Multi-process HRSourcing

Business Process Optimization, Part 1

Consider these three critical steps to gaining productivity in your organization.

by Atul Vashistha

If you’re anything like your peers, you understand how to reduce costs in your HR processes—through strategic outsourcing, for example. Yet after realizing cost savings, too many leaders stop there, not recognizing that there are opportunities to drive more value from processes through enhanced productivity and process optimization.

The Path to Optimization

In fact, you can achieve significant positive impact for your business if you focus on process optimization. In this two-part series, you will gain insight into how you can drive your processes toward optimization.

The path to drawing more value from your functions—improving both the efficiency and the effectiveness of your processes—has three steps. It starts with focusing on “low-hanging fruit” that offer the fastest route to cost reductions. The next focus should be on improved productivity through improving business processes. And finally, process optimization.

Step 1: Leverage Opportunities to Reduce Cost. The easiest efficiencies come from reductions in cost, which should involve:

  • Outsourcing noncore HR functions that don’t add significant value to the business but do add significant costs (global providers have demonstrated the ability to perform these noncore functions better, more quickly, and at a lower cost).
  • Globalizing noncore functions can reduce the costs even further.
  • Consolidating processes that have similar input and common output. For example, instead of maintaining separate employee personal data in workforce administration, recruiting, compensation and benefits, consolidate the databases of all four functions into one.

Step 2: Leverage Opportunities to Improve Productivity. Feeling the intense cost and value pressures from the business, HR leaders can’t be satisfied with cost reductions alone. Success in this step involves:

  • Mapping processes and subprocesses to identify non-value-added activities and then developing an action plan to remove or reduce those activities;
  • Appropriately automating processes;
  • Improving resource utilization (doing more work with fewer people);
  • Cross-functional training (to leverage efficiencies across processes);
  • Adopting best practices (to make sure that each process is held to the highest standard of efficiency);
  • Increasing the number of processes that employees can do themselves (employee self-service).

A great opportunity for productivity improvements lies in reducing or eliminating rework. A lot of time gets wasted within organizations because people don’t have the right inputs at the beginning of the process and end up repeating the same activity to get it right.

To avoid that kind of rework, set up your processes so that they can be done right the first time. Identify all of the activities that could require rework, and make a plan to reduce or eliminate that rework by training your

employees better, automating your systems, and creating proper documentation of relevant standard operating procedures.

Another way to improve productivity is to leverage external service providers. Improving the quality of their clients’ processes—and driving productivity gains within those processes—is in the DNA of these firms; it’s what they do. To leverage your relationship with your providers, consider these steps: Rely on the provider’s certified six sigma experts, whose job it is to focus on process improvements; and build minimum productivity gain requirements into your service agreement with the provider.

Step 3: Leverage Opportunities to Optimize Processes. Optimizing business processes is about marrying cost reductions and productivity improvements and then taking them a step further. So stay tuned: Next month I’ll talk in detail about Step 3 and explore how HR can become a true strategic partner in the organization. HRO

Tags: Multi-process HR, Sourcing

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