Administrators would do well to abandon their pretensions and roll up their sleeves.
By Paul Davies
Every day, it seems, another HR director discovers that his or her HR function is spending a great deal of time, effort, and money on non-strategic HR. What it costs collectively in fees to arrive at this conclusion is anyone’s guess, but, given the typical large consultancy’s perception of its own worth, it’s likely to be significant.
Worse is the manifestly predictable nature of the conclusion. How surprising can it be that many HR functions invest an extraordinary amount of effort in payroll and HR admin, or that their locally sourced HRIT is a hodgepodge of uncommunicative, sub-optimized systems? How about the manual processing of time data, personal information, and “life event” changes? Is there anyone still out there who doesn’t think it would be better to handle such processing automatically through self service?
Actually, a handful of people probably don’t buy the automation, self-service argument. But the rest of the script is well-worn, well-known, and generally well accepted. And it always ends with the glorious and, dare I say, fatuous exhortation that HR should restructure so that its HR talent is focused on strategic work (sorry: “human capital development capabilities”), and its non-strategic work (payroll, admin, and humdrum HRIT) is outsourced for someone else to worry about.
Such a restructuring inevitably requires a trailer full of billable hours on transformation and systems deployment work. However, at the end of the day, after all the hard work is done, and a dragon’s hoard of gold has been spent, the liberated HR function gets to sit back and strategize.
Or does it?
Of course not.
At the risk of oversimplifying the matter, the strategic HR department is a fairy tale told by theorists who are rightly trying to orientate thought leadership in companies back to value building and the long term. It is a laudable goal to aim for, but in real life, it’s never going to happen. In real life, the trick, as ever, is to achieve the right balance.
Non-strategic work such as payroll and HR admin is core work. If you don’t believe it, ask an employee. Perhaps core is not the right word, or perhaps the problem is semantics. The theorists usually define their terms before using them to avoid such misunderstandings. Maybe payroll is not core, just . . . bloody important. Either way, stop doing it for a month, and see what happens.
The point is this: No one can throw HR admin to anyone else and stop worrying about it. Neither can it be made someone else’s responsibility. The payment of employees, paid time calculation, and the privacy of employees’ data will always—without exception—remain the responsibility of the HR director, regardless of how strategic he/she wishes to be. The only way a payroll can be thrown over the fence and not worried about is if it’s simple enough to be retained in-house and not worried about or if we’re just talking about gross to net payroll and nothing else.
At its worst, the strategic HR department syndrome is a tilt toward laziness. It is an attempt to pretend that difficult issues such as making processes work efficiently in the overall company interests don’t matter to egghead HR people. However, they quite clearly do matter, so the desire to relegate them to the non-strategic “don’t waste time on it” heap smacks of avoiding the unglamorous, mind-reeling part of the job.
The key questions in HR outsourcing are not about core and non-core, or strategic and non-strategic; they are about how the interests of the business are best served. HR admin will always be the organization’s responsibility, and if the organization has sense, it will always worry about it. The question is simply this: How is it best for the work to be done? For many, the best quality, the best HRIT, and the least cost can be achieved through a services provider; for others, an in-house or hybrid solution might be best.
How many employees are engaged in admin versus strategy is not the key question either. The key questions are to do with the service specifications and costs. If there are loads of employees in HR admin, and HR service delivery costs are high, then far from spending too much time worrying about non-strategic work, the HR director quite clearly hasn’t been worrying about it enough.
Paul Davies is an independent advisor in HR services and outsourcing. He can be reached at firstname.lastname@example.org.