Case Study 1

HR Business Transformation
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Publication: March 2004
Copyright ARINSO International 2004

HR Service Centers
About the authors
About the authors
Rudy VANDENBERGHE is Executive Vice President at ARINSO International, in charge of HR

Strategy and Business Transformation. Rudy has been with ARINSO since 1995, and founded
and managed ARINSO the Netherlands, the group’s largest operation with some 240 staff &
consultants. Rudy is considered an expert in pan-european HR Outsourcing deals, as well as in
HR Transformation strategies.
Anita LETTINK is Business Consultant at ARINSO International, primarily involved in HR

Strategy and Transformation. She specializes in assisting international companies in shaping
their HR function, especially in the area of organization, service delivery models and technology
design. Prior to joining ARINSO, Anita was responsible for the design of IT strategy and enter-
prise architectures for various organizations.
HR Business Transformation March 2004 1

HR Service Centers
Acknowledgements
Acknowledgements
This document would not exist without the input of many ARINSO colleagues, especially the Business Con-
sultancy teams, who constantly strive to improve our ideas and offering, and bring their expertise to the field
of HR Transformation and Business Process Outsourcing.
Special thanks go to Rudy Vandenberghe and Luc Bossaert for their overall contribution and valuable
suggestions.
I would also like to thank Michel Vereeken, who contributed on the topic of HR service centers, Muriel
Van Antwerpen for her contribution on migration approach and Paul Bos for designing many illustrations.
Marielle Bruens and Angelique van Hagen created the example process in the appendix.
2 March 2004 HR Business Transformation

Table of Contents
Table of Contents
1. Executive Summary ........................................................................................................................................................... 6

HR Transformation – Opportunity for Change ................................................................................................. 6
HR Transformation – ARINSO’s Understanding ............................................................................................... 8
How to Read this Document ................................................................................................................................. 9
2. Benefits of HR Transformation .................................................................................................................................... 10
3. New Ways of Working for HR.................................................................................................................................... 14

HR Business Model ................................................................................................................................................. 14
From Intermediary to Self-Service ...................................................................................................................... 17
4. HR Services Model .......................................................................................................................................................... 19

HR Service Map ....................................................................................................................................................... 19
Process Classification ............................................................................................................................................. 20
Process Evaluation ................................................................................................................................................... 22
5. HR Operating Model ...................................................................................................................................................... 23

HR Organization ...................................................................................................................................................... 23
Business Partners .................................................................................................................................................... 24
Expertise Center ..................................................................................................................................................... 26
HR Service Center Organization ......................................................................................................................... 27
HR Contact Centers .............................................................................................................................................. 27
HR Technology Center .......................................................................................................................................... 32
Operating the Partnership ..................................................................................................................................... 32
Relationship Management ...................................................................................................................................... 33
Service Level Agreements (SLA) .......................................................................................................................... 34
Measuring Success and Performance: Metrics and Incentives ...................................................................... 35
6. HR Technology Model.................................................................................................................................................... 38
Core HR Technology ............................................................................................................................................. 38
ERP or Best-of-Breed ............................................................................................................................................. 38
HR Service Center Infrastructure ....................................................................................................................... 41
7. Sourcing.............................................................................................................................................................................. 43
Key Drivers for Outsourcing ............................................................................................................................... 43
8. Migration Approach ........................................................................................................................................................ 48

Transition to a New Organizational Environment .......................................................................................... 48

Table of Contents
9. Realizing Objectives ........................................................................................................................................................ 54

Optimized Service Delivery Model ..................................................................................................................... 56
Lessons Learned ...................................................................................................................................................... 57
10. Business Proposal .......................................................................................................................................................... 59
11. Building the Business Case .......................................................................................................................................... 61
12. Pricing and Financing Models ...................................................................................................................................... 67

Financing Models ..................................................................................................................................................... 69
Traditional Funding Model .................................................................................................................................... 69
Alternative Funding Model: Pre-Financing by ARINSO .................................................................................. 69
Pricing and Cost Allocation .................................................................................................................................. 70
13. Why ARINSO? ............................................................................................................................................................... 71
Appendix: Example Process............................................................................................................................................... 73

Use of Leading Practices ........................................................................................................................................ 73

Table of Figures
Table of Figures
Figure 1 – HR Cost Savings Model..................................................................................................................................... 7
Figure 2 – Employee Self-Service Sample........................................................................................................................ 12
Figure 3 – Manager Self-Service Sample......................................................................................................................... 13
Figure 4 – HR Business Model .......................................................................................................................................... 14
Figure 5 – HR as Intermediary – Actual Situation ........................................................................................................ 17
Figure 6 – Direct Access for the Business ..................................................................................................................... 18
Figure 7 – HR Service Map................................................................................................................................................. 20
Figure 8 – Integration of HR Business Lines .................................................................................................................. 24
Figure 9 – Service Delivery Funnel................................................................................................................................... 28
Figure 10 – Case Management Tool - 360° Employee View...................................................................................... 31
Figure 11 – Service Improvement Process..................................................................................................................... 36
Figure 12 – HR Application Architecture....................................................................................................................... 39
Figure 13 – HRSC Infrastructure Overview .................................................................................................................. 41
Figure 14 – Sourcing Stages ............................................................................................................................................... 44
Figure 15 – Sourcing Options............................................................................................................................................ 46
Figure 16 – HR Change Management Approach........................................................................................................... 49
Figure 17 – Transformation Path...................................................................................................................................... 50
Figure 18 – Transformation of HR Operation .............................................................................................................. 54
Figure 19 – Project Proposal ............................................................................................................................................. 60
Figure 20 – Business Case Methodology ........................................................................................................................ 62
Figure 21 – Business Case Examples ............................................................................................................................... 65
Figure 22 – Traditional Cost Model................................................................................................................................. 69
Figure 23 – Alternative Cost Model ................................................................................................................................ 70
Figure 24 – The ARINSO Advantage............................................................................................................................... 72

Executive Summary
1.
Executive Summary
HR Transformation – Opportunity for Change
Strategic To succeed in the unpredictable, demanding global marketplace, companies must de-
benefits of HR velop a strategy that focuses on their core business so they can deliver value and dis-
Transformation tinguish themselves from the competition. They must manage their business more
cost-effectively and efficiently, with fewer employees, but be able to scale up rapidly. In
order to remain focused, flexible and technologically competent, companies explore
new ways for service delivery, such as shared service centers and outsourcing. Many
companies realize that additional benefits can be achieved by adopting a worldwide, sin-
gle way of working that is in line with their overall vision.
Human Resources, as a non-core yet critical business department, is under the same
pressure to demonstrate effectiveness and added value. In each company, the Human
Resources (HR) organization must play a key role in attracting, developing and retaining
Human Capital that is capable of realizing the company strategy and mission. Through
superior HR services, delivered both efficiently and effectively, HR can substantially aid
a corporation in achieving its strategic ambitions. In practice, however, many HR or-
ganizations are still considered to be cost centers, with too much focus on operational
and administrative activities. In order to deliver value to the business, HR must trans-
form and develop into a strong support environment with advanced tools, performing
with agility and quality as expected by the business.
The goal of HR Transformation is to look at ways of maintaining high quality and strong
performance in the provision of HR services while delivering them at significantly re-
duced costs. This can be achieved by simplifying and standardizing HR processes, using
a standardized operation platform supported by a mature, streamlined HR delivery or-
ganization. Standardization and centralization of the HR operation lead to cost savings,
while the combination of self-service, service center functionality and specialized tools
creates high performing information and transaction processing facilities.
People, process HR Transformation implies a simultaneous improvement and change in People, Process
and technology and Technology. The transformation process will convert the existing structure, its
processes and people into a world-class operation. This implies the change of the ex-
isting day-to-day operations and a rigorous and complete transformation, resulting in
a reliable and cost-effective HR service delivery operation.

Executive Summary
The transformation consists of the following key elements:
• Get HR professionals to focus on 3 business roles:

– Business Unit HR
– HR Center of Expertise
– HR Service Center
• Create a new HR operating model in line with the overall business strategy and re-
train HR professionals into strong HR business consultants.
• Simplify HR processes through standardization and alignment with leading HR prac-

tices. Identify added value HR processes and redesign all processes into efficient,
tightly integrated and highly automated services.
• Apply state-of-the-art service technology, for both administrative support and high
added value HR processes. Design a core HR application architecture that serves as
a general framework and connect components through a transparent integration lay-
er.
Perception of Quality and speed of service are not the only drivers for change. There is a strong need
quality to decrease costs of HR services in order to strive for ‘best-in-class’ levels (as illustrated
increases… below):
Figure 1 – HR Cost Savings Model

Executive Summary
…HR cost per Research indicates that HR costs (including HR staff and HR related costs, in $ per
FTE decreases company-wide-FTE per year) vary considerably between companies. The median 1
proves to be $ 1.100, whereas Quartile 12 (expressed as “Best-in-class”) is calculated
at $ 575.
When companies succeed in reducing overall HR costs while introducing quality HR

services that are aligned with the company strategy, it is obvious that this can bring sig-
nificant benefits to the organization, both tangible and intangible.
HR Transformation – ARINSO’s Understanding
Focus on HR An HR organization must efficiently support line managers with their daily management
value activities, as well as guide employees into becoming master of their own career.
The evolution of the HR organization towards specialized lines of business is crucial in

order to be able to position itself as a strong partner for the business and meet stra-
tegic aspirations. To achieve this, HR must “free” itself from its current administrative
tasks, occupying most of its valuable time. The vision of the HR business partner model
needs development in most companies and requires strong leadership and sponsorship
from top-level management.
To facilitate this essential transformation, a necessary step is the creation of a dedicat-

ed HR service center. This service center must be equipped with state-of-the-art tech-
nology to deliver quality service to all “customers” whether they are employees,
managers or HR professionals.
Many service delivery models exist, and we think it unlikely that one model can cover
the whole of service delivery. The proposed HR Framework is based on our experi-
ence and can supply efficient and high-quality administrative services. When dealing
with a given situation, the framework should be tailored to suit the needs, as we will
explore further in the document.
As most businesses operate in global regions, the supporting technology should com-
pletely align over regions and countries. Best practices in both design and operations
suggest there is no practical or operational need to specifically accommodate local
specifications, unless dictated by regulatory requirements. When supported by one or
1
Median is the amount at which 50 % of the investigated population has higher costs and 50 % has lower costs.
2
Quartile: 25 % of the investigated companies have HR cost lower than this amount.

Executive Summary
more (global or regional) HR IT systems, almost all processes can be aligned on a global
basis, to accomplish efficiency and effectiveness. HR Technology alignment offers great
potential to improve the overall operational effectiveness.
Finally, as part of the transformation, the sourcing model of the HR service delivery
operation must be taken into account. Outsourcing can play a major part in the trans-
formation effort, as it answers explicit requirements of speed of change and quality lev-
els against costs, which are spread over a given period of time (typically 5-10 years).
Today’s market situation is such, that cost savings and quality improvements must be
captured without heavy capital expenditure. Any company considering (out-)sourcing
options wants to rely on a partner that brings in all the required resources, in terms of
upfront investment, service excellence, and technology fulfillment.
ARINSO believes that HR Transformation enables companies to achieve a quantum

leap forward in HR service delivery and HR value improvement, and ensures that high-
quality HR services are delivered in a fast and cost effective manner, resulting in satis-
fied HR customers.
How to Read this Document
The first part of this document provides an overview of HR Transformation and the
main concepts linked to it. It first explains the benefits of HR Transformation, then con-
tinues with a description of the proposed HR Business Model, followed by a closer look
at (re-)designing HR processes to match the new HR organization and roles. The HR
Operating Model is discussed, as well as the HR Technology Model. An overview of
sourcing options complements the information to enable informed decision-making. As
in any project, managing the change is a crucial element to ensure success. The migra-
tion approach of an HR Transformation project is described in detail and includes com-
munication and training strategies.
The second part contains recommendations for creating an HR Business Transforma-

tion proposal based on ARINSO’s experience. It describes steps to realize objectives
and explains the approach to build the business case. It also gives an overview of im-
portant lessons learned. Different pricing and financing models are introduced that en-
able scenario development according to client-specific needs. The document ends with
a view on partnership requirements and some suggestions on the proposed “go for-
ward” approach.

Benefits of HR Transformation
2.
Significant When an organization engages in HR Business Transformation, this results in a signifi-

change cant change of focus in the delivery of HR services, by freeing up resources to engage
in the more value added HR tasks. The proposed way forward delivers a state-of-the-
art environment that supports managers, employees and HR professionals in executing
the corporate strategy and achieving their goals.
The HR Transformation program will create a streamlined, more effective HR organi-

zation that adds increased value to:
• Organization
• Line Managers
• Employees
• HR Function
Organization
Support The new HR department can achieve significant cost savings while supporting the cor-
corporate porate culture. In particular, it will realize the following benefits for the organization as
culture a whole:
• Improve the value of human capital
• Provide a strategic HR approach instead of event-driven HR activities
• Help attract top talent
• Allow line managers to focus on people related issues rather than administrative ac-
tivities
• Enhance the ability to integrate new companies as a result of the new support envi-
ronment that operates largely independently from business processes and changes
to business organizational structure
• Provide transparency and consistency in services and costs

• Be responsive to business demands through rapid deployment of new solutions
• Allow more money to be spent in value added HR activities, like top policy expertise
and HR business partners
Line Managers
Faster decision Line managers spend too much of their time on administrative employee related tasks.
making Through rapid access to solutions, data and help on-line, single point accountability and
faster decision making, the new HR service delivery will save time that can then be
spent on fostering the business. In addition, as people managers, line managers will be
able to access comprehensive, team related data and, as a result, take informed deci-
sions. The new approach:
• Takes away low value added administrative activities
• Empowers line managers to take on “people” issues proactively
• Improves management of team development and performance
• Enables HR Business Partners to act as change facilitators
Employees
Greater control Employees will have greater control over their own employment lifecycle (job posting,
changing personal data, access to learning solutions, etc.) in the new environment,
through online access to information and quicker response from experts. This will en-
hance overall productivity and improve employee satisfaction. HR Transformation sup-
ports employees in the following ways:
• Provides quick and easy access to information
• Empowers people to make their own decisions
• Provides consistent information
• Enables greater transparency in administrative activities through the application of

clear standard procedures
• Improves focus on personal development and performance

HR Function
Transformed The HR function will be completely transformed along the three lines of the business
HR function model and will be able to attract and retain the best HR talent:
• HR Business Partners focus on change management and talent management activi-

ties: Business Partners will be valued for their business contribution;
• HR Experts focus on HR Intelligence and building in-depth expertise: expert staff will
be able to deliver best-in-class solutions in areas such as resourcing, learning, re-
warding, etc. and will be recognized as thought leaders in their field;
• HR Service Delivery focuses on high-quality and fast service delivery against agreed
service levels;
• Service Center staff will be motivated by service excellence and by solving day-to-
day problems;
• Overall, they will work from a customer focus point of view, and serve employees
and managers to their satisfaction.
The following illustrations compare the current state of work against the future state
and show the improvements both in time and activities.
Figure 2 – Employee Self-Service Sample

Figure 3 – Manager Self-Service Sample

New Ways of Working for HR
3.
HR Business Model
A future proof When applying business principles to HR, the HR function can be organized along lines
HR Business of business (LOB) that focus on different activities and deliverables. The 3 LOBs work
Model together to create an integrated HR fulfillment chain for its customers, as positioned
in the middle of this model: Employees, Managers and the Company.
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Figure 4 – HR Business Model

Main roles for As a consequence, there are three main HR roles that have different responsibilities
HR and challenges:
• HR Consultancy
• HR Center of Expertise
• HR Service Center
The matrix below displays an overview of the division of tasks and responsibilities be-
tween these roles:
HR Center of
HR Consultancy HR Service Center
Expertise
Business aligned "generalists". Pool of specialists / designers. Transaction/Information specialists.
Directly support needs of the Design/develop programs Support all transactional activities.
business. Support roll out of programs; teach Optimize HR processes
Provide strong linkage between others how. Manage all "transactional" support
Business and HR. Support consultants with "best systems.
Tailor and implement programs that practices" and key expertise. Direct projects to eliminate/
fit business needs. Assure best practices are exchanged. automate work.
Manage client expectations. Planning and long- range Design automated client-focused
Accountable to meet business coordination. services.
expectations. Benchmarking functional excellence. Integrate HRIS/HR systems.
Manage business projects Consult in systems design and
Identify new needs. information requirements.
HR consultancy HR Consultancy focuses on People Management Services and HR representation

(country HR). HR business partners are embedded in the business structure to meet
the business needs by focusing on the transformational and strategic aspects of HR. HR
Business Partners operate as a consultancy practice and specialize in business support
matters, such as alignment of HR and business strategy, change management, people
development and other generic HR subjects. In addition, HR Business Partners play a
role in internal communication and ongoing consulting processes with employees. HR
Consultancy work can be long or short term (a project could be change management
during a reorganization or merger). As in any consultancy organization, the challenge
lies in meeting the changing demand while offering the right skills and balancing recur-
ring revenues with project work.
HR Center of The Policy Experts and Process Owners who jointly work in the expertise centers pro-
Expertise vide world-class expertise in key HR areas that are specific to an organization, such as
Rewarding, Competency Development, Resourcing and Workforce Services. The
Center provides Experts, who can reengineer HR processes and are responsible for
developing new HR policies. The Center also ensures that HR is aligned with and con-

tributes to the corporate strategy. HR Experts utilize industry best practices and
benchmarks in order to achieve competitive advantage.
HR Service The HR Service Center focuses on transactional and information services and constantly
Center tries to optimize administrative services and customer support. Customers approach HR
through this layer. Using a high level of automation and self-service, the service center
delivers HR services at cost and quality levels acceptable to internal clients. The service
center is also responsible for providing the necessary infrastructure and technology and
for optimizing processes in order to maximize efficient and effective HR service delivery.
Effective account management warrants that business managers receive the requested
services and therefore see no need in building “shadow” services, which have an overall
cost increasing effect.
The following matrix gives an overview of the activity type of the 3 HR lines of business,
as well as their main purpose and challenge:
Line Of Output /
Type Challenge Revenue Base
Business Purpose
Business Partnership Consultancy Day to day HR Exactly meeting Fee based on
practice work demand at optimal proficiency (junior,
Project Work proficiency levels medior, senior,
(change executive level)
management or
reorganizations)
Policy Expertise & R&D - Marketing Research & Innovation for the % of workforce costs
Process Ownership preparation of HR real world
policy Effective use of
Application of resources
expert HR
expertise
Alignment of HR
process with
Business Objectives
HR Service Delivery Manufacturing High volume of Improve efficiency Volume and type of
facility admin. transactions and cost; maintain transactions
& outstanding agreed quality level
process support
The Business Partner and Policy and Process networks are strategic and require a high
degree of knowledge about a company’s core business. This is different for the HR
service delivery, because it matters less who is doing the job, as long as the job is done
well.

From Intermediary to Self-Service
Changing roles Transformation to the three proposed lines of (HR) Business is a necessary step. This
change must be supported with self-service and real time access to information for em-
ployees and managers.
Historically, most HR professionals find themselves in an intermediary position. In this

situation, many HR processes cannot be completed without permission from or inter-
vention by HR staff. In some areas, HR professionals even established a “monopoly” on
information (personnel files, resume databases) and similar knowledge required for ef-
fective HR Management. This information monopoly is formalized by restricting access
to HR information systems as illustrated below:
Figure 5 – HR as Intermediary – Actual Situation
Although this intermediary role is considered legitimate and even natural, current
state-of-the-art technology can empower employees and managers to search for HR
information, complete HR transactions and even perform simulations without inter-
vention or permission of HR professionals. This self-service concept (“self proficien-
cy”) is illustrated by the following examples:
• Through e-recruitment, managers and employees find each other without a recruit-
er’s intervention
• Web-enabled appraisal tools enable management and employees to generate feed-

back on their performance
• Web-enabled competence tools help employees to define the “gap” between re-
quired competences and the employee’s skills
• e-Learning tools bring knowledge and learning opportunities to the desktop
• Transactions and information can be stored in on-line personnel files.

The illustration below shows the new situation:
Figure 6 – Direct Access for the Business
As the intermediary role of HR professionals is declining, their “role” is changing to-

ward more value-added services. In addition, roles of employees and managers change
because they are empowered to access and use HR information. These changes, espe-
cially the new role of HR professionals, call for an integrated change management ap-
proach towards the new HR Business Model as a whole. The transformation to this HR
Business Model and the creation of a focused HR operation is explained in chapter 8:
Migration Approach.

HR Services Model
4.
HR Services Model
HR Service Map
Optimize HR Since the HR Service Delivery model introduces a new HR organization, all existing
processes HR processes must be reviewed in the context of the roles and objectives of the new
model. An important part of HR Transformation revolves around redesigning existing
HR processes into efficient, tightly integrated and highly-automated processes. New
process flowcharts must be designed that contain information on the actors, the tasks
to perform and the new technology support. When reviewing the processes, the fol-
lowing guiding principles must be respected:
• The processes must be defined based on the roles and responsibilities of all parties
involved: employees, line managers, service center, business partners, center of ex-
pertise, external vendors and support systems.
• The processes must be reviewed to automate the transactional activities (and re-
duce administrative tasks) and support measurable service levels. Wherever appro-
priate, global process standardization is the rule.
• The processes must be redesigned to facilitate professional consulting and expert

tasks in the added value services.
• The processes must be reviewed to allow low cost real-time service delivery,
through the use of self-service.
• The processes must be reviewed to allow for efficient management of vendor costs.
Self-service will be used for managers and employees to provide online access to tools.
Optimizing and streamlining HR processes and redesigning them to fit the new HR
Service Delivery Organization is therefore a crucial part of every HR Transformation.
The Appendix contains an example process flow that documents the training process.
The HR Services Map below gives an overview of processes covered by the HR Service
Delivery Model. Shading indicates the involvement of each HR role in the process. Some
processes can be automated to a great extent and mostly require involvement of the
service center. Other processes need more personal involvement or strategic thinking
and thus more involvement of business partners and/or the center of expertise.

HR Services Model
Every process must be evaluated to ensure that activities take place in the most cost
effective and efficient way, by the HR actor that is best suited to carry out the activities,
while adding high value to the business. Business partners will work mostly in the value
services, where the service center will process most of the transactions from the en-
abler and basic services. The illustration is based on an estimate of the desired future
input per role and must be optimized per organization.
Figure 7 – HR Service Map
Process Classification
Services The HR service map or process model serves as framework that details the preferred
framework way of working. The processes must be predictable and reliable, producing the expect-
ed results in all possible situations. HR processes can be grouped together in the fol-
lowing logical way:
• The enabler services are processes that must exist for each employee everywhere,
so that a solid database and support foundation is in place for all other HR processes,
as well as other information processes in the company (such as supply chain). Enabler

HR Services Model
processes consist of a single global support solution, available for the complete em-
ployee population, with ownership at the global level. The main drivers behind these
processes are reduction of administrative costs, optimal data accuracy and global HR
information. A large part of these processes can be carried out by the Service Center.
• Basic services are subject to local content dictated by regulations and collective
agreements. They are very service intensive and usually of high volume (or recur-
ring). Basic processes have many local or regional characteristics; they must be op-
timized in order to reduce administrative costs and increase flexibility and accuracy.
These processes typically have a high service demand and a high degree of complex-
ity due to difficult data structures caused by the regulatory environment. For large
employee populations, processes like Payroll, Time management and Benefits must
be integrated to maximize benefits from the self-service potential and online (retro-
active) calculations. For medium populations (< 1000), payroll can be delivered
through an interfaced solution outsourced to 3rd party suppliers. Small populations
(<300) can work through paper reports with 3rd party suppliers. Depending on the
process, these services are mainly carried out by the Service Center assisted by HR
experts and business partners.
• Value services provide “key tools” for HR and are global in nature: they are fully
integrated in the global solution map. Value services answer questions such as: what
is my future with the company, and how can I develop myself? Value processes are
less volume-intensive and bring value to employees and company. The main driver
behind these processes is to deliver value to HR customers and give them outstand-
ing support. While the execution of these processes mainly relies on the business
partners, policy experts and process owners play a key role in enabling the business
partners to deliver this support.
• Strategic services consist of processes like executive compensation, stock option

plans, HR benchmarking and overall HR strategy. Corporate reporting is important
as input for strategy. Strategic services are centralized and target specific employee
groups that are often smaller in size. They are usually carried out at a global level.
Depending on the process, most activities are divided between business partners
and experts.

HR Services Model
Process Evaluation
The evaluation of processes that are to be included in an HR Shared Services Center

should be based on the value that can be gained by transferring a process to the Shared
Services Model. This value can be defined as:
• Quantitative benefits, such as potential cost savings based on time (headcount)

and material (less applications) savings
• Qualitative benefits, such as increased productivity, quality and flexibility
In many cases, this evaluation is the basis that justifies the business case for the HR
Shared Services implementation and defines quick wins to ensure success from the be-
ginning. The ARINSO evaluation portfolio outlines the typical potential “value” that a
process can contribute to when transferred to a Shared Services Model, based on best
practices as well as ARINSO industry and client experience.
Not every process is suited to be included in an HR Shared Service Center; or perhaps

we should state that not every process step can be successfully transferred to a shared
services environment. HR is about people and on-site personal contact is often re-
quired. The service map gives a general indication to identify “low hanging fruit”. We
would like to stress the fact that each company must review the map in order to iden-
tify the processes that benefit most from a shared services approach.

HR Operating Model
5.
HR Operating Model
HR Organization
Translate the Translating the HR Business Model into an HR organization can be done in various
HR Business ways, depending on the current and the desired governance. A number of factors in-
Model fluence the way an organization can design the HR operating model, such as company
structure, global presence, number of employees and their concentration, locations,
time zones, languages, culture, etc.
One of the fundamental questions is whether the new HR organization will be a stand-
alone entity or tied to a functional business area. It is important to decide how govern-
ancerelated activities will be separated from service delivery. Also, location comes into
play: technology allows for virtual service centers, so people can work anywhere, but
it might be desirable to centralize HR professionals in an existing or new site. In addi-
tion, the preferred number of sites must be established: some organizations choose to
combine all service centers into one site to leverage investments, while others prefer
to separate activities in multiple sites. When making these choices, both one time setup
cost and ongoing operational costs must be considered before making the final deci-
sion. For organizations in Europe the decisions are more complex, as different coun-
tries with their unique languages, culture and laws factor in. An in-depth analysis is
required to identify the optimal model.
The following picture provides an overview of a possible operating model for the HR
organization and the integration of the 3 HR lines of business. In this model, all three
roles are part of the HR function that serves the individual business units and other HR
customers. Managers and employees access HR services through self-service or the HR
contact center. The HR service center is an independent business unit and contains in-
ternal support functions such as Finance, HR and Communications. The service center
is an in-house operation. However, the design of the model leaves room for outsourc-
ing the service center in the future. Although business partners and policy experts fall
under the governance of the HR function, they do not necessarily physically reside in
the same location as the service center. Technology support enables a consistent view
on and access to information for all HR roles.

HR Operating Model
Figure 8 – Integration of HR Business Lines
This chapter continues with a detailed description of each of the HR business roles and
the way they relate to and complement each other.
Business Partners
The key responsibility of the HR business partner is to work in the business units and
provide line managers with world-class support on HR issues. They provide people
with insight in the business agenda and share in the responsibility of their business unit
to achieve results. Business partners are HR strategists as well as change agents and
implementation advisors: they are familiar with the strategic plans of the company and
can help managers translate strategy into practice. They are responsible for developing
culture and climate, and coach line managers to become excellent leaders.
Business partners introduce new HR policies and procedures and support managers
and employees in executing them. They signal possible policy voids or other HR
problems and report those to the HR Service and/or Expertise Center so they can be
acted upon. Business partners liaise with the service center and center of expertise to
ensure desired outcomes are established, processes are clear and measured, and the
way of working operates effectively for the business unit.

HR Operating Model
Their key competences can influence people strategically, breakthrough thinking and
act as change catalyst. They have a good awareness of organizational needs and
contribute to people development and organizational changes. The role of the business
partners involves the following tasks:
• Develop the strategic relationship between HR and the business leaders
• Formulate and implement HR strategy with the business leaders
• Enhance and build the capability of the business by incorporating the HR component
into strategic planning, development and assessment
• Identify new programs and applications that support the business
• Support and implement change programs with good understanding of employee re-
lations
• Enable the business to deliver competitive advantage through people
• Provide support to the needs of the business
• Implement value added people related products and services at the business unit level
• Advise the business on decisions that must be taken outside of defined policy and
processes
• Manage business projects and advise the business on consequences for HR
• Work with Centers of Expertise and the Service Center to provide integrated, stra-
tegic and customer focused business solutions
• Tailor and implement programs that fit business needs: ensure that staff is well-
equipped when implementing new business programs/targets
• Work with Centers of Expertise to define new HR offerings in terms of operational

implementation and impact on the business
• Act as a liaison with the Service Center to resolve employee and management issues
• Manage client expectations, ensure that reasonable expectations are in place
• Accountability towards meeting the business’ expectations
• Provide strong linkage between business and HR

HR Operating Model
Expertise Center
Roles in the Expertise Center are divided into two categories: Policy Experts and Proc-
ess Owners. HR professionals working in the Expertise Center provide expert knowl-
edge on a limited number of HR processes: they are experts, not generalists. They
advise business partners when dealing with problems, and in case of repetitive issues,
can establish or change policies and procedures to resolve these. Experts can also take
over issues that are being identified in the service center and cannot be solved there
for reasons of complexity. Finally, experts have an outward look, and must identify ex-
ternal best practices and benchmarks and incorporate these, based on company strat-
egy, into optimized policies and processes.
Their key competences are conceptual thinking, being able to think of new ways of
achieving goals and translate those to processes, and to act on strategic changes. Ex-
perts have the following responsibilities:
• Design best practice end-to-end processes which meet specific business goals and
objectives
• Develop and communicate new policies and processes in tandem with Business Part-
ners and the Service Center
• Ensure that HR solutions integrate industry best practices and deliver competitive
advantage, utilizing external benchmarks as appropriate
• Provide expert leadership in areas such as Recruitment, Learning, Employment Law,

Diversity, and Remuneration
• Enhance the capability of HR Consultants (Business Partners) to deliver relevant, in-

novative services by providing advice and coaching as required
• Provide expert knowledge to assist in the selection of third parties to provide best-
of-breed HR solutions and services
• Develop tailored solutions in conjunction with the business units to meet specific,
often one off requirements
• Design local implementation plans for centrally driven programs, e.g. European ini-
tiatives
• Develop best practice tools and techniques, e.g. training evaluation
• Interpret policies as appropriate

HR Operating Model
HR Service Center Organization
Contact and The HR service delivery organization consists of the following organizational building
Technology blocks:
Center
• HR Contact Center
• HR Technology Center
HR Contact Centers
HR Contact Centers operate under single management and are typically located per
continent due to reasons of time zones and availability of HR service center infrastruc-
ture. Contact centers are fully focused on efficient transaction processing and case han-
dling, through different employee interaction channels:
• Self-service (Tier 0) processes transactions automatically, using technology such as

ESS/MSS, phone with IVR (Interactive Voice Response), web and e-mail forms. The
target is to handle 66% of all inquiries through self-service, the implication being that
2 out of 3 customer requests can be solved through automated technology without
human intervention or assistance.
• Human interactions with Service Agents (Tier 1), Subject Matter Experts (SME) and
Case Workers (Tier 2), and Policy Experts and Process Owners (Tier 3) who handle
all remaining requests.
Employee The HR Service Center is supported by a state-of-the-art service technology platform

‘touch points’ where multi-channel ‘customer’ interaction (e-mail forms, web and voice) is processed
in a unified way. The center is equipped with core technology allowing for multi-lan-
guage, multi-time-zone and multi-jurisdictional HR support. Customer inquiries are fil-
tered through different Tiers as shown in the illustration.

HR Operating Model
Self Service
Tier 0
Contact Center
E-HR Portal Tier 1
IVR,
Kiosks Tier 2 Policy Experts
Service
Subject Process Content Owners
Matter
Inquiries Agents Experts Tier 3
• Eployees
• Management 100% 66% 28% 5% 1%
• HR-Professionals Case
Workers
Internet,
Intranet Expertise Center
e-mail forms
Service Center
Figure 9 – Service Delivery Funnel
Tier 0 is the self-service processing of inquiries. Tier 0 contains all information so HR

customers can help themselves. Depending on the proficiency of employee groups and
the availability of computers, there are various self-service options. Self-service can be
offered in the form of an HR portal containing personalized information and forms. Al-
ternatively, self-service can be offered through a kiosk, telephone (interactive voice re-
sponse), e-mail and fax forms.
When self-service is not sufficient to handle a request, more complex cases and sup-
port are automatically routed to Tier 1, 2 or 3.
Tier 1: Contact Agents
Live agent Contact agents form the service desk, specialized in handling ‘simple’ inquiries and pro-
interface viding professional and pleasant service experience, while performing simple transac-
tions. They have a strong focus on quality delivery and are experienced in problem
solving techniques. Service agents have multiple language (usually native speakers) and
cultural skills. As the initial interface to the caller, they are knowledgeable about the
company and its end state objectives – strategically and tactically. They are generalists
who are well versed in the organization’s policies and programs. Their key competences
are communication and customer service orientation. When the inquiry requires re-
search or a deeper level of subject matter expertise, the service agents will forward the
inquiry electronically to Tier 2. Service agents have limited access to HR data (such as

HR Operating Model
address information). The ‘four eyes principle’ is used to assure that an HR professional
with the right authorization level approves the transaction. The main activities per-
formed by contact agents are:
• Provide a single point of contact for handling all HR transactions, queries and re-
quests
• Provide general advice covering a wide range of transactions or requests, including

benefits, policies and procedures
• Categorize and prioritize all transactions, queries, requests and issues
• Effective issue handling and resolution
• Build and maintain information available to employees, e.g. FAQ database
• Deliver service within agreed performance levels
• Enable capturing, measurement and trend reporting of employee data and HR trans-
actions
• Identify opportunities for improvement and work with the Expertise Center and
Technology Center to implement suitable solutions
• Own data integrity within the HR and Service systems
• Refer transactions, queries, requests and issues as appropriate
Tier 2: Subject Matter Experts and Case Workers
In-depth HR Tier 2 is the specialized level of subject matter experts and case workers, with specific
subject knowledge of HR processes like payroll, time management, benefits and other function-
knowledge al areas. Those resources have in-depth, yet secured, access to the personnel files and
have therefore a higher security profile than Tier 1 agents. Functional specialists take
responsibility for processing the requests and inquiries according to the process flow
as detailed in the SLA. If needed, support for 3rd party service providers such as pen-
sions, lease cars and health care can be blended in. Their key competences lie in the
area of problem solving, customer service and quality focus.
The main activities performed by subject matter experts and case workers are:

HR Operating Model
• Advise line management and employees on a wide range of requests including re-
cruitment, training benefits, policy and procedures
• Understand and interpret detailed requirements from customers and recommend a

suitable resolution
• Deliver service at agreed performance levels
• Liaise with Expertise Centers (Tier 3) when necessary, to achieve resolution of cus-
tomer queries and requests
• Provide ongoing single point of contact for queries and requests requiring a signifi-
cant level of subject matter expertise
• Advise the business on decisions that should be taken outside of defined policy and
processes
Subject matter experts and case workers are not necessarily physically tied to the Serv-
ice Center. Subject matter experts need a profound level of understanding the country
specific legislation and are thus best kept in country. Web collaboration and VOIP
(Voice over IP) technology make it possible for them to remain at their home location,
and still use the support systems provided by the contact center, which in fact creates
a virtual shared service center.
Tier 3: Expertise Center
Strategic HR Tier 3 inquiries are normally processed by members of the HR Expertise Center deal-
counseling ing with strategy and policy issues such as rewarding, succession planning and benefit
programs. Their location is not physically tied to the Service Center; web technology
makes it possible for them to remain at their job location (virtual shared service cent-
er).
Policy Experts and Process Owners are linked to the HR Service Center organization,
creating an environment in which continuous improvement can flourish.
Tier 3 members will implement the necessary changes to policies and procedures and
feed them back into the service center organization. They provide the necessary input
to adjust the self-service platform accordingly. (For more details, refer to the paragraph
Expertise Center earlier in this chapter.)

HR Operating Model
Case Management
Tracking and The case management tool and self-service infrastructure are crucial components in
servicing tracking and tracing service requests through the service fulfillment chain. The case tool
requests aims to assist the service agents in the day-to-day task of providing timely, informed and
traceable information or transactions. The case tool provides an overview of the cus-
tomer, creates incident tickets and routes the tickets according to the escalation work-
flow. The tool also contains a history and knowledge database and reporting
functionality. The case management tool contains service levels as documented in the
SLA and gives a warning signal when a case threatens to be resolved outside of the SLA.
The case management tool is the ultimate central repository of employee/HRSC inter-
action, capable of transferring knowledge about employee HR issues across the multi-
tiered service center.
Figure 10 – Case Management Tool - 360° Employee View
Case management support can optionally be extended to 3rd party HR service providers
so as to track and trace the complete HR service delivery chain. It provides statistics on
the performance of the HR service delivery and individual vendors, and is a crucial source
of compliance information for the service level agreements.

HR Operating Model
HR Technology Center
The technology center provides support, maintenance and improvement for both the
setup and operational life of the service center(s). The technology center uses the same
service technology platform as the service center to process the service requests to
its own support resources. The following services are provided:
• Technical and IT support (integrated in the company’s current IT support)
• Application maintenance and release management
• Continuous process and technology improvement
• Executive reporting on the service center operational performance and service level
compliance
• Infrastructure management and supervision
• Business continuity and disaster recovery
Some “creative” tension could exist between the contact centers and the technology
center in order to balance the use of technology to effectively support the operations.
Strong leadership and commitment are required to manage the whole of the HR serv-
ice delivery organization and to channel this creative tension into positive change en-
ergy.
For extensive information on HR Service Centers, please read ARINSO’s White Paper
on HR Service Centers.
Operating the Partnership
Continuous Once the target is set and the organization is in place, a platform must be created to
improvement manage the transitional and operational phase of the concentrated HR delivery opera-
platform tion.
Transformation spells change, not only for HR employees, who have to adapt or move,
but also for business managers and HR business partners, who now have to rely on the
new organization for services. Managers must understand how the new service delivery
model affects HR services. In order to succeed, an ongoing partnership must be estab-
lished between the business and HR.

HR Operating Model
To create a long-lasting and successful collaborative partnership, the following instru-

ments are important:
• Relationship management
• Service level agreements
• Key performance indicators, metrics and recurring measurements
Relationship Management
No matter how effectively all parties articulate their vision at the beginning and work
together on creating the best possible partnerships, business relations must be main-
tained on a daily basis. This is also true for partnerships between different business
units within a single organization. Account resources must be allocated to ensure that
all established agreements and defined controls are in place and managed in a sound
manner. All parties will need a way to demonstrate and communicate the progress they
have made as they go along.
Typically, when the HR service center is fully operational, it is recommended to set up

a communication platform on the following relationship levels:
• Governance Board: this board has executive representatives from the corporate
HR department and business leaders.
• Relationship Manager(s): the relationship manager’s role is to provide regular

communication and feedback sessions on service levels, costs and performance as
well as facilitate change and the planning and implementation of innovative solutions
for continuous improvement. The role of the relationship manager is critical to the
success of the arrangement.
• Compliance and Risk Assessment: performed by the company’s officers that

have the appropriate skills and authority to perform ongoing monitoring of risks, ad-
equate governance and verification of the controls installed; this includes the right
to audit activities outsourced to a third party.
The final contract must include a formalized escalation procedure, including details of
handling disagreements.

HR Operating Model
Service Level Agreements (SLA)
Service Center An important part of the relationship is performance to agreed service levels. The
Scorecard scope of the services must have clear boundaries, to determine what is in and out of
scope. Service Level Agreements (SLAs) are used to define all parties’ specific respon-
sibilities and are designed to be measurable. Compliance with the SLA is a joint effort:
as in any good relationship, performance on one side cannot be achieved if certain el-
ements on the other side are not in place.
Service Level Agreements represent a formal partnership agreement between the HR

service center, its customers and its suppliers, and outlines the obligations and com-
mitments of all parties. SLAs represent one element of performance management.
They should be managed in an overall context of partnership, cooperation and a mind-
set of continuous improvement. SLAs enable appropriate HR service delivery and im-
provement. To implement SLAs, definition of the following is required:
• Principles of the relationship between parties including all HR support organizations

(also Expertise Center and Business Partners)
• Services to be provided by the service center
• Input to be supplied by each party to ensure that services are delivered within tar-
gets
• Target service levels by which the effectiveness of the HR service delivery will be
measured
The Service Level Agreement section of the partnership defines scope, measurement
process and parameter values. Each party receives regular and up-to-date reporting
(even self-service reporting can be made available). Here are some of the elements that
are part of an SLA (not exhaustive):
• List of parties involved and their role
• Service levels to be provided
• Metrics that define performance levels
• Timelines and effective dates
• Pricing and time frame of pricing

HR Operating Model
• Allocation of benefits and cost reductions
• Disaster recovery plan
• Escalation procedure
Success can only be achieved when all parties meet their respective obligations. The
following table presents some general parameters specifying performance levels that
could be part of an SLA:
Key
Parameter Performance Definition Standard
Indicator
Change Record PCR (Person Change Processing time elapsed from data accurately 90% in 5 days or
Processing Record) Turnaround completed PCR is received in Service less
Center to date PCR is input to system
PCR Accuracy Frequency measure for all error types. 90%
Determined by dividing the correct PCRs in
audit/reporting sample by the total number
of PCRs in sample
Service Access & Hours of Operation M-F, 8:30-18:30 EST except standard legal 100%
Response holidays
IVR Availability Time the IVR system is accessible 98%
Abandon call rate Percentage of calls to Service Center 4% or less
Number that disconnect prior to speaking
to a Service Center Agent. Determined by
dividing the number of calls disconnected by
the total calls received
Payroll Pay check delivery Percentage pay checks mailed on time 99%
Pay check accuracy Frequency measure for payment errors. 99%
Determined by dividing the correctly
processed pay checks in audit sample by the
total number of pay checks in sample.
Overpayments Percentage of overpay cases. Determined by 2% or less
dividing number of overpay by total number
of checks processed for the period
Measuring Success and Performance: Metrics and Incentives
Service partners establish credibility through strong performance. We believe in regularly

assessing progress using key, enterprise-level goals and reporting on the achievements. It
is important not to track hundreds of metrics, but instead focus on a few essential key
measures that link operational performance to business strategy. Performance measures
provide an ongoing mechanism for evaluating the established service levels and improve
services to reach strategic targets. Periodically, the performance of the delivery operation
can be benchmarked against peers.

HR Operating Model
The Service Center Case Management tool is a critical source of information; manage-
ment can rely on it to monitor key issues and to gauge whether cases are being worked
on, and subsequently closed, in a timely manner. A measure of service quality can also
be derived from periodic customer satisfaction surveys of people who have contacted
the center within a certain time frame.
The following diagram details the service improvement process:
Figure 11 – Service Improvement Process
Service Baseline - Prepared initially to document the services at the start of the ar-
rangement, it is updated to reflect agreed changes as they occur.
SLA - Documents business unit specific views of the services – is amended over time
as the service requirements develop.
Business Unit Representatives - Senior HR representatives from the appropriate

business units, responsible for ‘buying’ the service, managing the relationship and ap-
proving changes.
Measure the Service - Appropriate service level and volume measures will be used
to demonstrate the service being received by the business units and help target im-
provements.
Service Report - Service performance reports that are produced monthly.

HR Operating Model
Service Review - The service manager and business unit representatives will meet
regularly to discuss service performance and address any changes to requirements or
future service challenges
Service Change - When changes to the service requirements are identified, they will
be managed through a controlled change process
Quality - Service issues will be turned into quality improvement actions, agreed be-
tween both parties.

HR Technology Model
6.
HR Technology Model
Core HR Technology
Consolidation As part of HR Business Transformation companies sometimes place a lot of emphasis

or integration? on selecting and implementing an HR solution (SAP, PeopleSoft, Oracle or other) and
determining system coverage (global, regional, local or per business area). However,
the choice of a technology platform for HR also depends on other factors, like availa-
bility of systems that cover (legal) local requirements, integration with company-wide
financial systems and third party vendors, etc. The current state of the art in technology
is such that it can answer even the most demanding needs. Instead of covering all tech-
nical options, this chapter will describe some issues to consider when designing the HR
Technology model.
ERP or Best-of-Breed
Component In most cases, companies are faced with the question: full ERP or best-of-breed? Using
based one consolidated HR platform offers advantages like out-of-the-box integration, but
architecture also limits you to the functionality of one solution, which could be poor in some crucial
HR areas. On the other hand, having to seamlessly integrate 10 different HR systems
(think of issues such as single sign-on, data integrity and web access) can be outright
impossible.
To have the best of both worlds, many organizations choose to introduce a component
based architecture connected through middleware, so individual applications (compo-
nents) can relatively easily be replaced or renewed. As a result, there is less emphasis
on selecting one system that fits all requirements; instead the focus lies on choosing
components that integrate well. When approaching system design in this way, impor-
tant prerequisites are the availability of well-designed and common processes (see also
chapter 4. HR Services Model), the existence of a global data model and a consistent
user directory.
The advantage of using only standard software lies in the fact that all maintenance and
release changes are completely integrated in the component systems. Components can
thus be (ex-)changed, without the change resulting in impact on the overall

HR Technology Model
architecture. Also, the choice of components can differ within organizations, depending
on preference or geographical spread.
Middleware as Since no software vendor can promise a fully functional and globally valid HR applica-
transparent tion, management needs to concentrate on multi-vendor environments instead of try-
layer ing to implement a ‘one-size-fits all’ strategy. Companies should focus on designing a
‘best-of-breed’ software application architecture where core and support systems are
tied together through powerful middleware and data interchange models. Even with a
complicated architecture in place, the user experience can be optimal, by way of pro-
viding a transparent layer (Service Integrator) between ‘touch points’ (user access
points) and systems.
Admin Systems Core Systems Support Systems
Service Center Basic Data Country/Process Document imaging

Dataware Store
Report & management
data exchange
Peoplesoft, Oracle Specific
Engine SAP HR Data
Case Management Policy
FAQ
Service Center Tool Database
Accounting
and Billing Proprietary Systems Voice
Contact Center Software
systems Recording
data data data data

exchange w/ exchange w/ exchange w/ exchange w/
´touch points´ ´touch points´ ´touch points´ ´touch points´
Service Integrator
External Fax &

provider Intranet E-mail Forms Voice Printed
systems Mail
Independent Software Vendor solutions

Employees
Managers Regular communication channels
Customers
… Data-mapping
Figure 12 – HR Application Architecture
HR application The illustration above gives a general overview of the proposed HR application archi-
architecture tecture, using middleware in the integration layer. Systems are divided in core systems,
support systems and administrative systems. Core systems are HR systems that store
HR data. Core systems consist of basic HR data (personal data etc.) that can be stored
on a global level, and country/process specific HR data (payroll, benefits, etc) that are
subject to local legislation. Support systems are applications that support the HR staff
in performing their activities, such as the case management tool that registers all calls
and distributes them among HR service center staff. Finally, administrative systems are
used for general activities, like reporting and billing.

HR Technology Model
Integration The HR Technology model is based on the concept of the integration of all systems.
layer The main enabler for this is the integration layer, which uses application messaging.
The core HR system contains all basic HR data and serves as the master system for
basic HR data. Changes in master data that are relevant for other components are sent
to the integrator layer, which distributes the changes as messages to the components
that must receive the data update. The message contains the changed data, and param-
eters that define how and when the change must be processed. When used in this way,
the integration layer ensures that all components remain synchronized.
The integration layer is the central element of the HR architecture. This layer is XML
based and integrates the various components. Within the integration layer, two main
elements can be distinguished:
• payroll integrator
• service integrator
Payroll The payroll integrator connects the global HR database with the local payroll system.
Integrator Depending on company needs (e.g. reporting), this can be either a one- or a bi-direc-
tional connection. If local subsidiaries are using different payroll solutions, these can still
be integrated in the overall HR Technology Model, provided these local solutions are
XML-based and can be connected through the payroll integrator.
For example, some companies use a core global HR system that does not cover all local
payrolls. In this case, the payroll integrator can connect the core HR system with an-
other vendor’s payroll system. Suppose a company uses PeopleSoft as core HR system
at global level, local subsidiaries can then choose to use either PeopleSoft or SAP Pay-
roll, while others can opt for a third party (outsourced) system. The user interface
shows integrated web pages, in which the end-user will not be able to distinguish be-
tween PeopleSoft and SAP fields. The HR service delivery covers both systems as if
they were only one. Data is stored in the system where it belongs and there is only
one master system for all data elements. Additional programming is kept to an absolute
minimum and each system can have its own release cycle. The payroll integrator en-
sures that data changes are processed in the correct way and that all systems remain
synchronized.
Service The service integrator is a universal translator between different HR systems and the
Integrator presentation layer on the employee’s desktop PC or phone. It connects the case man-
agement tool to the HR systems and translates queries that arrive through one of the

HR Technology Model
‘touch points’ (web pages, Interactive Voice Response, etc.) into the right format, so
they can be processed by the system. Employees querying the HR systems, Service
Agents and third parties connect to the back office and supporting systems through this
integrator.
HR Service Center Infrastructure
A virtual Service The infrastructure of the HR Service Center (HRSC) must be seamlessly integrated
Center into the overall HR architecture. The HRSC hosts the service agents (Tier 1) and sub-
ject matter support (Tier 2). Service center staff is supported by the HRSC infrastruc-
ture when dealing with employee HR demands. CTI integration and call center
software ensure increased productivity and immediate and speedy access to HR back-
office systems. The Service Center runs on the technology backbone as provided by
the Technology Center.
Since the HRSC is committed to providing multi-language, multi-jurisdictional support,

the Service Center should be looked upon as a virtual assembly of service agents located
in different parts of a continent or even the world. They are tied together by a common
technology platform, enabling them to work as if they where located in the same floor
or even room. The Service Center can include customer retained HR staff and/or IT
helpdesk as if they where an integral part of the HRSC.
The following illustration shows the IT Infrastructure for the HRSC:

Unified employee ´touch points´
IP ACD
Gateway
}
IP-Network IVR Service Integrator
@ Electronic Forms X ML IVR querying
E-mail Handler Structured processing of
Web Interaction
e-mail traffic
Telephone SS7 Voice Recording Information Parsing from
PSTN-Network
Unit ESS etc …
Electronic form handling
Fax Gateway • SAP-HR
• Peoplesoft
• Case Management Tool
• E-recruitment
Distribution of calls • Bespoke Application
based on:
Extra-Muros agents – Time zone
– Skills
– Language Roles
Customer
Retained HR-Staff
T1 – Service Agents
External
HR providers
T2 – Subject Matter Experts T3 – Policy Experts &
& case Workers Process Owners
Independent Software Vendor solutions

Bespoke application and data-mapping
development
Figure 13 – HRSC Infrastructure Overview

HR Technology Model
The HRSC infrastructure has a two-faced function:
• Real-time support for the employee when querying the underlying HR systems.
• Operational support for all service agents.
The employee interaction with HR improves based on the fully transparent interaction
with the HRSC infrastructure. Voice, web or other channel interaction with the under-
lying HR systems passes through a central ‘gateway’ referred to as the Service Integra-
tor. This ensures that the case management tool captures all employee interaction,
resulting in a 360° view of all customers.

Sourcing
7.
Sourcing
Key Drivers for Outsourcing
Centralize or Organizations cite many different reasons as key drivers leading to the decision to cen-
outsource? tralize and/or outsource. Choosing either option depends on specific internal organi-
zational goals, external market conditions and economic factors, such as:
• Enabling rapid business change
• Improving quality of services
• Reducing capital expenditure required to deliver services
• Providing access to greater expertise: obtain quick access to skills that are not read-
ily internally available or a company does not want to employ
• Assuring cost containment over a given time period
• Aligning HR strategy with business goals
• Access to latest technology
• Gaining process knowledge, streamlining processes
• Scalability: enabling quick ramp-up and ramp-down of volumes
• Risk sharing, shifting risk to service providers
Most companies will be somewhat familiar with HR outsourcing because at present

they use an external payroll or recruitment solution. The current trend is that compa-
nies concentrate on core activities, with the objective to streamline core business
processes and reduce operating expenses. By organizing core processes in an optimal
way, a company can gain competitive advantage and distinguish itself from other market
parties.
All other processes are then considered supporting processes: as such they must be
carefully evaluated, but since they do not belong to the strategic processes that distin-
guish a company from its competitors, (out) sourcing is a viable option. When consid-

Sourcing
ering outsourcing, the main drivers are strategic relevance, current service level, cost
containment and required performance level.
When an organization looks at sourcing, it is important to evaluate all available sourcing

options and determine the preferred route to the future end-state. Investigation of
outsourcing options is therefore an integral part of HR Transformation. An outsourc-
ing vendor can add value by excelling in cost reduction for transactional services and
delivering optimized processes, supported by the appropriate systems. Sourcing also
allows for greater control resulting from consistent service delivery, improved data ac-
curacy and reliable reporting. Most company concerns regarding outsourcing center
around issues such as security, budget constraints, and data access and control. The
challenge lies in maximizing leverage, understanding and minimizing risks and planning
change management.
Outsourcing is not an “all or nothing” decision: a number of realization scenarios can

be envisioned with respect to the degree of outsourcing as depicted in the following
illustration:
Figure 14 – Sourcing Stages
As the illustration shows, many organizations currently use outsourcing on an “as

needed” base and outsource those HR processes that they feel they cannot or do not
want to handle internally, like payroll. This is operational outsourcing. Before moving
to outsourcing enabler and basic services, companies can experiment incremental out-

Sourcing
sourcing, starting with technology or a few chosen scenarios to gain experience in this
field. Alternatively, some organizations choose to first consolidate services within a
shared service center before completely outsourcing the HR service center.
A number of scenarios can be envisioned with respect to the degree of outsourcing:
• No Outsourcing: All HR activities remain within the organization. A third party

delivers resources, skills and technology support. The organization manages the
build, transition and resulting delivery operations.
• Discrete Outsourcing: A number of HR processes are outsourced to (one or

more) third party vendors, governed by a contract or Service Level Agreement.
Outsourcing can be functional, technical or both.
• Out-tasked Technology Center: An outsourcing party implements and builds

the service delivery infrastructure, delivers application maintenance and IT support
on a Service Level Agreement (SLA) basis for a number of years.
• BPO or full out-tasking: An outsourcing party operates the Service Center(s) as

well as the Technology Center and is responsible for both functional and technical
operation and service delivery. A Service Level Agreement governs the relationship.
The contract usually covers a longer period (7+ years).
When moving in the direction of strategic outsourcing, an organization chooses to out-

source its services in the form of end-to-end processes, including technical and appli-
cation support. An organization can choose one outsourcing vendor, but can also
select vendors per process. In a later stadium the HR service center can also be out-
sourced, as well as part of the Center of Expertise. Alternatively, an organization can
create a joint venture with an outsourcing provider. It is important to consider future
options to outsource certain or all HR processes during the transformation project,
because this has consequences for both the operational and technical design of the
service centers. The following picture shows various sourcing options:

Sourcing
Figure 15 – Sourcing Options
Partnership Outsourcing of HR services must be organized along a partnership model, rather than
a customer/vendor relationship. The added value of outsourcing lies not only in low-
ering transactional costs, but also in continuous process improvements to provide bet-
ter service at a lower cost. In addition, through outsourcing, an organization gains
access to the latest capabilities, skills and technologies, the development of which
would be hard to justify within the organization. Because the provider must focus on
continuous improvement of service quality against lower cost, it is imperative that both
skills and technologies are constantly developed in order to provide world-class HR
services. Outsourcing providers can deliver more effective change management pro-
grams based on their experience. This will lead to shorter implementation times and
reduce risk for the organization.
The full potential of an outsourcing arrangement can only be achieved by active rela-
tionship management. We have seen many cases where a company forces an outsourc-
ing vendor to cut cost in an unrealistic way or outsources only problem services and
thus uses sourcing in a tactical instead of a strategic way. For outsourcing to succeed,
both parties must be involved as partners and have a mutual understanding of the busi-
ness goals. This demands time and attention to focus on enabling and supporting the
deal. Management of the relationship must be handled in a professional way and formal
contract management must be established to ensure long-term benefits. Also, instru-
ments must be put in place that control price and performance. As the development
of such a relationship takes time, sourcing options must always be considered for long-
term goals.

Sourcing
Transformational A company can obtain both a strong HR service delivery operation and a professional
outsourcing business partner organization through the HR transformation process. An option to
take into consideration is transformational outsourcing. This is a proven technique,
which ARINSO has successfully applied, and one which helps obtain the desired result
using the transformation strength and resources from an experienced HR BPO partner
as ARINSO. Transformational outsourcing relies on an incremental agreement instead
of a big bang approach and therefore limits the risks associated with an all or nothing
project. The projected end state is one where ARINSO operates the service center
including the technology center, while the organization remains focused on strategic
program development and delivering HR through business partners.
Mutual Transformational outsourcing allows a company to benefit from the operational excel-
partnership lence and economy of scale the outsourcing party provides, while fully focusing on HR
strategy and value creation at the same time. To achieve this, the relationship with the
outsourcing party must not solely be based on pricing and quality of service, but also
on continuous innovation and evaluation of new developments. The relationship be-
tween the organization and ARINSO must therefore be one of a mutual partnership:
both parties must focus on improving the service and benefit from them. Only when
performing this way, strategic sourcing can be realized.
The result of focusing on a best-in-class outsourced HR service delivery at a contained

cost and quality of service with ARINSO, by means of its integration power, creates
recurring revenues in the core business line. The outsourced activities will be per-
formed in a way that ensures compliance with a company’s values, policies and stand-
ards. Reliance on external service providers increases exposure and therefore
ARINSO is committed to install the proper controls to reduce risk to levels that are
appropriate.

Migration Approach
8.
Migration Approach
Transition to a New Organizational Environment
Transition as A crucial factor in achieving a successful transition from the AS IS to the TO BE envi-
critical success ronment is the acceptance of the HR transformation project. This acceptance is vital
factor to make the new HR service delivery model operational and to ensure the success of
the new working environment.
Most companies today have implemented global systems in the traditional way, where
employees were trained in the new technology as a first step. In those cases, the or-
ganizational and human changes were too often forgotten; people were not prepared
to work in a different way, with the result that the expected ROI of the project could
not be achieved. It is easy to understand that the traditional approach can cause a de-
crease in perceived service quality and failure to achieve the intended cost benefits.
The alternative approach is focused on viewing employees as crucial assets during the
transformation process, and consequently on maximizing people performance. This ap-
proach takes every element that impacts the organization into consideration; not only
the new tools and the new organization model, but also the new processes, roles, skills,
competences and knowledge.
Importance of People usually respond in different ways to transformation processes. Depending on

Change their view of the current situation, people will either look forward to the change or be
Management very apprehensive of what the change will bring.
To guarantee a successful outcome, strong change management is very important for

the project as a whole. The change management program must focus on clearly defining
the changes necessary to reach the company objectives, and on ensuring that all em-
ployees are correctly informed and accept the changes to the greatest extent possible.
If not, the project runs high risks of not being supported by employees, who therefore
will continue to work in their old, familiar way.
We have developed various materials, tools and techniques from a “best practices”
point of view, to help clients maximize company performance: the starting point is our
HR Change Management approach, that shows the dimensions of change. This ap-
proach defines how to manage the change, when moving from the current to the new

Migration Approach
HR Service Delivery model, in order to ensure that people will be ready, trained and
able to work in the new environment: the final objective being better service delivery
to clients (internal or external).
A change management approach must support a successful transformation to the new

situation, and focus on:
• Organization
• Processes
• Communication
• Training
while taking into account the impact of the culture and the commitment to the trans-
formation project.
Figure 16 – HR Change Management Approach
HR Change The HR Transformation Change Management framework incorporates the following

Management key elements: communication, training & qualification, organizational & personnel de-
Framework velopment, and change. The important starting point is to assess the impact of the up-
coming changes regarding required qualifications, changes in individual/team work
processes as well as organizational changes and potential resistances. Also, readiness

Migration Approach
to change should be analyzed in order to design the change management program in

the right direction.
Assessment The first activity is a change management assessment that aims to capture potential
fears and resistance with regard to changes in the way work will be done in the future,
potential job transitions and possibly new technology. Resistance should not be ig-
nored, but recognized and captured so that it can be addressed properly:
• Resistance is normal and unavoidable when people realize they will have to give
something up
• Not allowing people to express their feelings or calling into question their feelings
only encourages more resistance
• Surfacing and legitimizing feelings of resistance allows for analysis, recognition, and
action planning
Transformation In order to ensure that all dimensions are captured and the change project is a real
path success for the company, we have defined a Transformation Path, based on three
groups of activities.
Figure 17 – Transformation Path
Process & It will be crucial to analyze the impact of the new Service Delivery Model on the or-
Organization ganization and processes, and to propose improvement recommendations, based on
Development best practices. The final objective is to avoid gaps between the expected and the real
TO BE working environment, and to allow the most efficient use of the new technol-
ogy.

Migration Approach
A new organizational structure has to be defined, highlighting the new roles to be found
in the new organization, with the three major role categories as starting point:
• HR Consultancy (HR Business Partners) appropriately embedded in the business,

supporting transformational change and business needs
• HR Center of Expertise (CoE) providing world-class advice and policy development
• HR Service Center (HRSC) delivering transactional activities and basic employee

support
Each role has specific competences attributed to it that are mandatory for this role.
These competences help realizing the match between the existing and the required
profiles. The objective is to identify the new roles and functions to be filled in by the
employees in the context of the new Service Delivery Model and to recommend ways
in which the new model can be implemented for each individual.
The TO BE HR Service Delivery model also consists in reviewing the HR processes in

the context of the roles and objectives of the new model. New process flowcharts
must be written with information on the actors, the tasks to perform and the interac-
tions with the new technology.
Once the organization and the processes are reviewed and improved in the context of
the new Service Delivery Model, it is crucial to define new function descriptions with
competences per role. The competences will help defining the training to be given to
each employee or group of employees in order to prepare them for the new organi-
zation.
Communication Communication is a key success factor when initiating a new change. It helps people
Strategy understand, collaborate and accept the changes as final objective. A clear and efficient
communication strategy depends on the media, the timing and the frequency of mes-
sages, the content consistency, and the relevance of the communication actors.
It is always better to over-communicate and to start communication at the right time.

In order to set up a communication strategy, the communication linked to the project
must be integrated in the overall corporate communication framework. It is thus im-
portant to document the current communication process in order to ensure a perfect
understanding of the way in which the organization usually communicates. The com-
munication process should utilize various media channels to achieve the defined com-
munication goals and use different voices, not only from actively involved project
members, but also from executive management and line managers.

Migration Approach
Based on this analysis, it is necessary to define a communication plan with the following
objectives:
• To announce the change and the reasons for change
• To present a positive image of this change to all those concerned
• To develop a better understanding of the key elements of the medium- and long-
term vision
• To maximize the opportunities of involving everyone in the change
• To ensure understanding of the new way of working, the new technology as well as
the associated need for training
• To replace rumors with facts
This detailed Communication Plan will be used to manage and monitor communication
on a day-to-day basis throughout the project.
Training & Training and Knowledge Transfer are two major activities that allow employees to gain
Knowledge the right skills, competences and knowledge to fill in their new role and their new func-
Transfer tion, in the context of the new Service Delivery Model and the new IT strategy. With-
out appropriate training and knowledge transfer, the project failure risk is huge, even
if the organization, the process and the technology have been correctly reviewed and
implemented. To make sure people will work efficiently in the new environment, train-
ing and knowledge transfer activities need to be performed during the whole transfor-
mation project. Training and Knowledge Transfer must address all stakeholder groups,
so everyone is able to get results in the future situation.
Creating and delivering a Training Plan commonly consists of the following key ele-
ments:
• User Education - An organization needs to anticipate the effect the new HR De-
livery Model will have on employee morale and the bottom line – productivity and
profitability. Key task is to define the scope and components of the education plan
early in a project to ensure consistency and appropriate timing for training delivery.
The objective is to deliver a comprehensive, easily understandable educational pro-
gram.

Migration Approach
• Training Program Planning - The training audience and the specific skills and
knowledge that will be required to succeed in the new HR environment must be
identified. This can be accomplished by assessment through structured interviews
with system users and managers, and by analyzing the results to yield recommenda-
tions for education program topics that best meet the needs of the audience. It is
important to work closely with the future HR Shared Services staff to set specific
learning goals and objectives.
• Materials - The training materials will have to be written and tested, and detailed
course plans produced along with materials, exercises, and exams for the selected
training method. A baseline end-user course or vendor-approved course can be cus-
tomized to reflect the customer’s environment.
• Training Delivery - Training Delivery is accomplished according to the methods

and plans determined in the earlier activities. Ideally, the training should happen
“just-in-time” within a month of the “go live” date so users retain the full benefit of
the training.
Stakeholder In order to establish the change vision, it is essential to identify the relevant stakehold-
Management ers in and outside of HR. The identification should be based on formal, and more im-
portantly, informal communication lines. Stakeholders can be employees, managers,
subject matter experts as well as staff in and outside of HR. The identified stakeholders
should be engaged in defined roles within the context of the HR Transformation pro-
gram, to establish a clear Change Leadership and should have influence on the project
within a steering committee or project leadership. It has been proven that the commu-
nication with the highest impact is usually based on informal communication patterns
which project management should be aware of but not try to control.

Realizing Objectives
9.
HR An HR Transformation project enables business integration and the creation of the

Transformation three HR business roles. The best approach is a proven, streamlined process, which
allows making informed decisions and moving forward in a rapid manner. The main el-
ements are the HR organizational change, supported by the set up of one or more
Service Centers and the introduction of a core HR system with extensive self-service
and service technology support. The service center design is based on the leading prac-
tices used in ARINSO’s service centers. The service delivery model consists of techni-
cal, process and people practices.
In order to capture the whole of the improvement potential, ARINSO’s proposal ad-
dresses all of the different aspects requiring change.
Figure 18 – Transformation of HR Operation
Aspects of The axes of change are the following:

change
• Organizations: align the organizational structure with a focused HR service deliv-
ery organization. Enable the Business Partner model and Policy / Process Networks
for value added services. Design development strategy for HR staff.

• Locations: consolidate within countries, clusters or regions and plan for cultural,
linguistic or time zone issues.
• Processes: create a common process model for enabler, basic, value and strategic
services by capitalizing on best-in-class HR process design.
• Systems: move from a “patchwork” of separate non-compatible and non-integrat-

ed systems to a single system with a proven backbone (back office) and limited best-
of-breed add-ons, seamlessly accessible through the service integrator.
• Service technology: use self-service, call center and case management technology
to measure and deliver HR services. Create the attitude: Self-service is free, Personal
(“Room”) Service is more costly and can only be delivered against cost.
• Outsourcing and Vendor management: Outsource non-value added activities

and reduce the number of suppliers.
Important aspects that must be addressed but are not shown in the picture are the cul-
tural and behavioral changes, which need careful attention and facilitation. Change man-
agement is a critical aspect to facilitate the transition of the administrative capacity to
higher value added HR services and strong HR business partnership. This phase will
also assist in the identification and potential relocation of redundant employees and in
the preparation of retained HR professionals for their new role. A detailed description
of our change management methodology can be found in chapter 8, Migration Ap-
proach.
Too often we find that a company designs the transformation process to address only
one element at a time, such as the replacement of multiple systems, and then goes on
to target other dimensions such as processes. This approach is costly, time-consuming,
and poses a high risk for all parties involved. We propose to address all of the trans-
formation dimensions in a single step, while making it manageable through a planned
geographic rollout, adding more locations over a period of time. This plan ensures that
most employees are exposed to change only once. Typically, the service center infra-
structure is set-up in advance, creating room for timely ‘on boarding’ of all countries
involved. The transformation therefore cannot be limited to the HR service delivery
aspect but must address the whole of HR as a “normal” business operation.
Segmented In order to respond to the diversity of a company’s geographical spread and unique re-
approach quirements, ARINSO proposes a carefully segmented (instead of a ‘one-size-fits-all’)
reduces risk approach for each country where a company is active. This delivers economical use of

financial resources and allows stepwise and risk-mitigated “on-boarding” of business

units and business areas in the different locations.
Optimized Service Delivery Model
We have identified a number of criteria that we use to establish the basis of the opti-
mized delivery model:
• Geographical density of employee population (maintaining self-service for 1,000 em-

ployees makes more sense than for 10)
• Size and volume of transactions per process determine the level of automation and
support model
• Language support requirements throughout the different tiers
• Employee skills to access services using the different ‘touch points’
• Service center accessibility with regard to time zones and availability of skilled, mul-
tilingual resources (external as well as own resources)
• Telecommunication costs and infrastructure requirements
• Degree of service level
• Management complexity of a complete virtual service center
In brief, the ARINSO proposal specifies a number of aspects for each country:
• Processes in the scope of the proposal
• Service location (locally or from one of the service centers nearby)
• Self-service technology supported and for what employee categories
• Languages supported
A “full suite” of services is available for countries with substantial business operations
and large employee populations. Smaller countries will be encouraged to leverage avail-
able language support and self-service of the larger countries.
For all small countries the administration is handled locally and self-service support is
limited to the data processed in the basic processes. Self-service access for manage-

ment and optionally for employees is proposed in English only, as well as for all global
processes. A valid alternative is the clustering of small countries into regional adminis-
tration centers. These regional administration centers do not need to have the same
“tiered” organizational structure or volumes as proposed for the larger high volume
service centers.
Timeline The rollout plan for the different locations takes into account a company’s priorities and
“low hanging fruit”. Typically, total realization over a period of 2 years is challenging for
most companies, yet feasible. The exact amount of time is primarily determined by the
drive and commitment shown by all parties involved.
Lessons Learned
Based on our experience in HR Transformation, we have identified a number of lessons

learned that will benefit your transformation project. When starting a Transformation
project, it is important to review these lessons and see if they are valid for your organization
and how you can address these issues. When addressed in the appropriate way, these les-
sons can enhance the success of your HR Transformation project:
• As HR Transformation touches employees at all levels, we recommend that you en-

gage executive support for the change program in a very early stage.
• Have a clear, concise vision of the future HR function in place at the beginning and
communicate this vision at all levels. Ensure that executive sponsors are fully aware
of this vision and convey the correct message.
• Adopt a realistic time frame. Every company adapts to change in a different way. If
your company is traditionally slow in implementing new projects, do not design a very
aggressive time frame that will lead to failure. Adjust the time frame to correspond
with your company culture.
• Establish a sense of urgency and demonstrate added value. Use the business case to
pinpoint areas of improvement that bring quick results (“low hanging fruit”) and
identify corresponding metrics that demonstrate this improvement. This focus en-
sures that the project remains on track. We also recommend reconfirming the busi-
ness case after the blueprint stage, to make assumptions more credible.

• Setup a moratorium on all HR investments and projects to ensure that new initia-
tives are aligned with the overall goals of HR Transformation. This avoids business
units from introducing shadow services that compete with the shared service center.
• Do not underestimate the complexity of the project. An HR Transformation project

touches many areas: organization, people, processes and technology. Put in place an
overall project manager who focuses on (re-)aligning the sub-projects with the over-
all goal.
• Process harmonization should be followed by standardization for maximum consist-

ency and company benefits. Consistency enables better quality in service delivery
and allows for economies of scale. A solid understanding of legal and cultural differ-
ences is needed to succeed.
• Introducing self-service and automation, access to accurate, consistent and integrat-

ed data is imperative. If you cannot guarantee that the data stored in back-office sys-
tems is correct, we recommend that you first carry out a data clean-up project,
before releasing information to HR customers.
• Managing an HR service center on a daily basis is different from managing a service

center implementation. Service center management requires professionals with dif-
ferent skills. When designing the project plan, ensure that there is an end to the
project by putting in place a standing organization at a certain point in time.

Business Proposal
10.
Business Proposal
HR Many organizations are taking a closer look at the efficiency of their HR department,
Transformation its processes and supporting technology systems. They realize that lack of integration
study has resulted in sub-optimal processes, inefficient systems and information flows, and
that a well carried out HR Transformation project can result in many benefits, both
tangible and intangible. These improvements must be realized in an effective and effi-
cient way, guided by a well-developed business case that focuses on fast return on in-
vestment and creating long-term business value. Based on its extensive experience in
the area of HR strategy and systems, ARINSO has developed an innovative approach
to HR Business Transformation that enables an organization to rapidly develop a busi-
ness case and identify areas for improvement.
As a first step in exploring the benefits and potential of HR Transformation, we pro-

pose a joint baseline study to identify the different strategic options and build the ar-
guments for the decision making process, resulting in a business case. The results
include executive visioning of future processes, the proposed service delivery model,
and an agreed migration strategy with associated costs and benefits:
• HR organization blueprint
• Definition and ownership of basic, value and strategic processes
• Service delivery model for countries, staff types and processes
• HR Service Center blueprint: location, language support and resourcing
• HR Technology Center blueprint: core technology and support structure
• Implementation plan: timing, scope, phasing
• Change Management proposal
• Transition and Staff revaluation plan
• Refined costs and benefits model
• Sensitivity analysis, risk assessment and mitigation
The illustration below shows details on the goal, scope, timing, and deliverables of the
baseline study in an example project proposal. Because every company is different,
ARINSO will provide a customized proposal, tailored to suit the unique needs of your
organization.

Business Proposal
Figure 19 – Project Proposal
By deploying a proven business case methodology, best-practice end-to-end process

designs and relevant metrics to identify and measure progress, ARINSO can help an
organization in achieving its goals in the area of HR Business Transformation. The main
aspects of the baseline study are explained in the following chapter.

Building the Business Case
11.
Enhance Before starting HR Business Transformation, it is necessary to construct a business case,

organizational which clearly explains how the effort will enhance organizational value. The business case
value must not only justify costs and investments, but also set targets for quantifiable results: it
provides a baseline against which to measure progress and success.
The benefits of HR Transformation are both operational and strategic. Operational

benefits are usually simple to quantify: the most common justification of an HR Business
Transformation implementation is that it reduces costs. HR Business Transformation
streamlines processes and simplifies activities. System integration in combination with
the introduction of self-service options increases efficiency and reduces transaction
costs. It reduces information management costs with respect to hardware, software
and staff necessary to maintain (many) legacy systems. In addition, licensing costs can
be reduced because of higher volumes and vendor reduction. As a result, HR Business
Transformation provides both HR consolidation and technology consistency and re-
duces maintenance costs. The savings associated with the above benefits can be easily
quantified.
Strategic benefits are realized by exploiting opportunities that result from creating im-
proved HR Service Delivery. While the total costs of HR Transformation are tangible and
can be calculated, these strategic benefits of HR Business Transformation are harder to
quantify because they deal with intangibles, like providing new levels of service to business
units or spending more time on workforce planning. It is difficult to quantify the impact
of increased quality of service and more satisfied employees and translate these into clear
objectives. However, in order to build a solid business case, both operational and strate-
gic benefits must be taken into account.
Based on our experience with HR Transformation projects, ARINSO has developed a

business case methodology that supports organizations in creating a comprehensive anal-
ysis that quantifies operational and strategic benefits. We look at the current state as well
as a company’s strategic objectives in order to arrive at a proposal that will bring business
value. The following work streams are part of the ARINSO business case methodology:
• AS-IS Assessment (fact gathering) to create a sound decision support basis and re-
flect the uniqueness of a company. The AS-IS Assessment can be extended with an op-
tional benchmark study.

• TO-BE Design to establish a tailor-made design of the future organization.
• Transition Plan to smoothly lead the HR organization to its new place within the
company.
• Business Case, resulting from the first three work streams, reflects the overall study.
The emphasis on financial figures serves as a solid basis for decision-making, as well as
a framework for future project management and evaluation.
Figure 20 – Business Case Methodology
AS-IS This stream focuses on gathering information regarding the AS-IS situation of a company
assessment in order to document the organization, processes, technology, costs and service levels
currently obtained.
During the assessment, we take an in-depth look at the as-is state of HR. Which services
are delivered against which cost, and how are these services delivered? Who is involved
in what capacity? What systems are used and how many people are needed to provide
the services?
Most companies find it difficult to obtain accurate AS-IS cost estimates and projections.
The focus on costs may divert attention from another equally important aspect: what do
we buy for the money we spend? If all money goes to low-level administrative duties, then
HR generates almost no real business value. ARINSO proposes a model, where the as-is
cost must be validated against the obtained business value and compared with the to-be
value proposition before any conclusion can reasonably be drawn. It is important to keep
the appropriate focus during the AS-IS assessment: the information collected must have

the right level of detail required to understand the current state so it can serve as a base-
line for the transformation plan.
Benchmarking After the baseline has been established, we advise organizations to look outside: how do
the results compare against industry best practices, and how do other companies per-
form the process? If other companies are performing significantly better in certain areas,
it can be beneficial to focus on these areas and target them for first improvement. When
used this way, a benchmark can identify performance gaps, pinpoint significant gains and
thus assist with determining the preferred order for the HR Transformation project.
In addition, benchmarking allows companies to set goals against which to measure im-
provement during the HR Transformation process, which is important to evaluate
progress and demonstrate perceived benefits.
TO-BE design After analyzing the as-is state of HR in detail and determining goals and priorities, it is
important to create a vision of the end state, called TO-BE design. The previous stages
provide the information to realistically design the future. This stream focuses on the spec-
ifications for the Service Delivery Model, Process Model (Service map), Organizational
Blueprint and supporting IT technology. All designs are then aligned with the business
goals and the HR vision.
The to-be study will quantify all aspects of the new HR service organization and deter-
mine associated costs, benefits and justification of investment. This leads to the definition
of the Common HR Framework. The to-be study will be based on the assumption that
changes (whether organizational, economical or other) are a given, and thus take into ac-
count the fact that the scenario for moving forward must be flexible. The to-be study will
also quantify strategic benefits.
The To-BE Design results in the following deliverables, also called the Common HR
Framework:
• Guiding principles to provide the general direction. The guiding principles aid in under-
standing the parameters used while designing the future state. All decisions must be
evaluated against the guiding principles.
• Organizational Framework and Governance Model that detail the future HR organiza-
tion and the way it is governed.
• HR roles and responsibilities of the end-state. This includes a skill and competency
overview to move individual HR professionals to their new roles. The service delivery

matrix details which activity is performed where and clearly documents the responsi-
bilities of the future roles and organization.
• Process designs according to the new model with full leverage of automation provided
by technology support.
• HR Technology Framework to explain the technology support. This plan gives an over-
view of the future state of technology with full support for self-service etc.
• Sourcing options, a detailed description of possible (out)sourcing scenarios, including

benefits
• Service Level Agreements or Partnership Agreements that show commitment to sup-

port business goals.
Transition plan The transition plan builds the foundation to create an investment plan. The investment
plan outlines the required financial budget that is necessary in order to build and imple-
ment HR Shared Services. It includes all activities and investments, from establishing the
facilities to carrying out required trainings for the future HR Shared Services staff. The
investment plan describes the initial as well as ongoing costs. This stream details the road-
map towards full HR Transformation, including topics such as Service Center and HR IT
implementation plan, People and Knowledge Transfer and overall rollout planning (and
budget). The transition plan demonstrates how the organization moves from the current
state to the future state, with detailed time plans and cost overviews. It describes the pro-
posed people and knowledge transition and the technology investments, if appropriate.
The transition plan also contains a proposed project organization, and describes the de-
cision making process.
The deliverables are:
• Outline of the transition, transfer and roll-out of the services
• Overview of when and in which steps the service center will be built to be live at the
right time
• Plan for the transition of services, workforce, organization and possibly technology
• Plan and description of the necessary activities in regard to Change Management,

Qualification and Training
• Risk assessment leading to guidelines and recommended actions

Business case This final work stream validates the findings of the organization, process and technology
analysis, and incorporates them in a Business Case model to calculate and report on fi-
nancial metrics such as ROI, NPV and payback time (including sensitivity analysis). It fur-
ther investigates (pre-) financing scenarios. The final business case articulates the need for
changes through focus on the following items:
• Validate the cost findings from the AS-IS cost analysis study
• Identify all relevant HR related costs (direct, indirect and vendor costs) in the TO-BE
scenario(s)
• Calculate ROI and NPV by identifying the costs and benefits of the new service delivery
and the critical factors that could influence the ROI and NPV
• Identify any additional costs that may be impacted due to the introduction of the HR
Service Delivery Model and HR IT architecture
• Calculate the initial implementation cost
• Outline how the implementation costs can be funded and pre-financed
Analytical In order to obtain relevant and useable results that support the decision-making process,
techniques special analytical techniques will be used, such as Multi-scenario Analysis (or Monte Carlo
simulation) and Sensitivity Analysis.
Figure 21 – Business Case Examples

The advantages of this method are:
• Decision supporting tool: Provides better input for decision-making, as this

method gives more insight in the uncertainty and probability distribution of the re-
sults. It does not only generate discretionary figures (resulting from 2 or 3 scenarios)
but creates elaborate forward-looking projections.
• Sensitivity Analysis: The Sensitivity Analysis provides information on the factors

that have the most influence on the output, so that management can decide on ap-
propriate measures to safeguard the outcomes or positive returns of the project.
This results in improved risk management and mitigation measures.
• Communication of results throughout the company: This method uses spe-

cialized HR information to model the input parameters (information from HR
benchmarks and HR experience), and provides output for Executive management
(HR as well as Finance), thus bridging the gap between HR management and other
corporate management.
Viable business The ARINSO methodology will result in a viable business case: the model will quantify
case and estimate vision assumptions as articulated by company executives. The model will
include current state HR costs and people (FTE) estimates, future state HR process
costs and FTE estimates, and future state BPO costs and FTE estimates. It will also in-
clude a relevant cash flow analysis to demonstrate annual costs and benefits and a 5-
year NPV. Multiple scenarios can be investigated and Sensitivity Analysis can be per-
formed.
By following the ARINSO methodology, a company receives a strong business case that
supports the initiative, identifies both tangible and intangible benefits of carrying out HR
Business Transformation, combines global, regional and local approaches to fit a com-
pany’s needs and focuses on creating business value.

Pricing and Financing Models
12.
Financing ARINSO provides different scenarios for cost allocation and funding when carrying out
HR Service HR Transformation and creating the service center operation, according to client spe-
Delivery cific needs. The total cost of HR operations include costs for the 3 HR Business lines:
• HR Service Delivery
• HR Business Partners
• HR Policy Experts and Process Owners
This chapter details cost issues related to the transformation and operation of HR
Service Delivery.
When implementing the service center model, the setup costs include:
• consultancy costs for setting up the service delivery operation, including:

– hardware and other infrastructure costs (basically: software licenses, call center
facilities, network and other hardware)
– setup cost of the delivery operation (recruitment, training, relocation)
• consultancy costs for transformation, (re)training and change management to the

new HR delivery model
• potential severance costs
Costs for operating the service center include:
• labor costs for contact center operation (e.g. carrying out transactional processing,
providing professional and advisory services)
• labor costs for technology center operation
• costs for management and governance
• yearly software license and hardware maintenance costs
• telecom, housing and depreciation

Funding When setting up a business (as well as a contractual relationship) there are a number
scenarios of principles that can be applied in the area of funding. Most companies find it benefi-
ciary to engage in a partnership when transforming the HR function and accommodat-
ing change in HR service delivery. ARINSO proposes to jointly identify the so-called
"transformation opportunities" and to discuss scenarios to come to prioritization, re-
turn on investment calculations and subsequent decision-making on the funding of the
arrangement. There are several scenarios possible:
• Pre-financing of implementation costs by ARINSO (to be spread over the contract

period). This would result in a moderate up-front capital budget expense (for sever-
ance costs and internal change management efforts). The interest rate is to be
aligned with market conditions and capital costs of the company. The service con-
tract includes arrangements in case of early termination of the contract.
• Cost contained fee structure: fees can be agreed upon for the whole contract peri-
od, including a pre-defined year-to-year decline (reflecting higher efficiency obtained
over the contract period). For services outside the day-to-day scope, fee arrange-
ments can be made.
• Pay-as-you-grow: the number of employees drives the fee structure, thus making in-
voicing, controlling and budgeting much easier (transaction-based pricing). Employee
numbers can be floored or capped, to reflect future business increase (through or-
ganic growth or acquisition) or decrease (e.g. divestiture). For specific tasks, pricing
can be either service or project based.
• Risk/reward sharing scheme: business units have a joint accountability to reduce op-
erating costs and ensure the success of the service center. This includes using self-
service to a maximum and sharing lower costs when relocation to cheaper locations
should happen.
Regardless of the scenario, benchmarking of the service center with external best prac-
tices and costs must be conducted on a regular basis. Levels of client satisfaction can
be checked thanks to recurring formalized client feedback. Reporting will be based on
SLA results, client satisfaction and outcomes of the service center. In order to get the
service center up-and-running, a grace period should be specified, during which both
partners gradually step up to the defined engagements and performance.

Financing Models
Long-term ARINSO is willing to discuss taking part in the risks linked to financing and transformation.
finance models This will enable an alignment with the cash flow, to occur when the financial benefits of
the solution can be captured. We foresee the following interesting basic funding models:
• Traditional funding model
• Pre-financing by ARINSO with outsourcing
Traditional Funding Model
A normal implementation starts with a company assembling financial and project team
resources, assisted by ARINSO’s implementation consultants. Out-tasking to ARINSO
happens at the time of the on boarding to the service center and the activation of the
service. At the same time, future costs are fixed over a given period (7 years), adding
further long-term benefits. This traditional model includes a significant up-front invest-
ment for the setup of the service delivery model, which is a direct investment.
Figure 22 – Traditional Cost Model
Alternative Funding Model: Pre-Financing by ARINSO
In the transformational outsourcing model, ARINSO offers to share in the build risk
and in the financing of the project. In this case, both out-of-pocket costs as well as
transformation risks will be significantly reduced. Again, the model is based on full out-
sourcing to ARINSO and the described scope and service levels, allowing the fixing of
future costs over a given period (e.g. 7 years), adding further sustainable benefits. Re-
ductions in operating costs over time are part of a Profit Sharing Scheme.

Figure 23 – Alternative Cost Model
In both scenarios, a reasonable initial out of pocket cost will remain for the transfor-
mation costs to support the business partner and expertise center implementation.
Pricing and Cost Allocation
Within a shared services or outsourcing environment, different cost models are appli-
cable. Internal shared service organizations are mostly treated as a pure cost center
(with annual budgets), concentrating on process enhancement. There is normally little
room (nor incentive) for the true capturing of cost data and performing benchmarks.
When pricing becomes a contractual arrangement (e.g. in an outsourcing contract), dif-

ferent pricing strategies can be put in place:
• transfer pricing (or cost-plus), allowing the cost center to become a profit center,
but not entailing any incentives to reduce costs
• market pricing, challenging and benchmarking with actual prices for which services
are sold in the marketplace
In ARINSO’s view, pricing methodology should be integrally linked to the Service Level
Agreement (SLA), as both should be based on the principles of accountability. The per-
formance levels defined in the form of metrics can serve as the basis for a pricing-per-
transaction agreement. Further cost improvement and efficiency optimization are en-
couraged through a mutual rewarding scheme, to the benefit of both parties involved.

Why ARINSO?
13.
Why ARINSO?
ARINSO is well positioned to provide strength and experience in HR transformation.

Our main differentiators are a flexible partnership model and our proven abilities in
worldwide HR transformations. Our commitment is very strong because we aim to be
the leading transformational outsourcing company. Our unique selling points include:
• Expertise and experience: ARINSO has important HR, IT and change management
support capabilities. With experienced consultants in every functional area, ARINSO
has the skill set to address the requirements on a global as well as a local level
• Dedicated HR Transformation Consultancy practice: proven methodologies, tools,

delivered by highly skilled consultants with expertise in international environments.
• Proven outsourcing model: ARINSO has proven that it can successfully operate HR
services for highly complex clients in a long-term partnership agreement; ARINSO has
shown its ability to establish complete HR Service Centers in an extremely aggressive
time frame
• Global presence, local service: ARINSO works out of 22 countries in Europe, the
Americas, Africa and Asia. This allows ARINSO to approach functional and technical
requirements on a global, regional and local basis.
• Strong references: more than 600 successful HR implementations and 50 e-HR

projects worldwide. ARINSO has also top-class references of e-HR and global HR im-
plementations (ExxonMobil, Shell, Schlumberger, Renault)
• Established company: ARINSO is a listed company (Euronext Brussels: ARIN) with a

strong cash position and a solid balance sheet

Why ARINSO?
Figure 24 – The ARINSO Advantage

Appendix
Appendix
Appendix: Example Process
Use of Leading Practices
Standardization and use of leading best practices is an important cornerstone of the

proposed HR service delivery model. For every process component and activity, a new
process flow must be designed, taking into account the self-service concept and the
available technology. This results in new, optimized process flows.
To give you an idea of this new process model, we have included an example for the
training process (including tasks, roles and responsibilities).

Appendix
Training Process
Process Description
This process describes how to develop Training programs and create individuals plans.
All plans must be linked to the business needs. This training program needs to be
scheduled and registered. By executing executive succession planning, the organization
knows how to get employees ready for a specific function.
Process Categorization
Value services are less volume-intense and bring value to the employees. Value services
answer questions such as: what is my future with the company, and how can I develop
myself? Value processes provide “key tools” for HR and are global in nature: they are
fully integrated in the global solution map. The main driver for implementing these
processes is to deliver value to HR customers and deliver outstanding support. While
execution of these processes relies mainly on the business partners, policy experts and
process owners play a key role in enabling the business partners to deliver this support.
Process Objective
The specific objective of this process is to perform the training and career development
initiation process in the most efficient manner, with the most accurate data concerning
the employee, his/her competences, his/her objectives, the trainings he/she needs or
want to follow. A second objective of this process is to operate succession planning in
the most efficient way, preparing the employees interested in specific career path or a
specific function, and highlighting the ones who have a similar profile as required by a
specific function.
Process Flows
The process consists of the following process flows:
• Business Needs Assessment
• Individual Training Plan
• Training Program Development

Appendix
• Program Scheduling and Registration
• Executive Succession Planning
Process Trigger
Review Employee Performance Evaluation, Business Strategy, Business Needs and the
Executive Succession Planning.
Process Output
Participation in a training and development event and notify employee of opportunities.
Critical Success Factors
• Timeliness: the number of cases which change date in the system later than validity
of the begin date of the change
• Accuracy of data: the number of changes made in the system (training booking, com-
petency level modification, personal objective definition, competency evaluation, …)
• Simplicity: the number of data sources
• Minimized cost and effort: the training cost per employee

Appendix
Performance indicators
Training Performance indicators are:

Appendix
Dataflow Diagram
Training and Development - Business Needs Assessment

Vendors
SSC (T1/T2)
PROCESS STEP STEP STEP

Development C OE
STEP 6A STEP 10
TRIGGER 2 3 4
Training and
Identify Update Assess and

Review Review Develop and provide consolidate needs Training
Required competencies in workforce competency
Program
Business Corporate assessment for business
Corporate System, if learning Development
Strategy Initiatives methodology and tools
Competencies necessary opportunities
STEP
1
H R Busines s
Provide input on
Partner
business strategic
direction and
learning needs
STEP STEP
STEP 7 STEP 9
5 6
STEP 8 Identify Needs
Review required Assess Existing Perform
Do gaps for Business
competencies in Workforce Business Skills Yes
exist? Learning
system Competencies Gap Analysis
Opportunities
Line Manager
STEP 1A
No
Provide input on
business strategic
direction and
learning needs End
Training and Development - Individual Training Plan

STEP
7
Learning C OE
Review Global/ Business

Regional Needs
Business Needs Assessment
Assessment Process
Yes
STEP
STEP 2A STEP
4
6
STEP
H R Business
Review
Provides 5
Consolidated
Partner
Within Adjust
guidance and Individual learning No
Needs Forecast in budget? forecast
support system
STEP
9
Presents to
Unions or Work
Yes Yes
Council if
applicable
Line Manager
STEP
3 Program
Approve Scheduling
and
plan? Registration
Process
No Yes
PROCESS
TRIGGER
Review
Employee
Performance
Evaluation
STEP STEP STEP
1 2 8
Review Employee Personal Development Develop Document

approved plan in
Employee
Plan along with current skills and Individual Near-

performance
competencies and identify gaps for current Term learning management
career path Plan system
ARINSO International

Appendix
Training and Development - Training Program Development

Vendors
STEP STEP
SSC (T1/T2)
4 5
Conduct vendor Determine top

selection vendor choices
process based on criteria STEP STEP STEP
7 8 9
Conduct vendor Update system Conduct
negotiations and
with new Periodic Review
contract
negotiations if program offering and Materials
STEP STEP STEP information Testing
necessary
2 3 6
Training and Development C OE
Determine
Develop Make final
Sourcing for
No Program selection
Each Learning
PROCESS
Program Specifications decision
TRIGGER
STEP
Review Outlines/ 1
Business Content
Requirements or exists in
Needs
Assessment New of Modified system?
Learning Programs
STEP 2A STEP 3A
Develop new Update system

learning programs with new
Yes using existing program
content in system offerings
HR Bus iness
STEP 3B STEP 8A
Partner
Receive Receive
notification of notification of
new program new program
offering offering
Line Manager
STEP 3C STEP 8B
Receive Receive
offering offering
STEP 3D STEP 8C
Employee
Receive Receive
offering offering
Training and Development - Program Scheduling and Registration

STEP
8
Vendors
Conduct
Learning End
Event
STEP
4 STEP 5A STEP 5B No Yes
Update Rolling Set Up Logistics

Forward to
Learning Yes and Materials Documentation? Documentation
Fulfillment participants
SSC (T1/T2)
Forecast STEP
5
Are Logistics or
prework materials STEP 12
required
Yes 30 Days to
Notify receive
Employee documentation
Yes
H R Busines s Partner
No
No
STEP 4B
STEP 3B
Discuss request No
Approve? No with employee
and/or manager
Discuss with
Manager's Yes
Manager
Is training
unusual or cost
above $XX?
Line Manager
STEP 11 STEP 13
Yes Receive
STEP 1B STEP 4A
STEP 3A
Receive notification of
Receive automatic Discuss deliquent
notification of notification
pending license or Approve? No request with documents
certification
expiration via employee
workflow
PROCESS STEP 1A STEP 2A STEP STEP

STEP
TRIGGER Receive automatic 6 7 9
Select license
notification of Complete Post-
Individual pending license or
renewal or Complete Pre- Participate in and /
certification testing event Test and
Learning certification via Work and Pre- or Complete
workflow classes Submit request Assessment via
Plan Learning Event
Test ESS
Employ ee
STEP for training

Yes
2 online via ESS
STEP 10
Review Licenses or Select STEP
Performance and Certifications No Learning 3
expiring this year Update own
Personal Programs
Development Plan record
Outputs via ESS STEP
1

Appendix
Training and Development - Executive Succession Planning

STEP STEP STEP STEP STEP STEP
1 2 3 6 7 7
Performs List Potential Identify
Develop plans Communicate with
assessment of Execute
Executive Successor high potentials and
C OE
employee for successor succession plan,

Openings in Candidates to provide ongoing
performance and if appropriate
strengths Next 18 month Direct Reports list employees support
STEP
4
Present
recommen-
Execute ESP dations to
management
Management
PROCESS
TRIGGER STEP 1A STEP 2A
STEP
Provides Provide input on 5
information on potential future Agree with
employee strengths management changes No recommen-
(retirements, dations? Yes
and capabilities via
MSS promotions, etc.)
STEP 1B STEP 6A
SSC (T 1/T 2)
STEP 6B
Maintain Pending
Provides data
succession leadership
analysis, if
plans and track opening
necessary high potentials identified
STEP
8
HR Bus iness
Notify
Partner
employee of
opportunity
STEP 1C STEP 7A STEP

9
Provides data on
Employee
Receive support
key strengths Consider
and career
and capabilities opportunity
planning
via ESS

Appendix

ARINSO International (Euronext Brussels:ARIN) is a global HR Services partner offering comprehensive
HR business solutions to the world’s largest employers. ARINSO is dedicated to HR Excellence through
Strategic Guidance, Integration Services and customized HR Service Delivery Solutions.
ARINSO was founded in 1994, and currently employs over 1,400 staff in 22 countries: Belgium, Luxembourg,
the Netherlands, France, Spain, Portugal, Italy, Switzerland, United Kingdom, Germany, Sweden, Finland,
Poland, US, Canada, Argentina, Brazil, Mexico, Singapore, Malaysia,Thailand and Morocco.
www.arinso.com

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HR Business Transformation

Publication: March 2004

Copyright ARINSO International 2004

About the authors

About the authors

Rudy VANDENBERGHE is Executive Vice President at ARINSO International, in charge of HR

Anita LETTINK is Business Consultant at ARINSO International, primarily involved in HR

HR Business Transformation March 2004 1

2 March 2004 HR Business Transformation

1. Executive Summary ........................................................................................................................................................... 6

2. Benefits of HR Transformation .................................................................................................................................... 10

3. New Ways of Working for HR.................................................................................................................................... 14

4. HR Services Model .......................................................................................................................................................... 19

5. HR Operating Model ...................................................................................................................................................... 23

8. Migration Approach ........................................................................................................................................................ 48

HR Business Transformation March 2004 3

9. Realizing Objectives ........................................................................................................................................................ 54

10. Business Proposal .......................................................................................................................................................... 59

11. Building the Business Case .......................................................................................................................................... 61

12. Pricing and Financing Models ...................................................................................................................................... 67

13. Why ARINSO? ............................................................................................................................................................... 71

Appendix: Example Process............................................................................................................................................... 73

4 March 2004 HR Business Transformation

Figure 1 – HR Cost Savings Model..................................................................................................................................... 7

Figure 2 – Employee Self-Service Sample........................................................................................................................ 12

Figure 3 – Manager Self-Service Sample......................................................................................................................... 13

Figure 4 – HR Business Model .......................................................................................................................................... 14

Figure 5 – HR as Intermediary – Actual Situation ........................................................................................................ 17

Figure 6 – Direct Access for the Business ..................................................................................................................... 18

Figure 7 – HR Service Map................................................................................................................................................. 20

Figure 8 – Integration of HR Business Lines .................................................................................................................. 24

Figure 9 – Service Delivery Funnel................................................................................................................................... 28

Figure 10 – Case Management Tool - 360° Employee View...................................................................................... 31

Figure 11 – Service Improvement Process..................................................................................................................... 36

Figure 12 – HR Application Architecture....................................................................................................................... 39

Figure 13 – HRSC Infrastructure Overview .................................................................................................................. 41

Figure 14 – Sourcing Stages ............................................................................................................................................... 44

Figure 15 – Sourcing Options............................................................................................................................................ 46

Figure 16 – HR Change Management Approach........................................................................................................... 49

Figure 17 – Transformation Path...................................................................................................................................... 50

Figure 18 – Transformation of HR Operation .............................................................................................................. 54

Figure 19 – Project Proposal ............................................................................................................................................. 60

Figure 20 – Business Case Methodology ........................................................................................................................ 62

Figure 21 – Business Case Examples ............................................................................................................................... 65

Figure 22 – Traditional Cost Model................................................................................................................................. 69

Figure 23 – Alternative Cost Model ................................................................................................................................ 70

Figure 24 – The ARINSO Advantage............................................................................................................................... 72

HR Business Transformation March 2004 5

HR Transformation – Opportunity for Change

6 March 2004 HR Business Transformation

The transformation consists of the following key elements:

• Get HR professionals to focus on 3 business roles:

• Simplify HR processes through standardization and alignment with leading HR prac-

Figure 1 – HR Cost Savings Model

HR Business Transformation March 2004 7

When companies succeed in reducing overall HR costs while introducing quality HR

HR Transformation – ARINSO’s Understanding

The evolution of the HR organization towards specialized lines of business is crucial in

To facilitate this essential transformation, a necessary step is the creation of a dedicat-

8 March 2004 HR Business Transformation

ARINSO believes that HR Transformation enables companies to achieve a quantum

How to Read this Document

The second part contains recommendations for creating an HR Business Transforma-