Employment: HR Operational Efficiency ?€“ Reality, not Theory

Companies are finding it increasingly difficult to grow revenues while reducing costs in the current socio-economic environment and highly competitive market conditions.?  Toward these goals, optimization and improving operational efficiency have become synonyms for sustainable growth and a high performing business.?  But enhancing operational efficiency without losing quality is a complex and long-term process that inevitably affects both the core business and internal support processes of a company.

Over the past few years, many companies have sought to enhance the efficiency of their accounting functions. Now, companies are looking at the operational efficiency of their HR functions because of the growing importance and significance of HR to their businesses.?  To stay competitive, the HR function should be able to deliver outstanding quality services both to employees and to the business, at a low cost.?  Recent research as to companies' HR plans for 2016 indicates that almost half are interested in improving the efficiency of their HR processes.

Not long ago, it was commonly thought that HR efficiency would increase if the HR team would simply do what they routinely did a little faster and better.?  Practice shows that this approach only leads to a modest, short-term effect.? ?  In order to achieve longer and more stable results, companies need to think more dynamically.? ?  Now, the main trend in developing the HR function is to improve HR operational efficiency by performing a thorough HR diagnostic and then implementing changes to automate and optimize various specific tasks.? ?  Any such changes to increase HR operational efficiency must also comply with applicable HR legislation.

This process of transforming the HR function generally involves four areas, each with many smaller tasks:

? ?  ? •? ?  ? Performing a diagnostics of the existing HR function, including a comparative analysis against leading Russian and international best practices and benchmarks;

? ?  ? •? ?  ? Developing a new HR structure;

? ?  ? •? ?  ? Detailing a transformation-process step plan; and

? ?  ? •? ?  ? Implementing and project managing the plan.

One of the most effective ways to transform an HR structure is to:?  (i) separate key HR functions based on their frequency, complexity and the knowledge and skills required; and (ii) separate subdivisions responsible for a defined part of the whole HR process.? ?  The document requirements of Russian labor law and possible sanctions for violations require that any improvements to the HR business processes be reviewed carefully for compliance.

A standard HR model often consists of the following interrelated roles:

? ?  ? •? ?  ? Corporate Center — a strategic unit responsible for developing HR strategy with regard to staff recruitment, managing efficiency, personnel training and development, remuneration, internal communications and planning headcount.

? ?  ? •? ?  ? Centers of Expertise — subdivisions responsible for analytical functions such as career management, budgeting costs, developing of personnel assessment systems, HR analytics, developing internal employment-related policies, maintaining staff lists, etc.

? ?  ? •? ?  ? HR Shared Services Centers — focusing on routine transactional work, such as preparing obligatory HR papers, payroll calculations, administering benefits, preparing statutory reporting, candidate searches, administering training programs, and processing feedback.

Assigning these roles to separate subdivisions, with all of the necessary tools and information, is typically the most efficient approach.?  Often, an HR transformation plan also includes initiatives to automate HR business processes.?  ? 

HR transformation can result in achieving operational efficiency, as well as a number of additional potential benefits, including reducing functional costs, improving the clarity of communication between HR and the business, providing timely and relevant management reporting, improving employee satisfaction with HR, and, indirectly, improving the retention of employees and employee performance.