The intersection between HR strategy and HR technology


HR Service Delivery: Question 4

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Can we cut our costs significantly?

We’re not talking about simply cutting costs and eliminating services. We’re actually talking about discovering the current levels of service utilization and comparing that against a future service delivery scenario. Let’s say you could cut costs by 20%, but still effectively provide 95% of the current level of service delivery. Would you do it? Taking the stream of thought to the next step, if the 5% loss was in payroll accuracy versus call center efficiency, would you pick one but not the other?

In reality it won’t be quite this straightforward. Often your cost savings will come from a significant group of small areas, and the prioritization of how these costs are eliminated is more difficult. This analysis does help identify areas where your money is not bringing ROI, and whether or not you decide to maintain your spend there or not, at least you’re educated for when the money is tight.

But there is a reality in that many of our HR organizations tend to over engineer processes or we apply too much service delivery. Many of us call it “hand holding” where HR will cater to every whim to keep employees happy. In the end, we are implementing new service delivery strategies like self service, web knowledge bases, and improving our call centers, but we’re not enabling a change in behavior because we don’t discourage past behavior. It is entirely possible that when you have implemented a new strategy, you didn’t actually replace the old one. Looking at the overall end to end picture may reveal that there is considerable cost due to duplicate processing.

As always, when evaluating those small areas where a few people use process and technology differently, figure out if these are real opportunities or simply outliers from the norm. If a global change is warranted, don’t forget the change management process to run concurrently with the implementation.

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4 responses to “HR Service Delivery: Question 4”

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  2. Howard Gerver Avatar

    As the new economy unfolds before our eyes in early 2008, employers will be under increasing pressure to reduce spending. One over-looked area is healthcare eligibility. While dependent eligibility audits have become the rage, point-in-time eligibility audits can provide equally compelling savings opportunities. It is not uncommon for eligibility-based financial leakage to represent 2% plus of the healthcare budget. The best part is the savings can be used to fund other initiatives or in some cases, to save jobs. So before cuts are made in the obvious places, try looking in the not so obvious places. You may be surprised.

  3. Rob Avatar

    I think that a lot of HR process and policy implementation ends up being wasteful because rather than really building the right solution on a solid understanding of the people issues, and the employees themselves, they are built on notions of ‘best practice’ which to me is a contextual notion. So, often things start on the wrong foot, but then are also poorly implemented (see your point about change management).

    So yes, I think that HR could cut costs without reducing levels of service.