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HR Servitization

Structure HR administration efficiently, out of employees' sight

HR Servitization

HR servitization – just another buzzword? Yes, sort of. It is mainly about seeking inspiration from a different source for a specific HR sector that suffers greatly – HR administration. Some people also refer to it as HR services, a shared service centre, HR service centre or HR operations. It is the HR engine room, i.e. administration, payroll and time management. Below, we take a closer look at how we can turn managers and employees into HR admin fans using the servitization concept. 

Dissatisfied customers and dissatisfied HR 

Many HR customers (line managers and employees) would not give their HR admin departments a 5-star rating. A study by Haufe reveals that is it precisely the transactional, rather admin-heavy HR jobs that are not highly valued. 

Source: Haufe HR Service Experience 2021

To this is added the fact that frustration is already very high in many HR admin departments. There is masses to do and it is often extremely repetitive work requiring diligence. Employee turnover in these areas is often disproportionately high, which leads to a great loss of know-how. And, as an HR specialist, you are frequently faced with a choice between standardisation and efficiency versus customer focus and treating people as individuals. HR customers are not happy with this, nor is HR itself. 

Ensuring a firm foundation 

What's to be done? The fundamental position is to ensure HR administration is on a firm foundation. This includes these four areas: strategy, processes, organisation and digitalisation. 

  1. Strategy: 
    Most people want to achieve the targets of "cheap", "fast" and "good" in their service areas. Unfortunately, these three preclude each other. If you want fast and cheap you have to introduce standards. Standards are not always good enough for managers, however, and they feel the service aspect suffers. This is why it is important to specify the HR admin department strategy in advance, in accordance with the corporate strategy and by agreement with all the stakeholders. 
  2. Processes: 
    At its heart are the HR processes. It is important to have an overview of the processes available, how these are implemented and their complexity. These processes can then be simplified and coordinated with the digitalisation options. You can find out more in our blog on intelligent HR processes. Other key words in this field include SLAs, quality measurement, standardisation, rules/instructions, etc. 
  3. Organisation: 
    The second core element is HR employees. The challenge associated with HR admin topics is that they rarely concern just HR admin organisation, but also HR business partners and competence centres. This is where a clear definition of roles and enquiry routing is hugely important. Another organisational aspect is the abilities and also wishes of the HR admin team. Do you become a specialist or a generalist? 
  4. Digitalisation: 
    Last, but no less important, is technology. The following questions should be clarified where technology is concerned: Are Employee and Manager Self-Service (ESS/MSS) available? How do you reach all the employees (including those without computer access)? Who do employees approach first if they have a question? Is there an HR platform? What media discontinuity is there in the processes?

Have all these questions been answered? If they have, then all the hygiene criteria for healthy HR administration have been met. But we want a 5-star rating.

Production companies as inspiration 

Other areas outside of HR should provide inspiration. The servitization concept actually originated in the production company sector. This is where material goods are combined with services rather than being offered alone. The classic example is Rolls Royce that not only sells engines to aircraft manufacturers but also leases them. Rolls Royce remains the owner and also undertakes maintenance and repair. Customers pay for the engine per hour of operation.

In abstract, this means a paradigm shift in the acquisition of material goods: a customer doesn't want a coffee machine, they want a nice coffee to drink as they read their paper in the morning, or to sip when they make themself comfortable with a book. They want a feeling, an experience. In the case of HR servitization, the aim is for HR to give its stakeholders a totally positive service experience when dealing with HR administration.

How does HR admin achieve a 5-star rating? 

If you now transfer the servitization concept to HR, employees don't just want an employment contract, they also want an employment relationship with which they are happy. It's not just about the product that was previously ensured using strategy, processes, organisation and digitalisation as the parameters, but also about the solution offered to an employee. Let's stay with the example of an employment contract: traditionally, the process is designed from the HR viewpoint (what does HR need), is regarded as a pure transaction (send contract) that generates a tangible value (documents and instructions). If you take the servitization concept as a basis, it's about meeting a need from the employee's viewpoint. Instead of the transaction, it's about building relationships, and value is generated by the intangible, namely emotions. 

Source: HR Campus based on Frank Danzinger and Neely (2011) Fraunhofer

In the traditional world, the employment contract, with the terms of employment and the master data sheet and other relevant information, would be sent to the new employee. Would that appeal to you emotionally as an employee? Taking Gevekom as an example, it can be seen that things can be different: they enclose sweets and a handwritten card with your employment contract. It might be a different small gesture, such as a photo of the HR team under the contract covering letter. The servitization concept can be implemented at stages other than "entry". Why not write the following as the first line on an illness notification form? "We're sorry to hear you are not well and we sincerely hope you feel better soon!"

We are fans of servitization. 

It can be seen from these examples that the HR servitization concept is nothing astonishingly new. It is much more about placing employees firmly at the centre of the HR admin processes. This does not mean that they need to become complex as a result; often all that is needed is something small, like the wording or a personal note, to give employees the feeling that they are getting service with heart and not simply going through a process. What is needed is time to think about servitization. Caught in the daily rat race with the pressure of deadlines, such as a payroll run or statutory deadlines on your back, it is difficult to find the time. This is why it is highly recommended to have the base parameters in place first because this makes HR admin happy and gains them space and time. When you have processes that not only work but are also inspiring, employees are also happy and give 5-star ratings. 

Published: 28. July 2022

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