Jim Koenig, EquaTerra Client Executive, Human Resources Advisory
A challenge in establishing an HR services delivery function is determining the performance measures to govern the services. This applies whether the service delivery model is internal shared services, outsourcing or a hybrid. There are many factors to consider, such as: what are the desired outcomes from the services, what are the desired performance levels, how readily can the service levels be tracked and reported, and most importantly what are the acceptable value versus cost trade-offs (there is a direct cost relationship between the service level and the cost to deliver the service)?
Over the last decade service levels have matured for measuring the delivery of HR services, becoming increasingly more standard. Service levels are generally focused on the “outcomes” of specific process functions, with service timeliness and quality being key drivers (as these elements translate directly into the experience with the services). Service levels are also something where “more is not more.” In an HR services delivery function it is important to have “penalties” on the service components that are most impactful to the organization. The penalties need to be sufficient to drive the performance required – too many service levels dilute the impact. In an HR services delivery function it is typical to deploy a concept of critical and key performance measures with penalties assessed for those service levels deemed critical.
However, operational performance is not sufficient to monitor the overall health of the services delivery function (regardless of whether it is internal or external). Historically performance measures/service levels tended to be tactical in nature. Organizations have always struggled with how to measure the strategic performance of the HR services delivery function. An emerging trend is to include in the performance measurement process a “scorecard” that is designed to monitor the health of the overall services delivery function and/or relationship. These scorecards go beyond basic blocking and tackling to reflect more subjective measures and ultimately successful outcomes. A key goal is to move beyond the “the service levels are all green but we are still frustrated” issue that exists with many HR service delivery functions/relationships. This “scorecard” approach measures key elements of the services/relationship such as:
- Overall operational performance
- Delivery of accurate and complete responses to users of the services (e.g., employees, managers and participants)
- Ability to resource errors/issues and to assess root cause to ensure they do not repeat
- Stakeholder satisfaction (measured routinely and broadly)
- Services innovation (innovation is a key driver for buyers/users of HR services)
- Voice of the customer
- Governance process and health
- Strategic health of the services
- Ability to meet commitments/deadlines/milestones
- Ability to keep client/users informed of upcoming changes to services as well as future enhancements and new services
The following diagram shows the evolution of service levels along the continuum of tactical only to measuring both tactical and strategic health.
The evolution is gaining momentum as many service delivery functions (both internal and external) are now in the second or third generation. Don’t be left behind. Start taking steps now to elevate your HR organization’s service levels and drive more sophistication into the process to ensure that the HR services delivery function delivers the utmost benefit to the organization.
For more on measuring the delivery of HR services, read Measuring the Success of HR Outsourcing by my colleague in Europe, Stelios Milonakis.