Organizational Wellness

Are HR Shared Services Right For Your Company? The Good and the Bad.

Jun 28, 2023
Last Updated Jun 28, 2023

Many HR administrative processes once required hours of manual intake, paperwork, and filing — not to mention regular maintenance and records keeping. If one of your employees moved or got married, you might have felt like you were updating their address or name for months on end if you had to do it manually in every record you have. 

But now, thanks to automated processes like HR shared services, HR managers can quickly update and sync information with the click of a button. And they can center their focus on what truly matters — their employees’ experience and wellbeing.

But how do you know if HR shared services are the right type of system for your company to adopt? Here are their upsides, downsides, and what to keep in mind as you’re weighing this technology.

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What are Shared Services for HR?

HR Shared Services, also known as HRSS, are centralized platforms accessible to employees that address routine tasks. They allow individuals to access payroll information, benefits administration, new hire onboarding, job postings, recruiting, and more.

This service delivery model helps organizations manage their processes and services through automation technology. It reduces manual labor, streamlines processes, and ensures accuracy in data management. 

Examples of HR Shared Services

HR shared services have a strong emphasis on administrative tasks. In turn, this lets HR teams focus on operations and strategic improvements.

Examples of HR shared services include:

  • Payroll Processing: Automating the process of calculating and distributing salaries to employees with accurate tax calculations.
  • Benefits Administration: Streamlining the process of enrolling, managing, and processing employee benefits claims.
  • Onboarding & Offboarding: Managing all aspects of new employee onboarding and offboarding of existing employees.
  • Recruiting: Automating the recruitment process, from job postings to candidate tracking.
  • Performance Management: Setting objectives and goals for employees, developing and managing performance reviews, and tracking employee progress over time.

What Are The Advantages of HR Shared Services?

When considering whether to add shared services to your company, it’s important to take into account HR goals and objectives. If the advantages match the needs of the business, it might be worth considering a tech solution.

Standardization and Simplification of HR Approaches

Shared services help companies create a uniform approach across their departments and teams. About 87% of HR leaders aim to use shared services to improve their standardized workflows, a study by Deloitte found. When processes are consistent, it leaves less room for error. It also means all processes run through the same protocol, which helps managers access information easily.

Cost Reduction 

Cost reduction is the number one outcome achieved when HR departments use shared services, a according to Deloitte. HR platforms eliminate the need to hire specialists for singular tasks, lowering the department’s operational cost. It also helps companies save time and resources by automating routine tasks, improving efficiency.

Better Data Management & Analysis

Centralized data makes tracking and analyzing HR metrics easier. When all data is stored and collected in the same place, managers don’t need to resort to searching through ten different platforms. This can help improve productivity. Real-time data also helps organizations make informed decisions by equipping HR with the workforce information it needs to better analyze the company’s operations and competencies. 

Improves Communication By Breaking Down Department Silos

HR Shared Services help break down departmental barriers. They facilitate access to the same information across all departments, leading to improved communication and collaboration among teams. This, in turn, creates better workflows and enhances overall efficiency. This centralization can help HR specialists compare department or branch results against established benchmarks and measures, which help identify improvement opportunities and successes.

What Are The Disadvantages of HR Shared Services?

As with any other technology-driven model, there are some downsides to using HR-shared services that you might want to consider before making your decision. 

Standardized Approaches Can Lead To Compliance Issues

Sometimes a one-size-fits-all approach can cause problems. For example, states may have different approaches to tax compliance and benefits. This means that one shared service might not be the best for all states in which a company operates.

Additionally, some global companies might not be able to work with centralized services because they can't handle employee data from different countries due to cybersecurity or data protection laws. In cases like these, using more than one tool for payroll oversight and tracking may be a better approach, even if it requires additional monitoring to avoid knowledge gaps.

HR Responsibilities Shift to Unskilled Managers

When HR practices become automated and centralized, it's easy for some of the responsibilities to fall into the hands of employees or managers. While yes, the purpose is for shared services to be accessible to everyone, it’s best if the maintenance of HR systems and practices stay in the hands of HR specialists.

For example, if too many employees ask for the same days off work for holidays, it could lead to confusion and delays in projects due to the high level of absence. Here, HR professionals might need to step in to regulate time off available for it to be fair for the entire workforce.

Successful HRSS Requires Investment In Training HR Professionals

Companies need HR specialists with knowledge on platforms and people management in order to properly deploy these services. This may mean training for their HR professionals on new software, including overviews of the data they're working with education on relevant regulations. 

HR professionals with experience using HRSS are better able to optimize their skills and tasks. When they understand all the functions of a system, they can find improvements, ensure compliance, troubleshoot whenever there's a hiccup.

Automation Makes Time for What Really Matters: Employee Wellbeing

Automating administrative tasks with HRSS gives HR time to focus on what really: their workforce's health and wellness. After all, STAT.

Wellbeing programs are like an HRSS for employee wellness. They give your workforce tools to take care of themselves mentally and physically, which ultimately helps your organization improve. As our Return on Wellbeing Study found, nine out of 10 companies see a direct return on wellness spending from increased productivity and decreased talent and healthcare spending. 

Wellhub can help you support employee wellness. With flexible plans that accommodate remote and in-person teams, employees access thousands of wellness partners — from nutrition tracking to gym subscriptions to mindfulness resourcesConnect with a Wellhub wellbeing specialist today so we can help you automate workforce wellness!




Wellhub Editorial Team

The Wellhub Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.


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