared services/centers of excellence: > Nonprofit organizations (81%) were more likely than publicly owned for-profit organizations (35%) to indicate that they do not plan to change to a shared services model. > Organizations with multinational organizations were more likely than organizations with single country operations to indicate that they plan to change to a shared services model within 13 to 24 months (23% compared with 5%) or within the next 2 to 5 years (18% compared with 3%). > Organizations with single country operations (78%) were more likely than organizations with multinational operations (36%) to indicate that they do not plan to change to a shared services model. 35

Shared Services & Centers of Excellence | ©SHRM 2010 Demographics: Organization Sector 36 Note: n= 330

Shared Services & Centers of Excellence | ©SHRM 2010 Demographics: Location Staff Size 37 Note: n = 316.

Shared Services & Centers of Excellence | ©SHRM 2010 Demographics: Organization Operations 38 Note: n = 324

Shared Services & Centers of Excellence | ©SHRM 2010 Demographics: Union Status 39 Note: n = 328

Shared Services & Centers of Excellence | ©SHRM 2010 Demographics: Region 40 Note: n = 316

Shared Services & Centers of Excellence | ©SHRM 2010 SHRM Poll: Shared Services & Centers of Excellence Response rate = 18% Sample comprised 484 HR professionals from SHRM’s membership who were employed by organizations with 250 or more employees. Margin of error is +/- 4% Survey fielded May 6 – May 12, Methodology For more poll findings, visit: Follow us on Twitter: