Achieving HR Administration Excellence – Shared Services, Outsourcing and Cost Reduction

Best Practices, LLC undertook a benchmarking study to explore how leading organizations efficiently manage HR Service Center operations. This study also delivers insights into the Human Resources Administration function, with emphasis on HR Service Center administrative processes and management of corporate LOA programs, including FMLA (Family and Medical Leave Act).

Based on an in-depth survey of Human Resources executives within leading US companies across multiple industries, this study provides best practices and benchmarks for excellence in the management and execution of critical HR Service Center processes and leave of absence administration that will enable HR managers to identify productivity gaps and determine optimal staffing levels. Insights and metrics from this study are applicable to organizations that have a large HR department, shared services companies as well as companies that outsource HR functions.

Key Findings

The following are sample key findings from the report executive summary. Additional findings available in the report relate to process benchmarks in employee termination management, award program management and employee verification. Also revealed are outsourcing percentages by LOA/FMLA function and outsourced versus insourced cost comparisons. This research features a large number of critical metrics and provides granular detail in cost and productivity metrics for type and length of leave as well as for HR role by type of leave.
60% of the companies surveyed deliver HR services to employees via shared service organizational models.
Employee populations are growing increasingly complex due to multiple mergers, geographic distribution and swings in employment cycles. HR organizations are turning to increasingly centralized shared service models to deal with this complexity, but the success of these efforts – in terms of quality and cost – varies greatly from company to company. This new research by Best Practices has uncovered how the most effective HR Shared Service organizations are structured, organized, and how companies surveyed measure process-level efficiencies.

More than 40% of larger companies rely on significant outsourcing for some combination of employee HR documentation services and operations – but none completely outsource all functions.
Benchmark findings indicated that processes with strong system dependencies are outsourced far less frequently, and with a much higher level of scrutiny than processes with lower overall system interdependencies. For example, Employment Verification and Award Management are outsourced by more than 73% and 55% of companies, respectively. As companies grow and change, functional managers must constantly ask themselves the fundamental question: What business do I want to be in? Any task or process that is not core to a functional area’s self-proclaimed identity or mission is a strong candidate for outsourcing.

However, the study indicates that outsourcing efforts by large companies commonly encounter resistance from operational areas that control core HR data systems and processes. Technology still plays a critical role in determining outsourcing possibilities. Companies in the technology manufacturing and services sectors are pioneering the expansion of outsourcing to new HR processes, such as Personnel Essential Files Management, Large-Scale Data Update, Escalated Customer Service and Data Audit.

The cost burden of leave of absence benefits and policies can be mitigated through a combination of techniques including outsourcing and automation. With this study, you will be able to learn where outsourcing of LOA administration reduces costs, as well as what other processes are most automated.