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Had some really interesting discussions with senior HR practitioners this week – all touching on the shape, design and delivery of corporate services in the NHS.  Talking about the challenges facing NHS corporate functions, in particular we talked about HR Services and how senior teams should be considering areas for review and redesign using stronger evidence of efficiency and effectiveness.

We agreed NHS organisations needed help to understand their contribution, effectiveness, costs and efficiency. With better information available about those services, CEO’s could talk to their Directors about areas and ways to find better, more effective and affordable solutions to universal and ongoing organisational challenges.

Photo: kevindooley, Flickr

Over a period of years supporting public sector organisations’ support improvement action in corporate teams, especially with HR, Finance and Payroll, one of the most common topics of discussion with Directors and senior managers has been the proper place for payroll functions.

Some years ago, during a conversation with one (American) Chief Executive working in an NHS Trust that was experiencing problems with payroll services, this experienced leader expressed amazement that NHS organisations used outsourced payroll suppliers when ensuring staff were accurately and properly paid was “the most important responsibility of every employer.

Clearly he did not share the view of payroll as a low-value service, an assumption which might underpin the fact that, in UK public services, outsourcing payroll to a specialist provider is relatively commonplace.

Outsourced Solutions

Historically, payroll services have been the most likely corporate service for public bodies to buy-in from another organisation. Seen as non-core function, any in-house service would be viewed as wasting valuable time and money.

In the past, the challenge of legislative compliance combined with high volumes of relatively simple data driving most payroll processes (e.g. absence records, overtime worked, shift payments due) has made outsourcing the payroll function an attractive option.

This approach sees payroll as a”commoditized service” – a simple function which can and should be organised and delivered in the cheapest manner possible with the essential outcomes being payment accuracy and legal compliance.

During a time of austerity and cuts in public services, it seems more fashionable than ever before to outsource such services, having them delivered by a specialist payroll or multi-faceted corporate shared services provider. From 2007 onwards, public services have been seeking cost reductions in support functions by moving these services out to shared services organisations. The expectation for these projects is a combination of simplification, standardisation, automation and economies of scale will reduce costs while maintaining or improving standards. There should be no surprise there are both strong proponents and opponents of these projects, but everyone agrees delivering the benefits is pretty challenging.

For a shared services project to succeed in delivering savings while protecting quality, some fundamental changes are required, with significant review and redesign of functional roles and the business processes they are responsible for. With the trend for considering outsourcing a wider range of  administrative functions, the potential to buy in a combination of “HR and Payroll” or “Accounts and Payroll” is becoming increasingly common. In such cases the perspective of the client organisation about these support functions can be an important driver for the suitability of a particular solution. Read the rest of this entry →

Drawn into a conversation on LinkedIN last week about the “proper place” for the payroll team. Many people were sure that dealing with the pay, tax and accounting means there is no better place than in Finance – one even suggesting only Finance could be trusted to make accurate calculations.

Others were certain that the people-facing nature of payroll, the need for customer service plus the links to employment contracts pushed the function closer to Human Resources.

A few people identified the “HR input -Finance output” business that payroll delivered and talked about effective separation of duties to meet audit control requirements. This is definitely on the radar as a subject of a future article.

What do you think?

If your CEO asks the question posed in the title, it probably isn’t acceptable to respond with the plain truth answer “It depends on how you want HR to contribute to the business!”

While this wouldn’t be an answer many would welcome, it is important to consider what role and purpose the HR department plays in your organisation – how it delivers value for the business. Form and size should follow function and purpose – do you need a large administrative function or a smaller team of highly skilled professionals?

If leaders want a “back to basics” personnel support function, the HR team might include a small number of “professional staff” with more administrative support people – helping managers to comply with the obligations of employment law and effective employment practice.

A more strategic perspective, incorporating organisation development and combined with a devolved approach to people management can see the HR function with slightly larger number of more specialist team-members – highly adapted to providing advise on complex issues while expecting managers to do more for themselves – offering less administrative support – particularly where it has deployed smart self-service solutions.

So what is the answer to the level of resources needed?

Read the rest of this entry →

Photo: srqpix, Flickr

The Coalition Government is apparently considering changes to employment law – pushing the qualification period for protection against unfair dismissal up from one year to two years. While this represents a reversal of employment law changes which took effect in 1999 – taking the UK back to the position before the last Labour government – they are also considering the introduction of a fee to discourage vexatious claims.

Business representatives, such as the British Chamber of Commerce, often suggest current arrangements are too one-sided – soft on employees – causing huge expense for employers in defending cases. Deregulation in this area will boost jobs, they say, though the TUC express the view that increasing burdens on dismissed employees would be objectionable – preventing people from bringing legitimate claims.

The TUC also reject the idea employment tribunal cases are running out of control, reporting a 14% rise in individual claims during 2009/10 – a figure which, in the context of the economic slowdown and resulting job losses doesn’t sound too alarming.

While the idea of making changes which are “pro-business” seems sensible, comments on Laurie Anstis’ Work/Life/Law blog suggest there are plenty of pragmatists out there who think the impact of such a change is likely to be marginal and many concerns it will simply encourage employers to act sloppily.

The BBC investigation last year provides interesting facts and some balanced perspectives – especially the points that employers need not deploy expensive legal representation to handle tribunals and that half of cases defended by employers in 2009 were won (though this seems like a case of a glass half full?).

So is a change in the law going to have an impact? Read the rest of this entry →

Since the publication of the Smarter Government report in November 2009, which released the results of benchmarking work for the back office functions within central government, interested observers having been waiting for the NHS to complete it’s own review. This work has been completed and with the publication of the QIPP Back Office Efficiency and Management Optimisation Report has been published along with the conclusions on how the NHS should take matters forward.

As well as following on from the Smarter Government review, this work follows themes already established by HM Treasury’s Operational Efficiency Review, published in July 2009 which outlined the potential benefits of efforts to improve back-office efficiency. HM Treasury concluded it would be sensible to deliver improvements through shared back-office functions and larger scale procurement.

The QIPP report reveals the NHS spends £2.8bn on back office functions and suggests it would be possible to make savings of around £616m (around 22% of current spend) by standardising and streamlining services through scaled solutions.

This seems a more credible target than the common over-optimistic claims (30-50%) which fail to take into account the proportions of current work that cannot or will not be effectively shared.

A potential saving of this magnitude is certainly worth exploring in more detail but taking into account £2.8bn represents only 2.6% of NHS operating expenditure, it’s vital to keep a sense of perspective about the scale of benefits. Delivering all the potential savings identified would deliver 0.6% savings overall and only 3.1% of the £20bn savings target established for the NHS by 2013. The financial pressures facing the NHS will not be addressed by streamlining the back office! thie require more substantial work on core clinical services.

Furthermore, establishing shared services will take time, investment and significant effort. Shared services projects starting now would be unlikely to yield savings within the timescale of the current national savings programme. This does not mean they are not worth pursuing …. just that they need approaching with realistic expectations and appropriate objectives. Organisations that enter into such project with unrealistic expectations are most likely to fail.

There are important messages and key issues identified in the report that are worthy of more exploration. What can we learn from it? Read the rest of this entry →

Human Resources practitioners are a self-critical bunch, exhibiting regular doubts and self-criticism. The Chartered Institute of Personnel and Development (CIPD)  campaign to make HR a more attractive career opportunity sparked a bout of critical comment from practitioners. In the HRZone there has been a popular discussion thread where HR practitioners discuss what they would change about the profession.

Front-line managers and business commentators often express doubts about the specialism, suggesting good people management is just common sense.

There is also regular criticism, especially in the public sector, that HR policy and procedures are over-complex, presenting too many barriers to managers who want to run effective businesses. Facing this critique, perhaps it’s natural the profession appears somewhat defensive and this might also explain why the profession has been striving to demonstrate it’s value and contribution to business.

But just how valuable is the HR function to business? Is it a vital function or does it just make business harder to do? Read the rest of this entry →

Photo: .mw, Flickr

Social networking platforms have taken off like rockets over the last 5 years. Millions of people are using them to keep in contact with friends and colleagues sharing thoughts, ideas, trivia, photos, jokes across the Internet. For the generation reaching adulthood and maturing with these tools, they are a natural way to keep in touch while for many, they are an alien virtual world.

Perhaps unsurprisingly, many traditional organisations are struggling to keep pace with the phenomenon. Many organisations are looking to develop and enforce “social media policies” and often look to the human resources team to establish the ground rules.

Significant potential benefits from social media are recognised – creating new business opportunities, communicating effectively with customers personally and increasing credibility.

They are also concerned about loss of productivity with employees “playing” with social media plus  with technology concerns including security and bandwidth pressures. On top of these concerns, organisations are recognising the pervasive nature of individuals online presence, torn between using them to find out more about job applicants and new talent, while worrying about the possibility of employees divulging corporate secrets or bringing the organisation into disrepute through “inappropriate” virtual behaviour. Read the rest of this entry →

In a guest post on the HR Ringleader website, Felix Wetzel suggests the future is likely to see HR and Marketing moving ever closer until, sharing goals, with similar approaches and complementary skills and talents eventually, the functions merge.

Wetzel explains the need for HR and Marketing teams to work together to communicate and execute “the brand”. Much of the language he uses seems ill-judged in relation to a traditional HR audience. While “people = brand” makes a good start, moving on to “people = employees = customers = competitors = suppliers = citizens” might not help HR practitioners access his key ideas.

In fact the idea of linking brand with HR practive is not at all strange. The concept is supported by research and guidance on Employer Branding offered by the Chartered Institute of Personnel and Development (CIPD) which says -

“A strong employer brand should connect an organisation’s values, people strategy and HR policies and be intrinsically linked to a company brand.”

The CIPD’s research showed corporate branding was having a significant influence on recruitment campaigns, employee communication learning and development and leadership and management behaviours. HR practitioners perceived clear objetives for effective employer branding for alignment to vision and values, recruitment outcomes and both employee satisfaction and performance.

But are the two areas linked beyond the recruitment campaign? Read the rest of this entry →

Image : Tychay, Flickr

Over the last decade, it’s become increasingly clear the transactional side of Human Resources and the Payroll service are two sides of the same coin.

The HR team helps managers source and deploy people into effective roles on the right employment terms. The Payroll team implement those terms accurately and in accordance with tax legislation.

Completing the cycle, the Payroll Team provide invaluable workforce and cost information which cab support strategy, planning and policy review.

Both teams help manage the workforce and support the reduction of associated risks while removing burdens from front line management, allowing them to focus on operations and team leadership.

In the article “The Other”, SystematicHR described the highly structured environment payroll inhabits and the contrast with the “flexibility” which managers and HR departments so highly value. Working with both teams regularly, Attractor recognises the description and accepts there are elements of truth in the common stereotypes.

There is something else which, until recently at least, distiguished the two departments.

In the UK, organisations have traditionally been happy to outsource payroll transactions to a commercial partner. They recognise the work needs technical skills but can be labour intensive. They consider it safer to pass risks to a specialist body who guarantees compliance and, hopefully, generates economies of scale.

Some perceive the reluctance of organisations to outsource HR as protectionism or empire-building by the management team. HR is often considered more central to business operations, making it less attractive to outsource. Fears often arise over “losing control” of key issues on staff appointments and difficult people management issues. With HR supporting action by senior and line managers, it isn’t possible to  transfer “compliance risk” in the same way. Read the rest of this entry →