Executive Summary

To support this government department’s Human Resources (HR) transformation project, EquaTerra undertook an options analysis study. EquaTerra also formulated the business case to allow management to consider how various sourcing models could operate. Alternative models including a captive shared services model, outsourcing of HR and purchasing services directly from another department were also investigated.

EquaTerra worked collaboratively with the department to shape a HR operating model capable of delivering significant improvements in service delivery and cost savings of around 30 per cent. The model ultimately chosen was an outsourced model that could accommodate other departments in a sharing arrangement in the future.

The Business Challenge

To support the department’s strategic need to improve its capability and capacity for change, HR services had to be transformed. This need for change was driven by a growing remit for the department and the need to reduce costs. The project also presented an opportunity to deliver significant efficiency improvements to the HR function.

Recognising this challenge, the department created a forward-thinking programme of HR transformation, started to introduce a number of consistent processes and commenced development on a consolidated HRIT system. However, it was understood that radical changes were required that could not be realised through minor amendments to the current service delivery model.

The key business challenges identified by EquaTerra and the government department were as follows:

• To significantly improve the service delivered to customers by separating transaction processing from strategic decision support. Strategic needs included delivering more capacity for business change and to support broad business objectives
• To support self service and a culture of self sufficiency
• To become a provider of quality HR management information by increasing the responsiveness, integrity, and consistency
• To develop a reputation across all UK government departments for excellence in the provision of HR services and to support a formal framework of ‘Professional Skills for Government’ - a government programme which sets out the skills needed to do civil service jobs of all grades
• To deliver a sustainable reduction in operating expenses to provide good value to the taxpayer and support relevant reviews (such as the Gershon, Lyons and Readiness For Spending reviews)

The above challenges also had to complement the department’s commitment to realise total annual efficiencies of at least £292m in a period of 18 months including headcount reductions of 1,100 posts and the relocation of 200 posts out of London and the South East of England.

How We Helped

While supporting the business transformation strategy, EquaTerra worked collaboratively with the government department to identify and address issues impeding the effectiveness of HR delivery. These included a mixture of automated and paper-based tools, the numerous independent processes used, high costs per employee, the lack of employee self sufficiency and variable levels of customer satisfaction.

EquaTerra was engaged to recommend the sharing strategy most appropriate for the department. The four following options were evaluated from a qualitative, risk and economic perspective:

1. A shared services model operated in conjunction with another government department
2. A captive shared service model delivering HR services to this government department only
3. Purchasing services directly from another government department
4. Outsourcing to a HR service provider

A tool developed by the Central Goverment Shared Services Team (which included EquaTerra) to assist decision making was used as part of the evaluation process, looking particularly at:

• Addressing what is being shared. Specifically, the strategic direction, political constraints, market capacity, the business, functional and technology view, the governance and organisation challenge, the transformation objective, the delivery model and the support arrangements
• Considering the potential value of a chosen scale and scope of the project (scale defined by the potential user population and scope by the number of integrated functions)
• Assessing key issues for a chosen approach to implementing a sharing agreement

Results

The recommended solution was to outsource HR operations to deliver immediate cost savings and efficiency improvements whilst establishing a platform for sharing with other government departments. The cost and timing of this change was further supported by a number of quick wins.

Quick wins included the total consolidation of the department’s North East England HR services into a single location with the option of adopting this model in other regions such as North West England and London. This consolidation created a single functional centre of excellence with improved processes and a simple one-stop service for users. Greater efficiency and a reduced number of offices also delivered cost savings.

Self service tools for regional staff and senior civil servants were also successfully introduced allowing administration tasks such as updating personal contact details and timesheets to be managed without the need for HR staff support.

A comprehensive review of which services were to be delivered by which HR personnel also reduced the duplication of tasks, increased effectiveness and improved the overall quality of service.

EquaTerra also advised the government department on opportunities for selling HR services to other departments where they had centres of excellence and for outsourcing various functions such as recruitment, training and benefits.

About EquaTerra
EquaTerra sourcing advisors help clients achieve sustainable value in their IT and business processes. Our advisors average more than 20 years of industry experience and have supported more than 2,000 transformation and outsourcing projects across more than 60 countries. Supporting clients throughout the Americas, Europe, and Asia Pacific, we have deep functional knowledge in Finance and Accounting, HR, IT, Procurement and other critical business processes. EquaTerra helps clients achieve significant cost savings and process improvement with internal transformation, shared services and outsourcing solutions.