What Is the HR Shared Services Model?
The HR shared services model consolidates transactional and administrative HR activities into a centralized unit that serves multiple business divisions or locations. By standardizing processes and leveraging economies of scale, shared services reduce costs, improve consistency, and free HR business partners to focus on strategic activities that directly support business objectives.
For SHRM exam candidates, understanding the shared services model is important because it represents a fundamental approach to organizing the HR function for optimal efficiency and strategic impact.
The Three-Tier HR Service Delivery Model
Tier 0: Self-Service
The foundation of the shared services model is employee and manager self-service through technology platforms. Tier 0 includes ESS portals, knowledge bases, FAQ databases, and automated tools that enable employees to find answers and complete transactions independently. When designed effectively, Tier 0 resolves the majority of routine HR inquiries without human intervention.
Tier 1: HR Service Center
When self-service cannot resolve an inquiry, it escalates to the HR Service Center. Tier 1 agents are generalists who handle a wide range of HR questions and transactions. They use case management systems to track, route, and resolve inquiries. Common Tier 1 activities include processing employee data changes, answering policy questions, resolving payroll discrepancies, and managing benefits enrollment issues.
Tier 2: Centers of Expertise
Complex issues that require specialized knowledge escalate to Centers of Expertise (COEs). These teams consist of subject matter experts in areas such as compensation, benefits, employee relations, talent acquisition, and learning and development. COEs design programs, develop policies, and provide guidance on complex cases that exceed Tier 1 capabilities.
HR Business Partners
At the strategic level, HR Business Partners (HRBPs) work directly with business leaders to align HR strategy with business objectives. The shared services model frees HRBPs from transactional work, allowing them to focus on workforce planning, organizational development, change management, and other high-impact activities.
Benefits of HR Shared Services
- Cost reduction through process standardization and economies of scale
- Improved service quality through consistent processes and specialized expertise
- Better employee experience through faster response times and 24/7 self-service access
- Enhanced data quality and reporting through centralized data management
- Freed capacity for HR business partners to focus on strategic activities
- Scalability to accommodate organizational growth without proportional staffing increases
Implementing HR Shared Services
Readiness Assessment
Before implementing a shared services model, assess organizational readiness by evaluating current HR process maturity, technology infrastructure, change management capacity, and organizational culture. Shared services implementations are most successful in organizations that have sufficient scale to justify centralization, a commitment to process standardization, and leadership support for organizational restructuring.
Service Catalog Development
Define the services that will be delivered through shared services, including service descriptions, delivery channels, service level agreements (SLAs), and escalation procedures. The service catalog serves as the contract between the shared services organization and its internal customers.
Technology Requirements
- Case management system for tracking and routing inquiries
- Knowledge management platform for maintaining accurate, searchable content
- Self-service portal with intuitive interface and robust search capabilities
- Telephony and communication tools for service center operations
- Analytics and reporting tools for monitoring service levels and identifying improvement opportunities
Managing the Transition
Transitioning to a shared services model affects every HR professional and every employee in the organization. Comprehensive change management is essential for success.
- Communicate the vision and benefits clearly to all stakeholders
- Address concerns about job changes, role redefinition, and potential reductions
- Provide training for new roles and responsibilities
- Phase the transition to manage risk and allow for learning
- Monitor service quality closely during the transition and address issues promptly
Measuring Shared Services Performance
Key Performance Indicators
- First contact resolution rate (percentage of inquiries resolved at Tier 1)
- Average response and resolution times by tier and inquiry type
- Self-service adoption and deflection rates
- Employee satisfaction with HR service delivery
- Cost per transaction and cost per employee served
- SLA compliance rates across service categories
Continuous Improvement
Shared services organizations should establish continuous improvement processes that regularly analyze service delivery data, identify root causes of recurring issues, and implement process improvements. Voice of the Customer programs, Six Sigma methodologies, and Lean principles can all contribute to ongoing optimization.
SHRM Exam Connection
The HR shared services model represents a key approach to HR organizational design and service delivery optimization. SHRM exam candidates should understand the tiered service delivery model, the strategic rationale for shared services, the change management considerations involved in implementation, and how shared services enable HR to deliver both operational excellence and strategic value.